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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-38003
RAMACO RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
250 West Main Street, Suite 1800
Lexington, Kentucky
(Address of principal executive offices)
38-4018838
(I.R.S. Employer
Identification No.)
40507
(Zip Code)
(859) 244-7455
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Trading Symbol
METC
Securities registered pursuant to Section 12(g) of the Act: None
Name of each exchange on which registered on which registered
NASDAQ Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No X
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No X
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ☐
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the
definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
X
Accelerated filer
Smaller reporting company
Emerging growth company
☐
X
X
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. X
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued is audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No X
As of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of common stock held by non-affiliates of the
registrant was $21.5 million.
As of February 15, 2021, the registrant had 42,637,302 shares of common stock outstanding.
Documents Incorporated by Reference:
Certain information required to be furnished pursuant to Part III of this Form 10-K is set forth in, and is hereby incorporated by reference herein from, the definitive proxy statement for
our 2021 Annual General Meeting of Stockholders, to be filed by Ramaco Resources with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after
December 31, 2020 (the "2021 Proxy Statement”).
Table of Contents
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
TABLE OF CONTENTS
PART I
PART II
Market for Registrant’s Common Equity and Related Shareholder Matters
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Persons Transactions
Principal Accountant Fees and Services
ITEM 15.
SIGNATURES
Exhibits and Financial Statement Schedules
PART IV
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information in this report includes "forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933,
as amended (the "Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act”). All statements,
other than statements of historical fact included in this report, regarding our strategy, future operations, financial position, estimated revenue
and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this annual report,
the words "could,” "believe,” "anticipate,” "intend,” "estimate,” "expect,” "project” and similar expressions are intended to identify forward-
looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based
on management’s current expectations and assumptions about future events and are based on currently available information as to the
outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other
cautionary statements described under the heading "Risk Factors” included in this report.
Forward-looking statements may include statements about:
● risks related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, the health and
safety of our employees, government actions and restrictive measures implemented in response, delays and cancellations of
customer sales, supply chain disruptions and other impacts to the business, or our ability to execute our business continuity
plans;
● anticipated production levels, costs, sales volumes and revenue;
● timing and ability to complete major capital projects;
● economic conditions in the metallurgical coal and steel industries generally, including any near-term or long-term downturn in
these industries as a result of the COVID-19 pandemic and related actions;
● expected costs to develop planned and future mining operations, including the costs to construct necessary processing and
transport facilities;
● estimated quantities or quality of our metallurgical coal reserves;
● our ability to obtain additional financing on favorable terms, if required, to complete the acquisition of additional metallurgical
coal reserves as currently contemplated or to fund the operations and growth of our business;
● maintenance, operating or other expenses or changes in the timing thereof;
● financial condition and liquidity of our customers;
● competition in coal markets;
● the price of metallurgical coal and/or thermal coal;
● compliance with stringent domestic and foreign laws and regulations, including environmental, climate change and health and
safety regulations, and permitting requirements, as well as changes in the regulatory environment, including as a result of the
change in the presidential administration and composition of the U.S. Congress, the adoption of new or revised laws, regulations
and permitting requirements;
● potential legal proceedings and regulatory inquiries against us;
● the impact of weather and natural disasters on demand, production and transportation;
● purchases by major customers and our ability to renew sales contracts;
● credit and performance risks associated with customers, suppliers, contract miners, co-shippers and trading, banks and other
financial counterparties;
● geologic, equipment, permitting, site access and operational risks and new technologies related to mining;
● transportation availability, performance and costs;
● availability, timing of delivery and costs of key supplies, capital equipment or commodities such as diesel fuel, steel, explosives
and tires;
● timely review and approval of permits, permit renewals, extensions and amendments by regulatory authorities;
● our ability to comply with certain debt covenants;
● our expectations relating to dividend payments and our ability to make such payments; and
● other risks identified in this Annual Report that are not historical.
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We caution you that these forward-looking statements are subject to a number of risks, uncertainties and assumptions, which are
difficult to predict and many of which are beyond our control, incident to the development, production, gathering and sale of coal. Moreover,
we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we
believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Annual Report
are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ
materially and adversely from those anticipated or implied in the forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction of actual results.
All forward-looking statements, expressed or implied, included in this report are expressly qualified in their entirety by this cautionary
statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements
that we or persons acting on our behalf may issue.
Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are
expressly qualified by the statements in this section, to reflect events or circumstances after the date of this report.
Item 1. Business
PART I
Ramaco Resources, Inc. is a Delaware corporation formed in October 2016. Our common stock is listed on the NASDAQ Global Select
Market under the symbol "METC”. Our principal corporate offices are located in Lexington, Kentucky. As used herein, "Ramaco Resources,”
"we,” "our,” and similar terms include Ramaco Resources, Inc. and its subsidiaries, unless the context indicates otherwise.
General
We are an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia, southwestern Virginia, and
southwestern Pennsylvania. We are a pure play metallurgical coal company with 262 million tons of high-quality metallurgical coal reserves.
We believe our advantaged reserve geology provides us with higher productivities and industry leading lower cash costs. Our development
portfolio primarily includes four properties: Elk Creek, Berwind, RAM Mine and Knox Creek.
We believe each of these properties possesses geologic and logistical advantages that make our coal among the lowest delivered-
cost U.S. metallurgical coal to a majority of our domestic target customer base, North American blast furnace steel mills and coke plants, as
well as international metallurgical coal consumers.
We operate three deep mines and a surface mine at our Elk Creek mining complex. Development of this complex commenced in 2016
and included construction of a preparation plant and rail load-out facilities. The Elk Creek property consists of approximately 20,166 acres of
controlled mineral rights and contains 25 seams that we have targeted for production.
Development of our Berwind mining complex began in late 2017. In 2020, we suspended development at the Berwind mining complex
due to lower pricing and demand largely caused by the novel coronavirus disease 2019 ("COVID-19”) outbreak. This complex remains a key
part of our anticipated future growth. We expect to achieve commercial production at the Berwind mining complex approximately six months
after we resume the slope project as described under "Our Projects – Berwind” below. The Berwind property consists of approximately 31,200
acres of controlled mineral rights.
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Our Knox Creek facility includes a preparation plant and 62,100 acres of controlled mineral rights that we expect to develop in the
future. The Knox Creek preparation plant processes coal from our Berwind mine as well as coal we may purchase from third parties.
Our RAM Mine property is located in southwestern Pennsylvania, consists of approximately 1,570 acres of controlled mineral rights,
and is scheduled for initial production after a mining permit is issued. We expect this permit to be issued in 2021.
As of December 31, 2020, our estimated aggregate annual production capacity is approximately 2.3 million clean tons of coal. We plan
to complete development of our existing properties and increase production from our existing development portfolio to more than 4-4.5 million
clean tons of metallurgical coal annually, subject to market conditions, permitting and additional capital deployment. We may also acquire
additional reserves or infrastructure that contribute to our focus on advantaged geology and lower costs.
Metallurgical Coal Industry
Metallurgical coal is also known as "coking coal,” and is a key component of the blast furnace steelmaking process. North American
metallurgical mines are primarily located in the Appalachian area of the eastern United States, and supply all of the requirements of the steel
industry. Imported metallurgical coal has historically been un-economic due to transportation costs. Supply in excess of what can be
consumed in North America is exported to the seaborne market to buyers in Europe, South America, Africa, India and Asia.
Metallurgical coal is transported by truck, rail and barge to coke batteries. Metallurgical coal contracts in North America frequently
are calendar year contracts where both prices and volumes are fixed in the third or fourth quarter for the following calendar year.
The United States is the second largest global supplier to the seaborne metallurgical coal market behind Australia. U.S. producers,
with their variable production volumes, generally serve as a swing supplier to the international metallurgical coal market. U.S. metallurgical coal
exports compete with Australian metallurgical coals that are generally produced at lower cost, but are geographically disadvantaged to supply
Western Europe. Conversely, Australian production has a much shorter logistical route to East Asian customers. Any supply shortfall out of
Australia, or increase in global demand beyond Australia’s capacity, has historically been serviced by U.S. coal producers.
Export metallurgical coal pricing is determined utilizing a series of indices from a number of independent sources and is adjusted for
coal quality. Contracted volumes have terms that vary in duration from spot to one year, rarely exceeding one year. In some cases, indices are
used at the point that the coal changes hands. In other cases, an average over time may be utilized. When the term "benchmark” is still
utilized, it too is determined based on index values, typically for the preceding three months.
Metallurgical coals are generally classified as high, medium or low volatile. Volatiles are products, other than water, that are released
as gas or vapor when coal is converted to coke. Carbon is what remains when the volatiles are released.
Our Strategy
Our business strategy is to increase stockholder value through sustained earnings growth and cash flow generation by:
Developing and Operating Our Metallurgical Coal Properties. We have a 262 million ton reserve base of high-quality metallurgical
coal with attractive quality characteristics across high-volatility and low-volatility segments. This geologically advantaged reserve base
allows for flexible capital spending in challenging market conditions.
We plan to complete development of our existing properties and increase production from our existing development portfolio to more
than 4-4.5 million clean tons of metallurgical coal, subject to market conditions,
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permitting and additional capital deployment. We may also acquire additional reserves or infrastructure that contribute to our focus on
advantaged geology and lower costs.
Being a Low-Cost U.S. Producer of Metallurgical Coal. Our reserve base presents advantaged geologic characteristics such as
relatively thick coal seams at the deep mines, a low effective mining ratio at the surface mines, and desirable metallurgical coal quality. These
characteristics contribute to a production profile that has a cash cost of production that is significantly below most U.S. metallurgical coal
producers.
Maintaining a conservative capital structure and prudently managing the business for the long term. We are committed to
maintaining a conservative capital structure with a reasonable amount of debt that will afford us the financial flexibility to execute our business
strategies on an ongoing basis.
Enhancing Coal Purchase Opportunities. Depending on market conditions, we purchase coal from other independent producers.
Purchased coal is complementary from a blending standpoint with our produced coals or it may also be sold as an independent product.
Demonstrating Excellence in Safety and Environmental Stewardship. We are committed to complying with both regulatory and our
own high standards for environmental and employee health and safety requirements. We believe that business excellence is achieved through
the pursuit of safer and more productive work practices.
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Our Projects
Our properties are primarily located in southern West Virginia, southwestern Virginia, and southwestern Pennsylvania. The following
map shows the location of our mining complexes and projects:
Elk Creek Mining Complex
Our Elk Creek mining complex in southern West Virginia began production in late December 2016. The Elk Creek property consists of
approximately 20,166 acres of controlled mineral and contains 25 seams that we believe are economically mineable. Nearly all our seams contain
high-quality, high volatile metallurgical coal accessible at or above drainage. Additionally, almost all of this coal is high-fluidity, which is an
important factor for high volatile metallurgical coal.
We control the majority of the coal and related mining rights within the existing permitted areas and our current mine plans, as well as
the surface for our surface facilities, through leases and subleases from Ramaco Coal, LLC, a related party, and McDonald Land Company. We
estimate that the Elk Creek mining complex contains reserves capable of yielding approximately 113 million tons of clean saleable metallurgical
coal.
We currently market most of the coal produced from the Elk Creek mining complex as a blended high volatile A/B product. When
segregated, a portion of our coal can be sold as a high volatile A product for a premium. Our market for Elk Creek production is principally
North American coke and steel producers. We also market our coal to European, South American, Asian and African customers, and
occasionally to coal traders and brokers for use in filling orders for their blended products. Additionally, we seek to market a portion of our
coal in the specialty coal markets that value low ash content.
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We process our Elk Creek coal production through a 700 raw ton-per-hour preparation plant. The plant has a large-diameter (48”)
heavy-media cyclone, dual-stage spiral concentrators, froth flotation, horizontal vibratory and screen bowl centrifuges. Our rail load-out
facilities at Elk Creek are capable of loading 4,000 tons per hour and a full 150-car unit train in under four hours. The load-out facility is served
by the CSX railroad. We also have the ability to develop on controlled property a rail-loading facility on the Norfolk Southern railroad, which
would facilitate dual rail service. We have not yet committed the capital for development of a Norfolk Southern rail facility.
The existing impoundment at Elk Creek has been converted principally into a combined refuse facility. The combined capacity is
expected to provide approximately 20 years of disposal life for our operations. We completed construction of a full complement of plate
presses during 2020 to allow for dewatering material currently being pumped to our impoundment. This equipment allows us to process all
waste material for placement in the combined refuse facility.
On November 5, 2018, one of our three raw coal storage silos that fed our Elk Creek plant experienced a partial structural failure. A
temporary conveying system completed in late-November 2018 restored approximately 80% of our plant capacity. We completed a permanent
belt workaround and restored the preparation plant to its full processing capacity in mid-2019. Our insurance carrier, Federal Insurance
Company, disputed our claim for coverage based on certain exclusions to the applicable policy and, therefore, on August 21, 2019 we filed suit
against Federal Insurance Company and Chubb INA Holdings, Inc. in Logan County Circuit Court in West Virginia seeking a declaratory
judgment that the partial silo collapse was an insurable event and to require coverage under our policy. Defendants removed the case to the
United States District Court for the Southern District of West Virginia, and upon removal, we substituted ACE American Insurance Company
as a defendant in place of Chubb INA Holdings, Inc. Currently, the case is scheduled for trial beginning June 29, 2021, in Charleston, West
Virginia.
A large portion of our controlled reserves are permitted through existing, issued permits. We currently have three mining permits that
have not been activated and we are actively pursuing multiple new permits.
On January 3, 2020, we entered into a mineral lease with the McDonald Land Company for coal reserves which, in many cases, are
located immediately adjacent to our Elk Creek complex. This leased property became available after the former base lease with another party
was terminated. The prior lessee, who controlled the property since 1978, did not produce commercial amounts of coal from the property
during their possession of the lease. While it is unusual to have a metallurgical reserve in this part of Central Appalachia remain idle for such
an extended period of time, the configuration and location of the tracts lend themselves to be mined and processed far more efficiently from
our Elk Creek property. The McDonald reserves are expected to have the same geologic advantages and low costs that are being experienced
in our Elk Creek mines. Our 2020 reserve study of the McDonald tracts showed over 21 million proven and probable reserves in approximately
20 different coal seams to our Elk Creek reserve base. We project to mine approximately 10 million tons of these reserves in our current 10 year
mine plan.
Berwind Mining Complex
Our Berwind mining complex is located on the border of West Virginia and Virginia and is well-positioned to fill the anticipated market
for low volatile coals. The Berwind property consists of approximately 31,200 acres of controlled mineral and contains a large area of Squire Jim
seam coal deposits. The Squire Jim seam of coal is the lowest known coal seam on the geologic column in this region, and due to depth of
cover has never been significantly explored. We have outcrop access to this seam at the top of an anticline. Should we choose to develop this
seam in the future, we expect to experience above average seam height.
Development of our Berwind mining complex began in late 2017 in the thinner Pocahontas No. 3 seam with plans to slope up into the
thicker Pocahontas No. 4 seam, subject to market conditions. In 2020, we suspended development at the Berwind mining complex due to lower
pricing and demand largely caused by the economic effects of COVID-19. This complex remains a key part of our anticipated future growth.
We expect to achieve commercial production at the Berwind mining complex approximately six months after we resume the slope project. We
estimate that the mine life for the Berwind mining complex is more than 20 years.
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In February 2021, the resumption of the slope development project at Berwind was approved by our Board of Directors in anticipation
of better market conditions. We view Berwind as the second flagship complex for Ramaco. The slope project will allow us to transition our
mining efforts at Berwind to the thicker Pocahontas No. 4 seam. We have already expended more than $50 million in growth capital during the
past four years in development at the Berwind mining complex. We anticipate spending another $10-12 million in growth capital over the next
12 months with approximately one-third of that outlay occurring in early 2022. At full production at Berwind, we expect to produce
approximately 750,000 tons per year of high quality low-volatile coal with total cash costs per ton in the low- to mid-$70’s for company
produced coal. We expect to have initial production by late 2021, and to ramp up to full production levels by the second quarter of 2022.
We are currently mining a small amount of coal from the Triad mine at Berwind. The mine is anticipated to produce less than 250,000
tons in 2021, and should function as a bridge until the main Berwind Pocahontas #4 reserve is fully activated.
We have the necessary permits for the Berwind mine for our current and budgeted operations. A permit for our Squire Jim seam room-
and-pillar underground mine was issued during 2020. At this point, we do not anticipate activating this mining permit.
Knox Creek
The Knox Creek property consists of approximately 62,100 acres of controlled mineral, a 650 tons per hour preparation plant and coal-
loading facility along with a refuse impoundment. Rail service is provided by Norfolk Southern.
The Tiller Mine slope face-up and shafts were idled before our acquisition of the property. We have spent limited amounts of capital
to review the feasibility of a high volatile A metallurgical deep mine in the Jawbone seam of coal. This seam is located slightly above the Tiller
Seam and would be accessed via a short slope. Jawbone coal could flow through the same portal and slope as the idle Tiller mine.
From time to time, we process coal purchased from other independent producers at the Knox Creek preparation plant and load-out
facilities. We also process and load coal trucked from our Berwind mine at this facility.
In the fourth quarter of 2019, we acquired multiple permits from various affiliates of Omega Highwall Mining, LLC. Consideration for
the transaction included assumption of approximately $0.6 million of ARO liability, curing minor lease defaults, and paying advance royalties
under two assumed lease instruments. The total out-of-pocket consideration was less than $0.1 million, most of which is recoupable against
future royalty payments. These permits are in close proximity to our Knox Creek preparation plant and loadout infrastructure, and provide
immediate access to two separate mining areas in Southwestern Virginia. One is a deep mine permit in the Jawbone Seam, which contains
approximately 2.65 million tons of geologically advantaged metallurgical coal. The second is a metallurgical surface mine in the Tiller and Red
Ash seams that is spade ready for production. It contains approximately 800,000 tons of coal that can be mined via the surface and highwall
mining methods. The surface mining is expected to have very low mining ratios. The combination of close proximity to Knox Creek and
advantaged geology make these two mines likely to become active in the next few years. The fully permitted surface mine is one of the areas,
subject to market conditions, that could positively impact near-term production and profitability. It is possible that the surface mine will be
operated utilizing third party contractors we would manage.
In February 2021, a new mine development project known as the Big Creek mine and located near our Knox Creek preparation plant
was approved by our Board of Directors. We anticipate to begin production at the Big Creek mine within approximately four to six months of
breaking ground. We have obtained all required permits to begin development of the Big Creek mine. We anticipate full production of around
150,000-200,000 tons a year of primarily high quality, mid-volatile coal by the fourth quarter of 2021, with cash costs per ton in the upper $50’s
for company produced coal. We expect growth capital spending in the development of the Big Creek mine to be roughly $5-7 million over the
next two quarters. We expect this mine to be able to produce at these levels for more than three years.
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RAM Mine
Our RAM Mine property is located in southwestern Pennsylvania, consists of approximately 1,570 acres of controlled mineral and is
scheduled for initial production after a mining permit is issued. Production of high volatile coal from the Pittsburgh seam is planned from a
single continuous-miner room-and-pillar underground operation. The Pittsburgh seam, in close proximity to Pittsburgh area coke plants, has
historically been a key feedstock for these coke plants. Operation of our RAM Mine coal reserve may require access to a newly constructed
preparation plant and loading facility, third party processing, or direct shipment of raw coal product. Upon commencement of mining, we
anticipate that the mine will produce at an annualized rate of between 300 and 500 thousand tons with an estimated 10-year mining life.
We expect that coal from the RAM Mine coal reserve will be transported to our customers by highway trucks, rail cars or by barge on
river systems. In addition to close proximity to river barge facilities, our RAM Mine operations are also near Norfolk Southern rail access.
The RAM Mine coal reserve is not yet permitted, although we have applied for a permit and it is in the final phase of the permit
application process. We expect this permit to be issued in 2021.
Customers and Contracts
Coal prices differ substantially by region and are impacted by many factors including the overall economy, demand for steel, demand
for electricity, location, market, quality and type of coal, mine operation costs and the cost of customer alternatives. The major factors
influencing our business are the global economy and demand for steel.
We market the bulk of our production to North American integrated steel mills and coke plants, in addition to international customers
primarily in Europe, South America, Asia and Africa. Additionally, we market limited amounts of our production to various premium-priced
specialty markets, such as foundry cokemakers, manufacturers of activated carbon products, and specialty metals producers.
We sold 1.75 million tons of coal during 2020. Of this, 71% was sold to North American markets and 29% was sold into export
markets, excluding Canada. Principally, our export market sales were made to Europe. During 2020, sales to three customers accounted for
approximately 70% of total revenue. The total balance due from these three customers at December 31, 2020 was approximately 46% of total
accounts receivable. During 2019, sales to three customers accounted for approximately 53% of total revenue. The total balance due from
these two customers at December 31, 2019 was approximately 58% of total accounts receivable. No other customer accounted for more than
10% of our revenue during this period. If a major customer decided to stop purchasing coal or significantly reduced its purchases from us,
revenue could decline and our operating results and financial condition could be adversely affected.
Trade Names, Trademarks and Patents
We do not have any registered trademarks or trade names for our products, services or subsidiaries, and we do not believe that any
trademark or trade name is material to our business. The names of the seams in which we have coal reserves, and attributes thereof, are widely
recognized in the metallurgical coal market.
Competition
Our principal domestic competitors include Blackhawk Mining, LLC, Coronado Global Resources, Inc., Corsa Coal Corp, Arch
Resources, Inc., Alpha Metallurgical Resources, Inc., Energy, Inc. and Warrior Met Coal, Inc. We also compete in international markets
directly with domestic companies and with companies that produce coal from one or more foreign countries, such as Australia,
Canada, Colombia and South Africa. Many of these coal producers are larger than we are and have greater financial resources and larger
reserve bases than we do.
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Suppliers
Supplies used in our business include petroleum-based fuels, explosives, tires, conveyance structure, ventilation supplies, lubricants
and other raw materials as well as spare parts and other consumables used in the mining process. We use third-party suppliers for a significant
portion of our equipment rebuilds and repairs, drilling services and construction. We believe adequate substitute suppliers and contractors
are available and we are not dependent on any one supplier or contractor. We continually seek to develop relationships with suppliers and
contractors that focus on reducing our costs while improving quality and service.
Environmental, Health and Safety and Other Regulatory Matters
Our operations are subject to federal, state, and local laws and regulations, such as those relating to matters such as permitting and
licensing, employee health and safety, reclamation and restoration of mining properties, water discharges, air emissions, plant and wildlife
protection, the storage, treatment and disposal of wastes, remediation of contaminants, surface subsidence from underground mining and the
effects of mining on surface water and groundwater conditions.
Compliance with these laws and regulations may be costly and time-consuming and may delay commencement, continuation or
expansion of exploration or production at our facilities. They may also depress demand for our products by imposing more stringent
requirements and limits on our customers’ operations. Moreover, these laws are constantly evolving and are becoming increasingly complex
and stringent over time. These laws and regulations, particularly new legislative or administrative proposals, or judicial interpretations of
existing laws and regulations related to the protection of the environment could result in substantially increased capital, operating and
compliance costs.
Due in part to these extensive and comprehensive regulatory requirements and ever-changing interpretations of these requirements,
violations of these laws can occur from time to time in our industry and also in our operations. Expenditures relating to environmental
compliance are a major cost consideration for our operations and safety and compliance is a significant factor in mine design, both to meet
regulatory requirements and to minimize long-term environmental liabilities.
The following is a summary of the various federal and state environmental and similar regulations that have a material impact on our
business:
Surface Mining Control and Reclamation Act. The Surface Mining Control and Reclamation Act of 1977 ("SMCRA”) establishes
operational, reclamation and closure standards for our mining operations and requires that comprehensive environmental protection and
reclamation standards be met during the course of and following completion of mining activities. SMCRA also stipulates compliance with
many other major environmental statutes, including the CAA, the CWA, the ESA, RCRA and CERCLA. Permits for all mining operations must
be obtained from the United States Office of Surface Mining Reclamation and Enforcement ("OSMRE”) or, where state regulatory agencies
have adopted federally approved state programs under SMCRA, the appropriate state regulatory authority. Our operations are located in
states which have achieved primary jurisdiction for enforcement of SMCRA through approved state programs.
SMCRA imposes a complex set of requirements covering all facets of coal mining. SMCRA regulations govern, among other things,
coal prospecting, mine plan development, topsoil or growth medium removal and replacement, disposal of excess spoil and coal refuse,
protection of the hydrologic balance, and suitable post mining land uses.
From time to time, OSMRE will also update its mining regulations under SMCRA. For example, OSMRE has previously sought to
impose stricter stream protection requirements by requiring more extension pre-mining and baseline data for coal mining operations. The
rule was disapproved by Congress pursuant to the Congressional Review Act ("CRA”). However, whether Congress will enact future
legislation to require a new Stream Protection Rule remains uncertain. The existing rules, or other new SMCRA regulations, could result in
additional material costs, obligations and restrictions upon our operations.
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Abandoned Mine Lands Fund. SMCRA also imposes a reclamation fee on all current mining operations, the proceeds of which are
deposited in the Abandoned Mine Reclamation Fund ("AML Fund”), which is used to restore unreclaimed and abandoned mine lands mined
before 1977. The current per ton fee is $0.28 per ton for surface-mined coal and $0.12 per ton for underground-mined coal. These fees are
currently scheduled to be in effect until September 30, 2021. Estimates of our total reclamation and mine-closing liabilities are based upon
permit requirements and our experience related to similar activities. If these accruals are insufficient or our liability in a particular year is greater
than currently anticipated, our future operating results could be adversely affected.
Mining Permits and Approvals. Numerous governmental permits and approvals are required for mining operations. We are required
to prepare and present to federal, state, and local authorities data detailing the effect or impact that any proposed exploration project for
production of coal may have upon the environment, the public and our employees. The permitting rules, and the interpretations of these rules,
are complex, change frequently, and may be subject to discretionary interpretations by regulators. The requirements imposed by these permits
and associated regulations can be costly and time-consuming and may delay commencement or continuation of exploration, production or
expansion at our operations. The governing laws, rules, and regulations authorize substantial fines and penalties, including revocation or
suspension of mining permits under some circumstances. Monetary sanctions and, in certain circumstances, even criminal sanctions may be
imposed for failure to comply with these laws.
Applications for permits and permit renewals at our mining operations are also subject to public comment and potential legal
challenges from third parties seeking to prevent a permit from being issued, or to overturn the applicable agency’s grant of the permit. Should
our permitting efforts become subject to such challenges, the permits may not be issued in a timely fashion, may involve requirements which
restrict our ability to conduct our mining operations or to do so profitably, or may not be issued at all. Any delays, denials, or revocation of
these or other similar permits we need to operate could reduce our production and materially adversely impact our cash flow and results of our
operations.
In order to obtain mining permits and approvals from state regulatory authorities, mine operators must also submit a reclamation plan
for restoring the mined property to its prior condition, productive use or other permitted condition. The conditions of certain permits also
require that we obtain surface owner consent if the surface estate has been split from the mineral estate. This requires us to negotiate with
third parties for surface access that overlies coal we acquired or intend to acquire. These negotiations can be costly and time-consuming,
lasting years in some instances, which can create additional delays in the permitting process. If we cannot successfully negotiate for land
access, we could be denied a permit to mine coal we already own.
Finally, we typically submit necessary mining permit applications several months, or even years, before we anticipate mining a new
area. However, we cannot control the pace at which the government issues permits needed for new or ongoing operations. For example, the
process of obtaining CWA permits can be particularly time-consuming and subject to delays and denials. The EPA also has the authority to
veto permits issued by the Corps under the CWA’s Section 404 program that prohibits the discharge of dredged or fill material into regulated
waters without a permit. Even after we obtain the permits that we need to operate, many of the permits must be periodically renewed, or may
require modification. There is some risk that not all existing permits will be approved for renewal, or that existing permits will be approved for
renewal only upon terms that restrict or limit our operations in ways that may be material.
Financial Assurance. Federal and state laws require a mine operator to secure the performance of its reclamation and lease
obligations under SMCRA through the use of surety bonds or other approved forms of financial security for payment of certain long-term
obligations, including mine closure or reclamation costs. The changes in the market for coal used to generate electricity in recent years have
led to bankruptcies involving prominent coal producers. Several of these companies relied on self-bonding to guarantee their responsibilities
under the SMCRA permits including for reclamation. In response to these bankruptcies, OSMRE issued a Policy Advisory in August 2016 to
state agencies that was intended to discourage authorized states from approving self-bonding arrangements. Although the Policy Advisory
was rescinded in October 2017, certain states, including Virginia, had previously announced that they would no longer accept self-bonding to
secure reclamation obligations under the state mining laws. Additionally, in March 2018, the Government Accounting Office recommended
that Congress consider amending SMCRA to eliminate the availability of self-bonding to guarantee responsibilities under SMCRA permits.
Individually and collectively, these and future revised various financial assurance requirements may increase the amount of financial
assurance needed and
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limit the types of acceptable instruments, straining the capacity of the surety markets to meet demand. This may delay the timing for and
increase the costs of obtaining the required financial assurance.
We use surety bonds, trusts and letters of credit to provide financial assurance for certain transactions and business activities.
Federal and state laws require us to obtain surety bonds to secure payment of certain long-term obligations including mine closure or
reclamation costs and other miscellaneous obligations. The bonds are renewable on a yearly basis. Surety bond rates have increased in
recent years and the market terms of such bonds have generally become less favorable. Sureties typically require coal producers to post
collateral, often having a value equal to 40% or more of the face amount of the bond. As a result, we may be required to provide collateral,
letters of credit or other assurances of payment in order to obtain the necessary types and amounts of financial assurance. Under our surety
bonding program, we are not currently required to post any letters of credit or other collateral to secure the surety bonds; obtaining letters of
credit in lieu of surety bonds could result in a significant cost increase. Moreover, the need to obtain letters of credit may also reduce amounts
that we can borrow under any senior secured credit facility for other purposes. If, in the future, we are unable to secure surety bonds for these
obligations and are forced to secure letters of credit indefinitely or obtain some other form of financial assurance at too high of a cost, our
profitability may be negatively affected.
We intend to maintain a credit profile that precludes the need to post collateral for our surety bonds. Nonetheless, our surety has the
right to demand additional collateral at its discretion.
Some international customers require new suppliers to post performance guarantees during the initial stages of qualifying to become
a long-term supplier. To date we have not had to provide a performance guarantee, but it is possible that such a guarantee could be required in
the future.
Mine Safety and Health. The Mine Act and the MINER Act, and regulations issued under these federal statutes, impose stringent
health and safety standards on mining operations. The regulations that have been adopted under the Mine Act and the MINER Act are
comprehensive and affect numerous aspects of mining operations, including training of mine personnel, mining procedures, roof control,
ventilation, blasting, use and maintenance of mining equipment, dust and noise control, communications, emergency response procedures,
and other matters. MSHA regularly inspects mines to ensure compliance with regulations promulgated under the Mine Act and MINER Act.
Pennsylvania, West Virginia, and Virginia all have similar programs for mine safety and health regulation and enforcement. The
various requirements mandated by federal and state statutes, rules, and regulations place restrictions on our methods of operation and result
in fees and civil penalties for violations of such requirements or criminal liability for the knowing violation of such standards, significantly
impacting operating costs and productivity.
The regulations enacted under the Mine Act and MINER Act as well as under similar state acts are routinely expanded or made more
stringent, raising compliance costs and increasing potential liability. For example, MSHA published a request for information in August 2019
related to its consideration of a lower exposure limit for silica in respirable dust. Our compliance with current or future mine health and safety
regulations could increase our mining costs. At this time, it is not possible to predict the full effect that new or proposed statutes, regulations
and policies will have on our operating costs, but any expansion of existing regulations, or making such regulations more stringent may have a
negative impact on the profitability of our operations. If we were to be found in violation of mine safety and health regulations, we could face
penalties or restrictions that may materially and adversely impact our operations, financial results and liquidity.
In addition, government inspectors have the authority to issue orders to shut down our operations based on safety considerations
under certain circumstances, such as imminent dangers, accidents, failures to abate violations, and unwarrantable failures to comply with
mandatory safety standards. If an incident were to occur at one of our operations, it could be shut down for an extended period of time, and
our reputation with prospective customers could be materially damaged. Moreover, if one of our operations is issued a notice of pattern of
violations, then MSHA can issue an order withdrawing the miners from the area affected by any enforcement action during each subsequent
significant and substantial ("S&S”) citation until the S&S citation or order is abated.
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Workers’ Compensation and Black Lung. We are insured for workers’ compensation benefits for work related injuries that occur
within our United States operations. We retain first-dollar coverage for all of our subsidiaries and are insured for the statutory limits. Workers’
compensation liabilities, including those related to claims incurred but not reported, are recorded principally using annual valuations based on
discounted future expected payments using historical data of the operating subsidiary or combined insurance industry data when historical
data is limited. State workers’ compensation acts typically provide for an exception to an employer’s immunity from civil lawsuits for workplace
injuries in the case of intentional torts. However, West Virginia’s workers’ compensation act provides a much broader exception to workers’
compensation immunity. The exception allows an injured employee to recover against his or her employer where he or she can show damages
caused by an unsafe working condition of which the employer was aware that was a violation of a statute, regulation, rule or consensus
industry standard. These types of lawsuits are not uncommon and could have a significant impact on our operating costs.
In addition, we obtained from a third-party insurer a workers’ compensation insurance policy, which includes coverage for medical
and disability benefits for black lung disease under the Federal Coal Mine Health and Safety Act of 1969 and the Mine Act, as amended.
Under the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977, as amended in 1981, each coal mine
operator must pay federal black lung benefits to claimants who are current and former employees and also make payments to a trust fund for
the payment of benefits and medical expenses to claimants who last worked in the coal industry prior to January 1, 1970.
The Patient Protection and Affordable Care Act of 2010 includes significant changes to the federal black lung program including an
automatic survivor benefit paid upon the death of a miner with an awarded black lung claim and the establishment of a rebuttable presumption
with regard to pneumoconiosis among miners with 15 or more years of coal mine employment that are totally disabled by a respiratory
condition. These changes could have a material impact on our costs expended in association with the federal black lung program. In addition
to possibly incurring liability under federal statutes, we may also be liable under state laws for black lung claims.
Clean Air Act. The CAA and comparable state laws that regulate air emissions affect coal mining operations both directly and
indirectly. Direct impacts on coal mining and processing operations include CAA permitting requirements and emission control requirements
relating to air pollutants, including particulate matter such as fugitive dust. The CAA indirectly affects coal mining operations by extensively
regulating the emissions of particulate matter, sulfur dioxide, nitrogen oxides, mercury and other compounds emitted by coal-fired power
plants. In addition to the greenhouse gas ("GHG”) issues discussed below, the air emissions programs that may materially and adversely
affect our operations, financial results, liquidity, and demand for our coal, directly or indirectly, include, but are not limited to, the following:
● Cross-State Air Pollution Rule. In June 2011, the EPA finalized the Cross-State Air Pollution Rule ("CSAPR”), a cap-and-trade
program that requires 28 states in the Midwest and eastern seaboard of the U.S. to reduce power plant emissions that cross state
lines and contribute to ozone and/or fine particle pollution in other states. In May 2017, EPA further limited summertime (May-
September) nitrogen oxide emissions from power plants in 22 states in the eastern United States in the CSAPR Update Rule. For
states to meet these requirements, a number of coal-fired electric generating units will likely need to be retired, rather than
retrofitted with the necessary emission control technologies, reducing demand for thermal coal. Moreover, in September 2019,
the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit”) remanded the CSAPR Update Rule to EPA
on the grounds that it failed to timely require upwind states to control or eliminate their contribution to ozone and/or fine
particulate matter in downwind states, as required under the federal Clean Air Act. In October 2020, EPA proposed a Revised
CSAPR Update Rule in response to the D.C. Circuit’s ruling. The proposed rule addresses 21 states’ outstanding interstate
pollution transport obligations and would require additional emissions reductions of nitrogen oxides from power plants in 12
states. Imposition of stricter deadlines for controlling downwind contribution could accelerate unit retirements or the need to
implement emission control strategies. Any reduction in the amount of coal consumed by electric power generators as a result of
these limitations could decrease demand for thermal coal. However, the practical impact of CSAPR may be limited because
utilities in the U.S. have continued to take steps to comply with CAIR, which requires similar power plant
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emissions reductions, and because utilities are preparing to comply with the Mercury and Air Toxics Standards ("MATS”)
regulations, which require overlapping power plant emissions reductions.
● Acid Rain. Title IV of the CAA requires reductions of sulfur dioxide emissions by electric utilities and applies to all coal-fired
power plants generating greater than 25 Megawatts of power. Affected power plants have sought to reduce sulfur dioxide
emissions by switching to lower sulfur fuels, installing pollution control devices, reducing electricity generating levels or
purchasing or trading sulfur dioxide emission allowances. These reductions could impact our customers in the electric generation
industry. These requirements are not supplanted by CSAPR.
● NAAQS for Criterion Pollutants. The CAA requires the EPA to set standards, referred to as NAAQS, for six common air
pollutants: carbon monoxide, nitrogen dioxide, lead, ozone, particulate matter and sulfur dioxide. Areas that are not in compliance
(referred to as "non-attainment areas”) with these standards must take steps to reduce emissions levels. The EPA has adopted
NAAQS for nitrogen oxide, sulfur dioxide, particulate matter and ozone. The CAA further requires EPA to periodically review
and revise the NAAQS, resulting in the adoption of increasingly more stringent standards over time. States with areas non-
attainment areas must adopt a state implementation plan ("SIP”) that demonstrates compliance with the existing or new air
quality standards. These plans could require significant additional emissions control expenditures at coal-fired power plants. The
final rules and new standards may also impose additional emissions control requirements on our customers in the electric
generation, steelmaking, and coke industries. Because coal mining operations emit particulate matter and sulfur dioxide, our
mining operations could be affected when the new standards are implemented by the states.
● Mercury and Hazardous Air Pollutants. The EPA has established emission standards for mercury and other metal, fine
particulates, and acid gases from coal- and oil-fired power plants through the Mercury and Air Toxics Standards ("MATS”) rule.
In May 2020, the EPA published a final rule reversing its prior determination that it is appropriate and necessary to regulate these
pollutants. However, this rule will not alter or eliminate the emissions standards established by the MATS rule. Like CSAPR,
MATS and other similar future regulations could accelerate the retirement of a significant number of coal-fired power plants.
Such retirements would likely adversely impact our business.
Global Climate Change. Climate change continues to attract considerable public and scientific attention. There is widespread
concern about the contributions of human activity to such changes, especially through the emission of GHGs. There are three primary sources
of GHGs associated with the coal industry. First, the end use of our coal by our customers in electricity generation, coke plants, and
steelmaking is a source of GHGs. Second, combustion of fuel by equipment used in coal production and to transport our coal to our customers
is a source of GHGs. Third, coal mining itself can release methane, which is considered to be a more potent GHG than CO2, directly into the
atmosphere. These emissions from coal consumption, transportation and production are subject to pending and proposed regulation as part
of initiatives to address global climate change.
As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and
state levels of government to monitor and limit emissions of GHGs. Collectively, these initiatives could result in higher electric costs to our
customers or lower the demand for coal used in electric generation, which could in turn adversely impact our business.
At present, we are principally focused on metallurgical coal production, which is not used in connection with the production of
power generation. However, we may seek to sell greater amounts of our coal into the power-generation market in the future. The market for our
coal may be adversely impacted if comprehensive legislation or regulations focusing on GHG emission reductions are adopted, or if our
customers are unable to obtain financing for their operations.
At the international level, President Obama announced in November 2014 that the United States would seek to cut net GHG emissions
26-28 percent below 2005 levels by 2025 in return for China’s commitment to seek to peak emissions around 2030, with concurrent increases in
renewable energy. In April 2016, the United States further agreed to
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voluntarily limit or reduce future emissions as part of the Paris Agreement reached at the United Nations Conference on Climate Change. In
November 2019, the United States submitted formal notification to the United Nations that it intended to withdraw from the agreement and
withdrew from the agreement in November 2020. However, on January 20, 2021, President Biden signed an "Acceptance on Behalf of the
United States of America” that will allow the United States to rejoin the Paris Agreement. The newly signed acceptance, deposited with the
United Nations on January 20, 2021, reverses the prior withdrawal. The United States will officially rejoin the Paris Agreement on February 19,
2021. In addition, shortly after taking office in January 2021, President Biden issued a series of executive orders designed to address climate
change. Reentry into the Paris Agreement and President Biden’s executive orders may result in the development of additional regulations or
changes to existing regulations.
At the federal level, although no comprehensive climate change legislation has been implemented to date, such legislation has
periodically been introduced in the U.S. Congress and may be proposed or adopted in the future. The likelihood of such legislation has
increased due to the change in the administration. Furthermore, the EPA has determined that emissions of GHGs present an endangerment to
public health and the environment, because emissions of GHGs are, according to the EPA, contributing to the warming of the earth’s
atmosphere and other climatic changes. Based on these findings, the EPA has begun adopting and implementing regulations to restrict
emissions of GHGs under existing provisions of the CAA. For example, in August 2015, EPA finalized the CPP to cut carbon emissions from
existing power plants. The CPP creates individualized emission guidelines for states to follow, and requires each state to develop an
implementation plan to meet the individual state’s specific targets for reducing GHG emissions. In July 2019, the EPA adopted a rule that
replaced the CPP with a new rule titled the Affordable Clean Energy ("ACE”) Rule. Although the ACE rule moves away from the individualized
emission guidelines of the CPP, it still requires states to set appropriate GHG emission standards for power plants within their jurisdiction
based upon the application of "candidate” heat rate improvement measures. The implementation of the ACE rule is currently being challenged
in the D.C. Circuit. These and future GHG emission standards may encourage a shift away from coal-fired power generation, adversely
impacting the market for our product.
At the state level, several states, including Pennsylvania and Virginia, have already adopted measures requiring GHG emissions to be
reduced within state boundaries, including cap-and-trade programs and the imposition of renewable energy portfolio standards. Various states
and regions have also adopted GHG initiatives and certain governmental bodies, have imposed, or are considering the imposition of, fees or
taxes based on the emission of GHGs by certain facilities. A number of states have also enacted legislative mandates requiring electricity
suppliers to use renewable energy sources to generate a certain percentage of power.
