Item
1.01 Entry into a Material Definitive Agreement
Pennyrile
APA
On
September 6, 2019, Rhino Energy LLC (“Rhino Energy”), Pennyrile Energy LLC (“Pennyrile LLC”),
CAM Mining LLC, Castle Valley Mining LLC and Rhino Services LLC (collectively, the “Sellers”), Rhino Resource
Partners, LP (the “Partnership”), and Alliance Coal (“Buyer”) and Alliance Resource Partners,
L.P. (“Buyer Parent”) entered into an Asset Purchase Agreement (the “Pennyrile APA”) pursuant
to which Sellers agreed to sell to Buyer all of the real property, permits, equipment and inventory and certain other assets associated
with the Pennyrile Mine Complex in exchange for approximately $3.7 million, subject to certain adjustments.
Pursuant
to the Pennyrile APA, Sellers retain liability for certain employee claims, subsidence claims arising from pre-closing mining
operations, MSHA liabilities and certain other matters. The Pennyrile APA also provides that Buyer shall have the right to conduct
diligence on the Pennyrile Mine Complex and may contest the fair market value of the purchased assets or the estimate of the costs
of the assumed liabilities following such diligence investigation. In the event Buyer does contest such amounts, the parties will
attempt to resolve the dispute and to the extent they cannot, will submit the matter to a third party to make a final determination
with respect to such matters, and will adjust the purchase price accordingly.
The
parties have made customary representations, warranties and covenants in the Pennyrile APA. The closing of the transactions contemplated
by the Asset Purchase Agreement are subject to a number of closing conditions, including, among others, the performance of applicable
covenants and accuracy of representations and warranties and absence of material adverse changes in the condition of the Pennyrile
Mine Complex. Subject to the satisfaction of closing conditions, the transactions contemplated by the Pennyrile APA are expected
to close in the fourth quarter of 2019.
Coal
Supply APA
On
September 6, 2019, Rhino Energy and Pennyrile LLC, as Sellers, the Partnership, and Buyer and Buyer Parent entered into an Asset
Purchase Agreement for the sale and assignment of certain coal supply agreements associated with the Pennyrile Mine Complex (the
“Coal Supply APA”) in exchange for approximately $7.3 million. The Coal Supply APA includes customary representations
of the parties thereto, and indemnification for losses arising from the breaches of such representations and for liabilities arising
during the period in which the relevant parties were not party to the coal supply agreements. The transactions contemplated by
the Coal Supply APA closed upon the execution thereof.
Fifth
Amendment to Financing Agreement
On
September 6, 2019, Rhino Energy, the Partnership, certain of Rhino Energy’s subsidiaries identified as Borrowers, and certain
other Rhino Energy subsidiaries identified as Guarantors entered into a fifth amendment (the “Financing Agreement Amendment”)
to the Financing Agreement (the “Financing Agreement”) originally executed on December 27, 2017 with Cortland
Capital Market Services LLC, as Collateral Agent and Administrative Agent, CB Agent Services LLC, as Origination Agent and the
parties identified as Lenders therein (the “Lenders”).
The
Financing Agreement Amendment (i) extends the maturity of the Financing Agreement to December 27, 2022, (ii) provides a $5.0 million
term loan provided by the Lenders to the Borrowers under the delayed draw feature of the Financing Agreement, (iii) extends the
period by which an applicable premium payable to the Lenders will be calculated to December 31, 2021, (iv) modifies the certain
definitions and concepts to account for Rhino’s recent acquisition of properties from Blackjewel, (v) permits the disposition
of the Pennyrile Mining Complex and (viii) provides for the payment of additional fees to the Lenders, including a consent fee
of $1.0 million, an amendment fee of $825,000 and an increase in the lender exit fee of 1.00% of the amount of term loans made
under the Financing Agreement.
Royal
Energy Resources, Inc., through its wholly-owned subsidiary, Rhino GP, LLC, is the general partner of the Partnership, and the
Sellers are direct and indirect wholly-owned subsidiaries of the Partnership.