Document:

EXHIBIT 10.13

 

 

DAVID ZATEZALO

EMPLOYMENT AGREEMENT

 

 

THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into effective as of the
31st day of March, 2010, but intended to be
effective as of January 1, 2010 (the “Effective Date”), by and among (i) Rhino GP LLC, a
Delaware limited liability company (the “Company”), (ii) Hopedale Mining LLC,
a Delaware limited liability company, (“Hopedale”) and (iii) David Zatezalo (“Executive”).

 

Recitals:

 

Executive
is currently employed by Hopedale pursuant to an Employment Agreement dated April 8,
2008, as amended by a First Amendment to Employment Agreement dated as of April 28,
2009 ( the “Prior Agreement”).  The
Company is the general partner of Rhino Resource Partners, L.P. (the “Partnership”)
and Hopedale and the Company seek to continue Executive’s employment with
Hopedale until the completion of a public offering of units in the Partnership
(the “Offering”) and thereafter to transfer Executive’s employment from
Hopedale to the Company such that upon the completion of the Offering the
Executive will serve as an employee of the Company.  For purposes of this Agreement, the term “Employer”
shall mean the entity (Hopedale or Company) employing Executive at the
applicable time.

 

The
Company and Hopedale desire to enter into this Agreement in order to amend and
restate the terms of Executive’s employment. 
Executive desires to enter into this Agreement, and to accept employment
by Employer on the terms hereinafter set forth in this Agreement.

 

Agreement:

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:

 

1.           Term
of Employment.  Unless
terminated earlier in accordance with the provisions of Section 7,
Executive’s employment under this Agreement shall be effective for a term
commencing on the Effective Date and ending on December 31, 2012 (the “Employment
Term”).  From the Effective Date until
the closing of the Offering, should it occur, Executive shall be employed by
Hopedale.  Upon the closing of the
Offering, Executive shall become an employee of the Company; provided, however,
that any obligations or references specifically applicable to Hopedale (as
opposed to the Employer) shall remain in effect.

 

2.           Position
and Duties.  As of the
Effective Date, Executive shall serve as the President and Chief Executive
Officer of the Company and Hopedale.  In
addition, Executive shall also serve as the President and/or Chief Executive
Officer of those subsidiaries of Rhino Energy LLC and/or the Company 

 

1

 

as may be directed at any time and from time to time by Wexford Capital
LP (the “Manager”) or the Board, as applicable, in its and their sole and
absolute discretion.  It is understood
and acknowledged that some of such subsidiaries, in particular those which may
not carry on the business of mining, processing and/or selling coal as their
primary business, will likely have a President and/or CEO other than
Executive.  In such positions, Executive
shall report directly to the Manager and, upon the completion of the Offering,
to the Board.  Executive shall have the
customary authority, responsibilities and duties of such position(s), subject
to the direction and definition of such authority, responsibilities, and duties
from time to time by the Employer, acting through the Manager or the
Board.  During the Employment Term,
Executive will devote all of his business time and efforts to the performance
of his duties hereunder.    Executive
shall be subject to all of the employment and personnel policies and procedures
in effect from time to time and applicable to executive employees of
Employer.  Executive’s regular place of
employment during the Employment Term shall be at Employer’s executive offices
in Lexington, Fayette County, Kentucky, and Executive shall engage in such
travel as may be reasonably required in connection with the performance of his
duties hereunder.

 

3.           Base
Salary.  The Employer shall pay
Executive a base salary (the “Base Salary”) at the annual rate of $480,000 per
year for the first year of the Employment Term, increasing to $500,000 per year
for calendar year 2011 and to $520,000 for calendar year 2012.  Executive’s Base Salary shall be payable in
regular installments in accordance with the usual executive payroll practices
of the Employer.

 

4.           Incentive
Compensation.  Executive
shall be permitted to participate in any annual or long-term, cash or equity
based, incentive plan or other similar arrangements of the Employer, as they
may exist from time-to-time, for which Executive is eligible pursuant to the
terms of such plan or arrangement, provided that the specific grant to
Executive under any such plan or arrangement shall be in the Employer’s sole
discretion.

 

5.           Discretionary
Bonus.  The Employer may consider and
approve, in its sole discretion, an annual performance-based discretionary
bonus (“Discretionary Bonus”) for Executive of up to one hundred and fifty
percent (150%) of Executive’s Base Salary, commencing with a bonus for calendar
year 2009.

 

6.           Other Benefits.

 

(a)  Retirement Benefits.  During the Employment Term, Executive shall
be provided with the opportunity to participate in the Employer’s qualified 401(k) profit
sharing plan and non-qualified deferred compensation plan (if any), as they may
exist from time to time, in each case, in accordance with the terms of such
plans.

 

(b)  Welfare Benefits;
Vacation.  During the Employment
Term, Executive shall be provided with the opportunity to participate in the
Employer’s medical plan and other employee welfare benefits on a comparable
basis as such benefits are generally provided by the Employer from time to time
to the Employer’s other executives, in each case, in accordance with the terms
of such plans; provided, however the premiums for all such plans shall be paid
by the Employer.  Executive shall be
entitled to three (3) weeks of paid vacation each year during the
Employment Term.

 

1

 

(c)  Indemnification.  Subject to the Employer’s Limited Liability
Company Agreement, Employer shall indemnify and hold harmless Executive from
and against any loss, cost, damage, expense, or liability incurred by Executive
for any action taken by Executive in the scope of Executive’s employment for
the Employer, provided such action (i) is within the scope, duties, and
authority of Executive, (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 Executive.  The obligations of Employer under this Section 6(c) shall
survive the termination of this Agreement. 
If there is any conflict between this Section 6(c) and the
Employer’s Limited Liability Company Agreement, the Employer’s Limited
Liability Company Agreement shall control, provided however, that no revision
to the Employer’s limited liability company agreement may effect any diminishment
to the Employer’s indemnification obligations hereunder as they exist on the
date hereof.

 

(d)  Reimbursement of Business
Expenses.  During the Employment
Term, all reasonable business expenses incurred by Executive in the performance
of his duties hereunder shall be reimbursed by the Employer upon receipt of
documentation of such expenses in a form reasonably acceptable to the Employer,
and otherwise in accordance with the Employer’s expense reimbursement
policies.  Any reimbursement of any costs
and expenses by the Employer to Executive under this Agreement shall be made by
the Employer in no event later than the close of Executive’s taxable year
following the taxable year in which the cost or expense is incurred by
Executive.  The expenses incurred by
Executive in any calendar year that are eligible for reimbursement under this
Agreement shall not affect the expenses incurred by Executive in any other
calendar year that are eligible for reimbursement hereunder and Executive’s
right to receive any reimbursement hereunder shall not be subject to
liquidation or exchange for any other benefit.