The uncertainty over the outcome of litigation challenging the ACE rule and the extent of future regulation of GHG emissions may
inhibit utilities from investing in the building of new coal-fired plants to replace older plants or investing in the upgrading of existing coal-fired
plants. Any reduction in the amount of coal consumed by electric power generators as a result of actual or potential regulation of GHG
emissions could decrease demand for thermal coal, thereby reducing our revenue and adversely affecting our business and results of
operations. We or prospective customers may also have to invest in CO2 capture and storage technologies in order to burn coal and comply
with future GHG emission standards.
Finally, there have been attempts to encourage the reduction of coalbed methane emissions because methane has a greater GHG
effect than CO2 and can give rise to safety concerns. For example, EPA has established the Coalbed Methane Outreach Program ("CMOP”) in
an effort to mitigate methane emissions from underground coal mines through voluntary initiatives and outreach. If new laws or regulations
were introduced to reduce coalbed methane emissions, those rules could adversely affect our costs of operations by requiring installation of
air pollution controls, higher taxes, or costs incurred to purchase credits that permit us to continue operations.
Clean Water Act. The CWA and corresponding state laws and regulations affect coal mining operations by restricting the discharge
of pollutants, including dredged or fill materials, into waters of the United States. Likewise, permits are required under the CWA to construct
impoundments, fills or other structure in areas that are designated as waters of the United States. The CWA provisions and associated state
and federal regulations are complex and subject to amendments, legal challenges and changes in implementation. For example, prior to placing
fill material in waters of the United States, such as with the construction of a valley fill, coal mining companies are required to obtain a permit
from
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the Corps under Section 404 of the CWA. The permit can be either a Nationwide Permit ("NWP”), normally NWP 21, 49 or 50 for coal mining
activities, or a more complicated individual permit. NWPs are designed to allow for an expedited permitting process, while individual permits
involve a longer and more detailed review process. The EPA has the authority to veto permits issued by the Corps under the CWA’s
Section 404 program that prohibits the discharge of dredged or fill material into regulated waters without a permit. Recent court decisions,
regulatory actions and proposed legislation have created uncertainty over CWA jurisdiction and permitting requirements.
Prior to discharging any pollutants into waters of the United States, coal mining companies must obtain a National Pollutant
Discharge Elimination System ("NPDES”) permit from the appropriate state or federal permitting authority. NPDES permits include effluent
limitations for discharged pollutants and other terms and conditions, including required monitoring of discharges. Failure to comply with the
CWA or NPDES permits can lead to the imposition of significant penalties, litigation, compliance costs and delays in coal production.
Changes and proposed changes in state and federally recommended water quality standards may result in the issuance or modification of
permits with new or more stringent effluent limits or terms and conditions.
For instance, waters that states have designated as impaired (i.e., as not meeting present water quality standards) are subject to Total
Maximum Daily Load ("TMDL”) regulations, which may lead to the adoption of more stringent discharge standards for our coal mines and
could require more costly treatment. Likewise, the water quality of certain receiving streams requires an anti-degradation review before
approving any discharge permits. TMDL regulations and anti-degradation policies may increase the cost, time and difficulty associated with
obtaining and complying with NPDES permits.
In addition, in certain circumstances private citizens may challenge alleged violations of NPDES permit limits in court. Recently,
certain citizen groups have filed lawsuits alleging ongoing discharges of pollutants, including selenium and conductance, from valley fills
located at certain mining sites in some of the regions where we operate. In West Virginia, several of these cases have been successful for the
challengers. While it is difficult to predict the outcome of any potential or future suits, such litigation could result in increased compliance
costs following the completion of mining at our operations.
Finally, in June 2015, the EPA and the Corps published a new definition of "waters of the United States” ("WOTUS”) that would
have expanded areas requiring NPDES or Corps Section 404 permits. In October 2019, EPA and the Army Corps of Engineers issued a final
rule that repealed the 2015 WOTUS definition and reinstated the agencies’ narrower pre-2015 scope of federal CWA jurisdiction. In April 2020,
EPA and the Army Corps of Engineers issued the final Navigable Waters Protection Rule amending the definition of "water of the United
States” and replacing EPA’s October 2019 final rule. Judicial challenges to EPA’s October 2019 and April 2020 final rules are currently before
multiple federal district courts. If the October 2019 final rules are vacated and the expanded scope of jurisdiction in the 2015 rule is ultimately
implemented, the CWA permits we need may not be issued, may not be issued in a timely fashion, or may be issued with new requirements
which restrict our ability to conduct mining operations or to do so profitably.
Resource Conservation and Recovery Act. RCRA and corresponding state laws establish standards for the management of solid and
hazardous wastes generated at our various facilities. Besides affecting current waste disposal practices, RCRA also addresses the
environmental effects of certain past hazardous waste treatment, storage and disposal practices. In addition, RCRA requires certain of our
facilities to evaluate and respond to any past release, or threatened release, of a hazardous substance that may pose a risk to human health or
the environment.
RCRA may affect coal mining operations by establishing requirements for the proper management, handling, transportation and
disposal of solid and hazardous wastes. For example, EPA regulates coal ash as a solid waste under Subtitle D of RCRA through its coal
combustion residuals ("CCR”) rule. This rule establishes limits for the location of new sites and requires closure of sites that fail to meet
prescribed engineering standards, regular inspections of impoundments, and immediate remediation and closure of unlined ponds that are
polluting ground water. As initially promulgated, the rule exempted closed coal ash impoundments located at inactive facilities and allowed for
the continued operation of unlined or clay-lined ponds that were not polluting groundwater. However, in August 2020, EPA finalized
amendments to its CCR rule that would require closure to be initiated at all unlined and clay-lined surface
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impoundments by April 11, 2021. Additionally, in December 2016, Congress passed the Water Infrastructure Improvements for the Nation Act,
which provides for the establishment of state and EPA permit programs for the control of coal combustion residuals and authorizes states to
incorporate EPA’s final rule for coal combustion residuals or develop other criteria that are at least as protective as the final rule. These
requirements, as well as any future changes in the management of coal combustion residuals, could increase our customers’ operating costs
and potentially reduce their ability or need to purchase coal. In addition, contamination caused by the past disposal of coal combustion
residuals, including coal ash, could lead to material liability for our customers under RCRA or other federal or state laws and potentially further
reduce the demand for coal.
Currently, certain coal mine wastes, such as earth and rock covering a mineral deposit (commonly referred to as overburden) and coal
cleaning wastes, are exempted from hazardous waste management under RCRA. Any change or reclassification of this exemption could
significantly increase our coal mining costs.
Comprehensive Environmental Response, Compensation and Liability Act. CERCLA and similar state laws affect coal mining
operations by, among other things, imposing cleanup requirements for threatened or actual releases of hazardous substances into the
environment. Under CERCLA and similar state laws, joint and several liability may be imposed on hazardous substance generators, site
owners, transporters, lessees and others regardless of fault or the legality of the original disposal activity. Although the EPA excludes most
wastes generated by coal mining and processing operations from the primary hazardous waste laws, such wastes can, in certain
circumstances, constitute hazardous substances for the purposes of CERCLA. In addition, the disposal, release or spilling of some products
used by coal companies in operations, such as chemicals, could trigger the liability provisions of CERCLA or similar state laws. Thus, we may
be subject to liability under CERCLA and similar state laws for coal mines that we currently own, lease or operate or that we or our
predecessors have previously owned, leased or operated, and sites to which we or our predecessors sent hazardous substances. These
liabilities could be significant and materially and adversely impact our financial results and liquidity.
Endangered Species and Bald and Golden Eagle Protection Acts. The ESA and similar state legislation protect species designated
as threatened, endangered or other special status. The U.S. Fish and Wildlife Service (the "USFWS”) works closely with the OSMRE and state
regulatory agencies to ensure that species subject to the ESA are protected from mining-related impacts. Several species indigenous to the
areas in which we operate area protected under the ESA. Other species in the vicinity of our operations may have their listing status reviewed
in the future and could also become protected under the ESA. In addition, the USFWS has identified bald eagle habitat in some of the counties
where we operate. The Bald and Golden Eagle Protection Act prohibits taking certain actions that would harm bald or golden eagles without
obtaining a permit from the USFWS. Compliance with the requirements of the ESA and the Bald and Golden Eagle Protection Act could have
the effect of prohibiting or delaying us from obtaining mining permits. These requirements may also include restrictions on timber harvesting,
road building and other mining or agricultural activities in areas containing the affected species or their habitats.
Use of Explosives. Our surface mining operations are subject to numerous regulations relating to blasting activities. Due to these
regulations, we will incur costs to design and implement blast schedules and to conduct pre-blast surveys and blast monitoring. In addition,
the storage of explosives is subject to various regulatory requirements. For example, the Department of Homeland Security requires facilities in
possession of chemicals of interest (including ammonium nitrate at certain threshold levels) to complete a screening review. Our mines are low
risk, Tier 4 facilities which are not subject to additional security plans. The adoption of future, more stringent standards related to the use of
explosives could materially adversely impact our cost or ability to conduct our mining operations.
National Environmental Policy Act. NEPA requires federal agencies, including the Department of Interior, to evaluate major agency
actions that have the potential to significantly impact the environment, such as issuing a permit or other approval. In the course of such
evaluations, an agency will typically prepare an environmental assessment to determine the potential direct, indirect and cumulative impacts of
a proposed project. Where the activities in question have significant impacts to the environment, the agency must prepare an environmental
impact statement. Compliance with NEPA can be time-consuming and may result in the imposition of mitigation measures that could affect the
amount of coal that we are able to produce from mines on federal lands, and may require public comment. Furthermore, whether agencies have
complied with NEPA is subject to protest, appeal or litigation, which can delay or halt projects. The
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NEPA review process, including potential disputes regarding the level of evaluation required for climate change impacts, may extend the time
and/or increase the costs and difficulty of obtaining necessary governmental approvals, and may lead to litigation regarding the adequacy of
the NEPA analysis, which could delay or potentially preclude the issuance of approvals or grant of leases.
In the past, the Council on Environmental Quality ("CEQ”) has issued guidance encouraging agencies to provide more detailed
discussion of the direct, indirect, and cumulative impacts of a proposed action’s reasonably foreseeable GHG emissions and effects. Although
this guidance has since been withdrawn, the adoption of a similar guidance in the future could create additional delays and costs in the NEPA
review process or in our operations, or even an inability to obtain necessary federal approvals for our operations due to the increased risk of
legal challenges from environmental groups seeking additional analysis of climate impacts.
Other Environmental Laws. We are required to comply with numerous other federal, state, and local environmental laws and
regulations in addition to those previously discussed. These additional laws include but are not limited to the Safe Drinking Water Act, the
Toxic Substances Control Act, and the Emergency Planning and Community Right-to-Know Act. Each of these laws can impact permitting or
planned operations and can result in additional costs or operational delays.
Seasonality
Our primary business is not materially impacted by seasonal fluctuations. Demand for metallurgical coal is generally more heavily
influenced by other factors such as the general economy, interest rates and commodity prices.
Human Capital Resources
We believe our employees are a competitive advantage. We seek to foster a culture that supports diversity and inclusion, and strive
to provide a safe, healthy and rewarding work environment with opportunities for growth. We had 349 employees as of December 31, 2020,
including our named executive officers. None of our employees are covered by collective bargaining agreements, and we have not experienced
any strikes or work stoppages related to labor relation issues. We believe we have good relations with our employees. Our human capital
resources objectives include, as applicable, identifying, recruiting, training, retaining, incentivizing and integrating our existing and additional
employees. We also depend on experienced contractors and third-party consultants to conduct some of our day-to-day activities. We plan to
continue to use the services of many of these contractors and consultants.
Safety Philosophy. We have a comprehensive health and safety program based on the core belief that all accidents and occupational
illnesses are preventable. We believe that:
● Business excellence is achieved through the pursuit of safer and more productive work practices.
● Any task that cannot be performed safely should not be performed.
● Working safely is a requirement of our employees.
● Controlling the work environment is important, but human behavior within the work environment is paramount.
● Safety starts with individual decision-making—all employees must assume a share of responsibility for acts within their control
that pose a risk of injury to themselves or fellow workers.
● All levels of the organization must be proactive in implementing safety processes that promote a safe and healthy work
environment.
● Consequently, we are committed to providing a safe work environment; providing our employees with proper training and
equipment; and implementing safety and health rules, policies and programs that foster safety excellence.
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Our safety program includes a focus on the following:
● Hiring the Right Workers. Our hiring program includes significant pre-employment screening and reference checks.
● Safety Incentives. We have a compensation system that encourages and rewards excellent safety performance.
● Communication. We conduct regular safety meetings with the frequent involvement of senior management to reinforce the
"tone at the top.”
● Drug and Alcohol Testing. We require pre-employment drug screening as well as regular random drug testing that exceeds
regulatory requirements.
● Continuous Improvement Programs. We track key safety performance metrics, including accident rates, violation types and
frequencies. We have specific targets in these areas and we measure performance against these targets. Specific action plans are
implemented for targeted improvement in areas where performance falls below our expectations.
● Training. Our training program includes comprehensive new employee orientation and training, annual refresher training and
task training components. These training modules are designed to reinforce our high safety expectations. Work rules and
procedures are a key element of this training.
● Accident Investigation. We have a structured accident investigation procedure that identifies root causes of accidents as well as
actions necessary to prevent reoccurrence. We focus on near misses and close calls as a means of attempting to prevent more
serious accidents from occurring.
● Safety Audits. We conduct periodic safety audits that include work place examinations, including observation of workers at
work, as well as safety program reviews. Both internal and external resources are utilized to conduct these audits.
● Employee Performance Improvement. A key element of our safety program is the recognition that safe work practices are a
requirement of employment. We identify employee performance which is below expectations and develop specific action plans
for improvement.
● Employee Involvement. The key to excellent safety is employee involvement and engagement. We foster direct employee
involvement in a number of ways including audit participation, accident investigations, as training resources and through
solicitation of ideas in small group meetings and through anonymous workplace observation suggestion boxes.
● Positive Reinforcement. Establishing safety as a core belief is paramount to our safety performance. As a result, we look for
opportunities to celebrate accomplishments and to build pride in our operational safety and performance.
Jumpstart Our Business Startups Act ("JOBS Act”)
We are an "emerging growth company” as defined in the Jumpstart Our Business Startups Act (the "JOBS Act”). For as long as we
are an emerging growth company, unlike public companies that are not emerging growth companies under the JOBS Act, we will not be
required to:
● provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over
financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002;
● comply with any new requirements adopted by the Public Company Accounting Oversight Board (the "PCAOB”) requiring
mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional
information about the audit and the financial statements of the issuer;
● provide certain disclosure regarding executive compensation required of larger public companies or hold stockholder advisory
votes on the executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-
Frank Act”); or
● obtain stockholder approval of any golden parachute payments not previously approved.
We will cease to be an emerging growth company upon the earliest of:
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● the last day of the fiscal year in which we have $1.07 billion or more in annual revenues;
● the date on which we become a "large accelerated filer” (the fiscal year-end on which the total market value of our common
equity securities held by non-affiliates is $700 million or more as of our most recently completed second fiscal quarter);
● the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or
● the last day of the fiscal year following the fifth anniversary of our initial public offering, which will be December 31, 2022.
Available Information
Our investor relations website is ir.ramacoresources.com and we encourage investors to use it as a way of easily finding information
about us. We promptly make available on this website, free of charge, the reports that we file or furnish with the Securities and Exchange
Commission ("SEC”), corporate governance information (including our Code of Conduct and Ethics) and press releases. Our filings with the
SEC are also available to the public from commercial document retrieval services and at the SEC’s website at http://www.sec.gov.
Item 1A. Risk Factors
Our business involves certain risks and uncertainties. The following is a description of significant risks that might cause our future
financial condition or results of operations to differ materially from those expected. In addition to the risks and uncertainties described below,
we may face other risks and uncertainties, some of which may be unknown to us and some of which we may deem immaterial. If one or more of
these risks or uncertainties occur, our business, financial condition or results of operations may be materially and adversely affected. A
summary of our risk factors is as follows:
Risks Related to Our Business
● The impact of the spread of COVID-19 and the measures taken to mitigate it are adversely affecting our business, operations and
financial condition.
● Our properties have not yet been fully developed into producing coal mines and, if we experience any development delays or cost
increases or are unable to complete the construction of our facilities, our business, financial condition and results of operations could
be adversely affected.
● We have customer concentration, so the loss of, or significant reduction in, purchases by our largest coal customers could adversely
affect our business, financial condition, results of operations and cash flows.
● Our customer base is highly dependent on the steel industry.
● Deterioration in the global economic conditions, a worldwide financial downturn or negative credit market conditions could have a
material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends.
● We have incurred debt under the Paycheck Protection Program in response to the COVID-19 pandemic. The federal government or
private plaintiffs may challenge our determination that we meet the requirements for loans under the Paycheck Protection Program.
● We do not enter into long-term sales contracts for our coal and as a result we are exposed to fluctuations in market pricing.
● We face uncertainties in estimating our economically recoverable coal reserves, and inaccuracies in our estimates could result in
lower than expected revenues, higher than expected costs and decreased profitability.
● A substantial or extended decline in the prices we receive for our coal could adversely affect our business, results of operations,
financial condition, cash flows and ability to pay dividends to our stockholders.
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● Increased competition or a loss of our competitive position could adversely affect sales of, or prices for, our coal, which could impair
our profitability.
● The availability and reliability of transportation facilities and fluctuations in transportation costs could affect the demand for our coal
or impair our ability to supply coal to prospective customers.
● Any significant downtime of our major pieces of mining equipment, including any preparation plants, could impair our ability to
supply coal to prospective customers and materially and adversely affect our results of operations.
● Our ability to collect payments from customers could be impaired if their creditworthiness declines or if they fail to honor their
contracts with us.
● If we are unable to obtain needed capital or financing on satisfactory terms, we may have to curtail our operations and delay our
construction and growth plans, which may materially adversely affect our business, financial condition, results of operations, cash
flows and ability to pay dividends to our stockholders.
● Our operations could be adversely affected if we are unable to obtain required financial assurance, or if the costs of financial
assurance increase materially.
● Defects in title or loss of any leasehold interests in our properties could limit our ability to conduct mining operations on these
properties or result in significant unanticipated costs.
● Substantially all of our mining properties are leased from our affiliates and conflicts of interest may arise in the future as a result.
● We may face restricted access to international markets in the future.
Risks Related to Environmental, Health, Safety and Other Regulations
● The incoming U.S. administration and Congress could enact legislative and regulatory measures that could adversely affect our
mining operations or cost structure or our customers’ ability to use coal, which could have a material adverse effect on our financial
condition and results of operations.
● Current and future government laws, regulations and other legal requirements relating to protection of the environment and natural
resources may increase our costs of doing business and may restrict our coal operations.
● Our operations may impact the environment or cause exposure to hazardous substances, and our properties may have environmental
contamination, which could expose us to significant costs and liabilities.
● We must obtain, maintain, and renew governmental permits and approvals for mining operations, which can be a costly and time-
consuming process and result in restrictions on our operations.
● We and our significant stockholders are subject to the Applicant Violator System.
● Our mines are subject to stringent federal and state safety regulations that increase our cost of doing business at active operations
and may place restrictions on our methods of operation. In addition, government inspectors in certain circumstances may have the
ability to order our operations to be shut down based on safety considerations.
● We have reclamation, mine closing, and related environmental obligations under the Surface Mining Control and Reclamation Act. If
the assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated.
Risks Related to Our Company
● Our ability to pay dividends may be limited by the amount of cash we generate from operations following the payment of fees and
expenses, by restrictions in any future debt instruments and by additional factors unrelated to our profitability.
● Our significant stockholders have the ability to direct the voting of a majority of the voting power of our common stock, and their
interests may conflict with those of our other stockholders.
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● Your percentage of ownership in us may be diluted in the future.
● Certain of our directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking
acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business
opportunities.
● Our significant stockholders and their affiliates are not limited in their ability to compete with us, and the corporate opportunity
provisions in our amended and restated certificate of incorporation (our "Charter”) could enable our significant stockholders to
benefit from corporate opportunities that might otherwise be available to us.
Risks Related to Our Business
The impact of the spread of COVID-19 and the measures taken to mitigate it are adversely affecting our business, operations and
financial condition.
The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption during 2020. In response to
the COVID-19 pandemic, governments worldwide placed significant restrictions on both domestic and international travel and took action to
restrict the movement of people and suspend some business operations. Lockdowns, travel restrictions and restrictions on public gatherings,
coupled with the spread and impact of the COVID-19 pandemic, resulted in a significant worldwide economic slowdown. In certain cases,
states that had begun taking steps to reopen their economies experienced a subsequent surge in cases of COVID-19, causing these states to
cease such reopening measures in some cases and reinstitute restrictions in others. Rates of COVID-19 contractions have worsened in the
United States during the winter months, and will likely cause federal, state and local governments to impose more severe restrictions on
business and social activities. In the event governments impose such restrictions, the recovery of the economy may be further curtailed.
These social and governmental responses have caused a significant slowdown in the global economy and financial markets, and the
current and anticipated economic impact of these actions has caused declines in many commodity prices, including a decline in metallurgical
coal prices, and significant decline in the demand for steel. The extent of the impact of the COVID-19 pandemic on our business and financial
results will continue to depend on numerous evolving factors that we are not able to accurately predict, including the duration and scope of
the pandemic, global economic conditions during and after the pandemic, governmental actions that have been taken, or may be taken in the
future, in response to the pandemic, the development and availability of treatments and vaccines and extent to which these treatments and
vaccines may remain effective as potential new strains of the coronavirus emerge, and changes in consumer behavior in response to the
pandemic, some of which may be more than just temporary.
Like other coal companies, our business has been adversely affected by the COVID-19 pandemic and measures being taken to
mitigate its impact. The pandemic has resulted in widespread adverse impacts on our employees, customers, suppliers and other parties with
whom we have business relations. Our actions have included:
● an operational furlough of approximately 182 employees at the Elk Creek mining complex in West Virginia for most of the month of
April 2020;
● a one week operational furlough of approximately 157 employees at the Elk Creek mining complex in July 2020;
● the partial closure of our Berwind low volatile development mine complex affecting approximately 44 employees effective in July
2020; and
● a reduction or deferral of non-essential capital expenditures to adapt to the current market conditions.
Two customers declared a material adverse change or force majeure under their contracts with us and reduced or delayed their
planned volumes of purchases of metallurgical coal from us for 2020 because of COVID-19. These delays or curtailments affected
approximately 10% or 200,000 tons of our total contracted sales volumes for 2020 all of which was placed into the lower priced spot market.
These actions by customers may result in some disputes and could strain our relations with customers and others. If and to the
extent these actions result in material modifications or cancellations of the underlying contracts, or
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non-renewal of contracts, our business, financial condition, cash flows and results of operations could be materially adversely affected.
As the COVID-19 pandemic and government responses are rapidly evolving, the extent of the impact on domestic coal companies
remains unknown. There is considerable uncertainty regarding the extent and duration of governmental and other measures implemented to try
to slow the spread of the virus, such as large-scale travel bans and restrictions, border closures, quarantines, stay-at-home orders and
business and government shutdowns. Restrictions of this nature have caused, and likely will continue to cause, us, our suppliers and other
business counterparties to experience operational delays and delays in the delivery of materials and supplies that are sourced from around the
globe, and have caused, and likely will continue to cause, milestones or deadlines relating to various projects to be missed. We have also
modified certain business and workforce practices (including those related to employee travel, employee work locations, and cancellation of
physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by
governmental and regulatory authorities. However, the quarantine of personnel or the inability to access our facilities could adversely affect
our operations.
We cannot predict the full impact that COVID-19 will have on our business, cash flows, liquidity, financial condition and results of
operations at this time, due to numerous uncertainties. The ultimate impacts will depend on future developments, including, among others, the
consequences of governmental and other measures designed to slow the spread of the virus, the development of effective treatments, the
duration of the outbreak, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and
the timing and extent to which normal economic and operating conditions resume.
Our properties have not yet been fully developed into producing coal mines and, if we experience any development delays or cost
increases or are unable to complete the construction of our facilities, our business, financial condition and results of operations could be
adversely affected.
We have not completed development plans for all of our coal properties, and do not expect to have full annual production from all of
our properties until market conditions permit us to resume and complete these development plans. We expect to incur significant capital
expenditures until we have completed the development of our properties. In addition, the development of our properties involves numerous
regulatory, environmental, political and legal uncertainties that are beyond our control and that may cause delays in, or increase the costs
associated with, their completion. Accordingly, we may not be able to complete the development of the properties on schedule, at the
budgeted cost or at all, and any delays beyond the expected development periods or increased costs above those expected to be incurred
could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends to our
stockholders.
If we are unable to complete or are substantially delayed in completing the development of any of our properties, our business,
financial condition, results of operations cash flows and ability to pay dividends to our stockholders could be adversely affected.
We have customer concentration, so the loss of, or significant reduction in, purchases by our largest coal customers could adversely affect
our business, financial condition, results of operations and cash flows.
We are exposed to risks associated with an increasingly concentrated customer base both domestically and globally. We derive a
significant portion of our revenues from three customers, which accounted for approximately 33%, 24% and 13% of our total revenue,
respectively, aggregating approximately 70% of our total revenue for the 12 months ended December 31, 2020. The balance due from these
customers at December 31, 2020 was approximately 46% of total accounts receivable.
In 2020, two of these customers declared force majeure with respect to or curtailed their contractual obligations to purchase
metallurgical coal from us due to the economic impacts of COVID-19. These reductions and delays lowered our total contracted sales volumes
for 2020 by approximately 10% or almost 200,000 tons. Based on the current economic environment, it is possible that a portion of our
contractual commitments for 2021 could be similarly delayed or curtailed, and we are not currently able to anticipate the impact such
curtailments or delays could have on our business, financial condition, results of operations or cash flows.
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There are inherent risks whenever a significant percentage of total revenues are concentrated with a limited number of customers.
Revenues from our largest customers may fluctuate from time to time based on numerous factors, including market conditions, which may be
outside of our control. If any of our largest customers experience declining revenues due to market, economic or competitive conditions, we
could be pressured to reduce the prices that we charge for our coal, which could have an adverse effect on our margins, profitability, cash
flows and financial position. If any customers were to significantly reduce their purchases of coal from us, including by failing to buy and pay
for coal they committed to purchase in sales contracts, our business, financial condition, results of operations, cash flows and ability to pay
dividends to our stockholders could be adversely affected.
Our customer base is highly dependent on the steel industry.
Substantially all of the metallurgical coal that we produce is sold to steel producers. Therefore, demand for our metallurgical coal is
highly correlated to the steel industry. The steel industry’s demand for metallurgical coal is affected by a number of factors including the
cyclical nature of that industry’s business, technological developments in the steel-making process and the availability of substitutes for steel
such as aluminum, composites and plastics. A significant reduction in the demand for steel products would reduce the demand for
metallurgical coal, which would have a material adverse effect on our business, financial condition, cash flows and results of operations.
Similarly, if less expensive ingredients could be used in substitution for metallurgical coal in the integrated steel mill process, the demand for
metallurgical coal would materially decrease, which would also materially adversely affect demand for our metallurgical coal. Metallurgical coal
markets weakened significantly beginning in 2019 as certain China ports placed restrictions on imported coal and weakened further in 2020 due
to the economic impacts of the COVID-19 pandemic. Between these import restrictions and the economic impacts of the pandemic, concerns
about the stability of the global economy and the ongoing trade dispute between China and the U.S., metallurgical coal prices dropped
meaningfully in 2019 and 2020. Our export customers, excluding Canada, include foreign steel producers who may be affected by the tariffs to
the extent their production is imported into the U.S. Retaliatory threats by foreign nations to these tariffs may limit international trade and
adversely impact global economic conditions.
Deterioration in the global economic conditions in any of the industries in which prospective customers operate, a worldwide financial
downturn or negative credit market conditions could have a material adverse effect on our business, financial condition, results of
operations, cash flows and ability to pay dividends to our stockholders.
Economic conditions in the industries in which most of our prospective customers operate, such as steelmaking and electric power
generation, substantially deteriorated in recent years and reduced the demand for coal. A deterioration of economic conditions in our
prospective customers’ industries could cause a decline in demand for and production of metallurgical coal. Renewed or continued weakness
in the economic conditions of any of the industries served by prospective customers could have a material adverse effect on our business,
financial condition, results of operations, cash flows and ability to pay dividends to our stockholders.
We have incurred debt under the Paycheck Protection Program in response to the COVID-19 pandemic. The federal government or
private plaintiffs may challenge our determination that we meet the requirements for loans under the Paycheck Protection Program.
On April 20, 2020, we received loan proceeds in the amount of approximately $8.4 million under the Paycheck Protection Program
("PPP”) from KeyBank, as lender. In order to obtain the loan, we made a certification to the SBA that the then-current economic uncertainty,
including uncertainty in the capital markets, made the loan request necessary to support the ongoing operations of the Company. On April 23,
2020, the SBA issued additional guidance on eligibility for the PPP (the "FAQs”), expressing its view that a public company with substantial
market value and access to capital markets will not likely be able to make the required certification in good faith. The SBA noted that such a
company should be prepared to demonstrate to the SBA the basis for such company’s certification. Further, on April 28, 2020, Treasury
Secretary Mnuchin advised that all companies that have been extended PPP loans in excess of $2 million will be audited. We believe, in light of
the FAQs, that we have met the required good faith certification requirements and continue to meet the eligibility requirements for a PPP loan,
and we have applied for forgiveness of our PPP loan. However, the federal government or a private plaintiff may disagree and assert otherwise.
Any such contest with the federal government or third party action as a result of the PPP loan may require us to incur significant legal,
accounting
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and related fees. In addition, if it was ultimately determined that the certifications we made in connection with the PPP loan were not in good
faith, it may result in civil and criminal penalties, which could have a material adverse effect on our liquidity and financial condition.
The SBA continues to develop and issue new and updated guidance regarding the PPP loans application process, including
guidance regarding required borrower certifications and requirements for forgiveness of loans made under the program. We continue to track
the guidance as it is released and assess and re-assess various aspects of its application as necessary based on the guidance. While we
believe we have used loan proceeds for qualifying expenses, given the evolving nature of the guidance, it is possible that future changes in
the rules and regulations regarding PPP loans, or the SBA’s interpretation thereof, could affect whether the PPP loan is ultimately forgiven.
Our application for forgiveness was approved by KeyBank and is currently being reviewed by the SBA, but there is no assurance that the
SBA will approve the application for forgiveness.
We do not enter into long-term sales contracts for our coal and as a result we are exposed to fluctuations in market pricing.
Sales commitments in the metallurgical coal market are typically not long-term in nature and are generally no longer than one year in
duration. Most metallurgical coal transactions in the U.S. are done on a calendar year basis, where both prices and volumes are fixed in the
third and fourth quarter for the following calendar year. Globally the market is evolving to shorter term pricing. Some annual contracts have
shifted to quarterly contracts and most volumes are being sold on an indexed basis, where prices are determined by averaging the leading spot
indexes reported in the market and adjusting for quality. As a result, we are subject to fluctuations in market pricing. We are not protected from
oversupply or market conditions where we cannot sell our coal at economic prices. Metallurgical coal has been an extremely volatile
commodity over the past ten years and prices are likely to be volatile in the future. There can be no assurances we will be able to mitigate such
conditions as they arise. Any sustained failure to be able to market our coal during such periods would have a material adverse effect on our
business, financial condition, results of operations, cash flows and ability to pay dividends to our stockholders.
The failure to access coal preparation facilities may have a material adverse effect on our ability to produce coal for our prospective
customers and to meet quality specifications.
The costs of establishing the infrastructure necessary to enable us to continue to ramp up our mining operations will be significant.
We have constructed preparation and loading facilities at our Elk Creek mining complex. Our Berwind mine will remain under development until
we reach our targeted coal reserves in the Pocahontas No. 4 seam. That coal is currently, and is planned to continue to be, washed at our
active Knox Creek plant. At our RAM Mine, we may require access to either newly constructed preparation and loading facilities or
arrangements with third parties to process and load our coal. Alternatively, we might mine the coal in a manner that allows us to ship the coal
direct without washing. We will analyze whether to expend capital to construct preparation facilities or enter into third-party processing
arrangements. Our failure to provide the necessary preparation, processing and loading facilities for our projects would have a material
adverse effect on our operations.
The risks associated with the construction and operation of mines, processing plants and related infrastructure include:
● the potential lack of availability or cost of skilled and unskilled labor, equipment and principal supplies needed for construction
of facilities;
● the need to obtain necessary environmental and other governmental approvals and permits and the timing of the receipt of those
approvals and permits;
● industrial accidents;
● geologic mine failures, surface facility construction failures or mining, coal processing or transport equipment failures;
● structural failure of an impoundment or refuse area;
● natural phenomena such as inclement weather conditions, floods, droughts, rock slides and seismic activity;
● unusual or unexpected geological and coal quality conditions;
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● potential opposition from non-governmental organizations, environmental groups or other activists, which may delay or prevent
development activities; and
● restrictions or regulations imposed by governmental or regulatory authorities.
The costs, timing and complexities of developing our projects may be greater than anticipated. Cost estimates may increase
significantly as more detailed engineering work is completed on a project. It is common in mining operations to experience unexpected costs,
problems and delays during construction, development and mine start-up.
Product alternatives may reduce demand for our products.
Substantially all of our coal production is comprised of metallurgical coal, which commands a significant price premium over the
majority of other forms of coal because of its use in blast furnaces for steel production. Metallurgical coal has specific physical and chemical
properties, which are necessary for efficient blast furnace operation. Steel producers are continually investigating alternative steel production
technologies with a view to reducing production costs. The steel industry has increased utilization of electric arc furnaces or pulverized coal
injection processes, which reduce or eliminate the use of furnace coke, an intermediate product produced from metallurgical coal and, in turn,
generally decreases the demand for metallurgical coal. Many alternative technologies are designed to use lower quality coals or other sources
of carbon instead of higher cost high-quality metallurgical coal. While conventional blast furnace technology has been the most economic
large-scale steel production technology for a number of years, and emergent technologies typically take many years to commercialize, there
can be no assurance that over the longer term competitive technologies not reliant on metallurgical coal would not emerge, which could reduce
the demand and price premiums for metallurgical coal.
Moreover, we may produce and market other coal products, such as thermal coal, which are also subject to alternative competition.
Alternative technologies are continually being investigated and developed in order to reduce production costs or minimize environmental or
social impact. If competitive technologies emerge that use other materials in place of our products, demand and price for our products might
fall.
We face uncertainties in estimating our economically recoverable coal reserves, and inaccuracies in our estimates could result in lower
than expected revenues, higher than expected costs and decreased profitability.
Coal is economically recoverable when the price at which coal can be sold exceeds the costs and expenses of mining and selling the
coal. Any forecasts of our future performance are based on, among other things, estimates of our recoverable coal reserves. We base our
reserve information on geologic data, coal ownership information and current and proposed mine plans. There are numerous uncertainties
inherent in estimating quantities and qualities of coal and costs to mine recoverable reserves, including many factors beyond our control. As a
result, estimates of economically recoverable coal reserves are by their nature uncertain. Some of the factors and assumptions that can impact
economically recoverable coal reserve estimates include:
● geologic and mining conditions;
● historical production from the area compared with production from other producing areas;
● the assumed effects of environmental and other regulations and taxes by governmental agencies;
● our ability to obtain, maintain and renew all required permits;
● future improvements in mining technology;
● assumptions related to future prices; and
● future operating costs, including the cost of materials, and capital expenditures.
Each of the factors that impacts reserve estimation may vary considerably from the assumptions used in estimating the reserves. For
these reasons, estimates of coal reserves may vary substantially. Actual production, revenues and expenditures with respect to our future coal
reserves may vary from estimates, and these variances may be material. As a result, our estimates may not accurately reflect our actual future
coal reserves.
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Our inability to acquire additional coal reserves that are economically recoverable may have a material adverse effect on our future
profitability.
Our profitability depends substantially on our ability to mine, in a cost-effective manner, coal reserves that possess the quality
characteristics that prospective customers desire. Because our reserves will decline as we mine our coal, our future profitability depends upon
our ability to acquire additional coal reserves that are economically recoverable to replace the reserves we will produce. If we fail to acquire or
develop sufficient additional reserves over the long term to replace the reserves depleted by our production, our existing reserves could
eventually be exhausted.
Our multiple coal quality levels and the need to send test shipments to prospective customers may negatively impact our ability to further
develop our customer base.
Customers typically request test shipments of coal in advance of entering into coal sales agreements which requires that we provide
coal quality to meet customer specifications. If we experience delays in the delivery of test shipments, it could negatively impact our ability to
develop our customer base.
We are dependent on contractors for the successful completion of the development of our properties.
We regularly use contractors in the development of our mines and intend to use contractors if and when we construct facilities at the
RAM Mine. Timely and cost-effective completion of the development of our properties, including necessary facilities and infrastructure, in
compliance with agreed specifications is central to our business strategy and is highly dependent on the performance of our contractors under
the agreements with them.
Although some agreements may provide for liquidated damages, if the contractor fails to perform in the manner required with respect
to certain of its obligations, the events that trigger a requirement to pay liquidated damages may delay or impair the operation of our
properties, and any liquidated damages that we receive may not be sufficient to cover the damages that we suffer as a result of any such delay
or impairment. Further, we may have disagreements with our contractors about different elements of the construction process, which could
lead to the assertion of rights and remedies under their contracts and increase the costs associated with development of the properties or
result in a contractor’s unwillingness to perform further work. If any contractor is unable or unwilling to perform according to the negotiated
terms and timetable of its respective agreement for any reason or terminates its agreement, we would be required to engage a substitute
contractor. This would likely result in significant project delays and increased costs, which could have a material adverse effect on our
business, financial condition, results of operations, cash flows and ability to pay dividends to our stockholders.
Prices for coal are volatile and can fluctuate widely based upon a number of factors beyond our control, including oversupply relative to
the demand available for our coal and weather. A substantial or extended decline in the prices we receive for our coal could adversely
affect our business, results of operations, financial condition, cash flows and ability to pay dividends to our stockholders.
Our financial results are significantly affected by the prices we receive for our coal and depend, in part, on the margins that we earn
on sales of our coal. Our margins will reflect the price we receive for our coal over our cost of producing and transporting our coal. Prices and
quantities under U.S. domestic metallurgical coal sales contracts are generally based on expectations of the next year’s coal prices at the time
the contract is entered into, renewed, extended or re-opened. Pricing in the global seaborne market is moving towards shorter term pricing
models, typically using indexes. The expectation of future prices for coal depends upon many factors beyond our control, including the
following:
● the market price for coal;
● overall domestic and global economic conditions, including the supply of and demand for domestic and foreign coal, coke and
steel;
● the consumption pattern of industrial consumers, electricity generators and residential users;
● weather conditions in our markets that affect the demand for thermal coal or that affect the ability to produce metallurgical coal;
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● competition from other coal suppliers;
● technological advances affecting energy consumption;
● the costs, availability and capacity of transportation infrastructure;
● the impact of domestic and foreign governmental laws and regulations, including environmental and climate change regulations
and regulations affecting the coal mining industry, and delays in the receipt of, failure to receive, failure to maintain or revocation
of necessary governmental permits; and
● increased utilization by the steel industry of electric arc furnaces or pulverized coal injection processes, which reduce or
eliminate the use of furnace coke, an intermediate product produced from metallurgical coal, and generally decrease the demand
for metallurgical coal.
Metallurgical coal has been an extremely volatile commodity over the past 10 years. There are no assurances that supplies will remain
low, that demand will not decrease or that overcapacity may resume, which could cause declines in the prices of and demand for coal, which
could have a material adverse effect on our business, financial condition, results of operations, cash flows.
Increased competition or a loss of our competitive position could adversely affect sales of, or prices for, our coal, which could impair our
profitability. In addition, foreign currency fluctuations could adversely affect the competitiveness of our coal abroad.
We compete with other producers primarily on the basis of coal quality, delivered costs to the customer and reliability of supply. We
compete primarily with U.S. coal producers and with some Canadian coal producers for sales of metallurgical coal to domestic steel producers
and, to a lesser extent, thermal coal to electric power generators. We also compete with both domestic and foreign coal producers for sales of
metallurgical coal in international markets. Certain of these coal producers may have greater financial resources and larger reserve bases than
we do. We sell coal to the seaborne metallurgical coal market, which is significantly affected by international demand and competition.
We cannot assure you that competition from other producers will not adversely affect us in the future. The coal industry has
experienced significant consolidation in recent years, including consolidation among some of our major competitors. We cannot assure you
that the result of current or further consolidation in the coal industry, or the reorganization through bankruptcy of competitors with large
legacy liabilities, will not adversely affect us. A number of our competitors have idled production over the last several years in light of lower
metallurgical coal prices. A stabilization or increase in coal prices could encourage existing producers to expand capacity or could encourage
new producers to enter the market.
In addition, we face competition from foreign producers that sell their coal in the export market. Potential changes to international
trade agreements, trade concessions, foreign currency fluctuations or other political and economic arrangements may benefit coal producers
operating in countries other than the United States. Additionally, North American steel producers face competition from foreign steel
producers, which could adversely impact the financial condition and business of our prospective customers. We cannot assure you that we
will be able to compete on the basis of price or other factors with companies that in the future may benefit from favorable foreign trade policies
or other arrangements. Coal is sold internationally in U.S. dollars and, as a result, general economic conditions in foreign markets and changes
in foreign currency exchange rates may provide our foreign competitors with a competitive advantage. If our competitors’ currencies decline
against the U.S. dollar or against our prospective foreign customers’ local currencies, those competitors may be able to offer lower prices for
coal to prospective customers. Furthermore, if the currencies of our prospective overseas customers were to significantly decline in value in
comparison to the U.S. dollar, those prospective customers may seek decreased prices for the coal we sell to them. Consequently, currency
fluctuations could adversely affect the competitiveness of our coal in international markets, which could have a material adverse effect on our
business, financial condition, results of operations and cash flows.
