Document:

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. MoravecExhibit 10.13

 

ASSIGNMENT
AGREEMENT

 

This Assignment 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 Thomas Hanley (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 September 25, 2007, as amended
by an Amendment to Employment Agreement dated as of July 16, 2008 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.                                       To the extent so provided in the Employment
Agreement, Wexford and Assignee’s other affiliates are intended to be third
party beneficiaries of this Assignment Agreement, and the Assignment Agreement
shall be construed to confer upon Wexford and Assignee’s other affiliates all
rights or remedies under or by reason of this Assignment Agreement.

 

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:

  
	
   

  	
   

  
	
   

  	
  THOMAS HANLEY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

SIGNATURE
PAGE

ASSIGNMENT
AGREEMENT

 

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

This First Amendment to Employment Agreement
(“First Amendment”) is made and entered into this 16th day of July, 2008
between Rhino Energy LLC (“Employer”) and Thomas Hanley (“Employee”).

 

RECITALS:

 

A.                                   Employer
and Employee entered into an Employment Agreement dated September 25, 2007
(effective as of September 1, 2007) (the “Original Agreement”).  Capitalized terms used herein and not otherwise
defined shall have the meanings given to them in the Original Agreement.

 

B.                                     The parties now
desire to amend the Original Agreement to extend the Employment Term.

 

Now, Therefore, in
consideration of the foregoing, Employer and Employee hereby agree as follows:

 

1.                                       The
date “September 30, 2009” in Paragraph 1 of the Original Agreement, titled
“Terms and Duties,” is hereby replaced with the language “the earlier of December 31,
2009 or that certain date when the Consulting Agreement terminates or is terminated.”  The remaining portion of Paragraph 1 of the
Original Agreement shall remain unchanged.

 

2.                                       Except
as specifically stated herein, the Original Agreement, shall remain in full
force and effect and is hereby ratified and affirmed.

 

4

 

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

 

 

	
   

  	
  RHINO ENERGY LLC

  
	
   

  	
  “Employer”

  
	
   

  	
   

  
	
   

  	
  /s/ Nicholas R. Glancy

  
	
   

  	
  By: Nicholas R. Glancy, CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Thomas Hanley

  
	
   

  	
  Thomas Hanley

  
	
   

  	
  “Employee”

  

 

5

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (the “Agreement”) executed on the
25th day of September, 2007, but intended to be effective on the Effective Date
(defined below), is between Rhino Energy  LLC (“Employer”) and Thomas
Hanley (“Employee”).

 

W I T N E S S E T H

 

WHEREAS, Employee and Wexford Capital LLC (“Wexford”),
Employer’s sponsor and the manager of Employer’s owners, are parties to that certain
Consulting Agreement dated as of September 1, 2007 (the “Consulting
Agreement”), which Consulting Agreement contemplates possible employment of
Employee by a Portfolio Company (as defined in the Consulting Agreement);

 

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

 

WHEREAS,
the salary and benefits to be paid to Employee during the Employment Term (as
defined herein) will satisfy certain of Wexford’s obligations under the
Consulting Agreement; and

 

WHEREAS
the parties hereto acknowledge that this Agreement is
to be effective September 1, 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 and continuing until September 30, 2009, unless sooner
terminated as herein provided or extended by mutual agreement of the parties
(the “Employment Term”), the Employer hereby employs the Employee as its Senior
Vice President—Administration or in such other position, or with such other
duties, as Employer may designate during the Employment Term.  Employee further agrees to hold any 

 

6

 

other officer or director positions in Employer or any of its direct or
indirect subsidiaries or in NR Energy LLC or any of its direct or indirect
subsidiaries as Employer may request at any time and from time to time, at no
additional compensation to Employee (“Additional Offices”).  Employee agrees that any Additional Office is
held at the request of Employer, and that in the event Employer requests
Employee to resign such position, he will do so immediately and
unconditionally; provided that if Employer in its sole discretion grants
Employee any non-cash compensation with respect to any such Additional Office,
Employee may retain any vested portion of such compensation and must
immediately forfeit any non-vested portion thereof as will be further set forth
in the vesting arrangement with respect to such compensation.  If within two (2) business days after
receiving such a request, Employee has not resigned from such position,
Employee agrees that Employer will be entitled to recover, as liquidated
damages and not as a penalty, $5,000 for each business day after such two
business day period that Employee continues in each such position without
resigning.