 

(e)  Vehicle.  The Employer shall provide Executive with the
use of a 4-wheel or all wheel drive vehicle suitable for the intended duties of
Executive.

 

(f)  Benefits.  To the extent the Company does not have
employee benefits or benefit plans called for or referred to under this
Agreement, and such benefits are available to employees of Hopedale, at the
election of the Company, (i) to the extent legally permitted, Executive
shall have the  right to participate in
any employee benefits or benefit plans maintained by Hopedale to the extent he
would have been entitled as an employee of Hopedale, or (ii) the Company
shall (x) provide Executive with reasonably equivalent benefits or (y) pay
Executive the average cost per employee that Hopedale pays to enable Hopedale’s
employees to participate in such plans.

 

7.           Termination.  Notwithstanding any other provision of this
Agreement:

 

(a)  For Cause by the Employer
or Voluntary Resignation by Executive Without Good Reason.  If Executive is terminated by Employer for
Cause (as defined in Section12(d)) or if Executive voluntarily resigns without
Good Reason (as defined in Section 12(j)), Executive shall be entitled to
receive as soon as reasonably practicable after his date of termination or such
earlier time as may be required by applicable statute or regulation: (i) any
earned but unpaid Base Salary through the date of termination; (ii) payment
in respect of any vacation days accrued but unused through the date of
termination; and (iii) reimbursement for all business expenses properly
incurred in accordance with Employer’s policy prior to the date of termination
and not 

 

2

 

yet reimbursed by the Employer (the aggregate benefits payable pursuant
to clauses (i), (ii), and (iii) hereafter referred to as the “Accrued
Obligations”); and except as provided in Section 7(e), Executive shall
have no further rights to any compensation (including any Base Salary or bonus,
if any) or any other benefits under this Agreement.

 

(b)  Without Cause by the
Employer or Voluntary Resignation by Executive for Good Reason.  If Executive is terminated by the Employer
other than for Cause, Disability (as defined in Section 12(g)) or death,
or if Executive voluntarily resigns for Good Reason, Executive shall
receive:  (i) the Accrued
Obligations; and (ii) subject to Section 7(f) and Section 7(h),
Base Salary for a period of twelve (12) months from the termination of
employment, payable in a lump sum as provided in said Sections.  Except as provided in Section 7(e),
Executive shall have no further rights to any compensation (including any Base
Salary or bonus, if any) or any other benefits under this Agreement.

 

(c)  Death.  Following termination of employment for
death, Executive’s estate shall be entitled to receive the Accrued Obligations
and any a pro-rated Discretionary Bonus as awarded by the Employer.  Except as provided in Section 7(e),
Executive’s estate shall have no further rights to any other compensation or
any other benefits under this Agreement.

 

(d)  Disability.  Following termination of employment for
Disability, Executive shall be entitled to receive the Accrued
Obligations.  Except as provided in Section 7(e),
Executive shall have no further rights to any compensation (including any Base
Salary) or any other benefits under this Agreement.

 

(e) 
Accrued & Vested Benefits.  Upon any termination of Executive’s
employment, whether by Executive or Employer, Executive shall be entitled, in
addition to any other benefits that may be payable hereunder, to all benefits
accrued and vested as of the date of such termination, due to Executive under
any employee benefit plan, policy or practice of Employer (such as, for
example, accrued health benefits or reimbursements) (collectively, “Accrued and
Vested Benefits”).

 

(f)  Release Etc.  Notwithstanding any other provision of this
Agreement to the contrary, Executive acknowledges and agrees that any and all
payments to which Executive is entitled under this Section 7 which are
described as being subject to this Section 7(f) are conditioned upon
and subject to (i) Executive’s execution of an agreement in such
reasonable and customary form as shall be prepared by the Employer reaffirming
Executive’s obligations under Section 8 hereof, and (ii) Executive’s
execution of, and not having revoked within any applicable revocation period, a
general release and waiver, in such reasonable and customary form as shall be prepared
by the Employer, of all claims Executive may have against the Employer and its
directors, officers, subsidiaries and affiliates, except as to (x) matters
covered by provisions of this Agreement that expressly survive the termination
of this Agreement or are covered by the grant referred to in Section 9
hereof, and (y) any Accrued and Vested Benefits to which Executive may be
entitled.  Unless such release becomes
irrevocable within 55 days of Executive’s termination of employment, Executive
shall not be entitled to any severance benefits that are described as being
subject to this Section 7(f).  If
the release has become irrevocable within such 55-day period, the Employer
shall pay such severance benefits to Executive on the 60th day following his termination of employment,
subject to Section 7(h).

 

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(g)  Resignation.  Upon Executive’s termination of employment
for any reason, Executive shall be deemed to have immediately resigned from all
offices with the Employer and any of the Employer’s subsidiaries or affiliates
and shall, immediately upon the request of the Employer, confirm such
resignations in writing.

 

(h)  Section 409A Delay
in Payment.  Notwithstanding anything
in this Agreement to the contrary, if at the time of Executive’s termination of
employment with the Employer, Executive is a “specified employee,” as defined
in Section 409A of the Code, and the deferral of the payment or
commencement of any severance benefits otherwise payable under this Agreement
as a result of such termination of employment is necessary in order to avoid
the additional tax under Section 409A of the Code, then the Employer will
defer the payment of any such severance payments until the date that is six
months following Executive’s termination of employment with the Employer (or
the earliest date as is permitted under Section 409A of the Code).  Any payment deferred pursuant to this Section 7(h) will
be accumulated and paid to Executive (without interest) in a lump sum.

 

(i)  Termination of
Employment.  For purposes of this
Agreement, a termination of Executive’s employment means a “separation from
service” for purposes of Section 409A of the Code and the applicable
Treasury regulations thereunder.