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Our business involves many hazards and operating risks, some of which may not be fully covered by insurance. The occurrence of a
significant accident or other event that is not fully insured could adversely affect our business, results of operations, financial condition
and cash flows, and ability to pay dividends to our stockholders.
Our mining operations, including our preparation and transportation infrastructure, are subject to many hazards and operating risks.
Underground mining and related processing activities present inherent risks of injury to persons and damage to property and equipment. Our
mines are subject to a number of operating risks that could disrupt operations, decrease production and increase the cost of mining for
varying lengths of time, thereby adversely affecting our operating results. In addition, if coal production declines, we may not be able to
produce sufficient amounts of coal to deliver under future sales contracts. Our inability to satisfy contractual obligations could result in
prospective customers initiating claims against us. The operating risks that may have a significant impact on our future coal operations
include:
● variations in thickness of seams of coal;
● adverse geologic conditions, including amounts of rock and other natural materials intruding into the coal seam, that could affect
the stability of the roof and the side walls of the mine;
● environmental hazards;
● mining and processing equipment failures, structural failures and unexpected maintenance problems;
● fires or explosions, including as a result of methane, coal, coal dust or other explosive materials, or other accidents;
● inclement or hazardous weather conditions and natural disasters or other force majeure events;
● seismic activities, ground failures, rock bursts or structural cave-ins or slides;
● delays in moving our mining equipment;
● railroad delays or derailments;
● security breaches or terroristic acts; and
● other hazards or occurrences that could also result in personal injury and loss of life, pollution and suspension of operations.
Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for:
● personal injury or loss of life;
● damage to and destruction of property, natural resources and equipment, including our coal properties and our coal production
or transportation facilities;
● pollution, contamination and other environmental damage to our properties or the properties of others;
● potential legal liability and monetary losses;
● regulatory investigations, actions and penalties;
● suspension of our operations; and
● repair and remediation costs.
Although we maintain insurance for a number of risks and hazards, we may not be insured or fully insured, and we may not be able to
recover under our insurance policies, against the losses or liabilities that could arise from a significant accident in our future coal operations.
We may elect not to obtain insurance for any or all of these risks if we believe that the cost of available insurance is excessive relative to the
risks presented. In addition, pollution, contamination and environmental risks generally are not fully insurable. Moreover, a significant mine
accident or regulatory infraction could potentially cause a mine shutdown. The occurrence of an event that is not fully covered by insurance
could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends to our
stockholders.
In addition, if any of the foregoing changes, conditions or events occurs and is not determined to be a force majeure event, any
resulting failure on our part to deliver coal to the purchaser under contract could result in economic penalties, suspension or cancellation of
shipments or ultimately termination of the agreement, any of which could have a material adverse effect on our business, financial condition,
results of operations, cash flows and ability to pay dividends to our stockholders.
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Our operations are exclusively located in a single geographic region, making us vulnerable to risks associated with operating in a single
geographic area.
Currently, all of our operations are conducted in a single geographic region in the eastern United States in the states of Pennsylvania,
Virginia and West Virginia. The geographic concentration of our operations may disproportionately expose us to disruptions in our operations
if the region experiences severe weather, transportation capacity constraints, constraints on the availability of required equipment, facilities,
personnel or services, significant governmental regulation or natural disasters. If any of these factors were to impact the region in which we
operate more than other coal producing regions, our business, financial condition, results of operations and cash flows will be adversely
affected relative to other mining companies that have a more geographically diversified asset portfolio.
In addition, scientists have warned that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes
that have significant physical effects, such as increased frequency and severity of storms, droughts and floods and other climatic events. If
these warnings are correct, and if any such effects were to occur in areas where we or our customers operate, they could have an adverse
effect on our business, financial condition and cash flows.
The availability and reliability of transportation facilities and fluctuations in transportation costs could affect the demand for our coal or
impair our ability to supply coal to prospective customers.
Transportation logistics play an important role in allowing us to supply coal to prospective customers. Any significant delays,
interruptions or other limitations on the ability to transport our coal could negatively affect our operations. Delays and interruptions of rail
services because of accidents, failure to complete construction of rail infrastructure, infrastructure damage, lack of rail or port capacity,
weather-related problems, governmental regulation, terrorism, strikes, lock-outs, third-party actions or other events could impair our ability to
supply coal to customers and adversely affect our profitability. In addition, transportation costs represent a significant portion of the
delivered cost of coal and, as a result, the cost of delivery is a critical factor in a customer’s purchasing decision. Increases in transportation
costs, including increases resulting from emission control requirements and fluctuations in the price of locomotive diesel fuel and demurrage,
could make our coal less competitive, which could have a material adverse effect on our business, financial condition, results of operations,
cash flows and ability to pay dividends to our stockholders.
Any significant downtime of our major pieces of mining equipment, including any preparation plants, could impair our ability to supply
coal to prospective customers and materially and adversely affect our results of operations.
We depend on several major pieces of mining equipment to produce and transport our coal, including, but not limited to,
underground continuous mining units and coal conveying systems, surface mining equipment such as highwall miners, front-end loaders and
coal overburden haul trucks, preparation plants and related facilities, conveyors and transloading facilities. If any of these pieces of equipment
or facilities suffered major damage or were destroyed by fire, abnormal wear, flooding, incorrect operation or otherwise, we may be unable to
replace or repair them in a timely manner or at a reasonable cost, which would impact our ability to produce and transport coal and materially
and adversely affect our business, results of operations, financial condition and cash flows. Moreover, the Mine Safety and Health
Administration ("MSHA”) and other regulatory agencies sometimes make changes with regards to requirements for pieces of equipment. Such
changes could cause delays if manufacturers and suppliers are unable to make the required changes in compliance with mandated deadlines.
If either our preparation plants, or train loadout facilities, or those of a third party processing or loading our coal, suffer extended
downtime, including from major damage, or is destroyed, our ability to process and deliver coal to prospective customers would be materially
impacted, which would materially adversely affect our business, results of operations, financial condition, cash flows and ability to pay
dividends to our stockholders. For example, in late 2018, we experienced a partial structural failure at one of the raw coal storage silos that
feeds our Elk Creek plant in West Virginia, which idled our Elk Creek preparation plant for approximately one month.
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If customers do not enter into, extend or honor contracts with us, our profitability could be adversely affected.
Coal mined from our operations is subject to testing by prospective customers for its ability to meet various specifications and to
work satisfactorily in their ovens and other facilities prior to entering into contracts for purchase (which are typically short-term orders having
terms of one year or less). If we are unable to successfully test our coals or enter into new contracts for the sale of our coal, our ability to
achieve profitability would be materially adversely affected. Once we enter into contracts, if a substantial portion of our sales contracts are
modified or terminated and we are unable to replace the contracts (or if new contracts are priced at lower levels), our results of operations
would be adversely affected, perhaps materially. In addition, if customers refuse to accept shipments of our coal for which they have a
contractual obligation, our revenues could be substantially affected and we may have to reduce production at our mines until the customer’s
contractual obligations are honored. This, in turn, could have a material adverse effect on the payments we receive which could affect our
business, financial condition, cash flows and ability to pay dividends to our stockholders.
Certain provisions in typical long-term sales contracts provide limited protection during adverse economic conditions, which may
eventually result in economic penalties to us or permit the customer to terminate the contract. Furthermore, our ability to collect
payments from prospective customers could be impaired if their creditworthiness declines or if they fail to honor their contracts with us.
We do not expect to enter into significant long-term sales contracts, but if we do, price adjustment, "price reopener” and other similar
provisions typical in long-term sales contracts may reduce protection from short-term coal price volatility traditionally provided by such
contracts. Price reopener provisions may be included in our future sales contracts. These price reopener provisions may automatically set a
new price based on prevailing market price or, in some instances, require the parties to agree on a new price, sometimes within a specified
range of prices. Any adjustment or renegotiations leading to a significantly lower contract price could adversely affect our profitability. Some
annual metallurgical coal contracts have shifted to quarterly contracts and many include prices determined by averaging the leading spot
indexes reported in the market, exposing us further to risks related to pricing volatility.
Our ability to receive payment for coal sold and delivered depends on the continued solvency and creditworthiness of prospective
customers. The number of domestic steel producers is small, and they compete globally for steel production. If their business or
creditworthiness suffers, we may bear an increased risk with respect to payment default. Competition with other coal suppliers could force us
to extend credit to customers and on terms that could increase the risk we bear with respect to payment default. We could also enter into
agreements to supply coal to energy trading and brokering customers under which a customer sells coal to end-users. If the creditworthiness
of any prospective energy trading and brokering customer declines, we may not be able to collect payment for all coal sold and delivered to or
on behalf of this customer.
In addition, if customers refuse to accept shipments of our coal that they have a contractual obligation to purchase, our revenues will
decrease and we may have to reduce production at our mines until prospective customers’ contractual obligations are honored. Our inability
to collect payment from counterparties to our sales contracts may materially adversely affect our business, financial condition, results of
operations, cash flows and ability to pay dividends to our stockholders.
Decreases in demand for electricity and changes in coal consumption patterns of U.S. electric power generators could adversely affect our
business.
While demand for metallurgical coal is not closely linked to domestic demand for electricity, we anticipate that the incidental
production of thermal coal may generate up to 5% of our tons sold annually. Any changes in coal consumption by electric power generators
in the United States would likely impact our business over the long term.
The low price of natural gas in recent years has resulted, in many instances, in domestic electric generators increasing natural gas
consumption while decreasing coal consumption. Federal and state mandates for increased use of electricity derived from renewable energy
sources, such as the Clean Power Plan ("CPP”), also affect demand for our thermal coal. A decrease in coal consumption by the electric power
generation industry could adversely affect the price
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of coal, which could have a material adverse effect on its business, financial condition, results of operations, cash flows and ability to pay
dividends to our stockholders.
Changes in the coal industry that affect our prospective customers, such as those caused by decreased electricity demand and
increased competition, could also adversely affect our business. Indirect competition from natural gas fired plants that are relatively less
expensive to construct and less difficult to permit has the most potential to displace a significant amount of coal fired electric power
generation in the near term, particularly older, less efficient coal fired powered generators. In addition, uncertainty caused by federal and state
regulations could cause thermal coal customers to be uncertain of their coal requirements in future years, which could adversely affect our
ability to sell coal to such prospective customers under multi-year sales contracts. This could have a material adverse effect on our business,
financial condition, cash flows.
We may be unsuccessful in integrating the operations of any future acquisitions, including acquisitions involving new lines of business,
with our existing operations, and in realizing all or any part of the anticipated benefits of any such acquisitions.
From time to time, we may evaluate and acquire assets and businesses that we believe complement our existing assets and business,
such as the mineral lease with the McDonald Land Company for coal reserves adjacent to our Elk Creek mine complex near Logan, West
Virginia. The assets and businesses we acquire may be dissimilar from our initial lines of business. Acquisitions may require substantial
capital or the incurrence of substantial indebtedness. Our capitalization and results of operations may change significantly as a result of future
acquisitions. We may also add new lines of business to our existing operations.
Further, unexpected costs and challenges may arise whenever businesses with different operations or management are combined,
and we may experience unanticipated delays in realizing the benefits of an acquisition. Entry into certain lines of business may subject us to
new laws and regulations with which we are not familiar and may lead to increased litigation and regulatory risk. Also, following an
acquisition, we may discover previously unknown liabilities associated with the acquired business or assets for which we have no recourse
under applicable indemnification provisions. If an acquired business or new line of business generates insufficient revenue or if we are unable
to efficiently manage our expanded operations, our results of operations may be materially adversely affected.
To maintain and grow our business, we will be required to make substantial capital expenditures. If we are unable to obtain needed
capital or financing on satisfactory terms, we may have to curtail our operations and delay our construction and growth plans, which may
materially adversely affect our business, results of operations, financial condition and cash flows, and ability to pay dividends to our
stockholders.
In order to maintain and grow our business, we will need to make substantial capital expenditures associated with our mines and the
construction of coal preparation facilities which have not yet been constructed. Constructing, maintaining, repairing and expanding mines and
infrastructure, including coal preparation and loading facilities, is capital intensive. Specifically, the exploration, permitting and development of
coal reserves, and the maintenance of machinery, equipment and facilities, and compliance with applicable laws and regulations require
substantial capital expenditures. While we funded a significant amount of the capital expenditures needed to build out our mining and
preparation infrastructure at our Elk Creek property with cash on hand, we must continue to invest capital to maintain or to increase our
production and to develop any future acquired properties. Decisions to increase our production levels could also affect our capital needs. We
cannot assure you that we will be able to maintain our production levels or generate sufficient cash flow, or that we will have access to
sufficient financing to continue our production, exploration, permitting and development activities, and we may be required to defer all or a
portion of our capital expenditures.
If we do not make sufficient or effective capital expenditures, we will be unable to develop and grow our business. To fund our
projected capital expenditures, we will be required to use cash from our operations, incur debt or issue additional common stock or other
equity securities. Using cash from our operations will reduce cash available for maintaining or increasing our operating activities and paying
dividends to our stockholders. Our ability to obtain bank financing or our ability to access the capital markets for future equity or debt
offerings may be limited by our financial
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condition at the time of any such financing or offering and the covenants in our future debt agreements, as well as by general economic
conditions, contingencies and uncertainties that are beyond our control.
In addition, incurring debt may significantly increase our interest expense and financial leverage, and issuing additional equity
securities may result in significant stockholder dilution.
We may not be able to obtain equipment, parts and supplies in a timely manner, in sufficient quantities or at reasonable costs to support
our coal mining and transportation operations.
Coal mining consumes large quantities of commodities including steel, copper, rubber products and liquid fuels and requires the use
of capital equipment. Some commodities, such as steel, are needed to comply with roof control plans required by regulation. The prices we pay
for commodities and capital equipment are strongly impacted by the global market. A rapid or significant increase in the costs of commodities
or capital equipment we use in our operations could impact our mining operations costs because we may have a limited ability to negotiate
lower prices and, in some cases, may not have a ready substitute.
We use equipment in our coal mining and transportation operations such as continuous mining units, conveyors, shuttle cars, rail
cars, locomotives, and roof bolters. We procure this equipment from a concentrated group of suppliers, and obtaining this equipment often
involves long lead times. Occasionally, demand for such equipment by mining companies can be high and some types of equipment may be in
short supply. Delays in receiving or shortages of this equipment, as well as the raw materials used in the manufacturing of supplies and mining
equipment, which, in some cases, do not have ready substitutes, or the cancellation of any future supply contracts under which we obtain
equipment and other consumables, could limit our ability to obtain these supplies or equipment. In addition, if any of our suppliers experiences
an adverse event, or decides to no longer do business with us, we may be unable to obtain sufficient equipment and raw materials in a timely
manner or at a reasonable price to allow us to meet our production goals and our revenues may be adversely impacted. We use considerable
quantities of steel in the mining process. If the price of steel or other materials increases substantially or if the value of the U.S. dollar declines
relative to foreign currencies with respect to certain imported supplies or other products, our operating expenses could increase. Any of the
foregoing events could materially and adversely impact our business, financial condition, results of operations, cash flows and ability to pay
dividends to our stockholders.
We are a holding company and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial
obligations and to make dividend payments.
We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets. We have no
significant assets other than the equity interests in our subsidiaries. As a result, our ability to pay our obligations and to make dividend
payments, should we choose to do so in the future, depends entirely on our subsidiaries and their ability to distribute funds to us. The ability
of a subsidiary to make these distributions could be affected by a claim or other action by a third-party, including a creditor, or by the law of
their respective jurisdictions of formation which regulates the payment of dividends. If we are unable to obtain funds from our subsidiaries, we
may not be able to declare or pay dividends.
Our operations could be adversely affected if we are unable to obtain required financial assurance, or if the costs of financial assurance
increase materially.
Federal and state laws require financial assurance to secure our permit obligations including to reclaim lands used for mining, to pay
federal and state workers’ compensation and black lung benefits, and to satisfy other miscellaneous obligations. The changes in the market for
coal used to generate electricity in recent years have led to bankruptcies involving prominent coal producers. Several of these companies
relied on self-bonding to guarantee their responsibilities under the SMCRA permits including for reclamation. In response to these
bankruptcies, the OSMRE issued a Policy Advisory in August 2016 to state agencies that was intended to discourage authorized states from
approving self-bonding arrangements. Although the Policy Advisory was rescinded in October 2017, certain states, including Virginia, had
previously announced that it would no longer accept self-bonding to secure reclamation obligations under the state mining laws. Individually
and collectively, these and future revised financial assurance
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requirements may lead to increased demand for other forms of financial assurance, which may strain capacity for those instruments and
increase our costs of obtaining and maintaining the amounts of financial assurance needed for our operations, which may delay the timing for
and increase the costs of obtaining this financial assurance.
We use surety bonds, trusts and letters of credit to provide financial assurance for certain transactions and business activities. If, in
the future, we are unable to secure surety bonds for these obligations and are forced to secure letters of credit indefinitely or obtain some
other form of financial assurance at too high of a cost, we may not be able to obtain permits and production on our properties could be
adversely affected. This could have a material adverse effect on our business, financial condition, cash flows and ability to pay dividends to
our stockholders.
Our mines are located in areas containing oil and natural gas operations, which may require us to coordinate our operations with those
of oil and natural gas drillers.
Our coal reserves are in areas containing developed or undeveloped oil and natural gas deposits and reservoirs, including the
Marcellus Shale in Pennsylvania, and our Virginia reserves are currently the subject of substantial oil and natural gas exploration and
production activities, including by horizontal drilling. If we have received a permit for our mining activities, then, while we will have to
coordinate our mining with such oil and natural gas drillers, our mining activities are expected to have priority over any oil and natural gas
drillers with respect to the land covered by our permit. For reserves outside of our permits, we expect to engage in discussions with drilling
companies on potential areas on which they can drill that may have a minimal effect on our mine plan. Depending on priority of interests, our
operations may have to avoid existing oil and gas wells or expend sums to plug oil and gas wells.
If a well is in the path of our mining for coal on land that has not yet been permitted for our mining activities, we may not be able to
mine through the well unless we purchase it. The cost of purchasing a producing horizontal or vertical well could be substantial. Horizontal
wells with multiple laterals extending from the well pad may access larger oil and natural gas reserves than a vertical well, which would
typically result in a higher cost to acquire. The cost associated with purchasing oil and natural gas wells that are in the path of our coal mining
activities may make mining through those wells uneconomical, thereby effectively causing a loss of significant portions of our coal reserves,
which could materially and adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends to
our stockholders.
Defects in title or loss of any leasehold interests in our properties could limit our ability to conduct mining operations on these properties
or result in significant unanticipated costs.
We conduct a significant part of our mining operations on properties that we lease. A title defect or the loss of any lease upon
expiration of its term, upon a default or otherwise, could adversely affect our ability to mine the associated reserves and/or process the coal we
mine. Title to most of our owned or leased properties and mineral rights is not usually verified until we make a commitment to develop a
property, which may not occur until after we have obtained necessary permits and completed exploration of the property. In some cases, we
rely on title information or representations and warranties provided by our lessors or grantors. Our right to mine some of our reserves may be
adversely affected if defects in title or boundaries exist or if a lease expires. Any challenge to our title or leasehold interests could delay the
exploration and development of the property and could ultimately result in the loss of some or all of our interest in the property and,
accordingly, require us to reduce our estimated coal reserves. Mining operations from time to time may rely on an expired lease that we are
unable to renew. If we were to be in default with respect to leases for properties on which we have mining operations, we may have to close
down or significantly alter the sequence of such mining operations, which may adversely affect our future coal production and future
revenues. If we mine on property that we do not own or lease, we could incur liability for such mining.
In any such case, the investigation and resolution of title issues would divert management’s time from our business and our results
of operations could be adversely affected. Additionally, if we lose any leasehold interests relating to any preparation plants, we may need to
find an alternative location to process our coal and load it for delivery to customers, which could result in significant unanticipated costs.
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In order to obtain leases or mining contracts to conduct our mining operations on property where these defects exist, we may in the
future have to incur unanticipated costs. In addition, we may not be able to successfully negotiate new leases or mining contracts for
properties containing additional reserves or maintain our leasehold interests in properties where we have not commenced mining operations
during the term of the lease. Some leases have minimum production requirements. Failure to meet those requirements could result in losses of
prepaid royalties and, in some rare cases, could result in a loss of the lease itself.
Substantially all of our mining properties are leased from our affiliates and conflicts of interest may arise in the future as a result.
Most of our properties, except those controlled by us at or near Knox Creek and a couple of leases at Elk Creek, including our mineral
lease with the McDonald Land Company, are leased or subleased to our subsidiaries from entities controlled by Ramaco Coal, LLC, which
shares some common ownership with us. Additionally, RAMACO Central Appalachia, LLC and RAMACO Resources, LLC entered into
mutual cooperation agreements concerning the Elk Creek property and Berwind coal reserve, requiring each party to notify the other in the
event that such party acquires an interest in real property adjacent to or contiguous with the Elk Creek property or Berwind coal reserve,
respectively. RAMACO Northern Appalachia, LLC and RAM Mining, LLC entered into a mutual cooperation agreement concerning the RAM
Mine property, requiring each party to notify the other in the event that such party acquires an interest in real property in Pennsylvania that
contains coal or mining rights. Given the common ownership between Ramaco Coal, LLC and us and the complex contractual obligations
under these arrangements, conflicts could arise (including between us and Ramaco Coal, LLC and our Chairman and Chief Executive Officer
who is also an owner of Ramaco Coal, LLC). While we have an audit committee and formal related party transaction policy, a conflict may arise
which could adversely affect the interests of our stockholders, including, without limitation, conflicts involving compliance with payment and
performance obligations under existing leases, and negotiation of the terms of and performance under additional leases we may enter into with
Ramaco Coal, LLC or its subsidiaries or affiliates in the future. For example, if a title defect were identified with respect to a property under
lease or sublease from our affiliates, we may need to seek return of royalty payments or set off other payments due to such entities. Such a
conflict could distract our management and could result in disputes with our affiliates.
While none of our employees who conduct mining operations are currently members of unions, our business could be adversely affected
by union activities.
We are not subject to any collective bargaining or union agreement with respect to properties we currently control. However, it is
possible that future employees, or those of our contract miners, who conduct mining operations may join or seek recognition to form a labor
union or may be required to become labor agreement signatories. If some or all of the employees who conduct mining operations were to
become unionized, it could adversely affect productivity, increase labor costs and increase the risk of work stoppages at our mines. If a work
stoppage were to occur, it could interfere with operations and have a material adverse effect on our business, financial condition, results of
operations, cash flows and our ability to pay dividends to our stockholders.
A shortage of skilled labor in the mining industry could pose a risk to achieving improved labor productivity, which could adversely
affect our profitability.
Efficient coal mining using modern techniques and equipment requires skilled laborers, preferably with at least a year of experience
and proficiency in multiple mining tasks. In the event there is a shortage of experienced labor, it could have an adverse impact on our labor
productivity and our ability to expand production in the event there is an increase in the demand for our coal.
We may face restricted access to international markets in the future.
Access to international markets may be subject to ongoing interruptions and trade barriers due to policies and tariffs of individual
countries, and the actions of certain interest groups to restrict the import or export of certain commodities. There can be no assurance that our
access to these markets will not be restricted in the future. An inability for U.S. metallurgical coal suppliers to access international markets
would likely result in an oversupply of metallurgical
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coal in the domestic market, resulting in a decrease in prices, which could have a material adverse effect on our business, financial condition,
cash flows and ability to pay dividends to our stockholders.
Risks Related to Environmental, Health, Safety and Other Regulations
The incoming U.S. administration and Congress could enact legislative and regulatory measures that could adversely affect our mining
operations or cost structure or our customers’ ability to use coal, which could have a material adverse effect on our financial condition
and results of operations.
The President’s proposed climate plan includes rejoining the Paris climate agreement, as well as a target of achieving carbon-free
electricity generation in the United States by 2035 and net zero greenhouse gas emissions economy-wide by 2050. The plan calls for
establishment of technology-neutral Energy Efficiency and Clean Electricity Standards, accompanied by clean energy tax credits and other
incentives for utilities and grid operators to generate electricity with renewable energy. Depending upon what legislative and regulatory
proposals in pursuit of these targets come into effect, there could be increased pressure on U.S. utilities and power generators to reduce
greenhouse gas emissions, accelerating the decline in demand for coal in the United States. In addition, the Biden administration has indicated
that it will unwind a number of regulatory rollbacks enacted or proposed by the Trump administration, including, among others, the Affordable
Clean Energy Rule, the Navigable Waters Protection Rule, the proposed rule for the disposal of coal combustion residuals, and the National
Environmental Policy Act overhaul, or otherwise impose and enforce more stringent permitting or other requirements, including those relating
to reclamation, water quality, water availability and other environmental matters. New, more stringent legislation or regulations related to the
protection of the environment, health and safety or the reduction of greenhouse gas emissions, as well as changes in the interpretation and
enforcement of such laws and regulations, may require us or our customers to change operations significantly or incur increased costs, which
may adversely affect our mining operations, cost structure or our customers’ ability to use coal. Such changes could have a material adverse
effect on our financial condition and results of operations.
Laws and regulations restricting greenhouse gas emissions as well as uncertainty concerning such regulations could adversely impact the
market for coal, increase our operating costs, and reduce the value of our coal assets.
Climate change continues to attract considerable public and scientific attention. There is widespread concern about the contributions
of human activity to such changes, especially through the emission of GHGs. There are three primary sources of GHGs associated with the
coal industry. First, the end use of our coal by our customers in electricity generation, coke plants, and steelmaking is a source of GHGs.
Second, combustion of fuel by equipment used in coal production and to transport our coal to our customers is a source of GHGs. Third, coal
mining itself can release methane, which is considered to be a more potent GHG than CO2, directly into the atmosphere. These emissions from
coal consumption, transportation and production are subject to pending and proposed regulation as part of initiatives to address global
climate change.
As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and
state levels of government to monitor and limit emissions of GHGs. Collectively, these initiatives could result in higher electric costs to our
customers or lower the demand for coal used in electric generation, which could in turn adversely impact our business. They could also result
in direct regulation of the GHGs produced by our operations. See "Business—Environmental and Other Regulatory Matters—Global Climate
Change.”
At present, we are principally focused on metallurgical coal production, which is not used in connection with the production of
power generation. However, we may seek to sell greater amounts of our coal into the power-generation market in the future. The market for our
coal may be adversely impacted if comprehensive legislation or regulations focusing on GHG emission reductions are adopted, or if our
customers are unable to obtain financing for their operations. The uncertainty over the outcome of litigation challenging the CPP or its
replacement, and the extent of future regulation of GHG emissions may inhibit utilities from investing in the building of new coal-fired plants to
replace older plants or investing in the upgrading of existing coal-fired plants. Any reduction in the amount of coal consumed by electric
power generators as a result of actual or potential regulation of GHG emissions could decrease demand for our coal, thereby reducing our
revenues and materially and adversely affecting our business and results of
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operations. We or prospective customers may also have to invest in CO2 capture and storage technologies in order to burn coal and comply
with future GHG emission standards.
Current and future government laws, regulations and other legal requirements relating to protection of the environment and natural
resources may increase our costs of doing business and may restrict our coal operations.
We and our potential customers are subject to stringent and complex laws, regulations and other legal requirements enacted by
federal, state and local authorities relating to protection of the environment and natural resources. These include those legal requirements that
govern discharges or emissions of materials into the environment, the management and disposal of substances and wastes, including
hazardous wastes, the cleanup of contaminated sites, threatened and endangered plant and wildlife protection, reclamation and restoration of
mining properties after mining is completed, mitigation and restoration of streams or other waters, the protection of drinking water, assessment
of the environmental impacts of mining, monitoring and reporting requirements, the installation of various safety equipment in our mines,
remediation of impacts of surface subsidence from underground mining, and work practices related to employee health and safety. See
"Business—Environmental and Other Regulatory Matters.” Examples include laws and regulations relating to:
● employee health and safety;
● emissions to air and discharges to water;
● plant and wildlife protection, including endangered species protections;
● the reclamation and restoration of properties after mining or other activity has been completed;
● limitations on land use;
● mine permitting and licensing requirements;
● the storage, treatment and disposal of wastes;
● air quality standards;
● water pollution;
● protection of human health, plant-life and wildlife, including endangered and threatened species;
● protection of wetlands;
● the discharge of materials into the environment;
● remediation of contaminated soil, surface and groundwater; and
● the effects of operations on surface water and groundwater quality and availability.
Complying with these environmental and employee health and safety requirements, including the terms of our permits, has had, and
will continue to have, a significant effect on our costs of operations. In addition, there is the possibility that we could incur substantial costs
as a result of violations of environmental laws, judicial interpretations of or rulings on environmental laws or permits, or in connection with the
investigation and remediation of environmental contamination. For example, the EPA and several of the states where we operate have, or
intend to, propose revised recommended criteria for discharges of selenium regulated under the CWA, which may be more stringent than
current criteria. Any additional laws, regulations and other legal requirements enacted or adopted by federal, state and local authorities, or new
interpretations of existing legal requirements by regulatory bodies relating to the protection of the environment, including those related to
discharges of selenium, could further affect our costs or limit our operations. See "Business—Environmental and Other Regulatory Matters.”
Our operations may impact the environment or cause exposure to hazardous substances, and our properties may have environmental
contamination, which could expose us to significant costs and liabilities.
Our operations currently use hazardous materials and generate limited quantities of hazardous wastes from time to time. Drainage
flowing from or caused by mining activities can be acidic with elevated levels of dissolved metals, a condition referred to as "acid mine
drainage,” or may include other pollutants requiring treatment. We could become subject to claims for toxic torts, natural resource damages
and other damages as well as for the investigation and clean-up of soil, surface water, groundwater, and other media. Such claims may arise,
for example, out of conditions at sites that we currently own or operate, as well as at sites that we previously owned or operated, or may
acquire. Our liability
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for such claims may be joint and several, so that we may be held responsible for more than our share of the contamination or other damages, or
for the entire share.
We maintain coal refuse areas and slurry impoundments as necessary. Such areas and impoundments are subject to extensive
regulation. Structural failure of a slurry impoundment or coal refuse area could result in extensive damage to the environment and natural
resources, such as bodies of water that the coal slurry reaches, as well as liability for related personal injuries and property damages, and
injuries to wildlife. If an impoundment were to fail, we could be subject to claims for the resulting environmental contamination and associated
liability, as well as for fines and penalties. Our coal refuse areas and slurry impoundments are designed, constructed, and inspected by our
company and by regulatory authorities according to stringent environmental and safety standards.
We must obtain, maintain, and renew governmental permits and approvals for mining operations, which can be a costly and time-
consuming process and result in restrictions on our operations.
Numerous governmental permits and approvals are required for mining operations. Our operations are principally regulated under
permits issued pursuant to SMCRA and the federal CWA. State and federal regulatory authorities exercise considerable discretion in the
timing and scope of permit issuance. Requirements imposed by these authorities may be costly and time consuming and may result in delays
in the commencement or continuation of exploration or production operations. In addition, we may be required to prepare and present to
permitting or other regulatory authorities data pertaining to the effect or impact that proposed exploration for or production of coal might have
on the environment.
Our coal production is dependent upon our ability to obtain various federal and state permits and approvals to mine our coal
reserves. The permitting rules, and the interpretations of these rules, are complex, change frequently, and are often subject to discretionary
interpretations by regulators, all of which may make compliance more difficult or impractical, and which may possibly preclude the continuance
of ongoing mine development or operations or the development of future mining operations. The pace with which the government issues
permits needed for new operations and for ongoing operations to continue mining, particularly CWA permits, can be time-consuming and
subject to delays and denials. These delays or denials of environmental permits needed for mining could reduce our production and materially
adversely impact our cash flow and results of operations.
Prior to discharging any pollutants to waters of the United States, coal mining companies must obtain a National Pollutant Discharge
Elimination System ("NPDES”) permit from the appropriate state or federal permitting authority. NPDES permits include effluent limitations for
discharged pollutants and other terms and conditions, including required monitoring of discharges. Changes and proposed changes in state
and federally recommended water quality standards may result in the issuance or modification of permits with new or more stringent effluent
limits or terms and conditions. See "Business—Environmental and Other Regulatory Matters—Clean Water Act.”
Further, the public has certain statutory rights to comment on and submit objections to requested permits and environmental impact
statements prepared in connection with applicable regulatory processes, and otherwise engage in the permitting process, including bringing
citizens’ claims to challenge the issuance or renewal of permits, the validity of environmental impact statements or performance of mining
activities. As a result of challenges like these, the permits we need may not be issued or renewed in a timely fashion or issued or renewed at
all, or permits issued or renewed may not be maintained, may be challenged or may be conditioned in a manner that may restrict our ability to
efficiently and economically conduct our mining activities, any of which would materially reduce our production, cash flow, and profitability.
Permitting rules may also require, under certain circumstances, that we obtain surface owner consent if the surface estate has been
severed from the mineral estate. This could require us to negotiate with third parties for surface access that overlies coal we acquired or intend
to acquire. These negotiations can be costly and time-consuming, lasting years in some instances, which can create additional delays in the
permitting process. If we cannot successfully negotiate for land access, we could be denied a permit to mine coal we already own.
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We and our significant stockholders are subject to the Applicant Violator System.
Under SMCRA and its state law counterparts, all coal mining applications must include mandatory "ownership and control”
information, which generally includes listing the names of our officers and directors, and our principal stockholders owning 10 percent or more
of our voting shares, among others. Ownership and control reporting requirements are designed to allow regulatory review of any entities or
persons deemed to have ownership or control of a coal mine, and bars the granting of a coal mining permit to any such entity or person
(including any "owner and controller”) who has had a mining permit revoked or suspended, or a bond or similar security forfeited within the
five-year period preceding a permit application or application for a permit revision. Regulatory agencies also block the issuance of permits to
an applicant who, or whose owner and controller, has permit violations outstanding that have not been timely abated.
A federal database, known as the Applicant Violator System, is maintained for this purpose. Certain relationships are presumed to
constitute ownership or control, including the following: being an officer or director of an entity; being the operator of the coal mining
operation; having the ability to commit the financial or real property assets or working resources of the permittee or operator; based on the
instruments of ownership or the voting securities of a corporate entity, owning of record 10% or more of the mining operator, among others.
This presumption, in most cases, can be rebutted where the person or entity can demonstrate that it in fact does not or did not have authority
directly or indirectly to determine the manner in which the relevant coal mining operation is conducted. An ownership and control notice must
be filed by us each time an entity obtains a 10% or greater interest in us. If we have unabated violations of SMCRA or its state law
counterparts, have a coal mining permit suspended or revoked, or forfeit a reclamation bond, we and our "owners and controllers,” as
discussed above, may be prohibited from obtaining new coal mining permits, or amendments to existing permits, until such violations of law
are corrected. This is known as being "permit-blocked.” Additionally, Yorktown and Mr. Atkins are each currently deemed an "owner or
controller” of a number of other mining companies; as such, we could be permit-blocked based upon the violations of or permit-blocked status
of an "owner or controller” of us. This could adversely affect production from our properties.
We may be subject to additional limitations on our ability to conduct mining operations due to federal jurisdiction.
We may conduct some underground mining activities on properties that are within the designated boundary of federally protected
lands or national forests where the above-mentioned restrictions within the meaning of SMCRA could apply. Federal court decisions could
pose a potential restriction on underground mining within 100 feet of a public road as well as other restrictions. If these SMCRA restrictions
ultimately apply to underground mining, considerable uncertainty would exist about the nature and extent of this restriction. While it could
remain possible to obtain permits for underground mining operations in these areas even where this 100-foot restriction was applied, the time
and expense of that permitting process would be likely to increase significantly, and the restrictions placed on the mining of those properties
could adversely affect our costs.
Our customers are subject to extensive existing and future government laws, regulations and other legal requirements relating to
protection of the environment, which could negatively impact our business and the market for our products.
Coal contains impurities, including sulfur, mercury, chlorine and other elements or compounds, many of which are released into the
air when coal is burned. Complying with regulations to address these emissions can be costly for our customers. For example, in order to meet
the CAA limits for sulfur dioxide emissions from electric power plants, coal users must install costly pollution control devices, use sulfur
dioxide emission allowances (some of which they may purchase), or switch to other fuels. More costly and stringent environmental
regulations could adversely impact the operations of our customers, which could in turn adversely impact our business. A number of coal-
fired power plants, particularly smaller and older plants, already have retired or announced that they will retire rather than retrofit to meet the
obligations of these rules.
In addition, considerable uncertainty is associated with new air emissions initiatives that may require significant emissions control
expenditures for many coal-fired power plants. As a result, some of our prospective customers may switch to other fuels that generate fewer of
these emissions or may install more effective pollution control equipment
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that reduces the need for low-sulfur coal. Any further switching of fuel sources away from coal, closure of existing coal-fired power plants, or
reduced construction of new coal-fired power plants could have a material adverse effect on demand for, and prices received for, our coal. In
addition, our coke plant and steelmaking customers may face increased operational costs as a result of higher electric costs. See "Business—
Environmental and Other Regulatory Matters.”
Apart from actual and potential regulation of air emissions and solid wastes from coal-fired plants, state and federal mandates for
increased use of electricity from renewable energy sources could have an impact on the market for our coal. Several states, including
Pennsylvania and Virginia, have enacted legislative mandates requiring electricity suppliers to use renewable energy sources to generate a
certain percentage of power. Possible advances in technologies and incentives, such as tax credits, to enhance the economics of renewable
energy sources could make these sources more competitive with coal. Any reductions in the amount of coal consumed by electric power
generators as a result of current or new standards for the emission of impurities, or current or new incentives to switch to renewable fuels or
renewable energy sources, such as the ACE rule and various state programs, could reduce the demand for our coal, thereby reducing our
revenues and adversely affecting our business, cash flows, results of operations and our ability to pay dividends to our stockholders.
Environmental activism and initiatives aimed at limiting climate change and a reduction of air pollutants could interfere with our
business activities, operations and ability to access capital sources.
Participants in the coal mining industry are frequently targeted by environmental activist groups that openly attempt to disrupt the
industry. For example, Greenpeace International filed a letter with the SEC alleging that one coal mining company’s filings relating to a
proposed public offering of securities may contain incomplete and misleading disclosures regarding the risks of investing in the coal market.
On another occasion, the Sierra Club sent a letter to the SEC stating that it believed a coal mining company may be giving potential investors
false impressions regarding risks to its business. Other groups have objected to our RAM No. 1 mine permit application in Pennsylvania. It is
possible that we could continue to be the target of similar actions in the future, including when we attempt to grow our business through
acquisitions or commence new mining operations. If that were to happen, our ability to operate our business or raise capital could be materially
and adversely impacted.
In addition, there have also been efforts in recent years to influence the investment community, including investment advisors,
sovereign wealth funds, public pension funds, universities and other groups, promoting the divestment of fossil fuel equities and also
pressuring lenders to limit funding to companies engaged in the extraction of fossil fuel reserves. In California, for example, legislation was
signed into law to require the state’s pension funds to divest investments in companies that generate 50% or more of their revenue from coal
mining by July 2017.
Several large investment banks also announced that they had adopted climate change guidelines for lenders. The guidelines require
the evaluation of carbon risks in the financing of electric power generation plants, which may make it more difficult for utilities to obtain
financing for coal-fired plants. In addition, there have also been efforts in recent years affecting the investment community, including
investment advisers, sovereign wealth funds, public pension funds, universities and other groups, promoting the divestment of fossil fuel
equities, encouraging the consideration of environmental, social and governance ("ESG”) practices of companies in a manner that negatively
affects coal companies, and also pressuring lenders to limit funding to companies engaged in the extraction of fossil fuel reserves. The impact
of such efforts may adversely affect the demand for and price of securities issued by us, and impact our access to the capital and financial
markets. These efforts, as well as concerted conservation and efficiency efforts could cause coal prices and sales of our coal to materially
decline and could cause our costs to increase.
Other activist campaigns have urged companies to cease financing coal-driven businesses. A number of investors and asset
managers have enacted such policies as a result. For example, in January 2020, an asset manager with over $7 trillion in assets announced that
it will begin exiting investments that present high sustainability-related risks, such as thermal coal producers. The impact of such efforts may
adversely affect the demand for and price of securities issued by us and impact our access to the capital and financial markets. In addition,
several well-funded non-governmental organizations have explicitly undertaken campaigns to minimize or eliminate mining and the use of coal
as a source of electricity generation. The net effect of these developments is to make it more costly and difficult to maintain our business and
to continue to depress the market for coal.
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Our mines are subject to stringent federal and state safety regulations that increase our cost of doing business at active operations and
may place restrictions on our methods of operation. In addition, government inspectors in certain circumstances may have the ability to
order our operations to be shut down based on safety considerations.
The Federal Mine Safety and Health Act of 1977 (the "Mine Act”) and Mine Improvement and New Emergency Response Act (the
"MINER Act”), and regulations issued under these federal statutes, impose stringent health and safety standards on mining operations. The
regulations that have been adopted under the Mine Act and the MINER Act are comprehensive and affect numerous aspects of mining
operations, including training of mine personnel, mining procedures, roof control, ventilation, blasting, use and maintenance of mining
equipment, dust and noise control, communications, emergency response procedures, and other matters. MSHA regularly inspects mines to
ensure compliance with regulations promulgated under the Mine Act and MINER Act. In addition, Pennsylvania, West Virginia, and Virginia
all have similar programs for mine safety and health regulation and enforcement.
The various requirements mandated by federal and state statutes, rules, and regulations may place restrictions on our methods of
operation and potentially result in fees and civil penalties for violations of such requirements or criminal liability for the knowing violation of
such standards, significantly impacting operating costs and productivity. In addition, government inspectors have the authority to issue
orders to shut down our operations based on safety considerations under certain circumstances, such as imminent dangers, accidents, failures
to abate violations, and unwarrantable failures to comply with mandatory safety standards. See "Business—Environmental and Other
Regulatory Matters—Mine Safety and Health.”
