ROYAL ENERGY RESOURCES, INC. (OTCMKTS:ROYE) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement.

Option Agreement

On December 30, 2016, Royal Energy Resources, Inc. (Royal)
entered into an option agreement (the Option Agreement) with
Rhino Resource Partners LP (the Partnership), Rhino Resources
Partners Holdings, LLC (Rhino Holdings), an entity wholly owned
by certain investment partnerships managed by Yorktown Partners
LLC (Yorktown), and Rhino GP LLC (Rhino GP), the general partner
of the Partnership. Rhino GP is a wholly-owned subsidiary of
Royal. Upon execution of the Option Agreement, the Partnership
received an option (the Call Option) from Rhino Holdings to
acquire all of the shares of common stock of Armstrong Energy,
Inc. (Armstrong Energy) that are currently owned by investment
partnerships managed by Yorktown (the Armstrong Shares), which
currently represent approximately 97% of the outstanding common
stock of Armstrong Energy. Armstrong Energy, Inc. is a coal
producing company with approximately 554 million tons of proven
and probable reserves and six mines located in the Illinois Basin
in western Kentucky as of September 30, 2016. The Option
Agreement stipulates that the Partnership can exercise the Call
Option no earlier than January 1, 2018 and no later than December
31, 2019. In exchange for Rhino Holdings granting the Partnership
the Call Option, the Partnership issued 5.0 million common units,
representing limited partner interests in the Partnership (the
Call Option Premium Units) to Rhino Holdings upon the execution
of the Option Agreement. The Option Agreement stipulates the
Partnership can exercise the Call Option and purchase the
Armstrong Shares in exchange for a number of common units to be
issued to Rhino Holdings, which when added with the Call Option
Premium Units, will result in Rhino Holdings owning 51% of the
fully diluted common units of the Partnership (determined without
considering any common units issuable upon conversion of
Subordinated Units or Series A Preferred Units of the
Partnership). The purchase of the Armstrong Shares through the
exercise of the Call Option would also require Royal to transfer
a 51% ownership interest in Rhino GP to Rhino Holdings. The
Partnerships ability to exercise the Call Option is conditioned
upon (i) sixty (60) days having passed since the entry by
Armstrong Energy into an agreement with its bondholders to
restructure its bonds and (ii) the amendment of the Partnerships
revolving credit facility to permit the acquisition of Armstrong
Energy. The percentage ownership of Armstrong Energy represented
by the Armstrong Shares as of the date the Call Option is
exercised is subject to dilution based upon the terms under which
Armstrong Energy restructures its indebtedness, the terms of
which have not been determined yet.

The Option Agreement also contains an option (the Put Option)
granted by the Partnership to Rhino Holdings whereby Rhino
Holdings has the right, but not the obligation, to cause the
Partnership to purchase the Armstrong Shares from Rhino Holdings
under the same terms and conditions discussed above for the Call
Option. The exercise of the Put Option is dependent upon (i) the
entry by Armstrong into an agreement with its bondholders to
restructure its bonds and (ii) the termination and repayment of
any outstanding balance under the Partnerships revolving credit
facility. In the event either the Partnership or Rhino GP fail to
perform their obligations in the event Rhino Holdings exercises
the Put Option, then Rhino Holdings and the Partnership each have
the right to terminate the Option Agreement, in which event no
party thereto shall have any liability to any other party under
the Option Agreement, although Rhino Holdings shall be allowed to
retain the Call Option Premium Units.

The Option Agreement contains customary covenants,
representations and warranties and indemnification obligations
for losses arising from the inaccuracy of representations or
warranties or breaches of covenants contained in the Option
Agreement, the Seventh Amendment (defined below) and the GP
Amendment (defined below). The Partnership has entered into a
non-disclosure agreement with Armstrong Energy under which it has
inspection rights with regard to the books, records and
operations of Armstrong Energy, and the Option Agreement provides
that those rights shall continue until the Call Option or Put
Option are exercised or expire. Upon the request by Rhino
Holdings, the Partnership will also enter into a registration
rights agreement that provides Rhino Holdings with the right to
demand two shelf registration statements and registration
statements on Form S-1, as well as piggyback registration rights
for as long as Rhino Holdings owns at least 10% of the
outstanding common units.

to the Option Agreement, Rhino GP amended its Second Amended and
Restated Limited Liability Company Agreement (GP Amendment). to
the GP Amendment, Mr. Bryan H. Lawrence was appointed to the
board of directors of Rhino GP as a designee of Rhino Holdings
and Rhino Holdings has the right to appoint an additional
independent director. Rhino Holdings has the right to appoint two
members to the Rhino GP board of directors for as long as it
continues to own 20% of the common units on an undiluted basis.
The GP Amendment also provided Rhino Holdings with the authority
to consent to any delegation of authority to any committee of
Rhino GPs board. Upon the exercise of the Call Option or the Put
Option, the Second Amended and Restated Limited Liability Company
Agreement of Rhino GP, as amended, will be further amended to
provide that Royal and Rhino Holdings will each have the ability
to appoint three directors, and that the remaining director will
be the chief executive officer of Rhino GP unless agreed
otherwise.