 

8.           Covenants.

 

(a)  Confidentiality.  Executive agrees that Executive will not at
any time during Executive’s employment with the Employer or thereafter, except
in performance of Executive’s duties for and obligations to the Employer
hereunder, use or disclose, either directly or indirectly, any Confidential
Information (as hereinafter defined) of the Employer or its subsidiaries or
affiliates that Executive may learn by reason of his association with the
Employer.  The term “Confidential
Information” shall mean any past, present, or future confidential or sensitive
plans, programs, documents, agreements, internal management reports, financial
information, or other material relating to the business, strategies, services,
or activities of the Employer, including, without limitation, information with
respect to the Employer’s operations, processes, products, inventions, business
practices, finances, principals, vendors, suppliers, customers, potential
customers, marketing methods, costs, prices, contractual relationships,
including leases, regulatory status, compensation paid to employees, or other
terms of employment, and trade secrets, market reports, customer
investigations, customer lists, and other similar information that is
proprietary information of the Employer or its subsidiaries or affiliates;
provided, however, the term “Confidential Information” shall not include any of
the above forms of information which has become public knowledge, unless such
Confidential Information became public knowledge due to an act or acts by Executive
or his representative(s) in violation of this Agreement.  Notwithstanding the foregoing, Executive may
disclose such Confidential Information when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory authority
over the business of the Employer or its subsidiaries or affiliates, as the
case may be, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information; provided, further, that in the event that
Executive is ordered by any such court or other government agency,
administrative body, or legislative body to disclose any Confidential
Information, Executive shall (i) promptly notify the Employer of such
order, (ii) at 

 

4

 

the reasonable written request of the Employer, diligently contest such
order at the sole expense of the Employer as expenses occur or at the election
of Employer, cooperate with Employer’s effort to contest such order, and (iii) at
the reasonable written request of the Employer, seek to obtain, at the sole
expense of the Employer, such confidential treatment as may be available under
applicable laws for any information disclosed under such order or at the
election of Employer, cooperate with Employer’s effort to obtain such
confidential treatment.

 

(b)  Non-Compete.  During the Employment Term and for one (1) year
immediately following Executive’s termination of employment for any reason,
Executive shall not, without the prior written consent of the Employer,
participate or engage in, directly or indirectly (as an owner, partner,
employee, officer, director, independent contractor, consultant, advisor or in
any other capacity calling for the rendition of services, advice, or acts of
management, operation or control) any business for an individual or entity
whose principal business involves coal mining or coal marketing in the
following regions: Central Appalachia, Northern Appalachia, Illinois Basin,
Western Colorado, and any other region in which the Employer or any of the
Employer’s subsidiaries conduct business.

 

(c)  Non-Solicitation.  During the Employment Term and for two (2) years
immediately following Executive’s termination of employment for any reason,
Executive shall not, without the prior written consent of the Employer, solicit
or induce any then-existing employee of the Employer or any of its subsidiaries
or affiliates to leave employment with the Employer or any of its subsidiaries
or affiliates, or contact any then-existing customer or vendor under contract
with the Employer or any of its affiliates or subsidiaries for the purpose of
obtaining business similar to that engaged in, or received (as appropriate), by
the Employer or any of its affiliates or subsidiaries.

 

(d)  Cooperation.  Executive agrees that during the Employment
Term or following a termination of employment for any reason, Executive shall,
upon reasonable advance notice, assist and cooperate with the Employer with
regard to any investigation or litigation related to a matter or project in
which Executive was involved during Executive’s employment.  The Employer shall reimburse Executive for
all reasonable and necessary expenses related to Executive’s services under
this Section 8(d) (i.e., travel, lodging, meals, telephone, overnight
courier) within ten (10) business days of Executive submitting to the
Employer appropriate receipts and expense statements.

 

(e)  Survivability.  The duties and obligations of Executive
pursuant to this Section 8 shall survive the termination of this Agreement
and Executive’s termination of employment for any reason.

 

(f)  Remedies.  Executive acknowledges that the protections
of the Employer set forth in this Section 8 are fair and reasonable, and
that any violation of such protections would cause serious and irreparable harm
and damage to the Employer and its subsidiaries and affiliates.  Executive agrees that remedies at law for a breach
or threatened breach of the provisions of this Section 8 would be
inadequate and, therefore, the Employer shall be entitled, in addition to any
other available remedies (including money damages), without posting a bond, to
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction, or any other equitable remedy that
may be then available.

 

5

 

(g)  Limitation.  The terms of this Section 8 are intended
to limit disclosure and competition by the Executive to the maximum extent
permitted by law.  If the duration,
scope, or nature of any limitation or restriction imposed by any provision of
this Section 8 is finally determined by any court or tribunal of competent
jurisdiction to be in excess of what is valid and enforceable under applicable
law, such provision shall be construed to cover only that duration, scope or
activity that is valid and enforceable. 
Executive hereby acknowledges that this Section 8 shall be given
the construction which renders its provisions valid and enforceable to the
maximum extent, not exceeding its express terms, possible under applicable law.

 

9.           Offering
Incentives.  By a grant separate from
this document, the Employer shall grant to Executive certain units or phantom
units in Rhino Resource Partners, L.P. upon, and subject to, the closing of the
Offering within the Employment Term on terms (including, without limitation,
vesting) acceptable to the Company in its sole discretion.  The terms of such grant shall be determined
by the Company, but shall have a value of $1,500,000 upon the closing of the
Offering, based upon the issuance price of stock or units in such Offering.  In addition to the foregoing, in the event an
Offering is completed within the Employment Term, the Employer shall pay to the
Executive a one-time cash bonus of $250,000. 
Nothing herein shall require the Company to complete any Offering.  The term “Offering” as used herein shall mean
any sale of equity or convertible securities to the public, whether units in
Rhino Resource Partners, L.P. or Rhino Energy LLC, or stock in another entity
which succeeds to the business of or acquires Rhino Energy LLC.

 

10.         Representations
of Executive.  Executive
hereby represents to the Employer that Executive has full lawful right to enter
into this Agreement and carry out Executive’s duties hereunder, and that
performance of Executive’s obligations hereunder will not constitute a breach
of or default under any employment, confidentiality, non-competition or other
agreement.  Executive further represents
to the Employer that Executive is not listed in the Office of Surface Mining’s
Applicant Violator System database.  Executive
shall provide prompt notice to the Employer of Executive’s first employment
subsequent to a termination of employment.

 

11.         Miscellaneous.

 

(a)  Satisfaction of
Obligations Under Prior Agreement; Term Bonus.  Company, Hopedale and Executive hereby acknowledge
that this Agreement amends, restates and supersedes the Prior Agreement.

 

(b)  [Intentionally Omitted]

 

(c)  Governing Law.  This Agreement will be governed by, and
interpreted in accordance with, the laws of the Commonwealth of Kentucky applicable
to agreements made and to be wholly performed within the Commonwealth of
Kentucky, without regard to the conflict of laws provisions of any jurisdiction
which would cause the application of any law other than that of the
Commonwealth of Kentucky.  Executive
hereby consents to the jurisdiction of the state and federal courts of the
Commonwealth of Kentucky, including the Fayette Circuit Court, and hereby
waives any objection to venue of any action brought in such courts.