The regulations enacted under the Mine Act and MINER Act as well as under similar state acts are routinely expanded, raising
compliance costs and increasing potential liability. These existing and other future mine safety rules could potentially result in or require
significant expenditures, as well as additional safety training and planning, enhanced safety equipment, more frequent mine inspections,
stricter enforcement practices and enhanced reporting requirements. At this time, it is not possible to predict the full effect that new or
proposed statutes, regulations and policies will have on our operating costs, but any expansion of existing regulations, or making such
regulations more stringent may have a negative impact on the profitability of our operations. If we were to be found in violation of mine safety
and health regulations, we could face penalties or restrictions that may materially and adversely impact our operations, financial results and
liquidity.
We must also compensate employees for work-related injuries. State workers’ compensation acts typically provide for an exception to
an employer’s immunity from civil lawsuits for workplace injuries in the case of intentional torts. In such situations, an injured worker would be
able to bring suit against his or her employer for damages in excess of workers’ compensation benefits. In addition, West Virginia’s workers’
compensation act provides a much broader exception to workers’ compensation immunity, allowing an injured employee to recover against his
or her employer if he or she can show damages caused by an unsafe working condition of which the employer was aware and that was a
violation of a statute, regulation, rule or consensus industry standard. These types of lawsuits are not uncommon and could have a significant
effect on our operating costs.
We have obtained from a third-party insurer a workers’ compensation insurance policy, which includes coverage for medical and
disability benefits for black lung disease under the Federal Coal Mine Health and Safety Act of 1969 and the Mine Act, as amended. We
perform periodic evaluations of our black lung liability, using assumptions regarding rates of successful claims, discount factors, benefit
increases and mortality rates, among others. Of note, the Patient Protection and Affordable Care Act of 2010 significantly amended the black
lung provisions of the Mine Act by reenacting two provisions, which had been eliminated in 1981. Under the amendments, a miner with at
least fifteen years of underground coal mine employment (or surface mine employment with similar dust exposure) who can prove that he
suffers from a totally disabling respiratory condition is entitled to a rebuttable presumption that his disability is caused by black lung. The
other amendment provides that the surviving spouse of a miner who was collecting federal black lung benefits at the time of his death is
entitled to a continuation of those benefits. These changes could have a material impact on our costs expended in association with the federal
black lung program.
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We have reclamation, mine closing, and related environmental obligations under the Surface Mining Control and Reclamation Act. If the
assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated.
SMCRA establishes operational, reclamation and closure standards for our mining operations. SMCRA requires that comprehensive
environmental protection and reclamation standards be met during the course of and following completion of mining activities. Permits for all
mining operations must be obtained from the OSMRE or, where state regulatory agencies have adopted federally approved state programs
under SMCRA, the appropriate state regulatory authority. Our operations are located in states which have achieved primary jurisdiction for
enforcement of SMCRA through approved state programs. See "Business—Environmental and Other Regulatory Matters.”
In December 2016, OSMRE published the final version of the Stream Protection Rule. The rule became effective in January 2017 but
was subsequently "disapproved” pursuant to the CRA. The rule would have impacted both surface and underground mining operations by
imposing stricter guidelines on conducting coal mining operations within buffer zones and increasing testing and monitoring requirements
related to the quality or quantity of surface water and groundwater or the biological condition of streams. The Stream Protection Rule would
also have required the collection of increased premining data about the site of the proposed mining operation and adjacent areas to establish a
baseline for evaluation of the impacts of mining and the effectiveness of reclamation associated with returning streams to premining
conditions.
In addition, SMCRA imposes a reclamation fee on all current mining operations, the proceeds of which are deposited in the AML
Fund, which is used to restore unreclaimed and abandoned mine lands mined before 1977. The current per ton fee is $0.28 per ton for surface
mined coal and $0.12 per ton for underground mined coal. These fees are currently scheduled to be in effect until September 30, 2021.
We accrue for the costs of current mine disturbance and of final mine closure, including the cost of treating mine water discharge
where necessary. The amounts recorded are dependent upon a number of variables, including the estimated future closure costs, estimated
proven reserves, assumptions involving profit margins, inflation rates, and the assumed credit-adjusted risk-free interest rates. If these
accruals are insufficient or our liability in a particular year is greater than currently anticipated, our future operating results could be adversely
affected. We are also required to post bonds for the cost of a coal mine as a condition of our mining activities.
Risks Related to Our Company
Our ability to pay dividends may be limited by the amount of cash we generate from operations following the payment of fees and
expenses, by restrictions in any future debt instruments and by additional factors unrelated to our profitability.
We may pay special and regular quarterly dividends in the future. The declaration and payment of dividends, if any, is subject to the
discretion of our board of directors and the requirements of applicable law. The timing and amount of any dividends declared will depend on,
among other things: (a) our earnings, earnings outlook, financial condition, cash flow, cash requirements and outlook on current and future
market conditions, (b) our liquidity, including our ability to obtain debt and equity financing on acceptable terms, (c) restrictive covenants in
any future debt instruments and (d) provisions of applicable law governing the payment of dividends.
The metallurgical coal industry is highly volatile, and we cannot predict with certainty the amount of cash, if any, that will be
available for distribution as dividends in any period. Also, there may be a high degree of variability from period to period in the amount of
cash, if any, that is available for the payment of dividends. The amount of cash we generate from operations and the actual amount of cash we
will have available for dividends will vary based upon, among other things:
● risks related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, the health and
safety of our employees, government actions and restrictive measures
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implemented in response, delays and cancellations of customer sales, supply chain disruptions and other impacts to the
business, or our ability to execute our business continuity plans;
● the development of our properties into producing coal mines;
● the ability to begin generating significant revenues and operating cash flows;
● the market price for coal;
● overall domestic and global economic conditions, including the supply of and demand for domestic and foreign coal, coke and
steel;
● unexpected operational events or geological conditions;
● cost overruns;
● our ability to enter into agreements governing the sale of coal, which are generally short-term in nature and subject to
fluctuations in market pricing;
● the level of our operating costs;
● prevailing global and regional economic and political conditions;
● changes in interest rates;
● the impact of domestic and foreign governmental laws and regulations, including environmental and climate change regulations
and regulations affecting the coal mining industry;
● delays in the receipt of, failure to receive, failure to maintain or revocation of necessary governmental permits;
● modification or revocation of our dividend policy by our board of directors; and
● the amount of any cash reserves established by our board of directors.
The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be
affected by non-cash items. We may incur other expenses or liabilities that could reduce or eliminate the cash available for distribution as
dividends.
In addition, any future financing agreements may prohibit the payment of dividends if an event of default has occurred and is
continuing or would occur as a result of the payment of such dividends.
In addition, Section 170 of the Delaware General Corporation Law ("DGCL”) allows our board of directors to declare and pay
dividends on the shares of our common stock either (i) out of our surplus, as defined in and computed in accordance with the DGCL or (ii) in
case there shall be no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.
We may not have sufficient surplus or net profits in the future to pay dividends, and our subsidiaries may not have sufficient funds, surplus
or net profits to make distributions to us. As a result of these and the other factors mentioned above, we can give no assurance that dividends
will be paid in the future.
For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements that apply to
other public companies, including those relating to auditing standards and disclosure about our executive compensation.
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for "emerging growth companies,”
including certain requirements relating to auditing standards and compensation disclosure. We are classified as an emerging growth company.
For as long as we are an emerging growth company, which may be as late as our annual report for the fiscal year ending December 31, 2022,
unlike other public companies, we will not be required to, among other things, (1) provide an auditor’s attestation report on management’s
assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley
Act of 2002, (2) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the
auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the
issuer, (3) comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise or (4) provide
certain disclosure regarding executive compensation required of larger public companies.
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Our significant stockholders have the ability to direct the voting of a majority of the voting power of our common stock, and their interests
may conflict with those of our other stockholders.
Our significant stockholders, Yorktown and ECP, collectively own approximately 62% of our common stock, and management and our
directors own approximately 15%. As a result, our significant stockholders are able to control matters requiring stockholder approval,
including the election of directors, changes to our organizational documents and significant corporate transactions. This concentration of
ownership makes it unlikely that any other holder or group of holders of our common stock will be able to affect the way we are managed or
the direction of our business. The interests of our significant stockholders with respect to matters potentially or actually involving or affecting
us, such as future acquisitions, financings and other corporate opportunities and attempts to acquire us, may conflict with the interests of our
other stockholders. Given this concentrated ownership, our significant stockholders would have to approve any potential acquisition of us. In
addition, certain of our directors are currently employees of our significant stockholders. These directors’ duties as employees of our
significant stockholders may conflict with their duties as our directors, and the resolution of these conflicts may not always be in our or your
best interest.
Furthermore, we entered into a stockholders’ agreement with the significant stockholders in connection with our initial public
offering. Among other things, the stockholders’ agreement provides certain funds affiliated with and/or managed by Yorktown and ECP with
the right to designate a certain number of nominees to our board of directors until the later of (i) the time at which such stockholder no longer
has the right to designate an individual for nomination to the board of directors under the stockholders’ agreement, and (ii) the time at which
the significant stockholders cease to hold in aggregate at least 50% of the outstanding shares of our common stock.
The existence of a significant stockholder and the stockholders’ agreement may have the effect of deterring hostile takeovers,
delaying or preventing changes in control or changes in management or limiting the ability of our other stockholders to approve transactions
that they may deem to be in our best interests. Our significant stockholders’ concentration of stock ownership may also adversely affect the
trading price of our common stock to the extent investors perceive a disadvantage in owning stock of a company with significant
stockholders.
Your percentage of ownership in us may be diluted in the future.
Your percentage of ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or
otherwise, including, without limitation, equity awards that we may be granting to our directors, officers and employees. Such issuances may
have a dilutive effect on our earnings per share, which could adversely affect the market price of our common stock.
It is anticipated that the compensation committee of the board of directors of the Company will grant additional equity awards to
Company employees and directors, from time to time, under the Company’s compensation and employee benefit plans. These additional
awards will have a dilutive effect on the Company’s earnings per share, which could adversely affect the market price of the Company’s
common stock.
In addition, our Charter authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred
stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over
our common stock with respect to dividends and distributions, as our board of directors generally may determine. The terms of one or more
classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant the
holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or to veto
specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock
could affect the residual value of our common stock.
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Certain of our directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking
acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business
opportunities.
Certain of our directors, who are responsible for managing the direction of our operations and acquisition activities, hold positions of
responsibility with other entities (including Yorktown- and ECP-affiliated entities) that are in the business of identifying and acquiring coal
reserves. The existing positions held by these directors may give rise to fiduciary or other duties that are in conflict with the duties they owe
to us. These directors may become aware of business opportunities that may be appropriate for presentation to us as well as to the other
entities with which they are or may become affiliated. Due to these existing and potential future affiliations, they may present potential
business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest. They may also
decide that certain opportunities are more appropriate for other entities with which they are affiliated, and as a result, they may elect not to
present those opportunities to us. These conflicts may not be resolved in our favor.
Further, in addition to his role as our Chairman, Director and Chief Executive Officer, Mr. Atkins serves as Chairman and Chief
Executive Officer of Ramaco Coal, LLC and as a director of one of its subsidiaries. Given certain common ownership between Ramaco Coal,
LLC and us and the complex contractual obligations under the agreements we have entered into with Ramaco Coal, LLC and its subsidiaries,
conflicts could arise between us and Ramaco Coal, LLC and Yorktown, ECP and Mr. Atkins. In addition, a conflict may arise which could
adversely affect the interests of our stockholders, including, without limitation, conflicts involving compliance with payment and performance
obligations under existing leases, and negotiation of the terms of and performance under additional leases we may enter into with Ramaco
Coal, LLC or its subsidiaries or affiliates in the future. For additional discussion of our management’s business affiliations and the potential
conflicts of interest of which our stockholders should be aware, see "Certain Relationships and Related Persons Transactions.”
Our significant stockholders and their affiliates are not limited in their ability to compete with us, and the corporate opportunity
provisions in our Charter could enable our significant stockholders to benefit from corporate opportunities that might otherwise be
available to us.
Our governing documents provide that our significant stockholders (including portfolio investments of our significant stockholders)
are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. In particular, subject to the
limitations of applicable law, our Charter, among other things:
● permits our significant stockholders and any of our officers or directors who are also employees, officers or directors of the
significant stockholders to conduct business that competes with us and to make investments in any kind of property in which
we may make investments; and
● provides that if our significant stockholders and any of our officers or directors who are also employees, officers or directors of
the significant stockholders becomes aware of a potential business opportunity, transaction or other matter, they will have no
duty to offer that opportunity to us.
Our significant stockholders, or any of our officers or directors who are also employees, officers or directors of the significant
stockholders, may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such
opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to
pursue such opportunity. Further, such businesses may choose to compete with us for these opportunities, possibly causing these
opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, our significant stockholders, or any
of our officers or directors who are also employees, officers or directors of the significant stockholders, may dispose of coal properties or
other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. As a result, our renunciation of
our interest and expectancy in any business opportunity that may be from time to time presented to our significant stockholders, or any of our
officers or directors who are also employees, officers or directors of the significant stockholders, could adversely impact our business or
prospects if attractive business opportunities are procured by such parties for their own benefit rather than for ours.
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Each of our significant stockholders has resources greater than we do, which may make it more difficult for us to compete with our
significant stockholders with respect to commercial activities as well as for potential acquisitions. We cannot assure you that any conflicts
that may arise between us and our minority stockholders, on the one hand, and our significant stockholders, on the other hand, will be
resolved in our favor. As a result, competition from our significant stockholders could adversely impact our results of operations.
Our Charter and Bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which
may adversely affect the market price of our common stock.
Our Charter authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to
issue preferred stock, it could be more difficult for a third-party to acquire us. In addition, some provisions of our Charter and Bylaws could
make it more difficult for a third-party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:
● limitations on the removal of directors;
● limitations on the ability of our stockholders to call special meetings;
● establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be
acted upon at meetings of stockholders;
● providing that the board of directors is expressly authorized to adopt, or to alter or repeal our bylaws; and
● establishing advance notice and certain information requirements for nominations for election to our board of directors or for
proposing matters that can be acted upon by stockholders at stockholder meetings.
Our Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and
proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for
disputes with us or our directors, officers, employees or agents.
Our Charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of
Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding
brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or
agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law
(the "DGCL”), our Charter or our bylaws, or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine, in each
such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. This
exclusive forum provision does not apply to a cause of action brought under federal or state securities laws. Any person or entity purchasing
or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our
Charter described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum
that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and
such persons. Alternatively, if a court were to find these provisions of our Charter inapplicable to, or unenforceable in respect of, one or more
of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions,
which could adversely affect our business, financial condition or results of operations.
General Risk Factors
Future changes in tax legislation could have an adverse impact on our cash tax liabilities, results of operations or financial condition.
Tax legislation in 2017 reduced the U.S. corporate income tax rate from 35% to 21% and included certain other changes that resulted
in a significant reduction of our income tax liability. Congress could, in the future, revise or repeal those changes or enact other tax law
changes, such as the elimination of tax preferences currently available with respect to coal exploration and development and the percentage
depletion allowance. For example, President Biden has proposed increasing the U.S. corporate income tax rate to 28%. Such changes are
potentially more likely under the new Democratic party-controlled Congress. We are unable to predict whether any such changes will
ultimately be enacted, but any such changes could have a material impact on our cash tax liabilities, results of operations or financial
condition.
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Changes in the method of determining the London Interbank Offered Rate, or the replacement of the London Interbank Offered Rate with
an alternative reference rate, may adversely affect interest expense related to outstanding debt.
Amounts drawn under our current debt agreements may bear interest at rates based on the London Interbank Offered Rate
("LIBOR”). On July 27, 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase
out LIBOR by the end of 2021. On November 30, 2020, ICE Benchmark Administration ("IBA"), the administrator of LIBOR, with the support of
the United States Federal Reserve and the United Kingdom's Financial Conduct Authority, announced plans to consult on ceasing publication
of USD LIBOR on December 31, 2021 for only the one week and two month USD LIBOR tenors, and on June 30, 2023 for all other USD Libor
tenors. While this announcement extends the transition period to June 2023, the United States Federal Reserve concurrently issued a
statement advising banks to stop new USD LIBOR issuances by the end of 2021. In light of these recent announcements, the future of LIBOR
at this time is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR's phaseout
could cause LIBOR to perform differently than in the past or cease to exist. Uncertainty as to the nature of such potential phase-out and
alternative reference rates or disruption in the financial market could adversely affect our financial condition, results of operations and cash
flows.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business
and the trading price of our common stock.
Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public
company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We cannot be
certain that our efforts to maintain our internal controls will be successful or that we will be able to comply with our obligations under
Section 404 of the Sarbanes Oxley Act of 2002. Any failure to maintain effective internal controls, or difficulties encountered in implementing
or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations. Ineffective internal
controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the
trading price of our common stock.
Debt we incur in the future may limit our flexibility to obtain financing and to pursue other business opportunities.
Our future level of debt could have important consequences to us, including the following:
● our ability to obtain additional financing, if necessary, for working capital, capital expenditures or other purposes may be
impaired, or such financing may not be available on favorable terms;
● our funds available for operations and future business opportunities will be reduced by that portion of our cash flow required to
make interest payments on our debt;
● our ability to pay dividends if an event of default occurs and is continuing or would occur as a result of paying such dividend;
● we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
● our flexibility in responding to changing business and economic conditions may be limited.
Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be
affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our
operating results are not sufficient to service any future indebtedness, we will be forced to take actions such as reducing or delaying our
business activities, investments or capital expenditures, selling assets or issuing equity. We may not be able to affect any of these actions on
satisfactory terms or at all.
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The requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act”), and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs
and consume management attention, and we may be unable to comply with these requirements in a timely or cost-effective manner.
As a public company, we need to comply with new laws, regulations and requirements, certain corporate governance provisions of
the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the requirements of the NASDAQ, with which we were not required to
comply as a private company. Complying with these statutes, regulations and requirements occupies a significant amount of time for our
board of directors and management and significantly increases our costs and expenses. We need to:
● institute a more comprehensive compliance function;
● comply with rules promulgated by the NASDAQ;
● continue to prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;
● establish new internal policies, such as those relating to insider trading; and
● involve and retain to a greater degree outside counsel and accountants in the above activities.
Furthermore, while we generally must comply with Section 404 of the Sarbanes-Oxley Act of 2002, we are not required to have our
independent registered public accounting firm attest to the effectiveness of our internal controls until our first annual report subsequent to
our ceasing to be an "emerging growth company” within the meaning of Section 2(a)(19) of the Securities Act. Accordingly, we may not be
required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until as late as our
annual report for the fiscal year ending December 31, 2022. Once it is required to do so, our independent registered public accounting firm may
issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or
reviewed. Compliance with these requirements may strain our resources, increase our costs and distract management, and we may be unable to
comply with these requirements in a timely or cost-effective manner.
In addition, being a public company subject to these rules and regulations may make it more difficult and more expensive for us to
obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher
costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on
our board of directors or as executive officers.
Our ability to operate effectively could be impaired if we fail to attract and retain key personnel.
The loss of our senior executives could have a material adverse effect on our business. There may be a limited number of persons
with the requisite experience and skills to serve in our senior management positions. We may not be able to locate or employ qualified
executives on acceptable terms. In addition, as our business develops and expands, we believe that our future success will depend greatly on
our continued ability to attract and retain highly skilled personnel with coal industry experience. We may not be able to continue to employ
key personnel or attract and retain qualified personnel in the future. Our failure to retain or attract key personnel could have a material adverse
effect on our ability to effectively operate our business.
We could fail to retain customers or gain new ones.
The failure to obtain additional customers or the loss of all or a portion of the revenues attributable to any customer as a result of
competition, creditworthiness, inability to negotiate extensions or replacement of contracts or otherwise, could have a material adverse effect
on our business, financial condition, results of operations, cash flows and ability to pay dividends to our stockholders.
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Terrorist attacks or cyber-incidents could result in information theft, data corruption, operational disruption and/or financial loss.
Like most companies, we have become increasingly dependent upon digital technologies, including information systems,
infrastructure and cloud applications and services, to operate our businesses, process and record financial and operating data, communicate
with our business partners, analyze mine and mining information, estimate quantities of coal reserves, as well as other activities related to our
businesses. Strategic targets, such as energy-related assets, may be at greater risk of future terrorist or cyber-attacks than other targets in the
United States. Deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties,
including systems that collect, organize, store or use personal data, or cloud-based applications could lead to corruption or loss of our
proprietary data and potentially sensitive data, delays in production or delivery, difficulty in completing and settling transactions, challenges
in maintaining our books and records, environmental damage, communication interruptions, other operational disruptions and third-party
liability. Due to the nature of cyber-attacks, breaches to our or our service or equipment providers’ systems could go unnoticed for a
prolonged period of time. Our insurance may not protect us against such occurrences. Consequently, it is possible that any of these
occurrences, or a combination of them, could have a material adverse effect on our business, reputation, financial condition, results of
operations and cash flows. Further, as cyber incidents continue to evolve, we may be required to expend additional resources to continue to
modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.
Failure to adequately protect critical data and technology systems and the impact of data privacy regulation could materially affect us.
Information technology solution failures, network disruptions and breaches of data security could disrupt our operations by causing
delays or canceling or impeding processing of transactions and reporting financial results, resulting in the unintentional disclosure of
employee, royalty owner, or other third party or our confidential information, or damage to our reputation. There can be no assurance that a
system failure or data security breach will not have a material adverse effect on our operations, financial condition, results of operations or
cash flows. In addition, new laws and regulations governing data privacy and the unauthorized disclosure of confidential information pose
increasingly complex compliance challenges and potentially elevate costs, and any failure to comply with these laws and regulations (or
contractual provisions requiring similar compliance) could result in significant penalties and legal liability, require us to change our business
practices, increase the costs and complexity of compliance, and adversely affect our business. As noted above, we are also subject to the
possibility of cyber incidents or attacks, which themselves may result in a violation of these laws or may result in significant expense.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our Properties
At December 31, 2020, we owned or controlled, primarily through long-term leases, approximately 113,466 acres of coal minerals in
Virginia and West Virginia and 1,570 acres of coal minerals in Pennsylvania. Our preparation plants and loadout facilities are located on
properties owned by us or held under leases which expire at varying dates over the next 30 years. Most of the leases contain options to renew.
Our executive headquarters occupies leased office space in Lexington, Kentucky and we lease office space in Charleston, West
Virginia as an operations center. See Item 1. "Business—Our Projects” for specific information about our mining operations.
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Our Coal Reserves
Reserves are defined by the SEC Industry Guide 7 as that part of a mineral deposit which could be economically and legally extracted
or produced at the time of the reserve determination. Reserves are further classified as proven or probable according to the degree of certainty
of existence. In determining whether our reserves meet this standard, we take into account, among other things, our potential ability to obtain
a mining permit, the possible necessity of revising a mining plan, changes in estimated future costs, changes in future cash flows caused by
changes in costs required to be incurred to meet regulatory requirements and obtaining or renewing mining permits, variations in quantity and
quality of coal, and varying levels of demand and their effects on selling prices. Further, the economic recoverability of our reserves is based
on market conditions including contracted pricing, market pricing and overall demand for our coal. Thus, the actual value at which we no
longer consider our reserves to be economically recoverable varies depending on the length of time in which the specific market conditions are
expected to last. We consider our reserves to be economically recoverable at a price in excess of our cash costs to mine the coal and fund our
ongoing replacement capital. The reserves in this annual report are classified by reliability or accuracy in decreasing order of geological
assurance as Proven (Measured) and Probable (Indicated). The terms and criteria utilized to estimate reserves for this study are based on
United States Geological Survey Circular 891 and in general accordance with SEC Industry Guide 7, and are summarized as follows:
● Proven (Measured) Reserves: Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes; and grade and/or quality are computed from the results of detailed sampling and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth
and mineral content of reserves are well-established.
● Probable (Indicated) Reserves: Reserves for which quantity and grade and/or quality are computed from information similar to
that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are
otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high
enough to assume continuity between points of observation.
Our coal reserve estimates at December 31, 2020 were prepared by our engineers and geologists. Our coal reserve estimates are based
on data obtained from our drilling activities and other available geologic data. Acquisitions or sales of coal properties will change these
estimates. Changes in mining methods or the utilization of new technologies may increase or decrease the recovery basis for a coal seam.
Periodically, we retain outside experts to independently verify our coal reserve estimates. The most recent studies of our coal reserves at Elk
Creek, Knox Creek, Berwind and RAM Mine were prepared by an independent engineering firm, Weir International, Inc. ("Weir”). In periods
between third party updates, we update reserves utilizing our internal staff of engineers and geologists based upon production data. We
intend to continue to periodically retain outside experts to assist management with the verification of our estimates of our coal reserves going
forward.
In our most recent reserve study, Weir began preparing our reserve reporting for compliance with SEC Regulation S-K 1300
requirements, which is required for the first reporting period after December 31, 2021, by completing a historical project review and validating
our complete drill hole database. Weir validated that property control is accurately reflected in reserve modeling, verifying the latest property
boundaries, including control by each individual seam. Weir also examined reserve boundaries to ensure agreement with mining parameters,
such as minimum thickness, minimum yield and minimum inter-burden between seams. Resource classification is determined based on the
expectation of our meeting these mining parameters. Weir also conducted mining integrity checks to ensure each area reserve area is minable.
For example, a slope calculation was conducted in areas planned to be contour mined. If these areas were too steep, the reserves would be
reclassified as unminable and unreportable.
Our reserves available to us by lease or right to lease from Ramaco Coal, LLC are summarized by project in the table below. All
reserves listed for our Elk Creek mining complex, Berwind, Knox Creek and RAM Mine properties are controlled by Ramaco Coal, LLC. We
lease and sublease approximately 262 million tons of those reserves at our Elk
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Creek, Berwind, Knox Creek and RAM Mine properties. In addition, we have the right to lease approximately 63 million additional tons of
reserves controlled by Ramaco Coal, LLC, pursuant to mutual cooperation agreements.
Location
Mining Method
Reserves (in millions) (1)
Proven
Probable Total Operation
Projected Typical
Status of Mine Life Met Coal
Quality (2)
(years)
Underground,
Highwall, Surface
68
45
113 Producing
20+
High
Volatile A,
A/B, B
Planned
Transportation
CSX RR, Norfolk
Southern RR, Truck
Underground
Underground
Highwall,
Underground
30
2
81
181
20
50 Producing
20+
3
5
2022
10
13
81
94 Producing
262
20+ (3)
Low
Volatile
High
Volatile C
High
Volatile A
Truck, Norfolk
Southern RR
Norfolk Southern RR,
Truck, Barge
Truck, Norfolk
Southern RR
Logan, Wyoming and
Mingo Counties, WV
McDowell County, WV,
Buchanan and Tazewell
Counties, VA
Washington County, PA
Buchanan, Tazewell and
Russell Counties, VA
Elk Creek
Berwind
RAM
Mine
Knox
Creek
Total
(1) Reserves, presented as clean recoverable tons, are based upon 50% underground mining recovery, theoretical preparation plant yield
at appropriate specific gravities and 95% preparation plant efficiency. Assessments of economic mineability were determined using
metallurgical coal sales prices based on the three-year historical benchmark price for high volatile A/B coking of approximately $112
per short ton for coal produced at Elk Creek, RAM and Knox Creek and the three-year average low volatile coking coal historical
benchmark price of approximately $116 per short ton for coal produced at Berwind.
(2) Volatiles refers to the volatile matter contained in the coal. Classification of coal as low, mid or high volatile refers to the specific
volatile content within the coal, with coals of 17% to 22% volatiles being classified as low volatile, 23% to 31% as mid volatile and
32% or greater as high volatile. The amount of volatile matter in coal impacts coke yield—the amount of coke and coke by-products
produced per ton of coal charged. Low volatile coal contains more carbon, but too much carbon can result in coke oven damage. Too
much volatile matter results in less carbon and reduces the volume of coke produced. Therefore, coke producers use blends of high
volatile and low volatile coals for coke production. Totals may not sum due to rounding.
(3) The potential Jawbone underground mine would have a 10-15 year life.
These reserve estimates were assessed based on benchmark coal sales pricing at the time of reserve reporting for each property.
Utilizing the three-year average high volatile A/B coking coal historical benchmark price of approximately $112 per short ton for coal produced
at Elk Creek, RAM and Knox Creek, our mineral reserves at each such mines are economic. Utilizing a three-year average low volatile coking
coal historical benchmark price of approximately $114 per short ton, our mineral reserves at our Berwind mine are projected to be economic
when we reach our targeted coal reserve in the Pocahontas No.4 Seam, which we plan to achieve once market conditions permit us to resume
and complete our Berwind mine development plans.
Year-end reserve estimates are and will continue to be reviewed by our senior management, and revisions are communicated to our
board of directors. Inaccuracies in our estimates of our coal reserves could result in decreased profitability from lower than expected revenue
or higher than expected costs. Actual production recovered from identified reserve areas and properties, and revenue and expenditures
associated with our mining operations, may vary materially from estimates.
Item 3. Legal Proceedings
Due to the nature of our business, we may become, from time to time, involved in routine litigation or subject to disputes or claims
related to our business activities. In the opinion of our management, there are no pending litigation, disputes or claims against us which, if
decided adversely, will have a material adverse effect on our financial condition,
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cash flows or results of operations. For a description of our legal proceedings, see "Commitments and Contingencies,” Note 10 to the Notes to
Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this annual report.
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Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters
Our common stock is listed on the NASDAQ Global Select Market under the symbol "METC.”
PART II
Holders. As of the close of business on February 15, 2021, there were forty-four holders of record of our common stock. Because
many of our common shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number
of stockholders represented by these holders of record.
Dividends. We have never declared or paid cash dividends on our common stock. See Item 7 of Part II, "Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Item 6. Selected Financial Data
On February 8, 2017, in connection with the closing of our initial public offering, we completed a corporate reorganization pursuant to
which all the interests in Ramaco Development, LLC ("Ramaco Development”), our accounting predecessor, were exchanged for newly issued
shares of common stock of Ramaco Resources and as a result, Ramaco Development became a wholly-owned subsidiary of Ramaco
Resources. As such, the financial information presented below for the periods through February 8, 2017 pertains to the historical financial
statements and results of operations of Ramaco Development.
The selected historical consolidated financial data for the remaining periods were derived from our audited historical consolidated
financial statements. Historical results are not necessarily indicative of future results. Please read the following table in conjunction with
"Management’s Discussion and Analysis of Financial Condition and Results of
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Operations,” the historical consolidated financial statements of our predecessor and accompanying notes included elsewhere in this annual
report.
(In thousands)
Income Statement data:
Revenue
Cost and expenses
Cost of sales (exclusive of items shown separately below)
Other operating costs and expenses
Asset retirement obligation accretion
Depreciation and amortization
Selling, general and administrative
Total cost and expenses
Operating income (loss)
Other income
Interest expense, net
Income (loss) before tax
Income tax expense (benefit)
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
Cash Flow Data:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net change in cash and cash equivalents
Operating Data:
Tons sold:
Company produced
Purchased
Total tons sold
Tons produced
Balance Sheet Data:
Cash and cash equivalents
Property, plant and equipment – net
Total Assets
Current maturities of long-term debt
Long-term debt, less current portion
Other long-term obligations
Total stockholders' equity
2020
Years Ended December 31,
2017
2018
2019
2016
$ 168,915
$ 230,213
$ 227,574
$
61,036
$
5,216
145,503
162,470
176,555
—
570
20,912
21,023
188,008
(19,093)
11,926
(1,224)
$ (8,391)
(3,484)
$ (4,907)
(0.12)
$
(0.12)
$
—
511
19,521
18,179
200,681
29,532
1,758
(1,193)
$ 30,097
5,163
$ 24,934
0.61
$
0.61
$
—
494
12,423
14,006
203,478
24,096
2,518
(1,427)
$ 25,187
113
$ 25,074
0.63
$
0.62
$
$
$
60,521
258
405
3,154
12,591
— 76,929
(15,893)
204
272
(15,417)
$
—
$
(15,417)
(0.41)
(0.41)
4,397
416
229
252
7,452
— 12,746
(7,530)
—
15
(7,515)
—
(7,515)
$ 13,312
(24,753)
11,286
(155)
$
$ 42,382
(45,722)
2,825
(515)
$
$ 36,183
(42,937)
7,916
1,162
$
$
$
(8,469)
(19,802)
29,292
1,021
$
$
(3,861)
(77,463)
85,527
4,203
1,723
26
1,749
1,695
1,872
78
1,950
1,855
1,721
427
2,148
1,750
372
236
608
548
-
15
15
-
2020
2019
2018
2017
2016
December 31,
$
$
5,300
180,455
228,623
4,872
12,578
17,837
169,095
$
5,532
178,202
226,813
3,333
9,614
20,705
170,083
$
6,951
149,205
188,244
5,000
4,474
12,816
141,109
55
$
5,934
115,451
148,098
—
—
12,276
113,397
5,197
46,434
119,209
—
10,629
9,435
83,788
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion is intended to assist you in understanding our results of operations and our present financial condition
and contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking
statements are dependent upon events, risks and uncertainties that may be outside our control. We caution you that our actual results
could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences
are discussed elsewhere in this Annual Report, particularly in the "Cautionary Note Regarding Forward-Looking Statements” and "Risk
Factors,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed
may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by
applicable law.
Overview
Our primary source of revenue is the sale of metallurgical coal. We have a 262 million ton reserve base of high-quality metallurgical
coal and a development portfolio including four primary properties. Our plan is to continue development of our existing properties and grow
production to 4-4.5 million clean tons of metallurgical coal, subject to market conditions, permitting and additional capital deployment. We may
make acquisitions of reserves or infrastructure that continue our focus on advantaged geology and lower costs.
During 2020, we sold 1.75 million tons of coal. Of this, 71% was sold in North American markets and 29% was sold in export markets,
excluding Canada, principally to Europe, South America, Asia and Africa. We also purchase coal from third parties for sale for our own
account; although, these volumes decreased in 2019 and 2020. Sales of higher margin Company produced coal made up 99% of total sales in
2020 as compared with 96% in 2019.
The overall outlook of the metallurgical coal business is dependent on a variety of factors such as pricing, regulatory uncertainties
and global economic conditions. Coal consumption and production in the U.S. is driven by several market dynamics and trends including the
U.S. and global economies, the U.S. dollar’s strength relative to other currencies and accelerating production cuts.
Metallurgical coal markets weakened significantly during 2020 due to the on-going severe global economic slowdown stemming from
COVID-19 outbreak. The global spread of COVID-19 has created significant market volatility and economic uncertainty and disruption since
early-2020. In response to the pandemic, governments worldwide have placed significant restrictions on both domestic and international travel
and have taken action to restrict the movement of people and suspend some business operations, ranging from targeted restrictions to full
national lockdowns. These lockdowns, restrictions on public gatherings and stay-at-home measures, coupled with the spread and impact of
the COVID-19 pandemic, have resulted in a significant worldwide economic slowdown. In certain cases, states that had begun taking steps to
reopen their economies experienced a subsequent surge in cases of COVID-19, causing these states to cease such reopening measures in
some cases and reinstitute restrictions in others. The COVID-19 pandemic may significantly worsen in the United States during the upcoming
months, which may cause federal, state and local governments to reconsider imposing more severe restrictions on business and social
activities. In the event governments impose such restrictions, the re-opening of the economy may be further delayed.
The Company has been adversely affected by the deterioration and increased uncertainty in the macroeconomic environment as a
result of the impact of COVID-19. In 2020, two customers notified us that their contractual obligations to purchase metallurgical coal from us
would be delayed or curtailed because of COVID-19. These delays or curtailments reduced our total contracted sales volumes for 2020 by
approximately 10% or almost 200,000 tons.
We took certain actions to limit our production and reduce capital expenditures in response to the COVID-19 pandemic and reduced
global demand for metallurgical coal. These included:
● an operational furlough of approximately 182 employees at the Elk Creek mining complex in West Virginia for most of the month
of April 2020;
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● a one-week operational furlough of approximately 157 employees at the Elk Creek mining complex in July 2020;
● the partial closure of our Berwind low volatile development mine complex affecting approximately 44 employees effective in July
2020; and
● a reduction or deferral of non-essential capital expenditures, including cessation of the slope project at the Berwind mining
complex to adapt to the current market conditions.
To date we have not had significant issues with any of our critical suppliers, but we continue to communicate with them and closely
monitor their developments to ensure we have access to the goods and services required to maintain our operations.
We continue to actively monitor the situation and may take further actions altering our business operations if we determine they are
in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities. Additional
measures we may take could include extensions of operational furloughs, temporary salary reductions for certain executives, staffing
reductions and idling or realignment of additional mines as conditions dictate. It is not clear what potential effects any such alterations or
modifications may have on our business. The impact on our results in future periods could be much more significant and cannot currently be
quantified.
The annual contracting season with North American steel producers generally occurs in late-summer through the fall. As of
December 31, 2020, we had entered into forward sales contracts with certain North American customers for 2021 on a fixed price basis for 1.3
million tons of metallurgical coal at an average realizable price of $84/ton FOB mine. This level of pricing in 2021 is lower than we realized in
2020 and is due to a combination of factors, including the impact of COVID-19 discussed above, lower year-over-year steel prices, changes in
types of coal qualities purchased by customers in 2021 and general economic concerns in the United States. We anticipate placing a greater
percentage of our overall sales in the spot markets in 2021.
In 2020, our capital expenditures totaled approximately $24.8 million, down from $45.7 million in 2019. We continued to invest in
infrastructure and mine equipment at our Elk Creek mining complex, primarily related to increasing our long-term refuse disposal. In 2020, we
suspended development at the Berwind mining complex due to lower pricing and demand largely caused by the COVID-19 pandemic. This
complex remains a key part of our anticipated future growth.
On November 5, 2018, one of our three raw coal storage silos that fed our Elk Creek plant experienced a partial structural failure. A
temporary conveying system completed in late-November 2018 restored approximately 80% of our plant capacity. We completed a permanent
belt workaround and restored the preparation plant to its full processing capacity in mid-2019. Our insurance carrier disputed our claim for
coverage based on certain exclusions to the applicable policy and therefore on August 21, 2019, we filed suit seeking a declaratory judgment
that the partial silo collapse was an insurable event and to require coverage under our policy. Please see "Commitments and Contingencies,”
Note 10 to the Notes to Consolidated Financial Statements for further discussion of this matter.
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Results of Operations
(In thousands)
Consolidated statement of operations data
Revenue
Costs and expenses
Cost of sales (exclusive of items shown separately below)
Asset retirement obligation accretion
Depreciation and amortization
Selling, general and administrative
Total costs and expenses
Operating income (loss)
Other income
Interest expense, net
Income (loss) before tax
Income tax expense (benefit)
Net income (loss)
Adjusted EBITDA
Years ended December 31,
2019
2018
2020
$
168,915
$
230,213
$
227,574
145,503
570
20,912
21,023
188,008
162,470
511
19,521
18,179
200,681
176,555
494
12,423
14,006
203,478
(19,093)
29,532
24,096
11,926
(1,224)
(8,391)
(3,484)
(4,907)
18,455
$
$
1,758
(1,193)
30,097
5,163
24,934
55,382
$
$
2,518
(1,427)
25,187
113
25,074
42,169
$
$
Adjusted EBITDA was $18.5 million in 2020, which was 67% below that for 2019. We sold 1.75 million tons of Company produced
tons at realized pricing of $85/ton in 2020. In 2019, we sold 1.9 million tons of Company produced tons at realized pricing of $109/ton. The
decrease in EBITDA is principally due to lower pricing and volumes sold in 2020.
Year Ended December 31, 2020 compared to Year Ended December 31, 2019
Revenue. Our revenue includes sales to customers of Company produced coal and coal purchased from third parties. We include
amounts billed by us for transportation to our customers within revenue and transportation costs incurred within cost of sales.
For the year ended December 31, 2020, we had revenue of $168.9 million from the sale of 1.75 million tons of coal including 0.03 million
tons of purchased coal. During 2019, we sold 1.95 million tons of coal including 0.08 million tons of purchased coal for total revenue of $230.2
million.
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Coal sales information is summarized as follows:
(In thousands)
Company Produced
Coal sales revenue
Tons sold
Purchased from Third Parties
Coal sales revenue
Tons sold
Years ended December 31,
2019
Increase
2020
$
$
166,488
1,723
2,427
26
$
$
219,911
1,872
10,302
78
$
$
(53,423)
(149)
(7,875)
(52)
Metallurgical coal pricing and demand weakened significantly in mid- to late-2019 coinciding with the time that annual contracts for
2020 shipments of North American metallurgical coal were being entered. Because of this, we contracted for fewer tons to domestic markets
under annual contracts in 2020 as compared with 2019. Modestly higher volumes were planned for sale in the spot market during 2020 as
compared with 2019. The aforementioned weakness in spot market demand and pricing, principally attributable to the COVID-19 pandemic,
limited our overall sales results in 2020.
Cost of sales. Our cost of sales totaled $145.5 million for 2020 as compared to $162.5 million for 2019. The total cash cost per ton sold
(FOB mine) during 2020 was approximately $72 for Company produced coal as compared with $73 for 2019. The cost of sales for coal we
purchased from third parties declined to $1.6 million in 2020 from $8.9 million in 2019.
Asset retirement obligation accretion. Our asset retirement obligation ("ARO”) accretion was $0.6 million for 2020 as compared to
$0.5 million for 2019.
Depreciation and amortization. Depreciation of our plant and equipment totaled $17.1 million for the year ended December 31, 2020
as compared with $14.2 million for the previous year. Higher depreciation expense for 2020 was principally due to the increase in employment
of additional mining equipment. Amortization of capitalized development costs totaled $3.8 million in 2020 as compared with $5.3 million for the
previous year. The decrease in amortization of development costs in 2020 was driven by lower coal production from our properties and the full
amortization of certain preparation plant assets in 2019.