The foregoing description is qualified in its entirety by
reference to the Option Agreement, a copy of which is attached
hereto as Exhibit 10.1 and is incorporated into this Current
Report on Form 8-K by reference.

Series A Preferred Unit Purchase
Agreement

On December 30, 2016, the Royal entered into a Series A Preferred
Unit Purchase Agreement (the Preferred Unit Agreement) with
Weston Energy LLC (Weston), an entity wholly owned by certain
investment partnerships managed by Yorktown, and the Partnership.
Under the Preferred Unit Agreement, Weston and Royal agreed to
purchase 1,300,000 and 200,000, respectively, of Series A
Preferred Units representing limited partner interests in the
Partnership (Series A Preferred Units) at a price of $10.00 per
Series A Preferred Unit. The Series A Preferred Units have the
preferences, rights and obligations set forth in the Fourth
Amended and Restated Agreement of Limited Partnership of the
Partnership. In exchange for the Series A Preferred Units, Weston
and Royal paid cash of $11.0 million and $2.0 million,
respectively, to the Partnership and Weston assigned to the
Partnership a $2.0 million note receivable from Royal originally
dated September 30, 2016 (the Weston Promissory Note).

The Preferred Unit Agreement contains customary representations,
warrants and covenants, which include among other things, that,
for as long as the Series A Preferred Units are outstanding, the
Partnership will cause CAM Mining, LLC (CAM Mining) to conduct
its business in the ordinary course consistent with past practice
and use reasonable best efforts to maintain and preserve intact
its current organization, business and franchise and to preserve
the rights, franchises, goodwill and relationships of its
employees, customers, lenders, suppliers, regulators and others
having business relationships with CAM Mining.

The Preferred Unit Agreement stipulates that upon the request of
the holder of the majority of the Partnerships common units
following their conversion from Series A Preferred Units, as
outlined in the Amended and Restated Partnership Agreement (as
defined below), the Partnership will enter into a registration
rights agreement with such holder. Such majority holder has the
right to demand two shelf registration statements and
registration statements on Form S-1, as well as piggyback
registration rights.

On December 30, 2016, Rhino GP entered into the Fourth Amended
and Restated Agreement of Limited Partnership of the Partnership
(Amended and Restated Partnership Agreement) to create, authorize
and issue the Series A Preferred Units.

The Series A Preferred Units are a new class of equity security
that rank senior to all classes or series of equity securities of
the Partnership with respect to distribution rights and rights
upon liquidation. The holders of the Series A Preferred Units
shall be entitled to receive annual distributions equal to the
greater of (i) 50% of the CAM Mining free cash flow (as defined
below) and (ii) an amount equal to the number of outstanding
Series A Preferred Units multiplied by $0.80. CAM Mining free
cash flow is defined in the Amended and Restated Partnership
Agreement as (i) the total revenue of the Partnerships Central
Appalachia business segment, minus (ii) the cost of operations
(exclusive of depreciation, depletion and amortization) for the
Partnerships Central Appalachia business segment, minus (iii) an
amount equal to $6.50, multiplied by the aggregate number of met
coal and steam coal tons sold by the Partnership from its Central
Appalachia business segment. If the Partnership fails to pay any
or all of the distributions in respect of the Series A Preferred
Units, such deficiency will accrue until paid in full and the
Partnership will not be permitted to pay any distributions on its
partnership interests that rank junior to the Series A Preferred
Units, including its common units. The Series A Preferred Units
will be liquidated in accordance with their capital accounts and
upon liquidation will be entitled to distributions of property
and cash in accordance with the balances of their capital
accounts prior to such distributions to equity securities that
rank junior to the Series A Preferred Units.

The Series A Preferred Units will vote on an as-converted basis
with the common units, and the Partnership will be restricted
from taking certain actions without the consent of the holders of
a majority of the Series A Preferred Units, including: (i) the
issuance of additional Series A Preferred Units, or securities
that rank senior or equal to the Series A Preferred Units; (ii)
the sale or transfer of CAM Mining or a material portion of its
assets; (iii) the repurchase of common units, or the issuance of
rights or warrants to holders of common units entitling them to
purchase common units at less than fair market value; (iv)
consummation of a spin off; (v) the incurrence, assumption or
guaranty indebtedness for borrowed money in excess of $50.0
million except indebtedness relating to entities or assets that
are acquired by the Partnership or its affiliates that is in
existence at the time of such acquisition or (vi) the
modification of CAM Minings accounting principles or the
financial or operational reporting principles of the Partnerships
Central Appalachia business segment, subject to certain
exceptions.