 

6

 

(d)  Entire Agreement;
Amendments.  This Agreement contains
the entire understanding of the parties with respect to the employment of
Executive by the Employer.  There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth or referred to herein. 
This Agreement may not be altered, modified, or amended, nor may any of
its provisions be waived, except by written instrument signed by the parties
hereto which states that it is intended to alter, modify or amend this
Agreement or waive a right hereunder. 
Sections 7 and 8 hereof shall survive the termination of Executive’s
employment with the Employer, except as otherwise specifically stated therein.

 

(e)  Neutral Interpretation.  This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement of this Agreement shall
be interpreted in a neutral manner, and not more strongly for or against any
party based upon the source of the draftsmanship of the Agreement.   Each party has been provided ample time and
opportunity to review and negotiate the terms of this Agreement and consult
with legal counsel regarding the Agreement.

 

(f)  No Waiver.  The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party’s rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.

 

(g)  Severability.  In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.

 

(h) 
Successors.

 

(i)            This Agreement is personal to
Executive and shall not be assignable by Executive otherwise than by will or
the laws of descent and distribution. 
This Agreement shall inure to the benefit of and be enforceable by
Executive’s legal representatives.

 

(ii)           This
Agreement shall inure to the benefit of and be binding upon Hopedale, the
Company and their successors and assigns. 
The Company, or Hopedale, as applicable, shall require any successor
(whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) to
all or a substantial portion of its business and/or assets, by agreement in
form and substance reasonably satisfactory to Executive, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform this Agreement if no such
succession had taken place.  Regardless
of whether such an agreement is executed, this Agreement shall be binding upon
any successor of the Company or Hopedale and such successor shall be deemed the
“Employer” for purposes of this Agreement. 
Notwithstanding anything to the contrary contained herein, Executive
shall have the right to terminate this Agreement if the Employer’s assets or
membership units are sold to an entity that is not a subsidiary or an affiliate
of the Employer, Wexford Capital LP or any investment fund managed by Wexford
Capital LP.  Such a sale shall include a
merger, consolidation, sale of assets or membership units or other corporate
reorganization; however it shall not include a change in ownership as a result
of a public offering.  Such a termination
by Executive shall be deemed a termination for “Good 

 

7

 

Reason” as herein defined, under which Executive
would be entitled to the severance payment set out in Section 7 (b) (ii) above.

 

(i)  Notice.  For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given if delivered personally, if
delivered by overnight courier service, if sent by facsimile transmission or if
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses or sent via facsimile to the
respective facsimile numbers, as the case may be, as set forth below, or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt; provided, however, that (i) notices sent by
personal delivery or overnight courier shall be deemed given when delivered; (ii) notices
sent by facsimile transmission shall be deemed given upon the sender’s receipt
of confirmation of complete transmission, and (iii) notices sent by United
States registered mail shall be deemed given two days after the date of deposit
in the United States mail.

 

If
to the Company or Hopedale, to:

 

Rhino
GP LLC

c/o
Wexford Capital LP

411
W. Putnam Ave.

Greenwich,
CT 06830

Attn:  Mark Zand

and
to

 

Rhino
GP LLC

c/o
Wexford Capital LP

411
W. Putnam Ave.

Greenwich,
CT 06830

Attn:  Arthur Amron

 

If
to Executive, to such address as shall most currently appear on the records of
the Employer.

 

(j)  Withholding.  The Employer may withhold from any amounts
payable under this Agreement such Taxes (as defined in Section 12(l) as
may be required to be withheld pursuant to any applicable law or regulation.

 

(k)  Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

(l)  Code Section 409A.  It is intended that any this Agreement and
the Employer’s and Executive’s exercise of authority or discretion hereunder
comply with Code Section 409A (including the Treasury regulations and
other published guidance relating thereto), to the extent applicable, so as not
to subject Executive to the payment of any interest or additional tax 

 

8

 

imposed under Code Section 409A with respect to any amounts
payable or benefits provided under this Agreement.  To the extent any amount payable or benefit
provided under this Agreement would trigger the additional tax imposed by Code Section 409A,
the Agreement shall be modified to avoid such additional tax.

 

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

 

(n)  Waiver of Jury Trial.  The parties hereby voluntarily and
irrevocably waive the right to a trial by jury with regard to any action
arising under or in connection with this agreement or the employment of
Executive by the Employer.

 

12.         Definitions.

 

(a)  Accrued Obligations.  “Accrued Obligations” has the meaning set
forth in Section 7(a).

 

(b)  Base Salary.   “Base Salary” has the meaning set forth in Section 3.

 

(c)  Board.  “Board” means the Board of Directors of the
Company.

 

(d)  Cause.  “Cause” for termination by the Employer of
Executive’s employment with the Employer means any of the following:

 

(i)            the
failure of Executive to perform substantially his duties (other than any such
failure resulting from incapacity due to disability), within ten days after
written notice from the Employer;

 

(ii)           Executive’s
conviction of, or plea of guilty or no contest to (A) a felony or (B) a
misdemeanor involving dishonesty or moral turpitude; or

 

(iii)          Executive
engaging in any illegal conduct, gross misconduct, or other material breach of
this Agreement which is materially and demonstrably injurious to the business
or reputation of the Employer; or

 

(iv)          Executive
engaging in any act of dishonesty or fraud involving Employer or any subsidiary
or affiliate of Employer.

 

(e)  Code.  “Code” means the Internal Revenue Code of
1986, as amended from time to time.

 

(f)  Company.   “Company” means Rhino GP LLC, a Delaware
limited liability company.

 

(g)  Disability.   “Disability” means the inability of
Executive to perform his normal duties as a result of any physical or mental
injury or ailment for (i) any consecutive forty five 

 

9

 

(45) day period or (ii) any ninety (90) days (whether or not
consecutive) during any consecutive three hundred sixty five (365) day period.

 

(h)  Employment Term.   “Employment Term” has the meaning set forth
in Section 1.

 

(i)  Executive.   “Executive” means David Zatezalo.

 

(j)  Good Reason.  “Good Reason” for termination by Executive of
Executive’s employment means the occurrence (without Executive’s express
written consent) of any one of the following acts by the Employer or failures
by the Employer to act:

 

(i)            the assignment to Executive of any
duties inconsistent in any material respect with those of the office to which
Executive is assigned pursuant to Section 2 hereof (including status,
office, title and reporting requirements), or any other diminution in any
material respect in such position, authority, duties or responsibilities unless
agreed to by Executive;

 

(ii)           a
reduction in Base Salary;

 

(iii)          a
reduction in Executive’s welfare benefits plans, qualified retirement plan, or
paid time off benefit, other than a reduction as a result of a general change
in any such plan;

 

(iv)          any
purported termination of Executive’s employment under this Agreement by the
Employer other than for Cause, death or Disability; or

 

(v)           any
sale of Employer’s assets or membership units to an entity that is not a
subsidiary or an affiliate of the Employer, Wexford Capital LP or any investment
fund managed by Wexford Capital LP, as provided in Section 11(h)(ii).