Selling, general and administrative expenses. Selling, general and administrative expenses were $21.0 million for the year ended
December 31, 2020 as compared with $18.2 million for 2019. This increase reflects the growth of our organization including higher fees for
professional services.
Other income. Other income was $11.9 million for 2020 and $1.8 million in 2019. We recognized $8.4 million of other income during
2020 for the anticipated full forgiveness of the $8.4 million loan (the "PPP Loan”) we received pursuant to the Paycheck Protection Program
based on our usage of loan proceeds for eligible payroll expenses, lease, interest and utility payments. Other income also includes third-party
royalty income and rail rebates received, each of which increased modestly in 2020.
Interest expense, net. Interest expense, net was approximately $1.2 million in 2020, which was approximately equal that of the
prior year.
Income tax expense. We recognized an income tax benefit of $3.5 million in 2020 as compared with income tax expense of $5.2 million
in 2019. The income tax benefit for 2020 includes $1.8 million of benefit associated with the recognition of other income for the anticipated PPP
Loan forgiveness. In December 2020, the President signed new legislation making the PPP Loan forgiveness income tax free. Excluding this
impact, our effective tax rate was 20.4% for 2020, compared to 17.2% for 2019. The primary difference from the statutory rate of 21% is related
to permanent differences for state income taxes, non-deductible expenses and the difference in depletion expense between U.S. GAAP and
federal income tax purposes.
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Year Ended December 31, 2019 compared to Year Ended December 31, 2018
Please see Part I, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2019
Annual Report on Form 10-K for a discussion of the results of operation for the year ended December 31, 2019 as compared to the year ended
December 31, 2018.
Non-GAAP Financial Measures
Adjusted EBITDA. Adjusted EBITDA is used as a supplemental non-GAAP financial measure by management and external users of
our financial statements, such as industry analysts, investors, lenders and rating agencies. We believe Adjusted EBITDA is useful because it
allows us to more effectively evaluate our operating performance.
We define Adjusted EBITDA as net income plus net interest expense, stock-based compensation, depreciation and amortization
expenses and any transaction related costs. A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not
intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented
by other companies.
(In thousands)
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Net income (loss)
Depreciation and amortization
Interest expense, net
Income taxes
EBITDA
Stock-based compensation
Accretion of asset retirement obligation
Adjusted EBITDA
60
Years ended December 31,
2019
2018
2020
$
$
(4,907)
20,912
1,224
(3,484)
13,745
4,140
570
18,455
$
$
24,934
19,521
1,193
5,163
50,811
4,060
511
55,382
$
$
25,074
12,423
1,427
113
39,037
2,638
494
42,169
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Non-GAAP revenue per ton. Non-GAAP revenue per ton (FOB mine) is calculated as coal sales revenue less transportation costs,
divided by tons sold. We believe revenue per ton (FOB mine) provides useful information to investors as it enables investors to compare
revenue per ton we generate against similar measures made by other publicly-traded coal companies and more effectively monitor changes in
coal prices from period to period excluding the impact of transportation costs which are beyond our control. The adjustments made to arrive at
these measures are significant in understanding and assessing our financial condition. Revenue per ton sold (FOB mine) is not a measure of
financial performance in accordance with U.S. GAAP and therefore should not be considered as an alternative to revenue under U.S. GAAP.
(In thousands, except per ton amounts)
Revenue
Less: Adjustments to reconcile to Non-GAAP
revenue (FOB mine)
Transportation costs
Non-GAAP revenue (FOB mine)
Tons sold
Revenue per ton sold (FOB mine)
Year ended December 31, 2020
Year ended December 31, 2019
Company Purchased
Company Purchased
Produced
Coal
Total
Produced
Coal
Total
$
166,488
$
2,427
$
168,915
$
219,911
$
10,302
$
230,213
(20,000)
146,488
1,723
85
$
$
$
$
(811)
1,616
26
62
$
$
(20,811)
148,104
1,749
85
$
$
(16,253)
203,658
1,872
109
$
$
(424)
9,878
78
127
$
$
(16,677)
213,536
1,950
110
Non-GAAP cash cost per ton sold. Non-GAAP cash cost per ton sold is calculated as cash cost of sales less transportation costs,
divided by tons sold. We believe cash cost per ton sold provides useful information to investors as it enables investors to compare our cash
cost per ton against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal cost from
period to period excluding the impact of transportation costs which are beyond our control. The adjustments made to arrive at these measures
are significant in understanding and assessing our financial condition. Cash cost per ton sold is not a measure of financial performance in
accordance with U.S. GAAP and therefore should not be considered as an alternative to cost of sales under U.S. GAAP.
(In thousands, except per ton amounts)
Cost of sales
Less: Adjustments to reconcile to Non-GAAP
cash cost of sales
Transportation costs
Non-GAAP cash cost of sales
Tons sold
Cash cost per ton sold
2021 Sales Commitments
Year ended December 31, 2020
Year ended December 31, 2019
Company Purchased
Company Purchased
Produced
Coal
Total
Produced
Coal
Total
$
143,064
$
2,439
$
145,503
$
153,172
$
9,298
$
162,470
(19,684)
123,380
1,723
72
$
$
$
$
(823)
1,616
26
62
$
$
(20,507)
124,996
1,749
71
$
$
(16,185)
136,987
1,872
73
$
$
(425)
8,873
78
114
$
$
(16,610)
145,860
1,950
75
As of December 31, 2020, we had entered into forward sales contracts with North American customers for 2021 on a fixed price basis
for 1.3 million tons at an average realizable price of $84/ton FOB mine. These volumes were all metallurgical quality coal.
Liquidity and Capital Resources
Our primary source of cash is proceeds from the sale of our coal production to customers. Our primary uses of cash include the cash
costs of coal production, capital expenditures, royalty payments and other operating expenditures.
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Cash flow information is as follows:
(In thousands)
Consolidated statement of cash flow data:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net change in cash and cash equivalents and restricted cash
Years Ended December 31,
2019
2018
2020
$
$
13,312
(24,753)
11,286
(155)
$
$
42,382
(45,722)
2,825
(515)
$
$
36,183
(42,937)
7,916
1,162
Cash flows from operating activities during 2020 decreased from the comparable period of the prior year primarily resulting from lower
cash earnings and reduced amounts required for working capital (receivables, inventories and accounts payable).
Net cash used in investing activities, all of which was used for capital expenditures, was $24.8 million for the year ended December 31,
2020 as compared with $45.7 million for 2019.
Cash flows from financing activities were $11.3 million for 2020, which was primarily due to net borrowings during the period and
proceeds from the PPP Loan. Cash flows from financing activities were $2.8 million for 2019, which was due to net proceeds from short term
borrowings.
Restricted cash balances at December 31, 2020 and 2019 were $1.4 million and $1.3 million, respectively, consisted of funds held in
escrow for potential future workers’ compensation claims and were classified in other current assets in the consolidated balance sheets.
Indebtedness
Revolving Credit Facility and Term Loan—On November 2, 2018, we entered into a Credit and Security Agreement (as amended, the
"Revolving Credit Facility”) with KeyBank National Association ("KeyBank”). The Revolving Credit Facility was amended on February 20,
2020, and consists of a $10.0 million term loan (the "Term Loan”) and up to $30.0 million revolving line of credit, including $3.0 million letter of
credit availability. All personal property assets, including, but not limited to accounts receivable, coal inventory and certain mining equipment
are pledged to secure the Revolving Credit Facility.
The Revolving Credit Facility has a maturity date of December 31, 2023 and bears interest based on LIBOR + 2.0% or Base Rate +
1.5%. Base Rate is the highest of (i) KeyBank’s prime rate, (ii) Federal Funds Effective Rate + 0.5%, or (iii) LIBOR + 2.0%. Advances under the
Revolving Credit Facility are made initially as base rate loans, but may be converted to LIBOR rate loans at certain times at our discretion. As
of December 31, 2020, $7.0 million was outstanding on the Revolving Credit Facility and we had remaining availability of $16.7 million.
The Term Loan is secured under a Master Security Agreement with a pledge of certain underground and surface mining equipment,
bears interest at LIBOR + 5.15% and is required to be repaid in monthly installments of $278 thousand including accrued interest. The
outstanding principal balance of the Term Loan was $6.7 million at December 31, 2020.
The Revolving Credit Facility contains usual and customary covenants including limitations on liens, additional indebtedness,
investments, restricted payments, asset sales, mergers, affiliate transactions and other customary limitations, as well as financial covenants.
As of December 31, 2020, we were in compliance with all debt covenants.
Equipment Financing Loan—On April 16, 2020, we entered into an equipment loan with Key Equipment Finance, a division of
KeyBank, as lender, in the principal amount of approximately $4.7 million for the financing of existing underground and surface equipment. The
equipment loan bears interest at 7.45% per annum and is payable in 36 monthly installments of $147 thousand. There is a 3% premium for
prepayment of the note within the first 12 months.
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This premium declines by 1% during each successive 12-month period. The outstanding principal balance of the Equipment Financing Loan
was $3.8 million at December 31, 2020.
SBA Paycheck Protection Program Loan— On April 20, 2020, we received proceeds from a PPP Loan in the amount of approximately
$8.4 million from KeyBank, as lender, pursuant to the PPP of the CARES Act. The purpose of the PPP is to encourage the continued
employment of workers. Based upon receipt of this funding, we elected to recall our furloughed workers at our Elk Creek complex. We used all
proceeds from the PPP Loan to retain employees, maintain payroll and make lease, interest and utility payments.
The PPP Loan matures on April 16, 2022 and bears interest at a rate of 1% per annum. Pursuant to the subsequently enacted
Paycheck Protection Flexibility Act of 2020, we are permitted to defer required monthly payments of principal and interest until such time as
an approval or denial of forgiveness is received from the SBA.
The PPP Loan is evidenced by a promissory note dated April 16, 2020, which contains customary events of default relating to, among
other things, payment defaults and breaches of representations and warranties. The PPP Loan may be prepaid by the Company at any time
prior to maturity with no prepayment penalties.
All or a portion of the PPP Loan and accrued interest thereon may be forgiven by the SBA upon documentation of expenditures in
accordance with the SBA requirements and proper application by the Company. Under the CARES Act and Paycheck Protection Flexibility
Act of 2020, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and
covered utilities during either the eight week period or 24-week period beginning on the date of loan funding. For purposes of the PPP Loan,
payroll costs exclude cash compensation of an individual employee in excess of $100 thousand, prorated annually. Not more than 40% of the
forgiven amount may be for non-payroll costs. Forgiveness could be reduced if full-time headcount declines, or if salaries and wages for
employees with salaries of $100 thousand or less annually are reduced by more than 25%.
Our application for forgiveness was approved by KeyBank and is currently being reviewed by the SBA. We anticipate that the full
amount of the PPP Loan principal, together with accrued interest thereon, will be forgiven. Accordingly, we recognized $8.4 million as other
income in the consolidated statement of operations for 2020.
Refer to Notes 6 and 7 to the Consolidated Financial Statements included in Item 8 of Part I in this Annual Report on Form 10-K for
additional information on indebtedness.
Liquidity
As of December 31, 2020, our available liquidity was $22.0 million, comprised of cash and availability under our Revolving Credit
Facility. We expect to fund our capital and liquidity requirements with cash on hand, borrowings discussed above and projected cash flow
from operations. Factors that could adversely impact our future liquidity and ability to carry out our capital expenditure program include the
following:
● Timely delivery of our product by rail and other transportation carriers;
● Timely payment of accounts receivable by our customers;
● Cost overruns in our purchases of equipment needed to complete our mine development plans;
● Delays in completion of development of our various mines which would reduce the coal we would have available to sell and our
cash flow from operations; and
● Adverse changes in the metallurgical coal markets that would reduce the expected cash flow from operations.
Capital Requirements
Our primary use of cash includes capital expenditures for mine development and for ongoing operating expenses. During 2020 we
spent $24.8 million primarily for the purchase of mining equipment, infrastructure and development of mines at our Elk Creek and Berwind
mining complexes. We anticipate capital expenditures of approximately $15 million in 2021, with the potential to increase this amount
depending on market conditions.
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As of the date of this Annual Report on Form 10-K, management believes that current cash on hand, cash flow from operations and
available liquidity under our Revolving Credit Facility will be sufficient to meet its capital expenditure and operating plans. We expect to fund
any new reserve acquisitions from cash on hand, cash from operations and potential future issuances of debt or equity securities.
If future cash flows are insufficient to meet our liquidity needs or capital requirements, we may reduce our expected level of capital
expenditures and/or fund a portion of our capital expenditures through the issuance of debt or equity securities, the entry into debt
arrangements or from other sources, such as asset sales.
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2020:
(In thousands)
Minimum royalty obligations
Asset retirement obligations, discounted
Take or pay obligations
Total
Off-Balance Sheet Arrangements
Total
40,516
15,150
3,332
58,998
$
$
As of December 31, 2020, we had no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Less Than
1 year
Payments due by period
1 – 3
years
11,429
2,605
$
$
—
$
14,034
$
$
3 – 5
years
11,438
443
—
$
11,881
$
$
5,297
692
3,332
9,321
years
12,352
11,410
—
23,762
More than 5
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the amounts of revenue and expenses reported for the period then ended.
Mine development costs. Mine development costs represent the costs incurred to prepare future mine sites and/or seams of coal for
mining. These costs include costs of acquiring, permitting, planning, research, and developing access to identified mineral reserves and other
preparations for commercial production as necessary to develop and permit the properties for mining activities. Mine development costs are
capitalized and amortized on a units-of-production basis as mining of the associated mine’s assigned reserves takes place. Operating
expenditures, including certain professional fees and overhead costs, are not capitalized but are expensed as incurred.
Asset retirement obligations. We recognize as a liability an asset retirement obligation, or ARO, associated with the retirement of a
tangible long-lived asset in the period in which it is incurred or becomes determinable, with an associated increase in the carrying amount of
the related long-lived asset. The initially recognized asset retirement cost is amortized using the same method and useful life as the long-lived
asset to which it relates. Accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value.
Estimating the future ARO requires management to make estimates and judgments regarding timing and existence of a liability, as well
as what constitutes adequate restoration. Inherent in the fair value calculation are numerous assumptions and judgments including the
ultimate costs, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and
political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding
adjustment is made to the related asset.
Impairment of Long-lived Assets. We review our long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. These events and circumstances
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include, but are not limited to, a current expectation that a long-lived asset will be disposed of significantly before the end of its previously
estimated useful life, a significant adverse change in the extent or manner in which we use a long-lived asset or a change in its physical
condition.
When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash
flows from the use and eventual disposition of an asset or asset group to its carrying amount. If the projected undiscounted cash flows are
less than the carrying amount, an impairment is recorded for the excess of the carrying amount over the estimated fair value.
We make various assumptions, including assumptions regarding future cash flows in our assessments of long-lived assets for
impairment. The assumptions about future cash flows and growth rates are based on the current and long-term business plans related to the
long-lived assets.
Stock-based compensation expense. Compensation cost for equity incentive awards is based on the fair value of the equity
instrument generally on the date of grant and is recognized over the requisite service period.
The fair value of restricted stock awards is determined using the publicly-traded price of our common stock on the grant date. The fair
value of option awards is calculated using the Black-Scholes option-pricing model. The Black-Scholes model requires us to make assumptions
and judgments about the variables used in the calculation, including the expected term, expected volatility, risk-free interest rate, dividend rate
and service period.
Income Taxes. We provide for deferred income taxes for temporary differences arising from differences between the financial
statement and tax basis of assets and liabilities existing at each balance sheet date using enacted tax rates. We initially recognize the effects of
a tax position when it is more than 50 percent likely, based on the technical merits that the position will be sustained upon examination. Our
determination of whether or not a tax position has met the recognition threshold depends on the facts, circumstances, and information
available at the reporting date.
A valuation allowance may be recorded to reflect the amount of future tax benefits that management believes are not likely to be
realized. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of
temporary differences. The development of these expectations involves the use of estimates such as production levels, operating profitability,
timing of development activities and the cost and timing of reclamation work. If actual outcomes differ from our expectations, we may record an
additional valuation allowance through income tax expense in the period such determination is made.
Recent Accounting Pronouncements. See Item 8 of Part II, "Financial Statements and Supplementary Data—Note 2—Summary of
Significant Accounting Policies—Recent Accounting Pronouncements.”
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
In addition to the risks inherent in operations, we are exposed to financial, market, political and economic risks. The following
discussion provides additional detail regarding our exposure to the risks related to changes in commodity prices, interest rates and foreign
exchange rates.
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Commodity Price Risk. Our primary product is metallurgical coal, which is in itself a commodity. Our coal is sold under short-term
fixed price contracts, term transactions utilizing index pricing or on a spot basis. As such, we are exposed to changes in the international price
of metallurgical coal. We attempt to manage this risk by keeping tight control over our mining costs.
Interest Rate Risk. As we have limited debt, we are not overly exposed to interest rate risk. Should we incur additional debt in the
future or increase our cash position, the general level of interest rates will begin to take on greater importance. At that time, we will manage our
exposure through a variety of financial tools designed to minimize exposure to interest rate fluctuations.
Foreign Exchange Rate Risk. International sales of coal are typically denominated in U.S. dollars. As a result, we do not have direct
exposure to currency valuation exchange rate fluctuations. However, because our coal is sold internationally, to the extent that the U.S. dollar
strengthens against the foreign currency of a customer or potential customer, we may find our coal at a price disadvantage as compared with
other non-U.S. suppliers. This could lead to our receiving lower prices or being unable to compete for that specific customer’s business.
Consequently, currency fluctuations could adversely affect the competitiveness of our coal in international markets.
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Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Selected Quarterly Financial Data (Unaudited)
68
69
70
71
72
73
87
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Ramaco Resources, Inc.
Lexington, Kentucky
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Ramaco Resources, Inc. (the Company) as of December 31, 2020
and 2019, and the related consolidated statements of operations, equity, and cash flows for each of the years in the three-year period ended
December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and
the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with
accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our
audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/ Briggs & Veselka Co.
We have served as the Company’s auditor since 2015.
Houston, Texas
February 18, 2021
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In thousands, except share and per-share amounts
December 31,
2020
2019
Ramaco Resources, Inc.
Consolidated Balance Sheets
Assets
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses and other
Total current assets
Property, plant and equipment – net
Advanced coal royalties
Other
Total Assets
Liabilities and Stockholders' Equity
Liabilities
Current liabilities
Accounts payable
Accrued expenses
Asset retirement obligations
Current portion of long-term debt
Other current liabilities
Total current liabilities
Asset retirement obligations
Long-term debt, net
Deferred tax
Other long-term liabilities
Total liabilities
Commitments and contingencies
Stockholders' Equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding
Common stock, $0.01 par value, 260,000,000 shares authorized, 42,706,908 and 40,950,175 shares issued
and outstanding, respectively
Additional paid-in capital
Retained earnings
Total stockholders' equity
Total Liabilities and Stockholders' Equity
$
$
$
$
$
$
$
5,300
20,299
11,947
4,953
42,499
180,455
4,784
885
228,623
11,742
11,591
46
4,872
862
29,113
15,110
12,578
1,762
965
59,528
—
—
5,532
19,256
15,261
4,274
44,323
178,202
3,271
1,017
226,813
10,663
11,740
19
3,333
656
26,411
14,586
9,614
5,265
854
56,730
—
—
427
158,859
9,809
169,095
228,623
$
410
154,957
14,716
170,083
226,813
The accompanying notes are an integral part of these consolidated financial statements.
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Ramaco Resources, Inc.
Consolidated Statements of Operations
In thousands, except per-share amounts
Revenue
Costs and expenses
Cost of sales (exclusive of items shown separately below)
Asset retirement obligation accretion
Depreciation and amortization
Selling, general and administrative
Total costs and expenses
Operating income (loss)
Other income
Interest expense, net
Income (loss) before tax
Income tax expense (benefit)
Net income (loss)
Earnings (loss) per common share
Basic
Diluted
Basic weighted average shares outstanding
Diluted weighted average shares outstanding
Years ended December 31,
2019
2018
2020
$
168,915 $
230,213 $
227,574
145,503
570
20,912
21,023
188,008
162,470
511
19,521
18,179
200,681
176,555
494
12,423
14,006
203,478
(19,093)
29,532
24,096
11,926
(1,224)
(8,391)
(3,484)
(4,907) $
1,758
(1,193)
30,097
5,163
24,934
(0.12) $
(0.12) $
42,460
42,460
0.61
0.61
40,838
40,838
$
$
$
2,518
(1,427)
25,187
113
25,074
0.63
0.62
40,039
40,263
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
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Ramaco Resources, Inc.
Consolidated Statements of Equity
In thousands
Balance at January 1, 2018
Stock-based compensation
Net income
Balance at December 31, 2018
Restricted stock surrendered for withholding taxes payable
Stock-based compensation
Net income
Balance at December 31, 2019
Restricted stock surrendered for withholding taxes payable
Stock-based compensation
Net loss
Balance at December 31, 2020
Common
Stock
$
396
5
—
401
—
9
—
410
(1)
18
—
$
427
$
$
Additional
Paid-
in Capital
148,293
2,633
$
—
150,926
(20)
4,051
—
154,957
(220)
4,122
Retained
Earnings
(Deficit)
(35,292)
$
—
25,074
(10,218)
—
—
24,934
14,716
—
—
Total
Stockholders'
Equity
113,397
2,638
25,074
141,109
(20)
4,060
24,934
170,083
(221)
4,140
(4,907)
169,095
$
—
$
158,859
(4,907)
9,809
The accompanying notes are an integral part of these consolidated financial statements.
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Ramaco Resources, Inc.
Consolidated Statements of Cash Flows
In thousands
Cash flows from operating activities
2020
Years ended December 31,
2019
2018
Net income (loss)
Adjustments to reconcile net income (loss) to net cash from operating activities:
$
(4,907)
$
24,934
$
Accretion of asset retirement obligations
Depreciation and amortization
Amortization of debt issuance costs
Stock-based compensation
Other income - PPP Loan
Deferred income taxes
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses and other current assets
Inventories
Other assets and liabilities
Accounts payable
Accrued expenses
Net cash from operating activities
Cash flow from investing activities:
Purchases of property, plant and equipment
Proceeds from maturities of investment securities
Net cash from investing activities
Cash flows from financing activities
Proceeds from PPP Loan
Proceeds from borrowings
Proceeds from notes payable - related party
Payments of debt issuance cost
Repayment of borrowings
Repayment of notes payable - related party
Repayments of financed insurance payable
Restricted stock surrendered for withholding taxes payable
Net cash from financing activities
Net change in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash, beginning of period
Cash and cash equivalents and restricted cash, end of period
Supplemental cash flow information:
Cash paid for interest
Cash paid for taxes
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued expenses
Financed insurance
Additional asset retirement obligations incurred
$
$
570
20,912
58
4,140
(8,444)
(3,503)
(1,043)
986
3,314
(1,270)
2,753
(254)
13,312
(24,753)
—
(24,753)
8,444
50,043
—
—
(45,598)
—
(1,382)
(221)
11,286
(155)
6,865
6,710
1,095
19
1,228
1,588
86
511
19,521
58
4,060
—
5,156
(8,527)
723
(1,076)
689
(7,313)
3,646
42,382
(45,722)
—
(45,722)
—
73,750
—
—
(70,335)
—
(570)
(20)
2,825
$
$
(515)
7,380
6,865
$
999
$
—
2,902
939
516
The accompanying notes are an integral part of these consolidated financial statements.
72
25,074
494
12,423
569
2,638
—
109
(3,563)
(629)
(4,127)
(835)
(1,521)
5,551
36,183
(48,137)
5,200
(42,937)
—
28,424
3,000
(569)
(18,950)
(3,000)
(989)
—
7,916
1,162
6,218
7,380
826
—
1,319
1,276
—
Table of Contents
NOTE 1—DESCRIPTION OF BUSINESS
Ramaco Resources, Inc.
Notes to Consolidated Financial Statements
Ramaco Resources, Inc. ("Ramaco”) is a Delaware corporation formed in October 2016. Our principal corporate offices are located in
Lexington, Kentucky. We are an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia, southwestern
Virginia, and southwestern Pennsylvania.
As used herein, "the Company,” "we,” "us,” "our,” and similar terms include Ramaco Resources, Inc. and its subsidiaries, unless the
context indicates otherwise.
Our development portfolio includes four primary properties: Elk Creek, Berwind, RAM Mine and Knox Creek. We believe each of
these projects possesses geologic and logistical advantages that make our coal among the lowest delivered-cost U.S. metallurgical coal to a
majority of our domestic target customer base, North American blast furnace steel mills and coke plants, as well as international metallurgical
coal consumers.
We operate three deep mines and a surface mine at our Elk Creek mining complex. Development of this complex commenced in 2016
and included construction of a preparation plant and rail load-out facilities. Development of our Berwind mining complex began in late 2017. In
2020, we suspended development at the Berwind mining complex due to lower pricing and demand largely caused by the economic impacts of
the COVID-19 pandemic. This complex remains a key part of our anticipated future growth. We expect to achieve commercial production at the
Berwind mining complex approximately six months after we resume the slope project. The Knox Creek preparation plant processes coal from
our Berwind mine as well as coal we may purchase from or toll wash for third parties. Our RAM Mine property is scheduled for initial
production in 2022, subject to permitting and market conditions.
Impact of COVID-19 Pandemic on Our Business— The global spread of COVID-19 has created significant market volatility and
economic uncertainty and disruption since early 2020. In response to the pandemic, governments worldwide have placed significant
restrictions on both domestic and international travel and have taken action to restrict the movement of people and suspend some business
operations, ranging from targeted restrictions to full national lockdowns. These lockdowns, restrictions on public gatherings and stay-at-home
measures, coupled with the spread and impact of the COVID-19 pandemic, have resulted in a significant worldwide economic slowdown. In
certain cases, states that had begun taking steps to reopen their economies experienced a subsequent surge in cases of COVID-19, causing
these states to cease such reopening measures in some cases and reinstitute restrictions in others. The COVID-19 pandemic may significantly
worsen in the United States during the upcoming months, which may cause federal, state and local governments to reconsider imposing more
severe restrictions on business and social activities. In the event governments impose such restrictions, the re-opening of the economy may
be further delayed.
The Company has been adversely affected by the deterioration and increased uncertainty in the macroeconomic environment as a
result of the impact of COVID-19. In 2020, two customers notified us that their contractual obligations to purchase metallurgical coal from us
would be delayed or curtailed because of COVID-19. These delays or curtailments reduced our total contracted sales volumes for 2020 by
approximately 10% or almost 200,000 tons.
We took other actions to limit our production and reduce capital expenditures in response to the pandemic and reduced global
demand for metallurgical coal. These included:
● an operational furlough of approximately 182 employees at the Elk Creek mining complex in West Virginia for most of the month
of April 2020;
● a one-week operational furlough of approximately 157 employees at the Elk Creek mining complex in July 2020;
● the partial closure of our Berwind low volatile development mine complex affecting approximately 44 employees effective in July
2020; and
● a reduction or deferral of non-essential capital expenditures including cessation of the slope project at the Berwind mining
complex to adapt to the current market conditions.
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To date we have not had significant issues with any of our critical suppliers, but we continue to communicate with them and closely
monitor their developments to ensure we have access to the goods and services required to maintain our operations.
We continue to actively monitor the situation and may take further actions altering our business operations if we determine they are
in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities. Additional
measures we may take could include extensions of operational furloughs, temporary salary reductions for certain executives, staffing
reductions and idling or realignment of additional mines as conditions dictate. It is not clear what potential effects any such alterations or
modifications may have on our business. The impact on our results in future periods could be much more significant and cannot currently be
determined and quantified.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation—The accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America ("U.S. GAAP”) and U.S. Securities and Exchange Commission
regulations. The financial statements are presented on a consolidated basis for all periods presented. All significant intercompany balances
and transactions between consolidated entities have been eliminated in consolidation.
Use of estimates—The preparation of these financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates. The most significant estimates are related to the quantity and value of coal inventories, stock-based compensation,
asset retirement obligations, contingencies, evaluation of long-lived assets for impairment, and the quantities and values of coal reserves.
Revenue Recognition—Our primary source of revenue is from the sale of coal through contracts with steel producers usually having
durations of less than one year. Revenue is recognized when performance obligations under the terms of a contract with our customers are
satisfied. This occurs when control of the coal is transferred to our customers. For coal shipments to domestic customers via rail, control is
generally transferred when the railcar is loaded. Control is transferred for export coal shipments to customers via ocean vessel when the vessel
is loaded at the port.
Our coal sales generally include up to 90-day payment terms following the transfer of control of the goods to our customer. In the
case of some of our foreign customers, our contracts also require that letters of credit are posted to secure payment of any outstanding
receivable. We do not include extended payment terms in our contracts. Our contracts with customers typically provide for minimum
specifications or qualities of the coal we deliver. Variances from these specifications or qualities are settled by means of price adjustments.
Generally, these price adjustments are settled within 30 days of delivery and are insignificant.
Freight Revenue and Expense—Costs incurred to transport coal to the point of sale at the port facility are included in cost of sales
and the gross amounts billed to customers to cover shipping to and handling of the coal at the port are included in revenue.
Cash and Cash Equivalents—We classify all highly-liquid instruments with an original maturity of three months or less as cash
equivalents. Restricted cash balances at December 31, 2020 and 2019 were $1.4 million and $1.3 million, respectively, consisted of funds held in
escrow for potential future workers’ compensation claims and were classified in other current assets in the consolidated balance sheets.
Inventories— Coal is reported as inventory at the point in time it is extracted from the mine. Coal inventories are valued at the lower
of average cost or net realizable value, with cost determined on a first-in, first-out inventory valuation method. Coal inventory costs include
labor, supplies, equipment costs, freight, operating overhead, depreciation and amortization. Coal inventory quantities are adjusted
periodically based on aerial surveys of coal
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stockpiles. Supply inventories are valued at average cost and totaled $2.5 million at December 31, 2020 and $2.9 million at December 31, 2019.
Property, Plant and Equipment—Property, plant and equipment is recorded at cost. Expenditures which extend the useful lives of
existing plant and equipment are capitalized. Planned major maintenance costs which do not extend the useful lives of existing plant and
equipment are expensed as incurred. When properties are retired or otherwise disposed, the related cost and accumulated depreciation are
removed from the respective accounts and any profit or loss on disposition is recognized in the consolidated statements of operations.
Coal exploration costs are expensed as incurred. Coal exploration costs include those incurred to ascertain existence, location, extent
or quality of ore or minerals before beginning the development stage of the mine.
Capitalized mine development costs represent the costs incurred to prepare mine sites and/or seams of coal for future mining. These
costs include costs of acquiring, permitting, planning, research, and developing access to identified mineral reserves and other preparations
for commercial production as necessary to develop and permit the properties for mining activities. Operating expenditures including certain
professional fees and overhead costs are not capitalized but are expensed as incurred.
The capitalized mine development costs are amortized on a units-of-production basis as mining of that mine’s assigned reserves
takes place. Depreciation of plant and equipment is calculated on the straight-line method over their estimated useful lives ranging from three
to thirty years.
Advanced Coal Royalties—In most cases, we acquire the right to mine coal reserves under leases which call for the payment of
royalties on coal as it is mined and sold. In many cases, these mineral leases require the payment of advance or minimum coal royalties to
lessors that are recoupable against future production royalties. These advance payments are deferred and charged to operations as the coal
reserves are mined.
Impairment of Long-lived Assets—We review and evaluate long-lived assets, including property, plant and equipment and mine
development costs, for impairment when events or changes in circumstances indicate that the asset’s carrying value may not be recoverable.
Recoverability is measured by comparing the net book value to the fair value. When the net book value exceeds the fair value, an impairment
loss is measured and recorded.
If it is determined that an undeveloped mineral interest cannot be economically converted to proven and probable reserves, or that
the recoverability of capitalized mine development costs is uncertain, such capitalized costs are reduced to their net realizable value and an
impairment loss is recorded to expense and future development costs are expensed as incurred.
Asset Retirement Obligations—Legal obligations associated with the retirement of long-lived assets are reflected at their estimated
fair value, with a corresponding charge to development costs, at the time they are incurred. Our asset retirement obligations primarily consist
of spending estimates related to reclaiming metallurgical coal land and support facilities in accordance with federal and state reclamation laws
as defined by each mining permit. We estimate and record the fair value of a liability for an asset retirement obligation in the period in which it
is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value
each period and the capitalized cost is amortized using the units-of-production method over estimated recoverable reserves upon
commencement of mining.
Deferred Income—We account for the SBA Paycheck Protection Program Loan ("PPP Loan”) as an in-substance government grant
because we expect to meet the PPP Loan eligibility criteria and have concluded that the loan represents, in substance, a grant that is expected
to be forgiven. Proceeds from the PPP Loan were initially recognized as a deferred income liability. Subsequently, we reduced this liability and
recognized income on a systematic basis over the period in which the related costs for which the PPP Loan was intended were incurred. PPP
Loan income is presented as other income within the consolidated statements of operations.
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Self-Insurance—We are self-insured for certain losses relating to workers’ compensation claims. We purchase insurance coverage to
reduce our exposure to significant levels of these claims. Self-insured losses are accrued based upon estimates of the aggregate liability for
uninsured claims incurred as of the balance sheet date using current and historical claims experience and certain actuarial assumptions. As of
December 31, 2020, the estimated aggregate liability for uninsured claims totaled $1.7 million. Of this, $0.9 million was included in other long-
term liabilities within the consolidated balance sheets. As of December 31, 2019, the estimated aggregate liability for uninsured claims totaled
$1.0 million, including $0.7 million in other long-term liabilities. These estimates are subject to uncertainty due to a variety of factors, including
extended lag times in the reporting and resolution of claims, and trends or changes in claim settlement patterns, insurance industry practices
and legal interpretations. As a result, actual costs could differ significantly from the estimated amounts. Adjustments to estimated liabilities
are recorded in the period in which the change in estimate occurs.
Leases—We determine if an arrangement is a lease at inception. Operating leases are included in other current assets, other current
liabilities, and other long-term liabilities in our consolidated balance sheets. We do not have any finance leases.
Right of use ("ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our
incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at
commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms
may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease
payments is recognized on a straight-line basis over the lease term.
Leases of mineral reserves are exempted under U.S. GAAP from recognition within the financial statements.
Fair Value Measurements— For assets and liabilities that are recognized or disclosed at fair value in the consolidated financial
statements, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. We use a three-level fair value hierarchy that categorizes assets and liabilities measured
at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1 - inputs are quoted prices in active
markets for the identical assets or liabilities; Level 2 - inputs are other than quoted prices included in Level 1 that are directly or indirectly
observable through market-corroborated inputs; and Level 3 - inputs are unobservable, or observable but cannot be market-corroborated,
requiring us to make assumptions about pricing by market participants.
Income Taxes—Income taxes are accounted for using a balance sheet approach. We account for deferred income taxes by applying
statutory tax rates in effect at the reporting date of the balance sheet to differences between the book and tax basis of assets and liabilities. A
valuation allowance is established if it is more likely than not that the related tax benefits will not be realized. In determining the appropriate
valuation allowance, we consider the projected realization of tax benefits based on expected levels of future taxable income, available tax
planning strategies and reversals of existing taxable temporary differences.
Uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. We had no unrecognized tax positions at December 31, 2020 and 2019. We file
income tax returns in the U.S. and in various state and local jurisdictions which may be routinely examined by tax authorities. The statute of
limitations is currently open for all tax returns filed.
Segment Reporting—Our properties located in West Virginia, Virginia and Pennsylvania each consist of mineral reserves for
production of metallurgical coal from both underground and surface mines. These operations are within the Appalachia basin. Geology, coal
transportation routes to customers, regulatory environments and coal quality or type are characteristic to a basin. For financial reporting
purposes, these operations represent a single segment because
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each possesses similar production methods, distribution methods, and customer quality and consumption characteristics, resulting in similar
long-term expected financial performance.
Stock-Based Compensation—We account for employee stock-based compensation using the fair value method. Compensation cost
for equity incentive awards is based on the fair value of the equity instrument generally on the date of grant and is recognized over the
requisite service period. Forfeitures are recognized as they occur.
The fair value of restricted stock awards is determined using the publicly-traded price of our common stock on the grant date. The fair
value of option awards is calculated using the Black-Scholes option-pricing model. The Black-Scholes model requires us to make assumptions
and judgments about the variables used in the calculation, including the expected term, expected volatility, risk-free interest rate, dividend rate
and service period.
Concentrations—Our operations are all related to metallurgical coal within the mining industry. A reduction in metallurgical coal
prices or other disturbances in the metallurgical coal markets could have an adverse effect on our operations. In 2020, 2019 and 2018,
approximately 71%, 74% and 50%, respectively, of our revenue was derived from coal shipments to customers in North American markets.
Financial instruments that potentially subject us to a significant concentration of credit risk consist primarily of cash and cash
equivalents, restricted cash and accounts receivable. We maintain deposits in federally insured financial institutions in excess of federally
insured limits. We monitor the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash
deposits.
We have a limited number of customers. Contracts with these customers provide for billings principally upon shipment and
compliance with payment terms is monitored on an ongoing basis. Outstanding receivables beyond payment terms are promptly investigated
and discussed with the specific customer. We estimate an allowance for doubtful accounts based on an analysis of specific customers, taking
into consideration the age of past due accounts and an assessment of the customer’s ability to pay. An allowance for doubtful accounts was
not necessary as of December 31, 2020 and 2019.
During 2020, sales to three customers accounted for approximately 70% of total revenue. The total balance due from these customers
at December 31, 2020 was approximately 46% of total accounts receivable. During 2019, sales to three customers accounted for approximately
53% of total revenue. The total balance due from these customers at December 31, 2019 was approximately 58% of total accounts receivable.
During 2018, sales to six customers accounted for approximately 71% of total revenue.
Reclassifications—Financial statements presented for prior periods include reclassifications that were made to conform to the
current-year presentation.
Recent Accounting Pronouncements—In May 2014, the FASB issued Accounting Standards Update ("ASU”) 2014-09, Revenue from
Contracts with Customers. This standard supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of
ASU 2014-09 is to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 defines a five-step
process to achieve this core principle and, in doing so, it is possible that more judgment and estimates may be required within the revenue
recognition process than is required under present U.S. GAAP. These may include identifying performance obligations in the contract,
estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate
performance obligation. The new standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and
cash flows arising from customer contracts, including significant judgments and changes in judgments. We adopted this new standard on
January 1, 2018 using the modified retrospective method of adoption. The adoption of this standard did not have a material effect on our
financial position, results of operations or cash flows, but resulted in increased disclosures related to revenue recognition policies and
disaggregation of revenue.
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In February 2016, the FASB issued ASU 2016-02, Leases, which aims to make leasing activities more transparent and comparable and
requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability,
including leases currently accounted for as operating leases. Leases of mineral reserves and related land leases are exempted from the
standard. We adopted ASU 2016-02 on January 1, 2019. We elected the "package of practical expedients” within the standard which permits
us not to reassess prior conclusions about lease identification, lease classification and initial direct costs. We made an accounting policy
election to not separate lease and non-lease components for all leases. The adoption of this standard resulted in the recognition of right-of-
use assets and lease liabilities of $0.3 million, which were not previously recorded on our consolidated balance sheet.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, which replaces the existing incurred loss impairment
model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable
information to inform credit loss estimates. We adopted this standard effective January 1, 2020. The adoption of this ASU did not have a
material impact on our consolidated financial statements because we do not have a history of credit losses on our financial instruments and
have no material expected losses.
In August 2018, the FASB issued ASU 2018-15, Internal-Use Software, which addresses the accounting for implementation costs
associated with a hosted service. The standard provides that implementation costs be evaluated for capitalization using the same criteria as
that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as
the hosted service costs and over the expected term of the hosting arrangement. We adopted this standard as of January 1, 2020 on a
prospective basis. The adoption of this ASU did not have a material impact on our consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes, which enhances and simplifies various aspects of the income tax
accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business
combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The standard will be effective
for us in the first quarter of 2021. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial
statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting, which provides optional expedients and exceptions for applying generally accepted accounting principles to
contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are
effective for all entities beginning on March 12, 2020 through December 31, 2022. The Company may elect to apply the amendments
prospectively through December 31, 2022. The Company has not adopted this ASU as of December 31, 2020. The Company is currently
assessing the impact of adopting this standard on its financial statements and the timing of adoption.
NOTE 3—PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
(In thousands)
Plant and equipment
Construction in process
Capitalized mine development costs
Less: accumulated depreciation and amortization
Total property, plant and equipment, net
December 31,
2020
$ 155,173
7,245
74,279
(56,242)
$ 180,455
$
$
2019
142,773
11,986
58,773
(35,330)
178,202
Capitalized amounts related to coal reserves at properties where we are not currently engaged in mining operations totaled $15.4
million as of December 31, 2020 and $12.7 million as of December 31, 2019.
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Depreciation and amortization included:
(In thousands)
Depreciation of plant and equipment
Amortization of capitalized
mine development costs
Total depreciation and amortization
2020
Years ended December 31,
2019
2018
$
$
17,094
3,818
20,912
$
$
14,219
5,302
19,521
$
$
9,751
2,672
12,423
In the fourth quarter of 2019, we acquired multiple permits from various affiliates of Omega Highwall Mining, LLC. Consideration for
the transaction included assumption of approximately $0.6 million of ARO liability, curing minor lease defaults, and paying advance royalties
under two assumed lease instruments. The total out-of-pocket consideration was less than $0.1 million, most of which is recoupable against
future royalty payments. These permits are in close proximity to our Knox Creek preparation plant and loadout infrastructure, and provide
immediate access to two separate mining areas in Southwestern Virginia.
On January 3, 2020, we entered into a mineral lease with the McDonald Land Company for coal reserve tracts which, in many cases,
are located immediately adjacent to our Elk Creek complex. This lease adds more than 21 million proven and probable reserves in approximately
20 different coal seams to our Elk Creek reserve base.