 

During the Employment Term,
Employee may also be employed by or perform consulting services for Wexford or
any Portfolio Company (as that term is defined in the Consulting Agreement)
under the Consulting Agreement (such services being referred to as the “Approved
Wexford Employment”).  At the time of the
parties’ execution and delivery of this Agreement, Employee shall devote
approximately twenty percent (20%) of Employee’s available business time to the
Approved Wexford Employment; provided that during the Employment Term
Wexford in its discretion may approve any increase to the percentage of
Approved Wexford Employment and Wexford and Rhino jointly may approve any
decreases to such percentage, in each case in writing (an “Approved Percentage
Change”).  Any such Approved Percentage
Change shall not trigger any default or severance under this Agreement.

 

7

 

Other than any Approved Wexford
Employment, the Employee shall 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, except for Approved Wexford
Employment.  Employer and Employee will
each use good faith efforts to accommodate each other’s respective needs in
respect of this Agreement and the Approved Wexford 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.

 

2.                                      Compensation.  For Employee’s services hereunder during
the Employment Term, Employer shall pay to Employee a salary at the rate of
$220,000 per year (the “Base Salary”), payable periodically in accordance with
Employer’s usual executive payroll payment procedures; provided that the
Base Salary shall be increased or decreased, as the case may be, proportionally
to any corresponding Approved Percentage Change

 

3.                                      Place
of Employment. The Employee’s regular place of employment during the
Employment Term shall be at the Employer’s offices in Lexington, Kentucky.

 

4.                                      Temporary
Living Allowance; Travel; Expenses.  During the Employment Term, the Employee
shall be entitled to a monthly living allowance of $4,000 per month.  If Employee decides to relocate his permanent
residence to Lexington, Kentucky, Employer shall reimburse Employee up to
$25,000 for the reasonable costs incurred in connection with his relocation and
moving expenses (not to include brokers fees and costs or similar costs
incurred in purchasing or selling real estate) and Employer’s obligation to pay
the monthly living allowance shall permanently cease.  The Employee shall engage in such
travel as may reasonably be 

 

8

 

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.

 

5.                                      Satisfaction
of Certain Obligations Under Consulting Agreement.  It is agreed and acknowledged
between Employer and Employee that the provisions of this Agreement satisfy the
Portfolio Company Portion (as that term is defined in Section 2(b) of
the Consulting Agreement) and will reduce the amount of the Consulting Fee (as that
term is defined in Section 2(a) of the Consulting Agreement) by the
amount of Employee’s Base Salary. 
Additionally, it is further agreed and acknowledged between Employer and
Employee that the other obligations of Wexford under the Consulting Agreement
that may be satisfied through Employee’s employment by a Portfolio Company and
that are in fact so satisfied by the terms of this Agreement will be deemed
satisfied by Employee’s employment hereunder. 
Without limiting the generality of the foregoing, the living allowance
and relocation expense reimbursement provisions (if applicable) in Section 4
above are in lieu of any payments Employee would otherwise receive from Wexford
under Sections 2(g) or (h) of the Consulting Agreement.

 

6.                                      Confidentiality;
No Raid; Noncompete.

 

(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 and its affiliates
(including, without limitation, business plans, commercial information,
including information regarding investors or 

 

9

 

clients of Wexford or any Portfolio Company, current or proposed
business transactions and investment opportunities, co-investors or joint
venture partners, real and personal property leases, financial, engineering and
marketing information, strategic information, including future developments or
prospective business transactions or other matters concerning Employer’s or its
affiliates planning or operations, technical information, including methods,
know-how, processes, training models, computer programs and access codes and
information about costs, mining and processing methods, suppliers and
customers, including such information conceived, originated, discovered,
developed or 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.