 

Prior
to Executive’s right to terminate this Agreement, he shall give written notice
to the Employer of his intention to terminate his employment on account of Good
Reason.  Such notice shall state in
detail the particular act or acts of the failure or failures to act that
constitute the grounds on which Executive’s Good Reason termination is based
and such notice shall be given within six (6) months of the occurrence of
the act or acts or the failure or failures to act which constitute the grounds
for Good Reason.  The Employer shall have
thirty (30) days upon receipt of the notice in which to cure such conduct, to
the extent such cure is possible and reasonable.

 

(k)
 Manager.  “Manager means
Wexford Capital LP, successor by merger to Wexford Capital LLC and the “Manager”
of Rhino Energy LLC, as contemplated by Rhino Energy LLC’s Limited Liability
Company Agreement or its successor manager.

 

(l)  Taxes.  “Taxes”
mean any United States federal, state or local income, excise or other taxes
the Employer is required to withhold by applicable law with respect to any item
of compensation paid or provided to Executive by the Employer.

 

10

 

IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the dates written below.

 

 

	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ David Zatezalo

  	
   

  
	
  David Zatezalo

  	
   

  
	
   

  	
   

  
	
  Date
  signed:

  	
  04/06/10

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPANY:

  	
   

  
	
   

  	
   

  
	
  RHINO GP LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Mark Zand

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Mark
  Zand

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
  Date
  signed:

  	
  04/01/10

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  HOPEDALE:

  	
   

  
	
   

  	
   

  
	
  HOPEDALE MINING LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Mark Zand

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Mark
  Zand

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
  Date
  Signed:

  	
  04/01/10

  	
   

  
				

 

11EXHIBIT 10.14

 

 

RICHARD A. BOONE

EMPLOYMENT AGREEMENT

 

 

THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into effective as of the
16th day of April, 2008 (the “Effective Date”), by and among (i) Rhino GP, LLC, a
Delaware limited liability company (the “Company”), (iii) Rhino Energy LLC, a
Delaware limited liability company, (“Rhino”) and (iii) Richard A. Boone (“Executive”).

 

Recitals:

 

Executive
is currently employed by Rhino pursuant to an Amended and Restated Employment
Agreement dated September 21, 2006 (the “Prior Agreement”).  The Company is the general partner of Rhino
Resource Partners, L.P. (the “Partnership”) and Rhino and the Company seek to
continue the Executive’s employment with Rhino until the completion of a public
offering of units in the Partnership (the “Offering”) and thereafter to
transfer the Executive’s employment from Rhino to the Company such that upon
the completion of the Offering the Executive will serve as an employee of the
Company.  For purposes of this Agreement,
the term “Employer” shall mean the entity (Rhino or Company) employing
Executive at the applicable time.

 

The
Company and Rhino desire to enter into this Agreement in order to amend and
restate the terms of Executive’s employment. 
Executive desires to enter into this Agreement, and to accept employment
by Employer on the terms hereinafter set forth in this Agreement.

 

Agreement:

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:

 

1.           Term
of Employment.  Unless
terminated earlier in accordance with the provisions of Section 7,
Executive’s employment under this Agreement shall be effective for a term
commencing on the Effective Date and ending on May 31, 2011 (the “Employment
Term”).  From the Effective Date until
the closing of the Offering, should it occur, Executive shall be employed by
Rhino.  Upon the closing of the Offering,
Executive shall become an employee of the Company; provided, however, that any
obligations or references specifically applicable to Rhino (as opposed to
Employer) shall remain in effect.

 

2.           Position
and Duties.  As of the
Effective Date, Executive shall serve as the Chief Financial Officer of the
Company and Rhino.  In such positions,
Executive shall report directly to the CEO of Rhino and, upon the completion of
the Offering, to the CEO of the Company. Executive shall have the customary
authority, responsibilities and duties of such position(s), subject to the
direction and

 

1

 

definition of such authority, responsibilities, and duties from time to
time by Employer.  During the Employment
Term, Executive will devote all of his business time and efforts to the
performance of his duties hereunder. 
Executive shall be subject to all of the employment and personnel
policies and procedures in effect from time to time and applicable to executive
employees of Employer.  Executive’s
regular place of employment during the Employment Term shall be at Employer’s
executive offices in Lexington, Fayette County, Kentucky, and Executive shall
engage in such travel as may be reasonably required in connection with the
performance of his duties hereunder.

 

3.           Base
Salary.  The Employer shall pay
Executive a base salary (the “Base Salary”) at the annual rate of $228,000 per
year, subject to annual review for possible increase, payable in regular
installments in accordance with the usual executive payroll practices of
Employer.

 

4.           Incentive
Compensation.  Executive
shall be permitted to participate in any annual or long-term, cash or equity
based, incentive plan or other similar arrangements of the Employer, as they
may exist from time-to-time, for which Executive is eligible pursuant to the
terms of such plan or arrangement, provided that the specific grant to
Executive under any such plan or arrangement shall be in Employer’s sole
discretion.

 

5.           Discretionary
Bonus.  The Employer may consider and
approve in its sole discretion an annual performance-based discretionary bonus
(“Discretionary Bonus”) for Executive of up to forty percent (40%) of Executive’s
Base Salary.  The Discretionary Bonus
will be calculated on a full calendar year basis for 2008, 2009 and 2010.  The Discretionary Bonus for the period January 1,
2011 through the end of the Employment Term will be pro-rated for the partial
year.

 

6.           Other
Benefits.

 

(a)  Retirement Benefits.  During the Employment Term, Executive shall
be provided with the opportunity to participate in the Employer’s qualified 401(k) profit
sharing plan and non-qualified deferred compensation plan (if any), as they may
exist from time to time, in each case, in accordance with the terms of such
plans.

 

(b)  Welfare Benefits;
Vacation.  During the Employment
Term, Executive shall be provided with the opportunity to participate in the
Employer’s medical plan and other employee welfare benefits on a comparable
basis as such benefits are generally provided by the Employer from time to time
to Employer’s other executives, in each case, in accordance with the terms of
such plans; provided, however the premiums for all such plans shall be paid by
the Employer.  Executive shall be
entitled to three (3) weeks of paid vacation each year during the
Employment Term.