NOTE 4—FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of our financial assets and liabilities were as follows:
(In thousands)
Financial Assets:
Cash and cash equivalents
Accounts receivable
Other current assets - restricted cash
Financial liabilities:
Accounts payable
Debt
Other current liabilities - financed insurance payable
December 31, 2020
Fair
Value
Carrying
Amount
December 31, 2019
Fair
Value
Carrying
Amount
$
$
5,300
20,299
1,410
(11,742)
(17,450)
(862)
$
5,300
20,299
1,410
(11,742)
(17,450)
(862)
$
5,532
19,256
1,333
(10,663)
(12,947)
(656)
5,532
19,256
1,333
(10,663)
(12,947)
(656)
We use a market approach to determine the fair value of our fixed-rate debt using observable market data, which resulted in a Level 2
fair-value measurement.
Nonrecurring fair value measurements include asset retirement obligations, the estimated fair value of which is calculated as the
present value of estimated cash flows related to its reclamation liabilities using Level 3 inputs. The significant inputs used to calculate such
liabilities include estimates of costs to be incurred, our credit adjusted discount rate, inflation rates and estimated date of reclamation.
NOTE 5—ASSET RETIREMENT OBLIGATIONS
We estimate asset retirement obligations ("ARO”) for final reclamation based upon detailed engineering calculations of the amount
and timing of the future cash spending for a third-party to perform the required work.
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Spending estimates were escalated for inflation at 2% per year and the estimated cash outflows were then discounted at 4% at December 31,
2020 and 2019. Amounts recorded related to asset retirement obligations were as follows:
(In thousands)
Balance at beginning of year
Additional asset retirement obligations acquired/incurred
Expenditures made
Accretion expense
Revisions to estimates
Balance at end of year
NOTE 6—DEBT
Our outstanding debt consisted of the following:
(In thousands)
Term loan
Revolving Credit Facility
Equipment Loan
Total debt
Current portion of long-term debt
Long-term debt, net
December 31,
—
2020
$ 14,605
(105)
570
86
$ 15,156
2019
$ 12,778
800
—
511
516
$ 14,605
December 31,
2020
$
6,672
7,000
3,778
$ 17,450
4,872
$ 12,578
2019
$
9,947
3,000
—
$ 12,947
3,333
9,614
$
Revolving Credit Facility and Term Loan—On November 2, 2018, we entered into a Credit and Security Agreement (as amended, the
"Revolving Credit Facility”) with KeyBank National Association ("KeyBank”). The Revolving Credit Facility was amended on February 20,
2020 and consists of a $10.0 million term loan (the "Term Loan”) and up to $30.0 million revolving line of credit, including $3.0 million letter of
credit availability. All personal property assets, including, but not limited to accounts receivable, coal inventory and certain mining equipment
are pledged to secure the Revolving Credit Facility.
The Revolving Credit Facility has a maturity date of December 31, 2023 and bears interest based on LIBOR + 2.0% or Base Rate +
1.5%. Base Rate is the highest of (i) KeyBank’s prime rate, (ii) Federal Funds Effective Rate + 0.5%, or (iii) LIBOR + 2.0%. Advances under the
Revolving Credit Facility are made initially as base rate loans, but may be converted to LIBOR rate loans at certain times at our discretion. As
of December 31, 2020, we had remaining availability under the Revolving Credit Facility of $16.7 million.
The Term Loan is secured under a Master Security Agreement with a pledge of certain underground and surface mining equipment,
bears interest at LIBOR + 5.15% and is required to be repaid in monthly installments of $278 thousand including accrued interest.
The Revolving Credit Facility contains usual and customary covenants including limitations on liens, additional indebtedness,
investments, restricted payments, asset sales, mergers, affiliate transactions and other customary limitations, as well as financial covenants.
As of December 31, 2020, we were in compliance with all debt covenants.
Equipment Financing Loan—On April 16, 2020, we entered into an equipment loan with Key Equipment Finance, a division of
KeyBank, as lender, in the original principal amount of approximately $4.7 million for the financing of existing underground and surface
equipment (the "Equipment Financing Loan”). The loan bears interest at 7.45% per annum and is payable in 36 monthly installments of $147
thousand. There is a 3% premium for prepayment of the loan within the first 12 months. This premium declines by 1% during each successive
12-month period.
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Maturities of our long-term debt are as follows:
(In thousands)
Years ending December 31:
2021
2022
2023
Total
$
$
4,872
11,991
587
17,450
NOTE 7— SBA PAYCHECK PROTECTION PROGRAM LOAN
On April 20, 2020, we received proceeds from the PPP Loan in the amount of approximately $8.4 million from KeyBank, as lender,
pursuant to the Paycheck Protection Program ("PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act”). The
purpose of the PPP is to encourage the continued employment of workers. Based upon receipt of this funding, we elected to recall our
furloughed workers at our Elk Creek complex. We used all of the PPP Loan proceeds for eligible payroll expenses, lease, interest and utility
payments.
The PPP Loan matures on April 16, 2022 and bears interest at a rate of 1% per annum. Pursuant to the subsequently
enacted Paycheck Protection Flexibility Act of 2020, we are permitted to defer required monthly payments of principal and interest until such
time as an approval or denial of forgiveness is received from the U.S. Small Business Administration ("SBA”).
The PPP Loan is evidenced by a promissory note dated April 16, 2020, which contains customary events of default relating to, among
other things, payment defaults and breaches of representations and warranties. The PPP Loan may be prepaid by the Company at any time
prior to maturity with no prepayment penalties.
All or a portion of the PPP Loan and accrued interest thereon may be forgiven by the SBA upon documentation of expenditures in
accordance with the SBA requirements and proper application by the Company. Under the CARES Act and Paycheck Protection Flexibility
Act of 2020, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and
covered utilities during either the eight-week period or 24-week period beginning on the date of loan funding. For purposes of the PPP Loan,
payroll costs exclude cash compensation of an individual employee in excess of $100 thousand, prorated annually. Not more than 40% of the
forgiven amount may be for non-payroll costs. Forgiveness could be reduced if full-time headcount declines, or if salaries and wages for
employees with salaries of $100 thousand or less annually are reduced by more than 25%.
Our application for forgiveness was approved by KeyBank and is currently being reviewed by the SBA. We believe it is probable
that the full amount of the PPP Loan principal, together with accrued interest thereon, will be forgiven. Accordingly, we recognized $8.4 million
as other income in the consolidated statement of operations for 2020.
NOTE 8—LEASES
Operating Leases—We lease facilities under various noncancelable operating lease agreements. Our leases have remaining lease
terms of less than two years. Operating lease expense for facilities totaled $0.2 million, $0.2 million and $0.1 million in 2020, 2019 and 2018,
respectively.
At December 31, 2020 and 2019, operating lease ROU assets totaled $0.1 million and $0.2 million, respectively. Operating lease
liabilities at December 31, 2020 totaled $0.1 million. Of this, $31 thousand is included in other long-term liabilities within the consolidated
balance sheets. Operating lease liabilities at December 31, 2019 totaled $0.2 million. Of this, $0.1 million is included in other long-term liabilities
within the consolidated balance sheets.
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Maturities of operating lease liabilities are as follows:
(In thousands)
Years ending December 31:
2021
2022
Total lease payments
Less imputed interest
Total
$
$
98
41
139
(29)
110
As of December 31, 2020, the weighted average remaining lease term was 1.3 years and the weighted average discount rate used in
computing the lease obligations was 8.5%.
Coal Leases and Associated Royalty Commitments—Leases of mineral reserves and related land leases are exempted under U.S.
GAAP from recognition within the financial statements. We lease coal reserves under agreements that require royalties to be paid as the coal
is mined and sold. Many of these agreements require minimum annual royalties to be paid regardless of the amount of coal mined and sold.
Total royalty expense was $11.8 million, $15.6 million and $11.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.
These agreements generally have terms running through exhaustion of all the mineable and merchantable coal covered by the respective lease.
Royalties or throughput payments are based on a percentage of the gross selling price received for the coal we mine. Payments of minimum
coal royalties and throughput payments for leases with Ramaco Coal, LLC commenced in 2017 pursuant to the terms of the agreements.
Future minimum lease and royalty payments for each of the next five years and thereafter are as follows:
(In thousands)
Years ending December 31:
2021
2022
2023
2024
2025
Thereafter
Total minimum payments
NOTE 9—EQUITY
$
$
5,297
5,709
5,720
5,719
5,719
12,352
40,516
We are authorized to issue up to a total of 260,000,000 shares of common stock and 50,000,000 shares of preferred stock, each having
a par value of $0.01 per share. Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders and to receive ratably in proportion to the shares of common stock held by them any dividends declared from time to time
by the board of directors. Our common stock has no preferences or rights of conversion, exchange, pre-exemption or other subscription rights.
Stock-Based Compensation—We have a stock-based compensation plan under which stock options, restricted stock, performance-
based stock awards and other stock-based awards may be granted. At December 31, 2020, 3.2 million shares were available under the current
plan for future awards.
Options for the purchase of a total of 937,424 shares of our common stock for $5.34 per share were granted to two executives on
August 31, 2016. The options have a ten-year term from the grant date and are fully vested. The options remain outstanding and unexercised
and were not in-the-money at December 31, 2020.
We grant restricted stock to certain senior executive employees and directors. The shares vest over one to three and a half years from
the date of grant. During the vesting period, the participants have voting rights and may receive dividends, but the shares may not be sold,
assigned, transferred, pledged or otherwise encumbered. Unvested shares are
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forfeited upon termination of employment, unless an employee enters into another written arrangement. The fair value of the restricted shares
on the date of the grant is amortized ratably over the service period. Compensation expense for restricted stock awards totaled $4.1 million in
2020, $4.1 million in 2019 and $2.6 million in 2018. As of December 31, 2020, there was $6.0 million of total unrecognized compensation cost
related to unvested restricted stock to be recognized over a weighted average period of 1.9 years.
The following table summarizes restricted awards outstanding, as well as activity for the periods:
Outstanding at December 31, 2018
Granted
Vested
Forfeited
Outstanding at December 31, 2019
Granted
Vested
Forfeited
Outstanding at December 31, 2020
$
Weighted
Average Grant
Date Fair Value
6.99
5.44
5.70
5.73
6.32
3.05
5.30
3.49
4.28
$
Shares
966,134
889,908
(211,964)
(15,837)
1,628,241
1,867,477
(640,920)
(9,273)
2,845,525
The total fair value of awards vested was $1.5 million during 2020 and $0.8 million during 2019.
In December 2019, we entered into modification agreements with 14 executives and employees holding 1.4 million shares of unvested
restricted stock whereby the vesting periods for these share grants was extended an additional six months. In exchange for the modification,
we made an additional restricted stock grant to each of these executives and employees. In all, we granted 22,000 additional restricted shares in
the modification. Incremental compensation costs associated with these modifications totaled $0.8 million and was recognized during 2020.
NOTE 10—COMMITMENTS AND CONTINGENCIES
Environmental Liabilities—Environmental liabilities are recognized when the expenditures are considered probable and can be
reasonably estimated. Measurement of liabilities is based on currently enacted laws and regulations, existing technology and undiscounted
site-specific costs. Generally, such recognition would coincide with a commitment to a formal plan of action. No amounts have been
recognized for environmental liabilities.
Surety Bond—In accordance with state laws, we are required to post reclamation bonds to assure that reclamation work is completed.
Reclamation bonds outstanding at December 31, 2020 totaled approximately $14.9 million. Additionally, we had $0.3 million of surety bonds
that secured performance obligations.
Contingent Transportation Purchase Commitments—We secure the ability to transport coal through rail contracts and export
terminals that are sometimes funded through take-or-pay arrangements. As of December 31, 2020, contingent liabilities under these take-or-pay
arrangements expiring March 31, 2021 totaled $3.3 million. The level of these take or pay liabilities will be reduced at a per ton rate as such rail
and export terminal services are utilized against the required minimum tonnage amounts over the contract term stipulated in such rail and
export terminal contracts.
Litigation—From time to time, we are subject to various litigation and other claims in the normal course of business. No amounts
have been accrued in the consolidated financial statements with respect to any matters.
On November 5, 2018, one of three raw coal storage silos that fed our Elk Creek plant experienced a partial structural failure. A
temporary conveying system completed in late-November 2018 restored approximately 80% of the plant capacity. We completed a permanent
belt workaround and restored the preparation plant to its full processing capacity in mid-2019. Our insurance carrier, Federal Insurance
Company, disputed our claim for coverage based on certain exclusions to the applicable policy and therefore on August 21, 2019 we filed suit
against Federal Insurance
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Company and Chubb INA Holdings, Inc. in Logan County Circuit Court in West Virginia seeking a declaratory judgment that the partial silo
collapse was an insurable event and to require coverage under our policy. Defendants removed the case to the United States District Court for
the Southern District of West Virginia, and upon removal, we substituted ACE American Insurance Company as a defendant in place of
Chubb INA Holdings, Inc. Currently, the case is scheduled for trial beginning June 29, 2021, in Charleston, West Virginia.
NOTE 11—REVENUE
Our revenue is derived from contracts for the sale of coal which is recognized when the performance obligations under the contracts
are satisfied, which is at the point in time control is transferred to our customer. Generally, domestic sales contracts have terms of about
one year and the pricing is typically fixed. Export sales have spot or term contracts and pricing can either be by fixed-price or a price derived
against index-based pricing mechanisms. Disaggregated information about our revenue is presented below:
(In thousands)
Coal Sales
North American revenues
Export revenues, excluding Canada
Total revenues
2020
Years ended December 31,
2019
2018
$
$
119,981
48,934
168,915
$
$
170,927
59,286
230,213
$
$
114,508
113,066
227,574
As of December 31, 2020, outstanding performance obligations for 2021 totaled approximately 1.3 million tons for contracts having
fixed pricing and 0.3 million tons for contracts with index-based pricing mechanisms.
NOTE 12—RELATED PARTY TRANSACTIONS
Mineral Lease and Surface Rights Agreements—Much of the coal reserves and surface rights that we control were acquired through
a series of mineral leases and surface rights agreements with Ramaco Coal, LLC. Production royalty payables due to Ramaco Coal, LLC
totaling $0.4 million and $0.5 million at December 31, 2020 and 2019, respectively, were included in accounts payable in the consolidated
balance sheets. Royalties paid to Ramaco Coal, LLC in 2020, 2019 and 2018 totaled $4.5 million, $9.0 million and $1.9 million, respectively.
On-going Administrative Services—Under a Mutual Services Agreement dated December 22, 2017 but effective as of March 31, 2017,
the Company and Ramaco Coal, LLC agreed to share the services of certain of each company’s employees. Each party will pay the other a fee
on a quarterly basis for such services calculated as the annual base salary of each employee providing services multiplied by the percentage
of time each employee spent providing services for the other party. The services will be provided for 12-month terms, but may be terminated
by either party at the end of any 12-month term by providing written notice at least 30 days prior to the end of the then-current term. Charges
to Ramaco Coal, LLC were $0.2 million in both 2020 and 2019. In 2018, there were no charges to Ramaco Coal, LLC.
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NOTE 13—INCOME TAXES
Income tax expense (benefit) consisted of the following:
(In thousands)
Current taxes:
Federal
State
Current taxes
Deferred taxes:
Federal
State
Deferred taxes
Provision for income taxes, net
Years ended December 31,
2019
2018
2020
$
$
— $
19
19
(3,164)
(339)
(3,503)
(3,484)
$
— $
7
7
3,228
1,928
5,156
5,163
$
—
4
4
(111)
220
109
113
The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for
income taxes were as follows:
$
$
(In thousands)
Income taxes computed at the federal statutory rate
Effect of:
State taxes, net of federal benefits
Percentage depletion
PPP Loan forgiveness
Change in valuation allowance
Stock-based compensation
Other, net
Total
Deferred tax assets and liabilities were as follows:
(In thousands)
Deferred tax assets:
Loss carryforwards U.S. - Federal/States
Asset retirement obligations
Accrued expenses
Stock-based compensation
Other
Total deferred tax assets
Less valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Depreciation & amortization
Net deferred tax liabilities
Years ended December 31,
2019
2018
$
6,320
$
5,289
2020
(1,762)
(253)
(714)
(1,773)
—
473
545
(3,484)
$
945
(2,093)
—
—
109
(118)
5,163
$
970
(1,033)
—
(4,464)
—
(649)
113
$
December 31,
2020
2019
$
22,873
3,972
856
2,200
—
29,901
—
29,901
19,512
3,523
725
2,094
—
25,854
—
25,854
(31,663)
(1,762) $
(31,119)
(5,265)
$
As of December 31, 2020, our federal net operating loss carryforwards for income tax purposes were approximately $94 million. Total
state loss carryforwards were approximately $57 million. If not utilized, federal and state net operating loss carryforwards approximating $60
million and $36 million, respectively, will expire between 2035 and 2037. The remaining net operating loss carryforwards have no statutory
expiration.
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NOTE 14—EARNINGS (LOSS) PER SHARE
The following table is a calculation of the net earnings (loss) per basic and diluted share:
(In thousands, except per share amounts)
Numerator
Net income (loss)
Denominator
Weighted average shares used to compute basic EPS
Dilutive effect of stock-based awards
Weighted average shares used to compute diluted EPS
Earnings (loss) per share
Basic
Diluted
Years ended December 31,
2019
2018
2020
$
(4,907)
$
24,934
$
25,074
42,460
—
42,460
40,838
—
40,838
40,039
224
40,263
$
$
(0.12)
(0.12)
$
$
0.61
0.61
$
$
0.63
0.62
Diluted EPS for 2020 and 2019 excludes 937,424 options to purchase our common stock because their effect would be anti-dilutive.
* * * * *
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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table presents selected quarterly financial data derived from our unaudited interim financial statements. The following
data is only a summary and should be read with our historical consolidated financial statements and related notes contained in this document.
(In thousands, except per share amounts)
2020
Total revenues
Gross profit(a)
Operating income
Net income
Net earnings per share: (b)
Basic
Diluted
2019
Total revenues
Gross profit(a)
Operating income
Net income
Net earnings per share: (b)
Basic
Diluted
First Quarter Second Quarter Third Quarter Fourth Quarter
$
$
$
$
$
$
41,936
11,002
1,142
1,963
0.05
0.05
57,460
16,454
8,250
6,883
0.17
0.17
$
$
$
$
$
$
36,374
6,240
(4,299)
2,652
0.06
0.06
65,761
22,542
12,889
10,613
0.26
0.26
$
$
$
$
$
$
39,459
3,770
(7,582)
(4,776)
(0.11)
(0.11)
61,380
16,397
6,452
5,550
0.14
0.14
$
$
$
$
$
$
51,146
2,400
(8,354)
(4,746)
(0.11)
(0.11)
45,612
12,350
1,941
1,888
0.05
0.05
(a) Represents total revenue less cost of sales.
(b) The sum of quarterly per share amounts may not equal amounts reported for the annual periods due to the effects of rounding.
* * * * *
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including
the Chief Executive Officer ("CEO”), the principal executive officer, and Chief Financial Officer ("CFO”), the principal financial officer, we
conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and
15d - 15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act”), as amended. Based on this evaluation, the CEO
and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2020. There have been no significant
changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date we completed
the evaluation.
Management’s Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the 1934 Act. Management has assessed the effectiveness
of our internal control over financial reporting as of December 31, 2020 based on criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment,
management concluded that, as of December 31, 2020, our internal control over financial reporting was effective in providing reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.
Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting
during the quarter ended December 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
Limitations on Controls. Our disclosure controls and procedures and internal control over financial reporting are designed to provide
reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls
and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how
well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives
will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that
all control issues and instances of fraud, if any, within the Company have been detected.
Item 9B. Other Information
None.
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Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2021 Annual Meeting of
Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year.
Item 11. Executive Compensation
The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2021 Annual Meeting of
Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2021 Annual Meeting of
Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year.
Item 13. Certain Relationships and Related Persons Transactions
The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2021 Annual Meeting of
Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year.
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2021 Annual Meeting of
Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year.
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Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Report:
(1) Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Equity for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
(2) Selected Quarterly Financial Data (Unaudited)
(b) Exhibits
Exhibit
Number
Description
2.1
3.1
3.2
3.3
4.1
4.2
4.3
Master Reorganization Agreement, dated February 1, 2017, by and among Ramaco Resources, Inc., Ramaco Development, LLC,
Ramaco Merger Sub, LLC and the other parties named therein (incorporated by reference to Exhibit 2.1 of the Company’s Current
Report on Form 8-K (File No. 001-38003) filed with the Commission on February 7, 2017)
Amended and Restated Certificate of Incorporation of Ramaco Resources, Inc. (incorporated by reference to Exhibit 3.1 of the
Company’s Current Report on Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Amended and Restated Bylaws of Ramaco Resources, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current
Report on Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Amendment No. 1 to the Amended and Restated Bylaws of Ramaco Resources, Inc. (incorporated by reference to Exhibit 3.2 of
the Company’s Current Report on Form 8-K (File No. 001-38003) filed with the Commission on December 15, 2020)
Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-
1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Registration Rights Agreement, dated as of February 8, 2017, by and among Ramaco Resources, Inc. and the stockholders
named therein (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 001-38003) filed
with the Commission on February 14, 2017)
Shareholders’ Agreement, dated as of February 8, 2017, by and among Ramaco Resources, Inc., Yorktown Energy Partners
IX, L.P., Yorktown Energy Partners X, L.P., Yorktown Energy Partners XI, L.P., Energy Capital Partners Mezzanine Opportunities
Fund, LP, Energy Capital Partners Mezzanine Opportunities Fund A, LP, and ECP Mezzanine B (Ramaco IP), LP. (incorporated
by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K (File No. 001-38003) filed with the Commission on
February 14, 2017)
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*4.4
†10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
Description of Common Stock
Ramaco Resources, Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 4.3 of the Company’s Registration
Statement on Form S-8 (File No. 333-215913) filed with the Commission on February 6, 2017)
Berwind Mutual Cooperation Agreement, dated August 20, 2015, by and between Ramaco Resources, LLC and Ramaco Central
Appalachia, LLC (incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 (File No. 333-
215363) filed with the Commission on December 29, 2016)
Elk Creek Mutual Cooperation Agreement, dated August 20, 2015, by and between Ramaco Resources, LLC and Ramaco Central
Appalachia, LLC (incorporated by reference to Exhibit 10.4 of the Company’s Registration Statement on Form S-1 (File No. 333-
215363) filed with the Commission on December 29, 2016)
Indemnification Agreement, dated August 20, 2015, by and between Ramaco Coal, LLC and Ramaco Development, LLC
(incorporated by reference to Exhibit 10.5 of the Company’s Registration Statement on Form S-1 (File No. 333-215363) filed with
the Commission on December 29, 2016)
RAM Mine Mutual Cooperation Agreement, dated August 20, 2015, by and between RAM Mining, LLC and Ramaco Northern
Appalachia, LLC (incorporated by reference to Exhibit 10.6 of the Company’s Registration Statement on Form S-1 (File No. 333-
215363) filed with the Commission on December 29, 2016)
Promissory Note, dated August 31, 2016, by and between Ramaco Development, LLC, as maker, and Ramaco Coal, LLC, as
noteholder (incorporated by reference to Exhibit 10.7 of the Company’s Registration Statement on Form S-1 (File No. 333-215363)
filed with the Commission on December 29, 2016)
Corporate Guaranty, dated August 20, 2015, by and between Ramaco Coal, LLC, as guarantor, and RAMACO Development, LLC
as oblige (incorporated by reference to Exhibit 10.8 of the Company’s Registration Statement on Form S-1 (File No. 333-215363)
filed with the Commission on December 29, 2016)
Corporate Guaranty, dated August 20, 2015, by and between RAMACO Development, LLC, as guarantor, and Ramaco Coal,
LLC, as oblige (incorporated by reference to Exhibit 10.9 of the Company’s Registration Statement on Form S-1 (File No. 333-
215363) filed with the Commission on December 29, 2016)
Berwind Sublease Agreement, dated August 20, 2015, by and between Ramaco Central Appalachia, LLC and Ramaco Resources,
LLC (incorporated by reference to Exhibit 10.10 of the Company’s Registration Statement on Form S-1 (File No. 333-215363) filed
with the Commission on December 29, 2016)
First Amendment to Berwind Lease Agreement and Sublease, dated February 2016, by and among Berwind Land Company,
Ramaco Central Appalachia, LLC and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.11 of the Company’s
Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Second Amendment to Berwind Sublease, dated August 31, 2016, by and between Ramaco Central Appalachia, LLC and Ramaco
Resources, LLC (incorporated by reference to Exhibit 10.12 of the Company’s Registration Statement on Form S-1 (File No. 333-
215363) filed with the Commission on December 29, 2016)
Third Amendment to Berwind Lease Agreement and Consent to Sublease, dated December 19, 2017, by and between Berwind
Land Company and Ramaco Central Appalachia, LLC (incorporated by reference to
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Exhibit 10.12 of the Company’s Annual Report on Form 10-K (File No. 333-215913) filed with the Commission on February 20,
2020)
Elk Creek Coal Lease Agreement, dated August 20, 2015, by and between Ramaco Central Appalachia, LLC and Ramaco
Resources, LLC (incorporated by reference to Exhibit 10.13 of the Company’s Registration Statement on Form S-1 (File No. 333-
215363) filed with the Commission on December 29, 2016)
Amendment No. 1 to Elk Creek Coal Lease Agreement, dated December 31, 2015, by and between Ramaco Central Appalachia,
LLC and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.14 of the Company’s Registration Statement on
Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 2 to Elk Creek Coal Lease Agreement, dated March 31, 2016, by and between Ramaco Central Appalachia, LLC
and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.15 of the Company’s Registration Statement on Form S-1
(File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 3 to Elk Creek Coal Lease Agreement, dated August 31, 2016, by and between Ramaco Central Appalachia, LLC
and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.16 of the Company’s Registration Statement on Form S-1
(File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 4 to Elk Creek Coal Lease Agreement, dated January 12, 2017, by and between Ramaco Central Appalachia, LLC
and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K (File
No. 333-215913) filed with the Commission on February 20, 2020)
Amendment No. 5 to Elk Creek Coal Lease Agreement, dated September 28, 2018, by and between Ramaco Central Appalachia,
LLC and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K
(File No. 333-215913) filed with the Commission on February 20, 2020)
Amendment No. 6 to Elk Creek Coal Lease Agreement, dated December 21, 2018, by and between Ramaco Central Appalachia,
LLC and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K
(File No. 333-215913) filed with the Commission on February 20, 2020)
Amendment No. 7 to Elk Creek Coal Lease Agreement, dated February 1, 2019, by and between Ramaco Central Appalachia, LLC
and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K (File
No. 333-215913) filed with the Commission on February 20, 2020)
Elk Creek Surface Rights Lease Agreement, dated August 20, 2015, by and between Ramaco Central Appalachia, LLC and
Ramaco Resources, LLC (incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-1 (File
No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 1 to Elk Creek Surface Rights Lease Agreement, dated December 31, 2015, by and between Ramaco Central
Appalachia, LLC and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.18 of the Company’s Registration
Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 2 to Elk Creek Surface Rights Lease Agreement, dated March 31, 2016, by and between Ramaco Central
Appalachia, LLC and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.19
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
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10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
†10.32
†10.33
†10.34
of the Company’s Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 3 to Elk Creek Surface Rights Lease Agreement, dated August 31, 2016, by and between Ramaco Central
Appalachia, LLC and Ramaco Resources, LLC (incorporated by reference to Exhibit 10.20 of the Company’s Registration
Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Mutual Services Agreement, dated December 22, 2017, by and between Ramaco Development, LLC and Ramaco Coal, LLC
(incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K (File No. 001-38003) filed with the
Commission on March 21, 2018)
NRP Sublease Agreement, dated August 19, 2015, by and between Ramaco Central Appalachia, LLC and Ramaco Resources,
LLC (incorporated by reference to Exhibit 10.24 of the Company’s Registration Statement on Form S-1 (File No. 333-215363) filed
with the Commission on December 29, 2016)
Amendment No. 1 to NRP Sublease Agreement, dated August 31, 2016, by and between Ramaco Central Appalachia, LLC and
Ramaco Resources, LLC (incorporated by reference to Exhibit 10.25 of the Company’s Registration Statement on Form S-1 (File
No. 333-215363) filed with the Commission on December 29, 2016)
Amended and Restated Lease Agreement, dated August 20, 2015, by and among Ramaco Northern Appalachia, LLC, RAM
Farms, LLC, RAM Mining, LLC and RAMACO Mining, LLC (incorporated by reference to Exhibit 10.26 of the Company’s
Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 1 to Amended and Restated Lease Agreement, dated December 31, 2015, by and among Ramaco Northern
Appalachia, LLC, RAM Farms, LLC and RAM Mining, LLC (incorporated by reference to Exhibit 10.27 of the Company’s
Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 2 to Amended and Restated Lease Agreement, dated March 31, 2016, by and among Ramaco Northern
Appalachia, LLC, RAM Farms, LLC and RAM Mining, LLC (incorporated by reference to Exhibit 10.28 of the Company’s
Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Amendment No. 3 to Amended and Restated Lease Agreement, dated August 31, 2016, by and among Ramaco Northern
Appalachia, LLC, RAM Farms, LLC and RAM Mining, LLC (incorporated by reference to Exhibit 10.29 of the Company’s
Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Ramaco Development, LLC 2016 Membership Unit Option Plan (incorporated by reference to Exhibit 10.30 of the Company’s
Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Form of Ramaco Resources, Inc. Stock Option Notice and Agreement (incorporated by reference to Exhibit 10.31 of the
Company’s Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
Form of Amendment to Option Agreement (incorporated by reference to Exhibit 10.32 of the Company’s Registration Statement
on Form S-1 (File No. 333-215363) filed with the Commission on December 29, 2016)
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†10.35
†10.36
†10.37
†10.38
†10.39
†10.40
†10.41
†10.42
†10.43
†10.44
†10.45
†10.46
†10.47
†10.48
†10.49
Indemnification Agreement (Randall Atkins) (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Michael Bauersachs) (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Mark Clemens) (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Patrick C. Graney) (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (W. Howard Keenan, Jr.) (incorporated by reference to Exhibit 10.5 of the Company’s Current Report
on Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Trent Kososki) (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Bryan H. Lawrence) (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Tyler Reeder) (incorporated by reference to Exhibit 10.8 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Marc Solochek) (incorporated by reference to Exhibit 10.9 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Richard M. Whiting) (incorporated by reference to Exhibit 10.10 of the Company’s Current Report
on Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Michael Windisch) (incorporated by reference to Exhibit 10.11 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on February 14, 2017)
Indemnification Agreement (Bruce E. Cryder) (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on July 5, 2017)
Indemnification Agreement (Christopher L. Blanchard) (incorporated by reference to Exhibit 10.1 of the Company’s Current
Report on Form 8-K (File No. 001-38003) filed with the Commission on December 29, 2017)
Indemnification Agreement (Peter Leidel) (incorporated by reference to Exhibit 10.48 of the Company’s Annual Report on Form
10-K (File No. 001 38003) filed with the Commission on February 20, 2020)
Indemnification Agreement (Trent Kososki) (incorporated by reference to Exhibit 10.49 of the Company’s Annual Report on
Form 10-K (File No. 001 38003) filed with the Commission on February 20, 2020)
†10.50
Indemnification Agreement (C. Lynch Christian, III) (incorporated by reference to Exhibit 10.50 of the Company’s Annual Report
on Form 10-K (File No. 001 38003) filed with the Commission on February 20, 2020)
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*†10.51
Indemnification Agreement (Mahmud Riffat)
*†10.52
Indemnification Agreement (David E. K. Frischkorn, Jr.)
*†10.53
Indemnification Agreement (E. Forrest Jones, Jr.)
†10.54
†10.55
†10.56
†10.57
†10.58
10.59
10.60
10.61
Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
(File No. 001-38003) filed with the Commission on April 21, 2020)
Amendment to Restricted Stock Award Agreements, dated December 10, 2019, between the Company and Randall W. Atkins
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 001-38003) filed with the
Commission on December 13, 2019)
Amendment to Restricted Stock Award Agreements, dated December 10, 2019, between the Company and Michael D.
Bauersachs (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No. 001-38003) filed
with the Commission on December 13, 2019)
Amendment to Restricted Stock Award Agreements, dated December 10, 2019, between the Company and Christopher L.
Blanchard (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K/A (File No. 001-38003) filed
with the Commission on December 16, 2019)
Amendment to Restricted Stock Award Agreements, dated December 10, 2019, between the Company and Jeremy R. Sussman
(incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K/A (File No. 001-38003) filed with the
Commission on December 16, 2019)
Credit and Security Agreement, dated November 2, 2018, by and among: (i) Keybank National Association, as administrative
agent, collateral agent, lender and issuer; (ii) such other lenders that are now or hereafter become a party thereto; and (iii) the
Company, Ramaco Development, LLC, RAM Mining, LLC, Ramaco Coal Sales, LLC, Ramaco Resources, LLC and Ramaco
Resources Land Holdings, LLC, as borrower (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K (File No. 001-38003) filed with the Commission on November 2, 2018)
First Amendment to Credit and Security Agreement, dated as of February 20, 2020, by and among Ramaco Resources, Inc.,
Ramaco Development, LLC, RAM Mining, LLC, Ramaco Coal Sales, LLC, Ramaco Resources, LLC and Ramaco Resources Land
Holdings, LLC, as borrowers, the lenders party thereto and KeyBank National Association as administrative agent, collateral
agent, a lender and issuing bank (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K (File
No. 001-38003) filed with the Commission on April 21, 2020)
Credit and Security Agreement, dated November 22, 2019, by and among: (i) Key Equipment Finance, a division of Keybank
National Association, as administrative agent, collateral agent, lender and issuer; (ii) such other lenders that are now or hereafter
become a party thereto; and (iii) the Company, Ramaco Development, LLC, RAM Mining, LLC, Ramaco Coal Sales, LLC, Ramaco
Resources, LLC and Ramaco Resources Land Holdings, LLC, as borrower (incorporated by reference to Exhibit 10.57 of the
Company’s Annual Report on Form 10-K (File No. 001-38003) filed with the Commission on February 20, 2020)
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10.62
10.63
10.64
Promissory Note dated April 20, 2020 by Ramaco Resources, Inc., Ramaco Development, LLC, RAM Mining, LLC, Ramaco Coal
Sales, LLC, Ramaco Resources, LLC and Ramaco Resources Land Holdings, LLC, as borrowers, and Key Equipment Finance, a
Division of KeyBank National Association, as lender (incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K (File No. 001-38003) filed with the Commission on April 21, 2020)
Promissory Note dated April 16, 2020 by Ramaco Resources, Inc. in favor of KeyBank National Association (incorporated by
reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No. 001-38003) filed with the Commission on April
21, 2020)
Ramaco Resources, Inc. Change in Control and Severance Plan, effective as of April 27, 2020 (incorporated
by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K (File No. 001-38003) filed with
the Commission on April 28, 2020)
*10.65
Separation and Consulting Agreement, dated December 31, 2020, by and between Ramaco Resources, Inc. and Michael D.
Bauersachs
*21.1
*23.1
*23.2
*23.3
*31.1
*31.2
*32.1
*32.2
Subsidiaries of Ramaco Resources, Inc.
Consent of Briggs & Veselka Co.
Consent of Weir International, Inc.
Consent of True Line, Inc.
Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
*95.1
Mine Safety Disclosure
*101
Interactive Data File (Form 10-K for the year ended December 31, 2020 filed in XBRL). The financial information contained in the
XBRL-related documents is "unaudited” and "unreviewed.”
* Exhibit filed herewith.
† Management contract or compensatory plan or agreement.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
February 18, 2021
By: /s/ Randall W. Atkins
Randall W. Atkins
Chairman, Chief Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
By: /s/ Randall W. Atkins
Randall W. Atkins
Chairman, Chief Executive Officer and Director
(Principal Executive Officer)
By: /s/ Jeremy R. Sussman
Jeremy R. Sussman
Chief Financial Officer
(Principal Financial Officer)
By: /s/ John C. Marcum
John C. Marcum
Chief Accounting Officer
(Principal Accounting Officer)
By: /s/ Bryan H. Lawrence
Bryan H. Lawrence
Director
By: /s/ Richard M. Whiting
Richard M. Whiting
Director
By: /s/ Patrick C. Graney, III
Patrick C. Graney, III
Director
By: /s/ Jennifer Gray
Jennifer Gray
Director
By: /s/ Bruce E. Cryder
Bruce E. Cryder
Director
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February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
By: /s/ C. Lynch Christian III
C. Lynch Christian III
Director
By: /s/ Peter Leidel
Peter Leidel
Director
By: /s/ Mahmud Riffat
Mahmud Riffat
Director
By: /s/ David E. K. Frischkorn, Jr.
David E. K. Frischkorn, Jr.
Director
By: /s/ E. Forrest Jones, Jr.
E. Forrest Jones, Jr.
Director
98
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934
Exhibit 4.4
Ramaco Resources, Inc. (the "Company” or "Ramaco”) has one class of securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended: common stock, par value $0.01 per share (the "common stock”). The following contains a description
of our Common Stock, as well as certain related additional information. This description is a summary only and does not purport to be
complete and is subject to and qualified by reference to the provisions of applicable law, the Company’s Amended and Restated
Certificate of Incorporation, as amended (the "Certificate”), and the Company’s Amended and Restated Bylaws (the "Bylaws,” and
together with the Certificate, the "Charter Documents”), each of which is incorporated by reference as an exhibit to the Company’s
Annual Report on Form 10-K. For additional information, please read the Company’s Charter Documents and the applicable provisions of
the Delaware General Corporation Law (the "DGCL”). References to "we,” "our” and "us” refer to the Company, unless the context
otherwise requires. References to "stockholders” refer to holders of our common stock, unless the context otherwise requires.
General
Pursuant to the Certificate, we are authorized to issue 310,000,000 shares of capital stock, consisting of 260,000,000 shares of
common stock and 50,000,000 shares of preferred stock, par value $0.01 per share (the "preferred stock”). There are no issued and
outstanding shares of preferred stock.
Common Stock
Voting Rights
Holders of shares of common stock are entitled to one vote per share held of record on all matters to be voted upon by the
stockholders. The holders of common stock do not have cumulative voting rights in the election of directors.
Dividend Rights
Holders of shares of our common stock are entitled to ratably receive dividends when and if declared by our board of directors
out of funds legally available for that purpose, subject to any statutory or contractual restrictions on the payment of dividends and to
any prior rights and preferences that may be applicable to any outstanding preferred stock. Any determination to declare a regular or
special dividend, as well as the amount of any dividend that may be declared, will be based on the board of director’s consideration of
our financial position, earnings, earnings outlook, capital spending plans, outlook on current and future market conditions, alternative
stockholder return methods such as share repurchases, and other factors that the board of directors considers relevant at that time.
Liquidation Rights
Upon our liquidation, dissolution, distribution of assets or other winding up, the holders of common stock are entitled to receive
ratably the assets available for distribution to the stockholders after payment of liabilities and the liquidation preference of any of our
outstanding shares of preferred stock.
Other Matters
The shares of common stock have no preemptive or conversion rights and are not subject to further calls or assessment by us.
There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of our common stock are
fully paid and non-assessable.
Listing
Our common stock is traded on the NASDAQ Global Select Market under the symbol "METC.”
Anti-Takeover Effects of Provisions of Our Certificate, Bylaws and Delaware Law
Some provisions of Delaware law, and our Charter Documents described below, contain provisions that could make the
following transactions more difficult: acquisitions of us by means of a tender offer, a proxy contest or otherwise; or removal of our
incumbent officers and directors. These provisions may also have the effect of preventing changes in our management. It is possible that
these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in
their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids.
These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the
benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these
proposals could result in an improvement of their terms.
Delaware Law
We will not be subject to the provisions of Section 203 of the DGCL, regulating corporate takeovers for so long as Yorktown
Energy Partners IX, L.P., Yorktown Energy Partners X, L.P and Yorktown Energy Partners XI, L.P. (collectively, "Yorktown”) and Energy
Capital Partners Mezzanine Opportunities Fund, L.P., Energy Capital Partners Mezzanine Opportunities Fund A, LP and ECP Mezzanine B
(Ramaco IP), LP (collectively, "ECP”) and their respective affiliates own in the aggregate more than 15% of our outstanding common
stock. In general, those provisions prohibit a Delaware corporation, including those whose securities are listed for trading on the
NASDAQ, from engaging in any business combination with any interested stockholder for a period of three years following the date that
the stockholder became an interested stockholder, unless:
●
●
the transaction is approved by the board of directors before the date the interested stockholder attained that status;
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced; or
● on or after such time the business combination is approved by the board of directors and authorized at a meeting of
stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
Amended and Restated Certificate of Incorporation and Bylaws
Provisions of our Charter Documents may delay or discourage transactions involving an actual or potential change in control or
change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or
transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect
the price of our common stock.
Among other things, the Charter Documents:
●
establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for
election as directors or new business to be brought before meetings of our stockholders. These procedures provide
that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at
which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not
less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding
year.
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●
●
The Bylaws specify the requirements as to form and content of all stockholders’ notices. These requirements may
preclude stockholders from bringing matters before the stockholders at an annual or special meeting;
provide that all vacancies, including newly created directorships, may, except as otherwise required by law or, if
applicable, the rights of holders of a series of preferred stock, be filled by the affirmative vote of a majority of directors
then in office, even if less than a quorum;
provide our board of directors the ability to authorize undesignated preferred stock. This ability makes it possible for
our board of directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences
that could impede the success of any attempt to change control of us. These and other provisions may have the effect
of deferring hostile takeovers or delaying changes in control or management of the Company;
● as long as Yorktown and ECP and their respective affiliates own or control the voting of more than 50% of the
outstanding shares of our common stock:
o provide that Yorktown and ECP, collectively, may designate up to seven directors depending on their percent
ownership of our common stock;
o provide that the authorized number of directors may be changed only by the affirmative vote of holders of not
less than 50% in voting power of the then-outstanding shares of stock entitled to vote thereon;
o provide that any action required or permitted to be taken at any annual meeting or special meeting of the
stockholders of the Company may be taken by written consent;
o provide that our Charter Documents may be amended by the affirmative vote of the holders of at least 50% of our
then outstanding common stock;
o provide that special meetings of our stockholders may be called by the board of directors or our secretary at the
request of the holders of a majority of our common stock; and
o provide that we renounce any interest in existing and future investments in other entities by, or the business
opportunities of, Yorktown or ECP or any of their officers, directors, agents, stockholders, members, partners,
affiliates and subsidiaries (other than our directors that are presented business opportunities in their capacity as
our directors) and that they have no obligation to offer us those investments or opportunities; and
o provide that the Bylaws can be amended only with the approval of a majority of the board of directors and the
affirmative vote of holders of not less than 50% in voting power of the then-outstanding shares of stock entitled
to vote thereon.