 

(b)                                 Employee
and Employer each agree and acknowledge that Employee’s employment hereunder is
subject to the “No Raid; Noncompete” provisions of Section 7 of the
Consulting Agreement, all of which are hereby incorporated by reference mutatis mutandis. 
Employer shall be entitled to enforce the provisions of Section 7
of the Consulting Agreement as they are applicable to Employer.

 

(c)                                  The
terms of this Agreement are intended to limit disclosure and 

 

10

 

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 Section 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 Section 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 breach of the provisions of this Section 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 Section 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 executive salaried employees generally, as modified from time
to time.  Such benefits presently include
medical, life insurance and disability benefits, among others.  Employer’s benefits package of Employer may
change from time to time in the Employer’s discretion.  Employee shall be immediately entitled to
participate in all such benefits, according 

 

11

 

to their terms, subject to any waiting periods applicable to any of the
benefits.  Employee shall be entitled to
three (3) weeks of vacation per year. 
Unused vacation shall not carry over to future years, without written
supervisory approval.

 

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, Disability, Death or Resignation by Employee.   Employer shall have the right to
terminate this Agreement for “Cause,” (as that term is defined in the
Consulting Agreement.)  In the event of
termination for Cause, death or Disability (as that term is defined in the
Consulting Agreement) of Employee or voluntary resignation by Employee other
than for Good Reason (as that term is defined in the Consulting Agreement), 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 and Employee or the Employee’s estate, as the
case may be, shall only be entitled to receive the Employer’s share of the
Portfolio Company Portion of the Accrued Obligations (as that term is defined
in the Consulting Agreement) and, in the case of the death of the Employee, any
benefits payable to the estate of the Employee or Employee’s designees pursuant
to the terms of any benefit documents providing life insurance or other death
benefits.

 

12

 

If
Employer terminates this Agreement for reasons other than Cause, death or
Disability or if Employee terminates this Agreement for Good Reason then,
subject to Employee’s compliance with all applicable provisions of the
Consulting Agreement and the satisfaction of the conditions set forth in the
paragraph immediately below, Employee shall be entitled to receive continuing
payments of severance pay (less applicable withholding taxes) at a rate equal
to the Employer’s share of the Portfolio Company Portion at the time of
termination for a period of the lesser of six (6) months from the date of
such termination or the remainder of the Employment Term (the “Severance Term”).  During the Severance Term, Employee shall
also receive as compensation a continuation of the medical benefits provided
under this Agreement, at no additional cost to Employee.  Employer shall not be obligated to provide
Employee with any of the severance benefits contemplated by this paragraph if,
during what otherwise would have been the Severance Term, Employee continues to
provide consulting services to Wexford or any Portfolio Company and is
receiving annual compensation equal to the current amount of the Consulting Fee
(i.e. $275,000).

 

Except
for any Accrued Obligations, the severance benefits provided in the immediately
preceding paragraph will be provided to Employee only if the following
conditions are satisfied:  (i) Employee
agrees to continue to be bound by and complies with all applicable provisions
set forth in Section 6 and, to the extent Employer requests any
resignation as set forth therein, Section 1, (ii) Employee executes
and delivers to Employer, and does not revoke, a full general release, in a
form acceptable to Employer, releasing all claims, known and unknown, that Employee
may have against Employer, any affiliate or related entity, and any officers,
directors, principals, employees and agents of the foregoing, arising out of or
any way related to (I) this Agreement or the termination thereof, or (II) Employee’s
employment or relationship with Employer or any affiliate or the termination of
such relationship.