 

(c)  Indemnification.  Employer shall indemnify and hold harmless
Executive from and against any loss, cost, damage, expense, or liability
incurred by Executive for any action taken by Executive in the scope of
Executive’s employment for the Employer, provided such action (i) is
within the scope, duties, and authority of Executive, (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 Executive.  The obligations
of Employer under this Section 6(c) shall survive the termination of
this Agreement.

 

1

 

(d)  Reimbursement of Business
Expenses.  During the Employment
Term, all reasonable business expenses incurred by Executive in the performance
of his duties hereunder shall be reimbursed by the Employer upon receipt of
documentation of such expenses in a form reasonably acceptable to the Employer,
and otherwise in accordance with the Employer’s expense reimbursement policies.

 

(e)  Vehicle. Employer shall
provide Executive with the use of a vehicle suitable for the intended duties of
the Executive.

 

(f)  Benefits.  To the extent the Company does not have
employee benefits or benefit plans called for or referred to under this
Agreement, and such benefits are available to employees of Rhino, at the
election of the Company, (i) to the extent legally permitted, Executive
shall have the  right to participate in
any employee benefits or benefit plans maintained by Rhino to the extent he
would have been entitled as an employee of Rhino, or (ii) the Company
shall (x) provide Executive with reasonably equivalent benefits or (y) pay
Executive the average cost per employee that Rhino pays to enable Rhino’s
employees to participate in such plans.

 

7.           Termination.  Notwithstanding any other provision of this
Agreement:

 

(a)  For Cause by the Employer
or Voluntary Resignation by Executive Without Good Reason.  If Executive is terminated by Employer for
Cause (as defined in Section 12(d)) or if Executive voluntarily resigns
without Good Reason (as defined in Section 12(j)), Executive shall be
entitled to receive as soon as reasonably practicable after his date of termination
or such earlier time as may be required by applicable statute or regulation: (i) any
earned but unpaid Base Salary through the date of termination; (ii) payment
in respect of any vacation days accrued but unused through the date of
termination; and (iii) reimbursement for all business expenses properly
incurred in accordance with Employer’s policy prior to the date of termination
and not yet reimbursed by the Employer (the aggregate benefits payable pursuant
to clauses (i), (ii), and (iii) hereafter referred to as the “Accrued
Obligations”); and except as provided herein Executive shall have no further
rights to any compensation (including any Base Salary or bonus, if any) or any
other benefits under this Agreement.

 

(b)  Without Cause by the
Company or Voluntary Resignation by Executive for Good Reason.  If Executive is terminated by the Employer
other than for Cause, Disability (as defined in Section 12(g)) or death,
or if Executive voluntarily resigns for Good Reason, Executive shall
receive:  (i) the Accrued
Obligations; and (ii) subject to Section 7(f), Base Salary for a
period of twelve (12) months from the termination of employment, payable in a
lump sum within thirty (30) days of the date of termination.  Except as provided herein, Executive shall
have no further rights to any compensation (including any Base Salary or bonus,
if any) or any other benefits under this Agreement.

 

(c)  Death.  Following termination of employment for
death, Executive’s estate shall be entitled to receive the Accrued Obligations
as well a pro-rated annual discretionary bonus as awarded by Employer.  Except as provided herein, Executive’s estate
shall have no further rights to any other compensation or any other benefits
under this Agreement.

 

2

 

(d)  Disability.  Following termination of employment for
Disability, Executive shall be entitled to receive the Accrued
Obligations.  Except as provided herein,
Executive shall have no further rights to any compensation (including any Base
Salary) or any other benefits under this Agreement.

 

(e)  Accrued & Vested
Benefits.  Upon any termination of
Executive’s employment, whether by Executive or Employer, Executive shall be
entitled, in addition to any other benefits that may be payable hereunder, to
all benefits accrued and vested as of the date of such termination, due to
Executive under any plan, policy or practice of Employer (such as, for example,
accrued health benefits or reimbursements) (collectively, “Accrued and Vested
Benefits”).

 

(f)  Release Etc.  Notwithstanding any other provision of this
Agreement to the contrary, Executive acknowledges and agrees that any and all
payments to which Executive is entitled under this Section 7 which are
described as being subject to this Section 7(f) are conditioned upon
and subject to (i) Executive’s execution of an agreement in such
reasonable and customary form as shall be prepared by the Employer reaffirming
Executive’s obligations under Section 8 hereof, and (ii) Executive’s
execution of, and not having revoked within any applicable revocation period, a
general release and waiver, in such reasonable and customary form as shall be
prepared by the Employer, of all claims Executive may have against the Employer
and its directors, officers, subsidiaries and affiliates, except as to (x) matters
covered by provisions of this Agreement that expressly survive the termination
of this Agreement or are covered by the grant referred to in Section 9
hereof, and (y) any Accrued and Vested Benefits to which Executive may be
entitled.

 

(g)  Resignation.  Upon Executive’s termination of employment
for any reason, Executive shall be deemed to have immediately resigned from all
offices with the Employer and any of the Employer’s subsidiaries or affiliates
and shall, immediately upon the request of the Employer, confirm such
resignations in writing.

 

8.           Covenants.

 

(a)  Confidentiality.  Executive agrees that Executive will not at
any time during Executive’s employment with the Employer or thereafter, except
in performance of Executive’s duties for and obligations to the Employer
hereunder, use or disclose, either directly or indirectly, any Confidential
Information (as hereinafter defined) of the Employer or its subsidiaries or
affiliates that Executive may learn by reason of his association with the
Employer.  The term “Confidential
Information” shall mean any past, present, or future confidential or sensitive
plans, programs, documents, agreements, internal management reports, financial
information, or other material relating to the business, strategies, services,
or activities of the Employer, including, without limitation, information with
respect to the Employer’s operations, processes, products, inventions, business
practices, finances, principals, vendors, suppliers, customers, potential
customers, marketing methods, costs, prices, contractual relationships,
including leases, regulatory status, compensation paid to employees, or other
terms of employment, and trade secrets, market reports, customer investigations,
customer lists, and other similar information that is proprietary information
of the Employer or its subsidiaries or affiliates; provided, however, the term “Confidential
Information” shall not include any of the 

 

3

 

above forms of information which has become public knowledge, unless
such Confidential Information became public knowledge due to an act or acts by
Executive or his representative(s) in violation of this Agreement.  Notwithstanding the foregoing, Executive may
disclose such Confidential Information when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory authority
over the business of the Employer or its subsidiaries or affiliates, as the
case may be, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information; provided, further, that in the event that
Executive is ordered by any such court or other government agency,
administrative body, or legislative body to disclose any Confidential
Information, Executive shall (i) promptly notify the Employer of such
order, (ii) at the reasonable written request of the Employer, diligently
contest such order at the sole expense of the Employer as expenses occur or at
the election of Employer, cooperate with Employer’s effort to contest such
order, and (iii) at the reasonable written request of the Employer, seek
to obtain, at the sole expense of the Employer, such confidential treatment as
may be available under applicable laws for any information disclosed under such
order or at the election of Employer, cooperate with Employer’s effort to
obtain such confidential treatment.