● at any time after Yorktown and ECP and their respective affiliates no longer own or control the voting of more than 50% of
the outstanding shares of our common stock:
o provide that the authorized number of directors may be changed only by resolution of the board of directors;
o provide that any action required or permitted to be taken by the stockholders must be effected at a duly called
annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting
of such stockholders, subject to the rights of the holders of any series of preferred stock with respect to such
series;
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o provide that our Charter Documents may be amended by the affirmative vote of the holders of at least two-thirds
of our then outstanding common stock;
o provide that special meetings of our stockholders may only be called by the board of directors;
o provide, after Yorktown no longer beneficially owns or controls a majority of our outstanding voting interests,
for our board of directors to be divided into three classes of directors, with each class as nearly equal in number
as possible, serving staggered three-year terms, other than directors which may be elected by holders of
preferred stock, if any. This system of electing and removing directors may tend to discourage a third party from
making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult
for stockholders to replace a majority of the directors;
o provide that we renounce any interest in existing and future investments in other entities by, or the business
opportunities of, Yorktown or ECP or any of their officers, directors, agents, stockholders, members, partners,
affiliates and subsidiaries (other than our directors that are presented business opportunities in their capacity as
our directors) and that they have no obligation to offer us those investments or opportunities; and
o provide that the Bylaws can be amended by the board of directors.
Forum Selection
Our Certificate provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for:
●
●
●
●
any derivative action or proceeding brought on our behalf;
any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents
to us or our stockholders;
any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any
provision of the DGCL, our Certificate or our Bylaws; or
any action asserting a claim against us or any director or officer or other employee of ours that is governed by the
internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the
indispensable parties named as defendants therein.
Our Certificate also provides that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock
will be deemed to have notice of, and to have consented to, this forum selection provision. Although we believe these provisions will
benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the
provisions may have the effect of discouraging lawsuits against our directors, officers, employees and agents. The enforceability of
similar exclusive forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is
possible that, in connection with one or more actions or proceedings described above, a court could rule that this provision in our
Certificate is inapplicable or unenforceable. This exclusive forum provision does not apply to a cause of action brought under federal or
state securities laws.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
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INDEMNIFICATION AGREEMENT
Exhibit 10.51
This Indemnification Agreement ("Agreement”) is made effective as of December 10, 2020, by and between Ramaco Resources, Inc., a Delaware corporation
(the "Corporation”), and Mahmud Riffat ("Indemnitee”).
RECITALS:
WHEREAS, directors, officers and other persons in service to corporations or business enterprises are subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been brought only against the Corporation or business enterprise itself;
WHEREAS, highly competent persons have become more reluctant to serve as directors, officers or in other capacities unless they are provided with
adequate protection through insurance and adequate indemnification against inordinate risks of claims and actions against them arising out of their service to
and activities on behalf of the corporation;
WHEREAS, the Board of Directors of the Corporation (the "Board”) has determined that the increased difficulty in attracting and retaining such persons is
detrimental to the best interests of the Corporation and its stockholders and that the Corporation should act to assure such persons that there will be
increased certainty of such protection in the future;
WHEREAS, (i) the Amended and Restated Bylaws of the Corporation (as may be amended, the "Bylaws”) require indemnification of the officers and directors
of the Corporation, (ii) Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware ("DGCL”) and (iii)
the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive and thereby contemplate that contracts may
be entered into between the Corporation and members of the Board, officers and other persons with respect to indemnification;
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws and the Amended and Restated Certificate of Incorporation of the
Corporation (as may be amended, the "Certificate of Incorporation”) and any resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefore, nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, (i) Indemnitee does not regard the protection available under the Bylaws and insurance as adequate in the present circumstances, (ii) Indemnitee
may not be willing to serve or continue to serve as a director or officer of the Corporation without adequate protection, (iii) the Corporation desires Indemnitee
to serve in such capacity, and (iv) Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Corporation on the
condition that he be so indemnified.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
Section 1 (a) As used in this Agreement:
"Affiliate” of any specified Person shall mean any other Person controlling, controlled by or under common control with such specified Person.
"Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of (i) the Corporation or (ii) any other corporation,
limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of
the Corporation.
"Disinterested Director” shall mean a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
"Enterprise” shall mean the Corporation and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary.
"Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
"Expenses” shall mean all reasonable costs, expenses, fees and charges, including, without limitation, attorneys’ fees, document and e-discovery costs,
litigation expenses, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also
shall include, without limitation, (i) expenses incurred in connection with any appeal resulting from, incurred by Indemnitee in connection with, arising out of,
or in respect of or relating to, any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond, supersedes
bond, or other appeal bond or its equivalent, (ii) for purposes of Section 12(d) hereof only, expenses incurred by Indemnitee in connection with the
interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, (iii) any federal, state, local or foreign taxes
imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, and (iv) any interest, assessments or other charges
in respect of the foregoing. "Expenses” shall not include "Liabilities.”
"Indemnity Obligations” shall mean all obligations of the Corporation to Indemnitee under this Agreement, including the Corporation’s obligations to provide
indemnification to Indemnitee and advance Expenses to Indemnitee under this Agreement.
"Independent Counsel” shall mean a law firm of fifty (50) or more attorneys, or a member of a law firm of fifty (50) or more attorneys, that is experienced in
matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Corporation or Indemnitee in any matter
material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder; provided, however, that the term
"Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
"Liabilities” shall mean all claims, liabilities, damages, losses, judgments, orders, fines, penalties and other amounts payable in connection with, arising out of,
or in respect of or relating to any Proceeding, including, without limitation, amounts paid in settlement in any Proceeding and all costs and expenses in
complying with any judgment, order or decree issued or entered in connection with any Proceeding or any settlement agreement, stipulation or consent decree
entered into or issued in settlement of any Proceeding.
"Person” shall mean any individual, corporation, partnership, limited partnership, limited liability company, trust, governmental agency or body or any other
legal entity.
"Proceeding” shall mean any threatened, pending or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, formal or informal
hearing, inquiry or investigation, litigation, inquiry, administrative hearing or any other actual, threatened or completed judicial, administrative or arbitration
proceeding (including, without limitation, any such proceeding under the Securities Act of 1933, as amended, or the Exchange Act or any other federal law,
state law, statute or regulation), whether brought in the right of the Corporation or otherwise, and whether of a civil, criminal, administrative or investigative
nature, in each case, in which Indemnitee was, is or will be, or is threatened to be, involved as a party, witness or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Corporation, by reason of any actual or alleged action taken by Indemnitee or of any action on Indemnitee’s
part while acting as director or officer of the Corporation, or by reason of the fact that he is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, in each case whether or not
serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement can be provided under this
Agreement
(b) For the purpose hereof, references to "fines” shall include any excise tax assessed with respect to any employee benefit plan; references to "serving at the
request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a Person who acted in
good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation” as referred to in this Agreement.
Section 2 Indemnity in Third-Party Proceedings. The Corporation shall indemnify and hold harmless Indemnitee, to the fullest extent permitted by applicable
law, from and against all Liabilities and Expenses suffered or reasonably incurred (and, in the case of retainers, reasonably expected to be incurred) by
Indemnitee or on Indemnitee’s behalf in connection with any Proceeding (other than any Proceeding brought by or in the right of the Corporation to procure a
judgment in its favor), or any claim, issue or matter therein.
Section 3 Indemnity in Proceedings by or in the Right of the Corporation. The Corporation shall indemnify and hold harmless Indemnitee, to the fullest extent
permitted by applicable law, from and against all Liabilities and Expenses suffered or incurred by Indemnitee or on Indemnitee’s behalf in connection with any
Proceeding brought by or in the right of the Corporation to procure a judgment in its favor, or any claim, issue or matter therein. No indemnification for
Liabilities and Expenses shall be made under this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by
a court to be liable to the Corporation, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought
shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to such indemnification.
Section 4 Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, and without
limiting the rights of Indemnitee under any other provision hereof, including any rights to indemnification pursuant to Sections 2 or 3 hereof, to the fullest
extent permitted by applicable law, to the extent that Indemnitee is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue
or matter therein, in whole or in part, the Corporation shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with each successfully resolved Proceeding, claim, issue or matter. For purposes of this Section 4 and without limitation,
the termination of any Proceeding or claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
Section 5 Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable
law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked) to respond to discovery requests or a
subpoena or similar demand for documents or testimony, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all
Expenses suffered or incurred (or, in the case of retainers, reasonably expected to be incurred) by Indemnitee or on Indemnitee’s behalf in connection
therewith.
Section 6 Additional Indemnification. Notwithstanding any limitation in Sections 2, 3 or 4 hereof, the Corporation shall indemnify Indemnitee to the fullest
extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of
the Corporation to procure a judgment in its favor) against all Liabilities and Expenses suffered or reasonably incurred by Indemnitee in connection with such
Proceeding, including but not limited to:
(a) the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL; and
(b) the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the
extent to which a corporation may indemnify its officers and directors.
Section 7 Exclusions. Notwithstanding any provision in this Agreement, the Corporation shall not be obligated under this Agreement to indemnify or hold
harmless Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy obtained by the Corporation except with respect to
any excess beyond the amount paid under such insurance policy;
(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Corporation within the meaning of
Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law;
(c) for any reimbursement of the Corporation by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by
Indemnitee from the sale of securities of the Corporation, as required in each case under the Exchange Act (including any such reimbursements that arise from
an accounting restatement of the Corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act”), or the payment to the
Corporation of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is
held liable therefor (including pursuant to any settlement arrangements) or in respect of claw-back provisions promulgated under the rules and regulations of
the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act; or
(d) except as provided in Section 12(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Corporation or its directors, officers, employees or other
indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Corporation provides the
indemnification, in its sole discretion, pursuant to the powers vested in the Corporation under applicable law; or
(e) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful.
Section 8 Advancement. In accordance with the pre-existing requirements of the Bylaws, and notwithstanding any provision of this Agreement to the
contrary, the Corporation shall advance, to the extent not prohibited by applicable law, the Expenses reasonably incurred by Indemnitee in connection with
any Proceeding, and such advancement shall be made within ten (10) days after the receipt by the Corporation of a statement or statements requesting such
advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be
made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other
provisions of this Agreement. Advances shall include any and all Expenses reasonably incurred pursuing an action to enforce this right of advancement,
including Expenses incurred preparing and forwarding statements to the Corporation to support the advances claimed. Indemnitee shall qualify for advances
upon the execution and delivery to the Corporation of this Agreement, which shall constitute an undertaking providing that Indemnitee undertakes to repay
the amounts advanced to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Corporation. This Section 8 shall
not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 7 hereof.
Section 9 Procedure for Notification and Defense of Claim.
(a) Indemnitee shall promptly notify the Corporation in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or
advancement hereunder following the receipt by Indemnitee of written notice thereof. The written notification to the Corporation shall include a description of
the nature of the Proceeding and the facts underlying the Proceeding. To obtain indemnification under this Agreement, Indemnitee shall submit to the
Corporation a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Any delay or
failure by Indemnitee to notify the Corporation hereunder will not relieve the Corporation from any liability which it may have to Indemnitee hereunder or
otherwise than under this Agreement, and any delay or failure in so notifying the Corporation shall not constitute a waiver by Indemnitee of any rights under
this Agreement. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) In the event Indemnitee is entitled to indemnification and/or advancement with respect to any Proceeding, Indemnitee may, at Indemnitee’s option, (i)
retain counsel selected by Indemnitee and approved by the Corporation to defend Indemnitee in such Proceeding, at the sole expense of the Corporation
(which approval shall not be unreasonably withheld, conditioned or delayed), or (ii) have the Corporation assume the defense of Indemnitee in such
Proceeding, in which case the Corporation shall assume the defense of such Proceeding with counsel selected by the
Corporation and approved by Indemnitee (which approval shall not be unreasonably withheld, conditioned or delayed) within ten (10) days of the
Corporation’s receipt of written notice of Indemnitee’s election to cause the Corporation to do so. If the Corporation is required to assume the defense of any
such Proceeding, it shall engage legal counsel for such defense, and the Corporation shall be solely responsible for all fees and expenses of such legal
counsel and otherwise of such defense. Such legal counsel may represent both Indemnitee and the Corporation (and any other party or parties entitled to be
indemnified by the Corporation with respect to such matter) unless, in the reasonable opinion of legal counsel to Indemnitee, there is a conflict of interest
between Indemnitee and the Corporation (or any other such party or parties) or there are legal defenses available to Indemnitee that are not available to the
Corporation (or any such other party or parties). Notwithstanding either party’s assumption of responsibility for defense of a Proceeding, each party shall
have the right to engage separate counsel at its own expense. The party having responsibility for defense of a Proceeding shall provide the other party and
its counsel with all copies of pleadings and material correspondence relating to the Proceeding. Indemnitee and the Corporation shall reasonably cooperate in
the defense of any Proceeding with respect to which indemnification is sought hereunder, regardless of whether the Corporation or Indemnitee assumes the
defense thereof. Indemnitee may not settle or compromise any Proceeding without the prior written consent of the Corporation, which consent shall not be
unreasonably withheld, conditioned or delayed. The Corporation may not settle or compromise any Proceeding without the prior written consent of
Indemnitee.
Section 10 Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to Section 9(a) hereof, if any determination by the Corporation is required by applicable
law with respect to Indemnitee’s entitlement thereto, such determination shall be made (i) if Indemnitee shall request such determination be made by
Independent Counsel, by Independent Counsel, and (ii) in all other circumstances, (A) by a majority vote of the Disinterested Directors, even though less
than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than
a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee, or (D) if so directed by the Board, by the stockholders of the Corporation; and, if it is
so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee
shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination shall be borne by the Corporation (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and the Corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Corporation will
not deny any written request for indemnification hereunder made in good faith by Indemnitee unless a determination as to Indemnitee’s entitlement to such
indemnification described in this Section 10(a) has been made. The Corporation agrees to pay the reasonable fees and expenses of the Independent Counsel
referred to above and to fully indemnify such counsel against any and all Liabilities and Expenses arising out of or relating to this Agreement or its
engagement pursuant hereto.
(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a) hereof, (i) the
Independent Counsel shall be selected by the Corporation within ten (10) days of the Submission Date (the cost of such Independent Counsel to be paid by
the Corporation), (ii) the Corporation shall give written notice to Indemnitee advising it of the identity of the Independent Counsel so selected and (iii)
Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Corporation Indemnitee’s written objection to
such selection. Such objection by Indemnitee may be asserted only on the ground that the Independent Counsel selected does not meet the requirements of
"Independent Counsel” as defined in this Agreement. If such written objection is made and substantiated, the Independent Counsel selected shall not serve
as Independent Counsel unless and until Indemnitee withdraws the objection or a court has determined that such objection is without merit. Absent a timely
objection, the person so selected shall act as Independent Counsel. If no Independent Counsel shall have been selected and not objected to before the later
of (i) thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof (the "Submission
Date”) and (ii) ten (10) days after the final disposition of the Proceeding, each of the Corporation and Indemnitee shall select a law firm or member of a law firm
meeting the qualifications to serve as Independent Counsel,
and such law firms or members of law firms shall select the Independent Counsel. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 12(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to
the applicable standards of professional conduct then prevailing).
Section 11 Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the
fullest extent not prohibited by applicable law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in accordance with Section 9(a) of this Agreement, and the Corporation shall, to the fullest extent not prohibited by applicable law,
have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that
presumption. Neither the failure of the Corporation (including by its directors or independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Corporation (including by its directors or independent legal counsel) that Indemnitee has not met
such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) Subject to Section 12(e) hereof, if the person, persons or entity empowered or selected under Section 10 of this Agreement to determine whether
Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Corporation of the request therefore,
the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by applicable law, be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent a prohibition of such indemnification under applicable law; provided, however, that such 60-day
period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if (i) the determination is to be made by Independent Counsel and
Indemnitee objects to the Corporation’s selection of Independent Counsel and (ii) the Independent Counsel ultimately selected requires such additional time
for the obtaining or evaluating of documentation or information relating thereto; provided further, however, that such 60-day period may also be extended for
a reasonable time, not to exceed an additional sixty (60) days, if the determination of entitlement to indemnification is to be made by the stockholders of the
Corporation.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this Agreement) adversely affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the
Corporation or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(d) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is
based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise
by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this
Section 11(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
(e) Actions of Others. The knowledge or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this Agreement.
Section 12 Remedies of Indemnitee.
(a) Subject to Section 12(e) hereof, in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been
made pursuant to Section 10(a) of this Agreement within ninety (90) days after receipt by the Corporation of the request for indemnification, (iv) payment of
indemnification is not made pursuant to Sections 4 or 5 or the last sentence of Section 10(a) of this Agreement within ten (10) days after receipt by the
Corporation of a written request therefor, (v) payment of indemnification pursuant to Sections 2, 3 or 6 of this Agreement is not made within ten (10) days after
a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Corporation or any other Person takes or threatens to
take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover
from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of
Indemnitee’s entitlement to such indemnification or advancement. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Corporation shall not oppose
Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 12
the Corporation shall have the burden of proving Indemnitee is not entitled to indemnification or advancement, as the case may be.
(c) If a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is entitled to indemnification, the Corporation shall be
bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a prohibition of such indemnification
under applicable law.
(d) The Corporation shall, to the fullest extent not prohibited by applicable law, be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in
any such court or before any such arbitrator that the Corporation is bound by all the provisions of this Agreement. It is the intent of the Corporation that
Indemnitee not be required to incur Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder.
The Corporation shall indemnify Indemnitee against any and all such Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the
Corporation of a written request therefore) advance, to the extent not prohibited by applicable law, such Expenses to Indemnitee, which are incurred by
Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement from the Corporation under this Agreement or under any
directors’ and officers’ liability insurance policies maintained by the Corporation, regardless of whether Indemnitee ultimately is determined to be entitled to
such indemnification, advancement or insurance recovery, as the case may be.
(e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required
to be made prior to the final disposition of the Proceeding; provided that, in absence of any such determination with respect to such Proceeding, the
Corporation shall advance Expenses with respect to such Proceeding.
Section 13 Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement as provided by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution
of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal.
To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement than would be afforded
currently under the Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall
be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) The Corporation hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement and insurance provided by one or more
Persons with whom or which Indemnitee may be associated. The Corporation hereby acknowledges and agrees that (i) the Corporation shall be the
indemnitor of first resort with respect to any Proceeding, Expense, Liability or matter that is the subject of the Indemnity Obligations, (ii) the Corporation shall
be primarily liable for all Indemnity Obligations and any indemnification afforded to Indemnitee in respect of any Proceeding, Expense, Liability or matter that
is the subject of Indemnity Obligations, whether created by applicable law, organizational or constituent documents, contract (including this Agreement) or
otherwise, (iii) any obligation of any other Persons with whom or which Indemnitee may be associated to indemnify Indemnitee or advance Expenses or
Liabilities to Indemnitee in respect of any Proceeding shall be secondary to the obligations of the Corporation hereunder, (iv) the Corporation shall be
required to indemnify Indemnitee and advance Expenses or Liabilities to Indemnitee hereunder to the fullest extent provided herein without regard to any
rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated or insurer of any such Person and (v) the
Corporation irrevocably waives, relinquishes and releases any other Person with whom or which Indemnitee may be associated from any claim of contribution,
subrogation or any other recovery of any kind in respect of amounts paid by the Corporation hereunder. In the event any other Person with whom or which
Indemnitee may be associated or their insurers advances or extinguishes any liability or loss which is the subject of any Indemnity Obligation owed by the
Corporation or payable under any Corporation insurance policy, the payor shall have a right of subrogation against the Corporation or its insurer or insurers
for all amounts so paid which would otherwise be payable by the Corporation or its insurer or insurers under this Agreement. In no event will payment of an
Indemnity Obligation by any other Person with whom or which Indemnitee may be associated or their insurers affect the obligations of the Corporation
hereunder or shift primary liability for any Indemnity Obligation to any other Person with whom or which Indemnitee may be associated. Any indemnification,
insurance or advancement provided by any other Person with whom or which Indemnitee may be associated with respect to any Liability arising as a result of
Indemnitee’s Corporate Status or capacity as an officer or director of any Person is specifically in excess over any Indemnity Obligation of the Corporation or
any collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Corporation
under this Agreement.
(c) The Corporation shall maintain an insurance policy or policies providing liability insurance providing reasonable and customary coverage as compared
with similarly situated companies (as determined by the Board in its reasonable discretion) for directors, officers, employees, or agents of the Corporation or of
any other Enterprise, and Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or policies and such policies shall provide for and recognize that the insurance
policies are primary to any rights to indemnification, advancement or insurance proceeds to which Indemnitee may be entitled from one or more Persons with
whom or which Indemnitee may be associated to the same extent as the Corporation’s indemnification and advancement obligations set forth in this
Agreement. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Corporation has director and officer liability insurance in effect,
the Corporation shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts
payable as a result of such Proceeding in accordance with the terms of such policies.
(d) In the event of any payment under this Agreement, the Corporation shall not be subrogated to the rights of recovery of Indemnitee, including rights of
indemnification provided to Indemnitee from any other person or entity with whom Indemnitee may be associated; provided, however, that the Corporation
shall be subrogated to the extent of any such payment of all rights of recovery of Indemnitee under insurance policies of the Corporation or any of its
subsidiaries.
(e) The indemnification and contribution provided for in this Agreement will remain in full force and effect regardless of any investigation made by or on
behalf of Indemnitee.
Section 14 Duration of Agreement; Not Employment Contract. This Agreement shall continue until and terminate upon the latest of: (i) ten (10) years after the
date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Corporation or any other Enterprise, (ii) the date of final
termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto or (iii) the expiration of all statutes of limitation applicable to
possible Proceedings to which Indemnitee may be subject arising out of the Indemnitee’s Corporate Status. The indemnification provided under this
Agreement shall continue as to the Indemnitee even though he or she may have ceased to be a director of the Corporation or of any the Corporation’s direct
or indirect subsidiaries or to have Corporate Status. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to
the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. This Agreement shall not be deemed an employment contract between the
Corporation (or any of its subsidiaries or any other Enterprise) and Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the
Corporation (or any of its subsidiaries or any other Enterprise), if any, is at will, and Indemnitee may be discharged at any time for any reason, with or without
cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Corporation (or any of its subsidiaries or any
other Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director of the Corporation, by the
Certificate of Incorporation, the Bylaws or the DGCL.
Section 15 Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a)
the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent permitted by applicable law; (b) such provision or provisions shall be deemed
reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 16 Enforcement.
(a) The Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as a director, officer, employee or agent of the Corporation, and the Corporation acknowledges that Indemnitee is relying upon this
Agreement in serving as a director, officer, employee or agent of the Corporation.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is
a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and applicable law, and shall not be deemed a substitute therefore, nor
diminish or abrogate any rights of Indemnitee thereunder.
Section 17 Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties
thereto. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provision of this Agreement nor
shall any waiver constitute a continuing waiver.
Section 18 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been
duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified
or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral
confirmation that such transmission has been received:
(i) If to Indemnitee, at such address as Indemnitee shall provide to the Corporation.
(ii) If to the Corporation to:
Ramaco Resources, Inc.
250 West Main Street, Suite 1800
Lexington, Kentucky 40507
Attention: Board of Directors
or to any other address as may have been furnished to Indemnitee by the Corporation.
Section 19 Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Corporation, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
Liabilities or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (a) the relative benefits received by the Corporation and Indemnitee as a
result of the event(s) and transaction(s) giving cause to such Proceeding; and (b) the relative fault of the Corporation (and its directors, officers, employees
and agents) and Indemnitee in connection with such event(s) and transaction(s).
Section 20 Applicable Law. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules.
Section 21 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but
all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement.
Section 22 Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction
thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed effective as of the day and year first above written.
RAMACO RESOURCES, INC.
/s/ Randall W. Atkins
By:
Name: Randall W. Atkins
Title: Chairman and Chief Executive
INDEMNITEE
/s/ Mahmud Riffat
By:
Name: Mahmud Riffat
[Signature Page to Indemnification Agreement]
INDEMNIFICATION AGREEMENT
Exhibit 10.52
This Indemnification Agreement ("Agreement”) is made effective as of January 18, 2021, by and between Ramaco Resources, Inc., a Delaware corporation (the
"Corporation”), and David E.K. Frischkorn, Jr. ("Indemnitee”).
RECITALS:
WHEREAS, directors, officers and other persons in service to corporations or business enterprises are subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been brought only against the Corporation or business enterprise itself;
WHEREAS, highly competent persons have become more reluctant to serve as directors, officers or in other capacities unless they are provided with
adequate protection through insurance and adequate indemnification against inordinate risks of claims and actions against them arising out of their service to
and activities on behalf of the corporation;
WHEREAS, the Board of Directors of the Corporation (the "Board”) has determined that the increased difficulty in attracting and retaining such persons is
detrimental to the best interests of the Corporation and its stockholders and that the Corporation should act to assure such persons that there will be
increased certainty of such protection in the future;
WHEREAS, (i) the Amended and Restated Bylaws of the Corporation (as may be amended, the "Bylaws”) require indemnification of the officers and directors
of the Corporation, (ii) Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware ("DGCL”) and (iii)
the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive and thereby contemplate that contracts may
be entered into between the Corporation and members of the Board, officers and other persons with respect to indemnification;
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws and the Amended and Restated Certificate of Incorporation of the
Corporation (as may be amended, the "Certificate of Incorporation”) and any resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefore, nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, (i) Indemnitee does not regard the protection available under the Bylaws and insurance as adequate in the present circumstances, (ii) Indemnitee
may not be willing to serve or continue to serve as a director or officer of the Corporation without adequate protection, (iii) the Corporation desires Indemnitee
to serve in such capacity, and (iv) Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Corporation on the
condition that he be so indemnified.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
Section 1 (a) As used in this Agreement:
"Affiliate” of any specified Person shall mean any other Person controlling, controlled by or under common control with such specified Person.
"Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of (i) the Corporation or (ii) any other corporation,
limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of
the Corporation.
"Disinterested Director” shall mean a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
"Enterprise” shall mean the Corporation and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary.
"Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
"Expenses” shall mean all reasonable costs, expenses, fees and charges, including, without limitation, attorneys’ fees, document and e-discovery costs,
litigation expenses, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also
shall include, without limitation, (i) expenses incurred in connection with any appeal resulting from, incurred by Indemnitee in connection with, arising out of,
or in respect of or relating to, any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond, supersedes
bond, or other appeal bond or its equivalent, (ii) for purposes of Section 12(d) hereof only, expenses incurred by Indemnitee in connection with the
interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, (iii) any federal, state, local or foreign taxes
imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, and (iv) any interest, assessments or other charges
in respect of the foregoing. "Expenses” shall not include "Liabilities.”
"Indemnity Obligations” shall mean all obligations of the Corporation to Indemnitee under this Agreement, including the Corporation’s obligations to provide
indemnification to Indemnitee and advance Expenses to Indemnitee under this Agreement.
"Independent Counsel” shall mean a law firm of fifty (50) or more attorneys, or a member of a law firm of fifty (50) or more attorneys, that is experienced in
matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Corporation or Indemnitee in any matter
material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder; provided, however, that the term
"Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
"Liabilities” shall mean all claims, liabilities, damages, losses, judgments, orders, fines, penalties and other amounts payable in connection with, arising out of,
or in respect of or relating to any Proceeding, including, without limitation, amounts paid in settlement in any Proceeding and all costs and expenses in
complying with any judgment, order or decree issued or entered in connection with any Proceeding or any settlement agreement, stipulation or consent decree
entered into or issued in settlement of any Proceeding.
"Person” shall mean any individual, corporation, partnership, limited partnership, limited liability company, trust, governmental agency or body or any other
legal entity.
"Proceeding” shall mean any threatened, pending or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, formal or informal
hearing, inquiry or investigation, litigation, inquiry, administrative hearing or any other actual, threatened or completed judicial, administrative or arbitration
proceeding (including, without limitation, any such proceeding under the Securities Act of 1933, as amended, or the Exchange Act or any other federal law,
state law, statute or regulation), whether brought in the right of the Corporation or otherwise, and whether of a civil, criminal, administrative or investigative
nature, in each case, in which Indemnitee was, is or will be, or is threatened to be, involved as a party, witness or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Corporation, by reason of any actual or alleged action taken by Indemnitee or of any action on Indemnitee’s
part while acting as director or officer of the Corporation, or by reason of the fact that he is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, in each case whether or not
serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement can be provided under this
Agreement
(b) For the purpose hereof, references to "fines” shall include any excise tax assessed with respect to any employee benefit plan; references to "serving at the
request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a Person who acted in
good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation” as referred to in this Agreement.
Section 2 Indemnity in Third-Party Proceedings. The Corporation shall indemnify and hold harmless Indemnitee, to the fullest extent permitted by applicable
law, from and against all Liabilities and Expenses suffered or reasonably incurred (and, in the case of retainers, reasonably expected to be incurred) by
Indemnitee or on Indemnitee’s behalf in connection with any Proceeding (other than any Proceeding brought by or in the right of the Corporation to procure a
judgment in its favor), or any claim, issue or matter therein.
Section 3 Indemnity in Proceedings by or in the Right of the Corporation. The Corporation shall indemnify and hold harmless Indemnitee, to the fullest extent
permitted by applicable law, from and against all Liabilities and Expenses suffered or incurred by Indemnitee or on Indemnitee’s behalf in connection with any
Proceeding brought by or in the right of the Corporation to procure a judgment in its favor, or any claim, issue or matter therein. No indemnification for
Liabilities and Expenses shall be made under this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by
a court to be liable to the Corporation, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought
shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to such indemnification.
Section 4 Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, and without
limiting the rights of Indemnitee under any other provision hereof, including any rights to indemnification pursuant to Sections 2 or 3 hereof, to the fullest
extent permitted by applicable law, to the extent that Indemnitee is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue
or matter therein, in whole or in part, the Corporation shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with each successfully resolved Proceeding, claim, issue or matter. For purposes of this Section 4 and without limitation,
the termination of any Proceeding or claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
Section 5 Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable
law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked) to respond to discovery requests or a
subpoena or similar demand for documents or testimony, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all
Expenses suffered or incurred (or, in the case of retainers, reasonably expected to be incurred) by Indemnitee or on Indemnitee’s behalf in connection
therewith.
Section 6 Additional Indemnification. Notwithstanding any limitation in Sections 2, 3 or 4 hereof, the Corporation shall indemnify Indemnitee to the fullest
extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of
the Corporation to procure a judgment in its favor) against all Liabilities and Expenses suffered or reasonably incurred by Indemnitee in connection with such
Proceeding, including but not limited to:
(a) the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL; and
(b) the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the
extent to which a corporation may indemnify its officers and directors.
Section 7 Exclusions. Notwithstanding any provision in this Agreement, the Corporation shall not be obligated under this Agreement to indemnify or hold
harmless Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy obtained by the Corporation except with respect to
any excess beyond the amount paid under such insurance policy;
(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Corporation within the meaning of
Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law;
(c) for any reimbursement of the Corporation by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by
Indemnitee from the sale of securities of the Corporation, as required in each case under the Exchange Act (including any such reimbursements that arise from
an accounting restatement of the Corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act”), or the payment to the
Corporation of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is
held liable therefor (including pursuant to any settlement arrangements) or in respect of claw-back provisions promulgated under the rules and regulations of
the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act; or
(d) except as provided in Section 12(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Corporation or its directors, officers, employees or other
indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Corporation provides the
indemnification, in its sole discretion, pursuant to the powers vested in the Corporation under applicable law; or
(e) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful.
Section 8 Advancement. In accordance with the pre-existing requirements of the Bylaws, and notwithstanding any provision of this Agreement to the
contrary, the Corporation shall advance, to the extent not prohibited by applicable law, the Expenses reasonably incurred by Indemnitee in connection with
any Proceeding, and such advancement shall be made within ten (10) days after the receipt by the Corporation of a statement or statements requesting such
advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be
made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other
provisions of this Agreement. Advances shall include any and all Expenses reasonably incurred pursuing an action to enforce this right of advancement,
including Expenses incurred preparing and forwarding statements to the Corporation to support the advances claimed. Indemnitee shall qualify for advances
upon the execution and delivery to the Corporation of this Agreement, which shall constitute an undertaking providing that Indemnitee undertakes to repay
the amounts advanced to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Corporation. This Section 8 shall
not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 7 hereof.
Section 9 Procedure for Notification and Defense of Claim.
(a) Indemnitee shall promptly notify the Corporation in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or
advancement hereunder following the receipt by Indemnitee of written notice thereof. The written notification to the Corporation shall include a description of
the nature of the Proceeding and the facts underlying the Proceeding. To obtain indemnification under this Agreement, Indemnitee shall submit to the
Corporation a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Any delay or
failure by Indemnitee to notify the Corporation hereunder will not relieve the Corporation from any liability which it may have to Indemnitee hereunder or
otherwise than under this Agreement, and any delay or failure in so notifying the Corporation shall not constitute a waiver by Indemnitee of any rights under
this Agreement. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) In the event Indemnitee is entitled to indemnification and/or advancement with respect to any Proceeding, Indemnitee may, at Indemnitee’s option, (i)
retain counsel selected by Indemnitee and approved by the Corporation to defend Indemnitee in such Proceeding, at the sole expense of the Corporation
(which approval shall not be unreasonably withheld, conditioned or delayed), or (ii) have the Corporation assume the defense of Indemnitee in such
Proceeding, in which case the Corporation shall assume the defense of such Proceeding with counsel selected by the
Corporation and approved by Indemnitee (which approval shall not be unreasonably withheld, conditioned or delayed) within ten (10) days of the
Corporation’s receipt of written notice of Indemnitee’s election to cause the Corporation to do so. If the Corporation is required to assume the defense of any
such Proceeding, it shall engage legal counsel for such defense, and the Corporation shall be solely responsible for all fees and expenses of such legal
counsel and otherwise of such defense. Such legal counsel may represent both Indemnitee and the Corporation (and any other party or parties entitled to be
indemnified by the Corporation with respect to such matter) unless, in the reasonable opinion of legal counsel to Indemnitee, there is a conflict of interest
between Indemnitee and the Corporation (or any other such party or parties) or there are legal defenses available to Indemnitee that are not available to the
Corporation (or any such other party or parties). Notwithstanding either party’s assumption of responsibility for defense of a Proceeding, each party shall
have the right to engage separate counsel at its own expense. The party having responsibility for defense of a Proceeding shall provide the other party and
its counsel with all copies of pleadings and material correspondence relating to the Proceeding. Indemnitee and the Corporation shall reasonably cooperate in
the defense of any Proceeding with respect to which indemnification is sought hereunder, regardless of whether the Corporation or Indemnitee assumes the
defense thereof. Indemnitee may not settle or compromise any Proceeding without the prior written consent of the Corporation, which consent shall not be
unreasonably withheld, conditioned or delayed. The Corporation may not settle or compromise any Proceeding without the prior written consent of
Indemnitee.
Section 10 Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to Section 9(a) hereof, if any determination by the Corporation is required by applicable
law with respect to Indemnitee’s entitlement thereto, such determination shall be made (i) if Indemnitee shall request such determination be made by
Independent Counsel, by Independent Counsel, and (ii) in all other circumstances, (A) by a majority vote of the Disinterested Directors, even though less
than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than
a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee, or (D) if so directed by the Board, by the stockholders of the Corporation; and, if it is
so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee
shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination shall be borne by the Corporation (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and the Corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Corporation will
not deny any written request for indemnification hereunder made in good faith by Indemnitee unless a determination as to Indemnitee’s entitlement to such
indemnification described in this Section 10(a) has been made. The Corporation agrees to pay the reasonable fees and expenses of the Independent Counsel
referred to above and to fully indemnify such counsel against any and all Liabilities and Expenses arising out of or relating to this Agreement or its
engagement pursuant hereto.
(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a) hereof, (i) the
Independent Counsel shall be selected by the Corporation within ten (10) days of the Submission Date (the cost of such Independent Counsel to be paid by
the Corporation), (ii) the Corporation shall give written notice to Indemnitee advising it of the identity of the Independent Counsel so selected and (iii)
Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Corporation Indemnitee’s written objection to
such selection. Such objection by Indemnitee may be asserted only on the ground that the Independent Counsel selected does not meet the requirements of
"Independent Counsel” as defined in this Agreement. If such written objection is made and substantiated, the Independent Counsel selected shall not serve
as Independent Counsel unless and until Indemnitee withdraws the objection or a court has determined that such objection is without merit. Absent a timely
objection, the person so selected shall act as Independent Counsel. If no Independent Counsel shall have been selected and not objected to before the later
of (i) thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof (the "Submission
Date”) and (ii) ten (10) days after the final disposition of the Proceeding, each of the Corporation and Indemnitee shall select a law firm or member of a law firm
meeting the qualifications to serve as Independent Counsel,
and such law firms or members of law firms shall select the Independent Counsel. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 12(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to
the applicable standards of professional conduct then prevailing).
Section 11 Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the
fullest extent not prohibited by applicable law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in accordance with Section 9(a) of this Agreement, and the Corporation shall, to the fullest extent not prohibited by applicable law,
have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that
presumption. Neither the failure of the Corporation (including by its directors or independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Corporation (including by its directors or independent legal counsel) that Indemnitee has not met
such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) Subject to Section 12(e) hereof, if the person, persons or entity empowered or selected under Section 10 of this Agreement to determine whether
Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Corporation of the request therefore,
the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by applicable law, be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent a prohibition of such indemnification under applicable law; provided, however, that such 60-day
period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if (i) the determination is to be made by Independent Counsel and
Indemnitee objects to the Corporation’s selection of Independent Counsel and (ii) the Independent Counsel ultimately selected requires such additional time
for the obtaining or evaluating of documentation or information relating thereto; provided further, however, that such 60-day period may also be extended for
a reasonable time, not to exceed an additional sixty (60) days, if the determination of entitlement to indemnification is to be made by the stockholders of the
Corporation.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this Agreement) adversely affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the
Corporation or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(d) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is
based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise
by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this
Section 11(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
(e) Actions of Others. The knowledge or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this Agreement.
Section 12 Remedies of Indemnitee.
(a) Subject to Section 12(e) hereof, in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been
made pursuant to Section 10(a) of this Agreement within ninety (90) days after receipt by the Corporation of the request for indemnification, (iv) payment of
indemnification is not made pursuant to Sections 4 or 5 or the last sentence of Section 10(a) of this Agreement within ten (10) days after receipt by the
Corporation of a written request therefor, (v) payment of indemnification pursuant to Sections 2, 3 or 6 of this Agreement is not made within ten (10) days after
a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Corporation or any other Person takes or threatens to
take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover
from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of
Indemnitee’s entitlement to such indemnification or advancement. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Corporation shall not oppose
Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 12
the Corporation shall have the burden of proving Indemnitee is not entitled to indemnification or advancement, as the case may be.
(c) If a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is entitled to indemnification, the Corporation shall be
bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a prohibition of such indemnification
under applicable law.
(d) The Corporation shall, to the fullest extent not prohibited by applicable law, be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in
any such court or before any such arbitrator that the Corporation is bound by all the provisions of this Agreement. It is the intent of the Corporation that
Indemnitee not be required to incur Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder.
The Corporation shall indemnify Indemnitee against any and all such Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the
Corporation of a written request therefore) advance, to the extent not prohibited by applicable law, such Expenses to Indemnitee, which are incurred by
Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement from the Corporation under this Agreement or under any
directors’ and officers’ liability insurance policies maintained by the Corporation, regardless of whether Indemnitee ultimately is determined to be entitled to
such indemnification, advancement or insurance recovery, as the case may be.
(e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required
to be made prior to the final disposition of the Proceeding; provided that, in absence of any such determination with respect to such Proceeding, the
Corporation shall advance Expenses with respect to such Proceeding.
Section 13 Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement as provided by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution
of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal.
To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement than would be afforded
currently under the Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall
be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) The Corporation hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement and insurance provided by one or more
Persons with whom or which Indemnitee may be associated. The Corporation hereby acknowledges and agrees that (i) the Corporation shall be the
indemnitor of first resort with respect to any Proceeding, Expense, Liability or matter that is the subject of the Indemnity Obligations, (ii) the Corporation shall
be primarily liable for all Indemnity Obligations and any indemnification afforded to Indemnitee in respect of any Proceeding, Expense, Liability or matter that
is the subject of Indemnity Obligations, whether created by applicable law, organizational or constituent documents, contract (including this Agreement) or
otherwise, (iii) any obligation of any other Persons with whom or which Indemnitee may be associated to indemnify Indemnitee or advance Expenses or
Liabilities to Indemnitee in respect of any Proceeding shall be secondary to the obligations of the Corporation hereunder, (iv) the Corporation shall be
required to indemnify Indemnitee and advance Expenses or Liabilities to Indemnitee hereunder to the fullest extent provided herein without regard to any
rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated or insurer of any such Person and (v) the
Corporation irrevocably waives, relinquishes and releases any other Person with whom or which Indemnitee may be associated from any claim of contribution,
subrogation or any other recovery of any kind in respect of amounts paid by the Corporation hereunder. In the event any other Person with whom or which
Indemnitee may be associated or their insurers advances or extinguishes any liability or loss which is the subject of any Indemnity Obligation owed by the
Corporation or payable under any Corporation insurance policy, the payor shall have a right of subrogation against the Corporation or its insurer or insurers
for all amounts so paid which would otherwise be payable by the Corporation or its insurer or insurers under this Agreement. In no event will payment of an
Indemnity Obligation by any other Person with whom or which Indemnitee may be associated or their insurers affect the obligations of the Corporation
hereunder or shift primary liability for any Indemnity Obligation to any other Person with whom or which Indemnitee may be associated. Any indemnification,
insurance or advancement provided by any other Person with whom or which Indemnitee may be associated with respect to any Liability arising as a result of
Indemnitee’s Corporate Status or capacity as an officer or director of any Person is specifically in excess over any Indemnity Obligation of the Corporation or
any collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Corporation
under this Agreement.