The Partnership will have the option to convert the outstanding
Series A Preferred Units at any time on or after the time at
which the amount of aggregate distributions paid in respect of
each Series A Preferred Unit exceeds $10.00 per unit. Each Series
A Preferred Unit will convert into a number of common units equal
to the quotient (the Series A Conversion Ratio) of (i) the sum of
$10.00 and any unpaid distributions in respect of such Series A
Preferred Unit divided by (ii) 75% of the volume-weighted average
closing price of the common units for the preceding 90 trading
days (the VWAP); provided however, that the VWAP will be capped
at a minimum of $2.00 and a maximum of $10.00. On December 31,
2021, all outstanding Series A Preferred Units will convert into
common units at the then applicable Series A Conversion Ratio.

The foregoing description is qualified in its entirety by
reference to the Preferred Unit Agreement and the Amended and
Restated Partnership Agreement, copies of which are attached
hereto as Exhibits 10.2 and 10.7, and are incorporated into this
Current Report on Form 8-K by reference.

Seventh Amendment of Amended and Restated Credit
Agreement

On December 30, 2016, Rhino Energy LLC, a wholly owned subsidiary
of the Partnership, as borrower, and the Partnership and certain
of its subsidiaries, as guarantors, entered into a seventh
amendment of its amended and restated credit agreement (the
Seventh Amendment) with PNC Bank, National Association, as
Administrative Agent, PNC Capital Markets and Union Bank, N.A.,
as Joint Lead Arrangers and Joint Bookrunners, Union Bank, N.A.,
as Syndication Agent, Raymond James Bank, FSB, Wells Fargo Bank,
National Association and the Huntington National Bank, as
Co-Documentation Agents and the lenders party thereto. The
Seventh Amendment allows for the Series A Preferred Units as
outlined in the Fourth Amended and Restated Agreement of Limited
Partnership of the Partnership, as well as the Option Agreement.
The Seventh Amendment immediately reduces the revolving credit
commitments by $11.0 million and provides for additional
revolving credit commitment reductions of $2.0 million each on
June 30, 2017 and September 30, 2017. The Seventh Amendment
further reduces the revolving credit commitments over time on a
dollar-for-dollar basis for the net cash proceeds received from
any asset sales after the Seventh Amendment date once the
aggregate net cash proceeds received exceeds $2.0 million. The
Seventh Amendment alters the maximum leverage ratio to 4.0 to 1.0
effective December 31, 2016 through May 31, 2017 and 3.5 to 1.0
from June 30, 2017 through December 31, 2017. The maximum
leverage ratio shall be reduced by 0.50 to 1.0 for every $10.0
million of net cash proceeds, in the aggregate, received after
the Seventh Amendment date from (i) the issuance of any equity by
the Partnership and/or (ii) the disposition of any assets in
excess of $2.0 million in the aggregate, provided, however, that
in no event will the maximum leverage ratio be reduced below 3.0
to 1.0. The Seventh Amendment alters the minimum consolidated
EBITDA figure, as calculated on a rolling twelve months basis, to
$12.5 million from December 31, 2017 through May 31, 2017 and
$15.0 million from June 30, 2017 through December 31, 2017. The
Seventh Amendment alters the maximum capital expenditures
allowed, as calculated on a rolling twelve months basis, to $20.0
million through the expiration of the credit facility. A
condition precedent to the effectiveness of the Seventh Amendment
is the receipt of the $13.0 million of cash proceeds received by
the Partnership from the issuance of the Series A Preferred Units
to the Preferred Unit Agreement, which will be used to repay
outstanding borrowings under the revolving credit facility. Per
the Seventh Amendment, the receipt of $13.0 million cash proceeds
fulfills the required Royal equity contributions that were
outlined in the previous amendments to the Partnerships credit
agreement.

The foregoing description is qualified in its entirety by
reference to the Amendment, a copy of which is attached hereto as
Exhibit 10.3 and is incorporated into this Current Report on Form
8-K by reference.

Weston Energy, LLC Transaction

On December 30, 2016, Royal entered into a Secured Promissory
Note and a Pledge and Security Agreement with Weston, under which
Royal borrowed $2.0 million from Weston (the Loan). The
Loan bears interest at 8% per annum. All principal and accrued
interest is due and payable on January 15, 2017. The Loan is
payable, at the option of Royal, either in cash, or in common
units (Rhino Units) of the Partnership. In the event Royal
elects to pay the Loan in Rhino Units, the number of Rhino Units
that will be conveyed to satisfy the Loan will be equal to Loan
balance divided by 80% of the average of the high and low price
of the Partnerships common units for the twenty trading days
prior to the date of payment.