 

(b)  Non-Compete.  During the Employment Term and for one (1) year
immediately following a termination of employment for any reason, Executive
shall not, without the prior written consent of the Employer, participate or
engage in, directly or indirectly (as an owner, partner, employee, officer,
director, independent contractor, consultant, advisor or in any other capacity
calling for the rendition of services, advice, or acts of management, operation
or control) any business for an individual or entity whose principal business
involves coal mining or coal marketing in the following regions: Central
Appalachia, Northern Appalachia, Illinois Basin, Western Colorado, and any
other region in which the Employer or any of the Employer’s subsidiaries
conduct business.

 

(c)  Non-Solicitation.  During the Employment Term and for two (2) years
immediately following a termination of Employment for any reason, Executive
shall not, without the prior written consent of the Employer, solicit or induce
any then-existing employee of the Employer or any of its subsidiaries or
affiliates to leave employment with the Employer or any of its subsidiaries or
affiliates, or contact any then-existing customer or vendor under contract with
the Employer or any of its affiliates or subsidiaries for the purpose of
obtaining business similar to that engaged in, or received (as appropriate), by
the Employer or any of its affiliates or subsidiaries.

 

(d)  Cooperation.  Executive agrees that during the Employment
Term or following a termination of employment for any reason, Executive shall,
upon reasonable advance notice, assist and cooperate with the Employer with
regard to any investigation or litigation related to a matter or project in
which Executive was involved during Executive’s employment.  The Employer shall reimburse Executive for
all reasonable and necessary expenses related to Executive’s services under
this Section 8(d) (i.e., travel, lodging, meals, telephone, overnight
courier) within ten (10) business days of Executive submitting to the Employer
appropriate receipts and expense statements.

 

4

 

(e)  Survivability.  The duties and obligations of Executive
pursuant to this Section 8 shall survive the termination of this Agreement
and Executive’s termination of employment for any reason.

 

(f)  Remedies.  Executive acknowledges that the protections
of the Employer set forth in this Section 8 are fair and reasonable, and
that any violation of such protections would cause serious and irreparable harm
and damage to the Employer and its subsidiaries and affiliates.  Executive agrees that remedies at law for a
breach or threatened breach of the provisions of this Section 8 would be
inadequate and, therefore, the Employer shall be entitled, in addition to any
other available remedies (including money damages), without posting a bond, to
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction, or any other equitable remedy that
may be then available.

 

(g)  Limitation.  The terms of this Section 8 are intended
to limit disclosure and competition by the Executive to the maximum extent
permitted by law.  If the duration,
scope, or nature of any limitation or restriction imposed by any provision of
this Section 8 is finally determined by any court or tribunal of competent
jurisdiction to be in excess of what is valid and enforceable under applicable
law, such provision shall be construed to cover only that duration, scope or
activity that is valid and enforceable. 
Executive hereby acknowledges that this Section 8 shall be given
the construction which renders its provisions valid and enforceable to the
maximum extent, not exceeding its express terms, possible under applicable law.

 

9.           Offering
Incentives.  By a grant separate from
this document, the Employer shall grant to Executive certain units in Rhino
Resource Partners, L.P. upon, and subject to, the closing of the Offering on
terms (including, without limitation, vesting) acceptable to the Company in its
sole discretion within the Employment Term. 
The terms of such grant shall be determined by the Company, but shall
have a value of $500,000 upon the closing of the Offering, based upon the
issuance price of stock or units in such Offering.  In addition to the foregoing, in the event an
Offering is completed within the Employment Term, the Employer shall pay to the
Executive a one-time cash bonus of $100,000. 
Nothing herein shall require the Company to complete any Offering.  The term “Offering” as used herein shall mean
any sale of equity or convertible securities to the public, whether units in
Rhino Resource Partners, L.P. or Rhino Energy LLC, or stock in another entity
which succeeds to the business of or acquires Rhino Energy LLC.

 

10.         Representations
of Executive.  Executive
hereby represents to the Employer that Executive has full lawful right to enter
into this Agreement and carry out Executive’s duties hereunder, and that
performance of Executive’s obligations hereunder will not constitute a breach
of or default under any employment, confidentiality, non-competition or other
agreement.  Executive further represents
to the Employer that Executive is not listed in the Office of Surface Mining’s
Applicant Violator System database. 
Executive shall provide prompt notice to the Employer of Executive’s
first employment subsequent to a termination of employment.

 

11.         Miscellaneous.

 

(a)  Satisfaction of
Obligations Under Prior Agreement; Term Bonus.  Company, Rhino and Executive hereby
acknowledge that this Agreement amends, restates and supersedes the Prior
Agreement.

 

5

 

(b)  [Intentionally Omitted]

 

(c)  Governing Law.  This Agreement will be governed by, and
interpreted in accordance with, the laws of the Commonwealth of Kentucky
applicable to agreements made and to be wholly performed within the
Commonwealth of Kentucky, without regard to the conflict of laws provisions of
any jurisdiction which would cause the application of any law other than that
of the Commonwealth of Kentucky. 
Executive hereby consents to the jurisdiction of the state and federal
courts of the Commonwealth of Kentucky, including the Fayette Circuit Court,
and hereby waives any objection to venue of any action brought in such courts.

 

(d)  Entire Agreement;
Amendments.  This Agreement contains
the entire understanding of the parties with respect to the employment of
Executive by the Employer.  There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth or referred to herein. 
This Agreement may not be altered, modified, or amended, nor may any of
its provisions be waived, except by written instrument signed by the parties
hereto which states that it is intended to alter, modify or amend this
agreement or waive a right hereunder. 
Sections 7 and 8 hereof shall survive the termination of Executive’s
employment with the Employer, except as otherwise specifically stated therein.

 

(e)  Neutral Interpretation.  This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement of this Agreement shall
be interpreted in a neutral manner, and not more strongly for or against any
party based upon the source of the draftsmanship of the Agreement.   Each party has been provided ample time and
opportunity to review and negotiate the terms of this Agreement and consult
with legal counsel regarding the Agreement.

 

(f)  No Waiver.  The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party’s rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.

 

(g)  Severability.  In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.

 

(h)  Successors.

 

(i)            This
Agreement is personal to Executive and shall not be assignable by Executive
otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of
and be enforceable by Executive’s legal representatives.