 

13

 

10.                               Indemnity.  Employer
agrees to (a) indemnify and hold harmless Employee against all actions,
proceedings, costs, charges, expenses, losses, damages or liabilities
(collectively, “Liabilities”) incurred or sustained by Employee arising out of
or relating to Employee’s employment hereunder, unless such Liability results
from the willful misfeasance, bad faith or gross negligence of Employee; and (b) advance
to Employee reasonable attorneys’ fees and other costs and expenses incurred in
connection with the defense of any action or proceeding which arises out of
such conduct.  In the event that such a
good faith advance is made by Employer it will be subject to repayment to the
extent that it is finally judicially determined that Employee was not entitled
to indemnification.

 

11.                               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.

 

12.                               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.

 

14

 

13.                               Amendments.  No amendment, waiver or variation of the
terms and conditions of this Agreement shall be made unless the terms of such
amendment are in writing.  An amendment,
waiver or variation by Employer and Employee shall only be effective if (a) it
is in writing and signed by Employer’s CEO and Employee, (b) it
specifically refers to this Agreement and (c) it specifically states that
Employer or Employee, as the case may be, is waiving or amending its rights
hereunder.  Any such amendment, waiver or
variation shall be effective only in the specific instance and for the purpose
for which it was given.

 

14.                               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.

 

15.                               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.

 

16.                               Notices.  Any notice
which either party desires or is required to give to the other party hereunder
shall be in writing, and shall be sent by certified mail, return receipt
requested, by hand delivery (against a signed receipt), or by reputable
overnight delivery service (such as 

 

15

 

Federal Express) which can certify actual delivery, or by facsimile or
e-mail, in each case at the addresses or facsimile numbers set forth below:

 

	
  To Employer:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Rhino Energy LLC

  	
   

  	
   

  
	
  3120 Wall Street, Suite 310

  	
   

  	
   

  
	
  Lexington, Kentucky 40513

  	
   

  	
   

  
	
  Attn:

  	
  Nicholas Glancy, CEO

  
	
   

  	
  Fax No.: 859-389-6588

  
	
   

  	
  E-Mail: nglancy@rhinoenergyllc.com

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Wexford Capital LLC

  	
   

  	
   

  
	
  411 West Putnam Avenue

  	
   

  	
   

  
	
  Greenwich, Connecticut 06830

  	
   

  	
   

  
	
  Attn:

  	
  Joseph Jacobs

  
	
   

  	
  Fax No.: 203-862-7320

  
	
   

  	
  Email: jjacob@wexford.com

  
	
   

  	
  and

  
	
   

  	
  Arthur Amron

  
	
   

  	
  Fax. No.: 203-862-7312

  
	
   

  	
  Email: aamron@wexford.com

  
	
   

  	
   

  	
   

  
	
  To Employee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Thomas Hanley

  
	
   

  	
  4806 Fort Sumner Drive

  
	
   

  	
  Bethesda, MD 20816

  
	
   

  	
  Fax No.: 203-862-7339

  
	
   

  	
  Email: thanle@wexford.com

  
				

 

Any notice given by certified mail, as
aforesaid, shall be deemed given on the third (3rd) day after such notice is
deposited with the United States Postal Service.  Any notice given by hand, as aforesaid, shall
be deemed given when received (against a signed receipt).  Any notice given by overnight delivery
services, as aforesaid, shall be deemed given on the first business day
following the date when such notice is deposited with such delivery
service.  Any notice given 

 

16

 

by facsimile, as aforesaid, shall be deemed
given upon receipt of answerback confirmation. 
Any notice given by e-mail, as aforesaid, shall be deemed given upon receipt
of notice delivery.

 

17.                               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.

 

18.                               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.

 

19.                               Third Party Beneficiaries. 
Wexford shall be a third party beneficiary to this Agreement.  All of Employer’s other affiliates shall be
third party beneficiaries to the provisions of Section 6(a) of this
Agreement.  Other than Wexford and such
other affiliates, there are no third party beneficiaries to this Agreement.

 

20.                               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.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

17

 

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,
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Thomas Hanley

  
	
   

  	
  Thomas Hanley

  

 

18

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