Alternatively, Royal may elect to pay the Loan by the transfer to
Weston of Series A Preferred Units of the Partnership if (i) the
Partnership completes an exchange of its common units for shares
of Armstrong Energy, and (ii) Weston makes an investment in the
Series A Preferred Units of at least $28 million, neither of
which is expected to occur before maturity date of the Loan. The
proceeds of the Loan were used to make an investment of $2.0
million in Series A Preferred Units of the Partnership on
December 30, 2016.

The foregoing summary of the Loan does not purport to be complete
and is qualified in its entirety by reference to the definitive
transaction documents. A copy of the Secured Promissory Note is
attached hereto as Exhibit 10.4, and a copy of the Pledge and
Security Agreement is attached hereto as Exhibit 10.5, and both
are incorporated herein by reference.

Securities Purchase Agreement Amendment and Weston
Energy, LLC Loan Amendment

On March 21, 2016, the Partnership and Royal entered into a
securities purchase agreement (the Securities Purchase Agreement)
to which the Partnership issued 6,000,000 common units in the
Partnership to Royal in a private placement at $1.50 per common
unit for an aggregate purchase price of $9.0 million. Royal paid
the Partnership $2.0 million in cash and delivered a promissory
note payable to the Partnership in the amount of $7.0 million.
The promissory note is payable in three installments: (i) $3.0
million on July 31, 2016; (ii) $2.0 million on or before
September 30, 2016 and (iii) $2.0 million on or before December
31, 2016.

On September 30, 2016, Royal issued Weston a promissory note in
exchange for $2.0 million in cash and Royal contributed the
proceeds to the Partnership in satisfaction of its obligation to
make the September 30, 2016 payment on the promissory note issued
to the Partnership to the Securities Purchase Agreement. On
December 30, 2016, Weston assigned to the Partnership the $2.0
million note receivable from Royal originally dated September 30,
2016 as part of the Series A Preferred Unit Purchase Agreement
discussed above.

On December 30, 2016, Royal and the Partnership amended the
Securities Purchase Agreement and the $2.0 million promissory
note assigned from Weston the Partnership through a letter
agreement (the Letter Agreement) to extend the maturity dates of
both of these agreements to December 31, 2018. The Letter
Agreement states the outstanding balance of the Securities
Purchase Agreement and the $2.0 million promissory note assigned
from Weston the Partnership may be converted, at the option of
Royal, at any time prior to December 31, 2018, in exchange for
unregistered Royal common stock issued to the Partnership at a
price per share equal to seventy five percent (75%) of the volume
weighted average closing price for the ninety (90) trading days
preceding the date of conversion, if such shall occur, provided
that for the purpose of this calculation, such average closing
price shall be no less than $3.50 and no more than $7.50.

The foregoing summary of the Letter Agreement does not purport to
be complete and is qualified in its entirety by reference to the
definitive transaction documents. A copy of the Letter Agreement
is attached hereto as Exhibit 10.6.

Item 1.02 Termination of a Material Definitive
Agreement.

The Option Agreement supersedes and terminates the Equity
Exchange Agreement entered into by the Partnership, Royal, Rhino
Holdings, Yorktown and Rhino GP on September 30, 2016. The Equity
Exchange Agreement had provided that Yorktown would contribute
its shares of common stock of Armstrong Energy to Rhino Holdings
and Rhino Holdings would contribute those shares to the
Partnership in exchange for 10.0 million newly issued common
units of the Partnership. The Agreement also contemplated that
Rhino GP would issue a 50% ownership of Rhino GP to Rhino
Holdings.

Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The disclosure set forth above under Item 1.01 to this Current
Report on Form 8-K is hereby incorporated by referenced into this
Item 2.03.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

About ROYAL ENERGY RESOURCES, INC. (OTCMKTS:ROYE)

Royal Energy Resources, Inc. is an energy company, which focuses on coal and energy related assets and activities, including energy infrastructure investments. The Company has a geographically diverse asset base with coal reserves located in Central Appalachia, Northern Appalachia, the Illinois Basin and the Western Bituminous region. The Company’s segments consist of Central Appalachia, which includes surface and underground mines located in Eastern Kentucky and Southern West Virginia; Northern Appalachia, which includes surface and underground mines located in Ohio; Rhino Western, which includes an underground mine located in the Western Bituminous region in Utah; Illinois Basin, which includes an underground mine in western Kentucky, and Other, which includes its ancillary businesses, and oil and natural gas investments. The Company produces and markets coal from surface and underground mines in Kentucky, West Virginia, Ohio and Utah.

ROYAL ENERGY RESOURCES, INC. (OTCMKTS:ROYE) Recent Trading Information

ROYAL ENERGY RESOURCES, INC. (OTCMKTS:ROYE) closed its last trading session 00.00 at 8.25 with 100 shares trading hands.