 

(ii)           This Agreement shall inure to the
benefit of and be binding upon Rhino, the Company and their successors and
assigns.  The Company, or Rhino, as
applicable, shall require any successor (whether direct or indirect, by
purchase, merger, reorganization, consolidation, acquisition of property or
stock, liquidation, or otherwise) to all or a substantial portion of its
business and/or assets, by agreement in form and substance reasonably
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform this Agreement if no such 

 

6

 

succession
had taken place.  Regardless of whether
such an agreement is executed, this Agreement shall be binding upon any
successor of the Company or Rhino and such successor shall be deemed the “Employer”
for purposes of this Agreement. 
Notwithstanding anything to the contrary contained herein, the Executive
shall have the right to terminate this Agreement if Employer’s assets or
membership units are sold to an entity that is not a subsidiary or an affiliate
of the Employer.  Such a sale shall
include a merger, consolidation, sale of assets or membership units or other
corporate reorganization; however it shall not include a change in ownership as
a result of a public offering.  Such a
termination by Executive shall not be deemed a termination for “Good Reason” as
herein defined, under which Executive would be entitled to the severance
payment set out in Section 7 (b) (ii) above.

 

(i)  Notice.  For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given if delivered personally, if
delivered by overnight courier service, if sent by facsimile transmission or if
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses or sent via facsimile to the
respective facsimile numbers, as the case may be, as set forth below, or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt; provided, however, that (i) notices sent by
personal delivery or overnight courier shall be deemed given when delivered; (ii) notices
sent by facsimile transmission shall be deemed given upon the sender’s receipt
of confirmation of complete transmission, and (iii) notices sent by United
States registered mail shall be deemed given two days after the date of deposit
in the United States mail.

 

If
to the Company or Rhino, to:

 

Rhino
GP, LLC

3120
Wall Street

Suite 310

Lexington,
Kentucky 40513

Attn:  Nicholas R. Glancy

 

cc:

 

Rhino
GP, LLC

411
W. Putnam Ave.

Greenwich,
CT 06830

Attn:  Arthur Amron

 

If
to Executive, to such address as shall most currently appear on the records of
the Employer.

 

(j)  Withholding.  The Employer may withhold from any amounts
payable under this Agreement such Taxes (as defined in Section 12(k)) as
may be required to be withheld pursuant to any applicable law or regulation.

 

7

 

(k)  Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

 

(l)  Code Section 409A.  It is intended that any amounts payable under
this Agreement and the Employer’s and Executive’s exercise of authority or
discretion hereunder shall comply with Code Section 409A (including the
Treasury regulations and other published guidance relating thereto) so as not
to subject Executive to the payment of any interest or additional tax imposed
under Code Section 409A.  To the
extent any amount payable under this Agreement would trigger the additional tax
imposed by Code Section 409A, the Agreement shall be modified to avoid
such additional tax.

 

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

 

(n)  Waiver of Jury Trial.  The parties hereby voluntarily and
irrevocably waive 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
Executive by the Employer.

 

12.         Definitions.

 

(a)  Accrued Obligations.  “Accrued Obligations” has the meaning set
forth in Section 7(a).

 

(b)  Base Salary.   “Base Salary” has the meaning set forth in Section 3.

 

(c)  Board.  “Board” means the Board of Directors of the
Company.

 

(d)  Cause.  “Cause” for termination by the Employer of
Executive’s employment with the Employer means any of the following:

 

(i)            the failure of Executive to perform
substantially his duties (other than any such failure resulting from incapacity
due to disability), within ten days after written notice from the Employer;

 

(ii)           Executive’s conviction of, or plea of
guilty or no contest to (A) a felony or (B) a misdemeanor involving
dishonesty or moral turpitude; or

 

(iii)          Executive engaging in any illegal
conduct, gross misconduct, or other material breach of this Agreement which is
materially and demonstrably injurious to the business or reputation of the
Employer; or

 

(iv)          Executive engaging in any act of
dishonesty or fraud involving Employer or any subsidiary or affiliate of
Employer.

 

8

 

(e)  Code.  “Code” means the Internal Revenue Code of
1986, as amended from time to time.

 

(f)  Company.   “Company” means Rhino GP, LLC, a Delaware
limited liability company.

 

(g)  Disability.   “Disability” means the inability of
Executive to perform his normal duties as a result of any physical or mental
injury or ailment for (i) any consecutive forty five (45) day period or (ii) any
ninety (90) days (whether or not consecutive) during any three hundred sixty
five (365) calendar day period.

 

(h)  Employment Term.   “Employment Term” has the meaning set forth
in Section 1.

 

(i)  Executive.   “Executive” means Richard A. Boone.

 

(j)  Good Reason.  “Good Reason” for termination by Executive of
Executive’s employment means the occurrence (without Executive’s express
written consent) of any one of the following acts by the Employer or failures
by Employer to act:

 

(i)            the assignment to Executive of any
duties inconsistent in any material respect with those of the office to which
Executive is assigned pursuant to Section 2 hereof (including status,
office, title and reporting requirements), or any other diminution in any
material respect in such position, authority, duties or responsibilities unless
agreed to by Executive;

 

(ii)           a reduction in Base Salary;

 

(iii)          a reduction in Executive’s welfare
benefits plans, qualified retirement plan, or paid time off benefit, other than
a reduction as a result of a general change in any such plan; or

 

(iv)          any purported termination of Executive’s
employment under this Agreement by the Employer other than for Cause, death or
Disability.

 

Prior
to Executive’s right to terminate this Agreement, he shall give written notice
to the Employer of his intention to terminate his employment on account of Good
Reason.  Such notice shall state in
detail the particular act or acts of the failure or failures to act that
constitute the grounds on which Executive’s Good Reason termination is based
and such notice shall be given within six (6) months of the occurrence of
the act or acts or the failure or failures to act which constitute the grounds
for Good Reason.  The Employer shall have
thirty (30) days upon receipt of the notice in which to cure such conduct, to
the extent such cure is possible and reasonable.

 

(k)  Taxes.  “Taxes” mean the incremental United States
federal, state and local income, excise and other taxes payable by Executive
with respect to any applicable item of income.

 

9

 

IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
dates written below.

 

 

	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Richard A. Boone

  	
   

  
	
  Richard A. Boone

  	
   

  
	
   

  	
   

  
	
  Date
  signed:

  	
  April 16,
  2008

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RHINO GP, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Nicholas Glancy

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Nicholas
  Glancy

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  Date
  signed:

  	
  April 16,
  2008

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RHINO ENERGY LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Nicholas Glancy

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Nicholas
  Glancy

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  Date
  signed:

  	
  April 16,
  2008

  	
   

  
				

 

10

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