(c) The Corporation shall maintain an insurance policy or policies providing liability insurance providing reasonable and customary coverage as compared
with similarly situated companies (as determined by the Board in its reasonable discretion) for directors, officers, employees, or agents of the Corporation or of
any other Enterprise, and Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or policies and such policies shall provide for and recognize that the insurance
policies are primary to any rights to indemnification, advancement or insurance proceeds to which Indemnitee may be entitled from one or more Persons with
whom or which Indemnitee may be associated to the same extent as the Corporation’s indemnification and advancement obligations set forth in this
Agreement. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Corporation has director and officer liability insurance in effect,
the Corporation shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts
payable as a result of such Proceeding in accordance with the terms of such policies.
(d) In the event of any payment under this Agreement, the Corporation shall not be subrogated to the rights of recovery of Indemnitee, including rights of
indemnification provided to Indemnitee from any other person or entity with whom Indemnitee may be associated; provided, however, that the Corporation
shall be subrogated to the extent of any such payment of all rights of recovery of Indemnitee under insurance policies of the Corporation or any of its
subsidiaries.
(e) The indemnification and contribution provided for in this Agreement will remain in full force and effect regardless of any investigation made by or on
behalf of Indemnitee.
Section 14 Duration of Agreement; Not Employment Contract. This Agreement shall continue until and terminate upon the latest of: (i) ten (10) years after the
date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Corporation or any other Enterprise, (ii) the date of final
termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto or (iii) the expiration of all statutes of limitation applicable to
possible Proceedings to which Indemnitee may be subject arising out of the Indemnitee’s Corporate Status. The indemnification provided under this
Agreement shall continue as to the Indemnitee even though he or she may have ceased to be a director of the Corporation or of any the Corporation’s direct
or indirect subsidiaries or to have Corporate Status. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to
the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. This Agreement shall not be deemed an employment contract between the
Corporation (or any of its subsidiaries or any other Enterprise) and Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the
Corporation (or any of its subsidiaries or any other Enterprise), if any, is at will, and Indemnitee may be discharged at any time for any reason, with or without
cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Corporation (or any of its subsidiaries or any
other Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director of the Corporation, by the
Certificate of Incorporation, the Bylaws or the DGCL.
Section 15 Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a)
the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent permitted by applicable law; (b) such provision or provisions shall be deemed
reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 16 Enforcement.
(a) The Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as a director, officer, employee or agent of the Corporation, and the Corporation acknowledges that Indemnitee is relying upon this
Agreement in serving as a director, officer, employee or agent of the Corporation.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is
a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and applicable law, and shall not be deemed a substitute therefore, nor
diminish or abrogate any rights of Indemnitee thereunder.
Section 17 Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties
thereto. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provision of this Agreement nor
shall any waiver constitute a continuing waiver.
Section 18 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been
duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified
or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral
confirmation that such transmission has been received:
(i) If to Indemnitee, at such address as Indemnitee shall provide to the Corporation.
(ii) If to the Corporation to:
Ramaco Resources, Inc.
250 West Main Street, Suite 1800
Lexington, Kentucky 40507
Attention: Board of Directors
or to any other address as may have been furnished to Indemnitee by the Corporation.
Section 19 Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Corporation, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
Liabilities or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (a) the relative benefits received by the Corporation and Indemnitee as a
result of the event(s) and transaction(s) giving cause to such Proceeding; and (b) the relative fault of the Corporation (and its directors, officers, employees
and agents) and Indemnitee in connection with such event(s) and transaction(s).
Section 20 Applicable Law. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules.
Section 21 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but
all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement.
Section 22 Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction
thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed effective as of the day and year first above written.
RAMACO RESOURCES, INC.
/s/ Randall W. Atkins
By:
Name: Randall W. Atkins
Title: Chairman and Chief Executive
INDEMNITEE
/s/ David E.K. Frischkorn, Jr.
By:
Name: David E.K. Frischkorn, Jr.
[Signature Page to Indemnification Agreement]
INDEMNIFICATION AGREEMENT
Exhibit 10.53
This Indemnification Agreement ("Agreement”) is made effective as of January 18, 2021, by and between Ramaco Resources, Inc., a Delaware corporation (the
"Corporation”), and E. Forrest Jones, Jr. ("Indemnitee”).
RECITALS:
WHEREAS, directors, officers and other persons in service to corporations or business enterprises are subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been brought only against the Corporation or business enterprise itself;
WHEREAS, highly competent persons have become more reluctant to serve as directors, officers or in other capacities unless they are provided with
adequate protection through insurance and adequate indemnification against inordinate risks of claims and actions against them arising out of their service to
and activities on behalf of the corporation;
WHEREAS, the Board of Directors of the Corporation (the "Board”) has determined that the increased difficulty in attracting and retaining such persons is
detrimental to the best interests of the Corporation and its stockholders and that the Corporation should act to assure such persons that there will be
increased certainty of such protection in the future;
WHEREAS, (i) the Amended and Restated Bylaws of the Corporation (as may be amended, the "Bylaws”) require indemnification of the officers and directors
of the Corporation, (ii) Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware ("DGCL”) and (iii)
the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive and thereby contemplate that contracts may
be entered into between the Corporation and members of the Board, officers and other persons with respect to indemnification;
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws and the Amended and Restated Certificate of Incorporation of the
Corporation (as may be amended, the "Certificate of Incorporation”) and any resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefore, nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, (i) Indemnitee does not regard the protection available under the Bylaws and insurance as adequate in the present circumstances, (ii) Indemnitee
may not be willing to serve or continue to serve as a director or officer of the Corporation without adequate protection, (iii) the Corporation desires Indemnitee
to serve in such capacity, and (iv) Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Corporation on the
condition that he be so indemnified.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
Section 1 (a) As used in this Agreement:
"Affiliate” of any specified Person shall mean any other Person controlling, controlled by or under common control with such specified Person.
"Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of (i) the Corporation or (ii) any other corporation,
limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of
the Corporation.
"Disinterested Director” shall mean a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
"Enterprise” shall mean the Corporation and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary.
"Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
"Expenses” shall mean all reasonable costs, expenses, fees and charges, including, without limitation, attorneys’ fees, document and e-discovery costs,
litigation expenses, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also
shall include, without limitation, (i) expenses incurred in connection with any appeal resulting from, incurred by Indemnitee in connection with, arising out of,
or in respect of or relating to, any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond, supersedes
bond, or other appeal bond or its equivalent, (ii) for purposes of Section 12(d) hereof only, expenses incurred by Indemnitee in connection with the
interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, (iii) any federal, state, local or foreign taxes
imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, and (iv) any interest, assessments or other charges
in respect of the foregoing. "Expenses” shall not include "Liabilities.”
"Indemnity Obligations” shall mean all obligations of the Corporation to Indemnitee under this Agreement, including the Corporation’s obligations to provide
indemnification to Indemnitee and advance Expenses to Indemnitee under this Agreement.
"Independent Counsel” shall mean a law firm of fifty (50) or more attorneys, or a member of a law firm of fifty (50) or more attorneys, that is experienced in
matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Corporation or Indemnitee in any matter
material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder; provided, however, that the term
"Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
"Liabilities” shall mean all claims, liabilities, damages, losses, judgments, orders, fines, penalties and other amounts payable in connection with, arising out of,
or in respect of or relating to any Proceeding, including, without limitation, amounts paid in settlement in any Proceeding and all costs and expenses in
complying with any judgment, order or decree issued or entered in connection with any Proceeding or any settlement agreement, stipulation or consent decree
entered into or issued in settlement of any Proceeding.
"Person” shall mean any individual, corporation, partnership, limited partnership, limited liability company, trust, governmental agency or body or any other
legal entity.
"Proceeding” shall mean any threatened, pending or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, formal or informal
hearing, inquiry or investigation, litigation, inquiry, administrative hearing or any other actual, threatened or completed judicial, administrative or arbitration
proceeding (including, without limitation, any such proceeding under the Securities Act of 1933, as amended, or the Exchange Act or any other federal law,
state law, statute or regulation), whether brought in the right of the Corporation or otherwise, and whether of a civil, criminal, administrative or investigative
nature, in each case, in which Indemnitee was, is or will be, or is threatened to be, involved as a party, witness or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Corporation, by reason of any actual or alleged action taken by Indemnitee or of any action on Indemnitee’s
part while acting as director or officer of the Corporation, or by reason of the fact that he is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, in each case whether or not
serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement can be provided under this
Agreement
(b) For the purpose hereof, references to "fines” shall include any excise tax assessed with respect to any employee benefit plan; references to "serving at the
request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a Person who acted in
good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation” as referred to in this Agreement.
Section 2 Indemnity in Third-Party Proceedings. The Corporation shall indemnify and hold harmless Indemnitee, to the fullest extent permitted by applicable
law, from and against all Liabilities and Expenses suffered or reasonably incurred (and, in the case of retainers, reasonably expected to be incurred) by
Indemnitee or on Indemnitee’s behalf in connection with any Proceeding (other than any Proceeding brought by or in the right of the Corporation to procure a
judgment in its favor), or any claim, issue or matter therein.
Section 3 Indemnity in Proceedings by or in the Right of the Corporation. The Corporation shall indemnify and hold harmless Indemnitee, to the fullest extent
permitted by applicable law, from and against all Liabilities and Expenses suffered or incurred by Indemnitee or on Indemnitee’s behalf in connection with any
Proceeding brought by or in the right of the Corporation to procure a judgment in its favor, or any claim, issue or matter therein. No indemnification for
Liabilities and Expenses shall be made under this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by
a court to be liable to the Corporation, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought
shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to such indemnification.
Section 4 Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, and without
limiting the rights of Indemnitee under any other provision hereof, including any rights to indemnification pursuant to Sections 2 or 3 hereof, to the fullest
extent permitted by applicable law, to the extent that Indemnitee is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue
or matter therein, in whole or in part, the Corporation shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with each successfully resolved Proceeding, claim, issue or matter. For purposes of this Section 4 and without limitation,
the termination of any Proceeding or claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
Section 5 Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable
law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked) to respond to discovery requests or a
subpoena or similar demand for documents or testimony, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all
Expenses suffered or incurred (or, in the case of retainers, reasonably expected to be incurred) by Indemnitee or on Indemnitee’s behalf in connection
therewith.
Section 6 Additional Indemnification. Notwithstanding any limitation in Sections 2, 3 or 4 hereof, the Corporation shall indemnify Indemnitee to the fullest
extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of
the Corporation to procure a judgment in its favor) against all Liabilities and Expenses suffered or reasonably incurred by Indemnitee in connection with such
Proceeding, including but not limited to:
(a) the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL; and
(b) the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the
extent to which a corporation may indemnify its officers and directors.
Section 7 Exclusions. Notwithstanding any provision in this Agreement, the Corporation shall not be obligated under this Agreement to indemnify or hold
harmless Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy obtained by the Corporation except with respect to
any excess beyond the amount paid under such insurance policy;
(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Corporation within the meaning of
Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law;
(c) for any reimbursement of the Corporation by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by
Indemnitee from the sale of securities of the Corporation, as required in each case under the Exchange Act (including any such reimbursements that arise from
an accounting restatement of the Corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act”), or the payment to the
Corporation of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is
held liable therefor (including pursuant to any settlement arrangements) or in respect of claw-back provisions promulgated under the rules and regulations of
the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act; or
(d) except as provided in Section 12(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Corporation or its directors, officers, employees or other
indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Corporation provides the
indemnification, in its sole discretion, pursuant to the powers vested in the Corporation under applicable law; or
(e) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful.
Section 8 Advancement. In accordance with the pre-existing requirements of the Bylaws, and notwithstanding any provision of this Agreement to the
contrary, the Corporation shall advance, to the extent not prohibited by applicable law, the Expenses reasonably incurred by Indemnitee in connection with
any Proceeding, and such advancement shall be made within ten (10) days after the receipt by the Corporation of a statement or statements requesting such
advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be
made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other
provisions of this Agreement. Advances shall include any and all Expenses reasonably incurred pursuing an action to enforce this right of advancement,
including Expenses incurred preparing and forwarding statements to the Corporation to support the advances claimed. Indemnitee shall qualify for advances
upon the execution and delivery to the Corporation of this Agreement, which shall constitute an undertaking providing that Indemnitee undertakes to repay
the amounts advanced to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Corporation. This Section 8 shall
not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 7 hereof.
Section 9 Procedure for Notification and Defense of Claim.
(a) Indemnitee shall promptly notify the Corporation in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or
advancement hereunder following the receipt by Indemnitee of written notice thereof. The written notification to the Corporation shall include a description of
the nature of the Proceeding and the facts underlying the Proceeding. To obtain indemnification under this Agreement, Indemnitee shall submit to the
Corporation a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Any delay or
failure by Indemnitee to notify the Corporation hereunder will not relieve the Corporation from any liability which it may have to Indemnitee hereunder or
otherwise than under this Agreement, and any delay or failure in so notifying the Corporation shall not constitute a waiver by Indemnitee of any rights under
this Agreement. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) In the event Indemnitee is entitled to indemnification and/or advancement with respect to any Proceeding, Indemnitee may, at Indemnitee’s option, (i)
retain counsel selected by Indemnitee and approved by the Corporation to defend Indemnitee in such Proceeding, at the sole expense of the Corporation
(which approval shall not be unreasonably withheld, conditioned or delayed), or (ii) have the Corporation assume the defense of Indemnitee in such
Proceeding, in which case the Corporation shall assume the defense of such Proceeding with counsel selected by the
Corporation and approved by Indemnitee (which approval shall not be unreasonably withheld, conditioned or delayed) within ten (10) days of the
Corporation’s receipt of written notice of Indemnitee’s election to cause the Corporation to do so. If the Corporation is required to assume the defense of any
such Proceeding, it shall engage legal counsel for such defense, and the Corporation shall be solely responsible for all fees and expenses of such legal
counsel and otherwise of such defense. Such legal counsel may represent both Indemnitee and the Corporation (and any other party or parties entitled to be
indemnified by the Corporation with respect to such matter) unless, in the reasonable opinion of legal counsel to Indemnitee, there is a conflict of interest
between Indemnitee and the Corporation (or any other such party or parties) or there are legal defenses available to Indemnitee that are not available to the
Corporation (or any such other party or parties). Notwithstanding either party’s assumption of responsibility for defense of a Proceeding, each party shall
have the right to engage separate counsel at its own expense. The party having responsibility for defense of a Proceeding shall provide the other party and
its counsel with all copies of pleadings and material correspondence relating to the Proceeding. Indemnitee and the Corporation shall reasonably cooperate in
the defense of any Proceeding with respect to which indemnification is sought hereunder, regardless of whether the Corporation or Indemnitee assumes the
defense thereof. Indemnitee may not settle or compromise any Proceeding without the prior written consent of the Corporation, which consent shall not be
unreasonably withheld, conditioned or delayed. The Corporation may not settle or compromise any Proceeding without the prior written consent of
Indemnitee.
Section 10 Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to Section 9(a) hereof, if any determination by the Corporation is required by applicable
law with respect to Indemnitee’s entitlement thereto, such determination shall be made (i) if Indemnitee shall request such determination be made by
Independent Counsel, by Independent Counsel, and (ii) in all other circumstances, (A) by a majority vote of the Disinterested Directors, even though less
than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than
a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee, or (D) if so directed by the Board, by the stockholders of the Corporation; and, if it is
so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee
shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination shall be borne by the Corporation (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and the Corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Corporation will
not deny any written request for indemnification hereunder made in good faith by Indemnitee unless a determination as to Indemnitee’s entitlement to such
indemnification described in this Section 10(a) has been made. The Corporation agrees to pay the reasonable fees and expenses of the Independent Counsel
referred to above and to fully indemnify such counsel against any and all Liabilities and Expenses arising out of or relating to this Agreement or its
engagement pursuant hereto.
(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a) hereof, (i) the
Independent Counsel shall be selected by the Corporation within ten (10) days of the Submission Date (the cost of such Independent Counsel to be paid by
the Corporation), (ii) the Corporation shall give written notice to Indemnitee advising it of the identity of the Independent Counsel so selected and (iii)
Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Corporation Indemnitee’s written objection to
such selection. Such objection by Indemnitee may be asserted only on the ground that the Independent Counsel selected does not meet the requirements of
"Independent Counsel” as defined in this Agreement. If such written objection is made and substantiated, the Independent Counsel selected shall not serve
as Independent Counsel unless and until Indemnitee withdraws the objection or a court has determined that such objection is without merit. Absent a timely
objection, the person so selected shall act as Independent Counsel. If no Independent Counsel shall have been selected and not objected to before the later
of (i) thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof (the "Submission
Date”) and (ii) ten (10) days after the final disposition of the Proceeding, each of the Corporation and Indemnitee shall select a law firm or member of a law firm
meeting the qualifications to serve as Independent Counsel,
and such law firms or members of law firms shall select the Independent Counsel. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 12(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to
the applicable standards of professional conduct then prevailing).
Section 11 Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the
fullest extent not prohibited by applicable law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in accordance with Section 9(a) of this Agreement, and the Corporation shall, to the fullest extent not prohibited by applicable law,
have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that
presumption. Neither the failure of the Corporation (including by its directors or independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Corporation (including by its directors or independent legal counsel) that Indemnitee has not met
such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) Subject to Section 12(e) hereof, if the person, persons or entity empowered or selected under Section 10 of this Agreement to determine whether
Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Corporation of the request therefore,
the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by applicable law, be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent a prohibition of such indemnification under applicable law; provided, however, that such 60-day
period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if (i) the determination is to be made by Independent Counsel and
Indemnitee objects to the Corporation’s selection of Independent Counsel and (ii) the Independent Counsel ultimately selected requires such additional time
for the obtaining or evaluating of documentation or information relating thereto; provided further, however, that such 60-day period may also be extended for
a reasonable time, not to exceed an additional sixty (60) days, if the determination of entitlement to indemnification is to be made by the stockholders of the
Corporation.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this Agreement) adversely affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the
Corporation or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(d) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is
based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise
by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this
Section 11(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
(e) Actions of Others. The knowledge or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this Agreement.
Section 12 Remedies of Indemnitee.
(a) Subject to Section 12(e) hereof, in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been
made pursuant to Section 10(a) of this Agreement within ninety (90) days after receipt by the Corporation of the request for indemnification, (iv) payment of
indemnification is not made pursuant to Sections 4 or 5 or the last sentence of Section 10(a) of this Agreement within ten (10) days after receipt by the
Corporation of a written request therefor, (v) payment of indemnification pursuant to Sections 2, 3 or 6 of this Agreement is not made within ten (10) days after
a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Corporation or any other Person takes or threatens to
take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover
from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of
Indemnitee’s entitlement to such indemnification or advancement. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Corporation shall not oppose
Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 12
the Corporation shall have the burden of proving Indemnitee is not entitled to indemnification or advancement, as the case may be.
(c) If a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is entitled to indemnification, the Corporation shall be
bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a prohibition of such indemnification
under applicable law.
(d) The Corporation shall, to the fullest extent not prohibited by applicable law, be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in
any such court or before any such arbitrator that the Corporation is bound by all the provisions of this Agreement. It is the intent of the Corporation that
Indemnitee not be required to incur Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder.
The Corporation shall indemnify Indemnitee against any and all such Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the
Corporation of a written request therefore) advance, to the extent not prohibited by applicable law, such Expenses to Indemnitee, which are incurred by
Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement from the Corporation under this Agreement or under any
directors’ and officers’ liability insurance policies maintained by the Corporation, regardless of whether Indemnitee ultimately is determined to be entitled to
such indemnification, advancement or insurance recovery, as the case may be.
(e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required
to be made prior to the final disposition of the Proceeding; provided that, in absence of any such determination with respect to such Proceeding, the
Corporation shall advance Expenses with respect to such Proceeding.
Section 13 Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement as provided by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution
of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal.
To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement than would be afforded
currently under the Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall
be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) The Corporation hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement and insurance provided by one or more
Persons with whom or which Indemnitee may be associated. The Corporation hereby acknowledges and agrees that (i) the Corporation shall be the
indemnitor of first resort with respect to any Proceeding, Expense, Liability or matter that is the subject of the Indemnity Obligations, (ii) the Corporation shall
be primarily liable for all Indemnity Obligations and any indemnification afforded to Indemnitee in respect of any Proceeding, Expense, Liability or matter that
is the subject of Indemnity Obligations, whether created by applicable law, organizational or constituent documents, contract (including this Agreement) or
otherwise, (iii) any obligation of any other Persons with whom or which Indemnitee may be associated to indemnify Indemnitee or advance Expenses or
Liabilities to Indemnitee in respect of any Proceeding shall be secondary to the obligations of the Corporation hereunder, (iv) the Corporation shall be
required to indemnify Indemnitee and advance Expenses or Liabilities to Indemnitee hereunder to the fullest extent provided herein without regard to any
rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated or insurer of any such Person and (v) the
Corporation irrevocably waives, relinquishes and releases any other Person with whom or which Indemnitee may be associated from any claim of contribution,
subrogation or any other recovery of any kind in respect of amounts paid by the Corporation hereunder. In the event any other Person with whom or which
Indemnitee may be associated or their insurers advances or extinguishes any liability or loss which is the subject of any Indemnity Obligation owed by the
Corporation or payable under any Corporation insurance policy, the payor shall have a right of subrogation against the Corporation or its insurer or insurers
for all amounts so paid which would otherwise be payable by the Corporation or its insurer or insurers under this Agreement. In no event will payment of an
Indemnity Obligation by any other Person with whom or which Indemnitee may be associated or their insurers affect the obligations of the Corporation
hereunder or shift primary liability for any Indemnity Obligation to any other Person with whom or which Indemnitee may be associated. Any indemnification,
insurance or advancement provided by any other Person with whom or which Indemnitee may be associated with respect to any Liability arising as a result of
Indemnitee’s Corporate Status or capacity as an officer or director of any Person is specifically in excess over any Indemnity Obligation of the Corporation or
any collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Corporation
under this Agreement.
(c) The Corporation shall maintain an insurance policy or policies providing liability insurance providing reasonable and customary coverage as compared
with similarly situated companies (as determined by the Board in its reasonable discretion) for directors, officers, employees, or agents of the Corporation or of
any other Enterprise, and Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or policies and such policies shall provide for and recognize that the insurance
policies are primary to any rights to indemnification, advancement or insurance proceeds to which Indemnitee may be entitled from one or more Persons with
whom or which Indemnitee may be associated to the same extent as the Corporation’s indemnification and advancement obligations set forth in this
Agreement. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Corporation has director and officer liability insurance in effect,
the Corporation shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts
payable as a result of such Proceeding in accordance with the terms of such policies.
(d) In the event of any payment under this Agreement, the Corporation shall not be subrogated to the rights of recovery of Indemnitee, including rights of
indemnification provided to Indemnitee from any other person or entity with whom Indemnitee may be associated; provided, however, that the Corporation
shall be subrogated to the extent of any such payment of all rights of recovery of Indemnitee under insurance policies of the Corporation or any of its
subsidiaries.
(e) The indemnification and contribution provided for in this Agreement will remain in full force and effect regardless of any investigation made by or on
behalf of Indemnitee.
Section 14 Duration of Agreement; Not Employment Contract. This Agreement shall continue until and terminate upon the latest of: (i) ten (10) years after the
date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Corporation or any other Enterprise, (ii) the date of final
termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto or (iii) the expiration of all statutes of limitation applicable to
possible Proceedings to which Indemnitee may be subject arising out of the Indemnitee’s Corporate Status. The indemnification provided under this
Agreement shall continue as to the Indemnitee even though he or she may have ceased to be a director of the Corporation or of any the Corporation’s direct
or indirect subsidiaries or to have Corporate Status. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to
the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. This Agreement shall not be deemed an employment contract between the
Corporation (or any of its subsidiaries or any other Enterprise) and Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the
Corporation (or any of its subsidiaries or any other Enterprise), if any, is at will, and Indemnitee may be discharged at any time for any reason, with or without
cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Corporation (or any of its subsidiaries or any
other Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director of the Corporation, by the
Certificate of Incorporation, the Bylaws or the DGCL.
Section 15 Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a)
the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent permitted by applicable law; (b) such provision or provisions shall be deemed
reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 16 Enforcement.
(a) The Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as a director, officer, employee or agent of the Corporation, and the Corporation acknowledges that Indemnitee is relying upon this
Agreement in serving as a director, officer, employee or agent of the Corporation.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is
a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and applicable law, and shall not be deemed a substitute therefore, nor
diminish or abrogate any rights of Indemnitee thereunder.
Section 17 Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties
thereto. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provision of this Agreement nor
shall any waiver constitute a continuing waiver.
Section 18 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been
duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified
or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral
confirmation that such transmission has been received:
(i) If to Indemnitee, at such address as Indemnitee shall provide to the Corporation.
(ii) If to the Corporation to:
Ramaco Resources, Inc.
250 West Main Street, Suite 1800
Lexington, Kentucky 40507
Attention: Board of Directors
or to any other address as may have been furnished to Indemnitee by the Corporation.
Section 19 Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Corporation, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
Liabilities or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (a) the relative benefits received by the Corporation and Indemnitee as a
result of the event(s) and transaction(s) giving cause to such Proceeding; and (b) the relative fault of the Corporation (and its directors, officers, employees
and agents) and Indemnitee in connection with such event(s) and transaction(s).
Section 20 Applicable Law. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules.
Section 21 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but
all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement.
Section 22 Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction
thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed effective as of the day and year first above written.
RAMACO RESOURCES, INC.
/s/ Randall W. Atkins
By:
Name: Randall W. Atkins
Title: Chairman and Chief Executive
INDEMNITEE
/s/ E. Forrest Jones, Jr.
By:
Name: E. Forrest Jones, Jr.
[Signature Page to Indemnification Agreement]
Exhibit 10.65
SEPARATION AND CONSULTING AGREEMENT
THIS SEPARATION AND CONSULTING AGREEMENT ("Agreement”) is effective as of December 31, 2020,
between Ramaco Resources, Inc., a Delaware corporation (the "Company”) and Michael D. Bauersachs ("Consultant”).
W I T N E S S E T H:
WHEREAS, Consultant is currently employed by the Company and serves as the Chief Executive Officer of the Company;
WHEREAS, Consultant will separate from employment with the Company in order to pursue business opportunities with
Ramaco Royalty, LLC, an entity related to but separate from the Company and which entity currently leases and subleases a majority of the
coal currently controlled by the Company and its subsidiaries, pursuant to the terms set forth herein;
WHEREAS, the Company wishes to engage Consultant to provide advisory services to the Company until the second
anniversary of the date hereof;
WHEREAS, Consultant wishes to provide advisory services to the Company;
WHEREAS, in consideration of the mutual promises contained herein, Consultant voluntarily enters into this Agreement
upon the terms and conditions herein set forth; and
WHEREAS, in consideration of the mutual promises contained herein, the Company is willing to enter into this Agreement
upon the terms and conditions herein set forth.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, the
Company and Consultant agree as follows:
ARTICLE I
RESIGNATION AND TREATMENT OF BENEFITS
1 . 1 Resignation as Officer and Director. Effective as of December 31, 2020, Consultant hereby resigns as Chief Executive
Officer and from any and all director or other officer (or equivalent) positions he holds with the Company. Consultant agrees to take any
and all further acts necessary to accomplish these resignations.
1.2 Resignation from Employment. Effective as of December 31, 2020 (the "Resignation Date”), Consultant hereby resigns
as an employee of the Company.
1 . 3 Termination of Benefits. Consultant will be entitled to any and all compensation and benefits accrued through the
Resignation Date under any of the Company’s employee benefit plans, programs or arrangements, the amount of such benefits will be
payable in accordance with the terms and conditions of such employee benefits plans, programs or arrangements regardless of whether such
benefits are payable after the Resignation Date. Such benefits shall include, without limitation, any cash bonus earned by Consultant through
the Resignation Date as well as any matching payment under the Company’s 401K plan. For the avoidance of doubt, the continued
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vesting of Consultant’s outstanding restricted stock awards as of the Resignation Date will be controlled by Article IV below.
1.4 Health Plans. If Consultant elects to continue coverage for Consultant and Consultant’s spouse and eligible dependents, if
any, under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA”), Consultant may continue COBRA benefits at his sole cost and expense.
1.5 No Other Benefits. Except as specified in this Agreement, Consultant will not be entitled to any severance payments and,
subsequent to the Resignation Date, Consultant will not be eligible to receive any awards under any incentive plan of the Company or any
other benefits under any plan or arrangement of the Company. Without limiting the foregoing, Consultant hereby waives any and all right to
benefits under the Company’s Change in Control and Severance Plan (the "Severance Plan”).
1 . 6 Post-Employment Release. Consultant acknowledges that this Article I of the Agreement provides Consultant with
additional rights and privileges to which Consultant would not otherwise be entitled, and, in exchange for the same, the Company requires
the binding execution by Consultant (without revocation) of the Waiver and Release attached hereto as Exhibit A (the "Waiver and
Release”), which must be executed and returned during the period beginning on the Resignation Date and ending on the thirtieth (30th) day
after the Resignation Date, which Consultant hereby agrees provides him with at least 21 calendar days to consider whether to sign and
return the Waiver and Release to the Company. Notwithstanding any provision herein to the contrary, if Consultant has not delivered to the
Company an executed and irrevocable Waiver and Release on or before the thirtieth (30th) day after the Resignation Date, the Company
will have no further obligations to Consultant pursuant to this Agreement.
ARTICLE II
CONSULTING SERVICES
2 . 1 Engagement; Resignation Date. The Company agrees to engage Consultant for the provision of consulting and advisory
services, and Consultant agrees to provide such services to the Company, pursuant to the terms of this Agreement beginning as of the
Resignation Date and continuing for the period of time set forth in Article III of this Agreement, subject to the terms and conditions of this
Agreement.
2.2 Consulting Services. Consultant agrees to devote such time and efforts as may reasonably be required to perform, and to
perform diligently, such consulting and advisory services as requested by the Company and such other services as the parties may mutually
agree upon from time to time (the "Consulting Services”). In furtherance of the Consulting Services, Consultant shall be entitled, within
reason, and upon reasonable notice to and approval by Company, to use office related services for the common good of Company and its
lessors and sublessors.
2.3 Independent Contractor. Consultant will not be an employee of the Company during the Consulting Term, but will act in the
capacity of an independent contractor. Consultant will act solely in a consulting capacity hereunder and will not have authority to act for the
Company or to give instructions or orders on behalf of the Company or otherwise to make
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commitments for or on behalf of the Company. The Company will not exercise control over the detail, manner or methods of the
performance of the services by Consultant during the Consulting Term.
ARTICLE III
TERM AND TERMINATION
3.1 Term. Unless sooner terminated pursuant to other provisions in this Agreement, the Company agrees to engage Consultant
for the period beginning on the Resignation Date and ending on December 31, 2022 (the "Consulting Term”). Any continued engagement
for the provision of services by the Company that continues beyond the end of the Consulting Term will not be governed by the terms of this
Agreement unless the parties extend the Consulting Term by mutual written agreement.
3.2 Termination. The Company may terminate this Agreement, and the Consulting Services, for Cause upon written notice with
the opportunity to cure within five (5) days. "Cause” will mean Consultant’s material failure to perform the Consulting Services upon
reasonable request by the Company or Consultant’s material breach of this Agreement. Consultant may terminate this Agreement at any
time by giving the Company ten (10) days advance written notice.
ARTICLE IV
COMPENSATION
4 . 1 Compensation. For the Consulting Term, Consultant will be entitled to compensation for his services in the amount of
$200,000 per annum, payable in equal installments, on a monthly basis at the beginning of each month. (the "Consulting Fee”). The
Consulting Fee shall be paid to MDB Energy Advisors, LLC, a consulting company in which Consultant is the sole member, and Consultant
acknowledges and agrees that payment of the Consulting Fee identified in this Section 4.1 to MDB Energy Advisors, LLC shall fully satisfy
any obligation to pay such Consulting Fee hereunder.
4.2 Continued Vesting of Awards.
( a ) Continued Vesting. Provided that Consultant serves continuously through the Consulting Term, Consultant will
continue to vest in all the restricted stock awards issued under the Ramaco Resources, Inc. Long-Term Incentive Plan ("LTIP”) that remain
outstanding as of the Resignation Date. The awards will vest pursuant to and in accordance with the vesting schedule in the LTIP on the
normal dates of vesting as if Consultant had been employed directly by the Company. Consultant also currently holds certain stock options.
Such options shall also be enforceable through their term.
(b) Waiver of Change in Control Provisions. Consultant waives any rights to accelerated vesting under the Severance
Plan for those awards that remain outstanding as of the Resignation Date, provided, however, with respect to the Consultant’s restricted
stock awards only, should there be a change in control event (as defined in the Severance Plan) during the Consulting Period, Consultant
shall be entitled to accelerated vesting of such awards. The agreement herein to limited accelerated vesting shall have no effect on
Consultant’s waiver contained herein.
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4 . 3 Expenses and Other. Consultant will be reimbursed directly by the Company for all out of pocket expenses incurred in
connection with performing the Consulting Services under this Agreement, including reimbursement of mileage, in the same manner as the
Company has historically accepted. For all expenses, Consultant will furnish to the Company detailed statements, receipts and vouchers to
verify the expenses, and will submit the expenses on a weekly basis. Such expenses will be paid within thirty days of their submission to the
Company. Company confirms that Consultant shall continue to be eligible to receive third party coal related publications during the
Consulting Term. Consultant shall also maintain access to that certain email address Michael.Bauersachs@ramacometc.com. Consultant
shall use its best efforts to communicate outside of the company with a different email.
4 . 4 Benefits; Responsibility for Taxes. During the Consulting Term, Consultant will not be entitled to participate in any
employee benefit plan of the Company based on Consultant’s role as an independent contractor. This provision will not prevent Consultant
from taking advantage of the continuing right to health coverage under COBRA. Consultant will be solely responsible for, and will pay all
social security, federal income taxes, unemployment insurance, worker’s compensation insurance, pensions, annuities or other liabilities or
taxes incurred by or on behalf or for the benefit of Consultant arising out of the performance by Consultant of his obligations under this
Agreement.
ARTICLE V
PROTECTION OF INFORMATION
5 . 1 Disclosure to and Property of the Company. For purposes of this Article V, the term "the Company” will include the
Company and any of its affiliates. All information, trade secrets, designs, ideas, concepts, improvements, product developments,
discoveries and inventions, whether patentable or not, that are conceived, made, developed, disclosed to or acquired by Consultant,
individually or in conjunction with others, during the period of, and in connection with, Consultant’s engagement by the Company (whether
during business hours or otherwise and whether on the Company’s premises or otherwise) that relate to the Company’s or any of its
affiliates’ businesses, trade secrets, products or services (including, without limitation, all such information relating to corporate opportunities,
strategies, business plans, product specifications, compositions, manufacturing and distribution methods and processes, research, financial
and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer’s organizations or within the organization of acquisition prospects, or production, marketing and
merchandising techniques, prospective names and marks) and all writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries, inventions and other similar forms of expression (collectively, "Confidential Information”) will be
disclosed to the Company and are and will be the sole and exclusive property of the Company or its affiliates, as applicable. Moreover, all
documents, videotapes, written presentations, brochures, drawings, memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, E-mail, voice mail, electronic databases, maps, drawings, architectural renditions, models and all other
writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, inventions and other
similar forms of expression (collectively, "Work Product”) are and will be the sole and exclusive property of the Company (or its affiliates).
Consultant agrees to perform all actions reasonably requested by the Company or
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its affiliates to establish and confirm such exclusive ownership. Upon termination of Consultant’s engagement by the Company, for any
reason, Consultant promptly will deliver such Confidential Information and Work Product, and all copies thereof, to the Company.
5.2 Disclosure to Consultant. The Company will disclose to Consultant and place Consultant in a position to have access to or
develop Confidential Information and Work Product of the Company (or its affiliates); and will entrust Consultant with business
opportunities of the Company (or its affiliates); and will place Consultant in a position to develop business good will on behalf of the
Company (or its affiliates).
5 . 3 No Unauthorized Use or Disclosure. Consultant agrees to preserve and protect the confidentiality of all Confidential
Information and Work Product of the Company and its affiliates. Consultant agrees that Consultant will not, at any time during or after the
Consulting Term, make any unauthorized disclosure of, and Consultant will not remove from the Company premises, Confidential
Information or Work Product of the Company or its affiliates, or make any use thereof, except, in each case, in the carrying out of
Consultant’s responsibilities hereunder. Consultant will use all reasonable efforts to cause all persons or entities to whom any Confidential
Information will be disclosed by Consultant hereunder to preserve and protect the confidentiality of such Confidential Information.
Provided, however, that Consultant may use or disclose Confidential Information or Work Product to the extent reasonably necessary to
perform services for Ramaco Royalty, LLC, any successor to Ramaco Royalty, LLC (collectively, "Ramaco Royalty”) or any other affiliate
of the Company, and that such use or disclosure shall not be a violation of this Agreement. Consultant will have no obligation hereunder to
keep confidential any Confidential Information if and to the extent disclosure thereof is specifically required by law; provided, however, that
in the event disclosure is required by applicable law, Consultant will provide the Company with prompt notice of such requirement prior to
making any such disclosure, so that the Company may seek an appropriate protective order. At the request of the Company at any time,
Consultant agrees to deliver to the Company all Confidential Information that Consultant may possess or control. Consultant agrees that all
Confidential Information of the Company (whether now or hereafter existing) conceived, discovered or made by Consultant during the
period of Consultant’s provision of consulting services to the Company exclusively belongs to the Company (and not to Consultant), and
upon request by the Company for specified Confidential Information, Consultant will promptly disclose such Confidential Information to the
Company and perform all actions reasonably requested by the Company to establish and confirm such exclusive ownership. Affiliates of the
Company will be third party beneficiaries of Consultant’s obligations under this Article V. As a result of Consultant’s provision of consulting
services to the Company, Consultant may also from time to time have access to, or knowledge of, Confidential Information or Work
Product of third parties, such as customers, suppliers, partners, joint venturers, and the like, of the Company and its affiliates. Consultant
also agrees to preserve and protect the confidentiality of such third-party Confidential Information and Work Product.
5 . 4 Assistance by Consultant. Except as set forth in this Agreement, during the period of Consultant’s provision of consulting
services to the Company, Consultant will assist the Company and its nominee, at any time, in the protection of the Company’s or its
affiliates’ worldwide right, title and interest in and to Confidential Information and Work Product and the execution of all formal assignment
documents requested by the Company or its nominee(s) and the execution of all lawful oaths and applications for patents and registration of
copyright in the
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United States and foreign countries. After Consultant’s provision of consulting services to the Company terminates, at the request from time
to time and expense of the Company or its affiliates, Consultant will assist the Company or its nominee(s) in the protection of the Company’s
or its affiliates’ worldwide right, title and interest in and to Confidential Information and Work Product and the execution of all formal
assignment documents requested by the Company or its nominee and the execution of all lawful oaths and applications for patents and
registration of copyright in the United States and foreign countries.
5.5 Non-Disparagement; Statements Concerning the Company. Consultant will refrain, both during and after the termination of
the consulting relationship, from publishing any oral, online, or written statements about the Company, any of its affiliates or any of the
Company’s or such affiliates’ directors, officers, or employees, as well as any consultants, agents or representatives of the Company or its
affiliates who are known to Consultant that (a) are slanderous, libelous or defamatory, or (b) place the Company, any of its affiliates, or any
of the Company’s or any such affiliates’ directors, officers, employees, consultants, agents or representatives in a false light before the
public. The Company’s officers and directors shall have a corresponding obligation not to disparage or otherwise defame Consultant. A
violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded the Company and its affiliates and
Consultant under this provision are in addition to all rights and remedies otherwise afforded by law.
5.6 Protected Activity. Nothing in this Agreement prohibits Consultant from filing a charge with, or reporting possible violations
of federal law or regulation to any governmental agency or entity, including but not limited to the U.S. Equal Opportunity Commission, the
Department of Justice, the Securities and Exchange Commission, Congress, and any agency Inspector General, or making other disclosures
that are protected under the whistleblower provisions of federal law or regulation. This Agreement does not limit Consultant’s ability to
communicate with any government agencies or participate in any investigation or proceeding that may be conducted by any government
agency, including providing documents or other information, without notice to the Company. In addition, this Agreement does not limit
Consultant’s right to receive an award for information provided to any government agencies. Further, Consultant is advised that an
individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is
made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (B) solely for the
purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal. Consultant acknowledges that an individual who files a lawsuit for retaliation by an employer
for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information
in the court proceeding, if the individual (x) files any document containing the trade secret under seal; and (y) does not disclose the trade
secret, except pursuant to court order.
5.7 Remedies. Consultant acknowledges that money damages would not be a sufficient remedy for any breach of this Article V
by Consultant, and the Company or its affiliates will be entitled to enforce the provisions of this Article V by terminating payments then
owing to Consultant under this Agreement or otherwise and to specific performance and injunctive relief as remedies for such breach or any
threatened breach. Such remedies will not be deemed the
6
exclusive remedies for a breach of this Article V but will be in addition to all remedies available at law or in equity, including the recovery of
damages from Consultant and Consultant’s agents. However, if it is determined that Consultant has not committed a breach of this Article
V, then the Company will resume the payments and benefits due under this Agreement and pay to Consultant all payments and benefits that
had been suspended pending such determination.
ARTICLE VI
NON-COMPETITION AGREEMENT
6.1 Definitions. As used in this Article VI, the following terms will have the following meanings:
"Business” means the operation and development of high quality, low cost metallurgical coal mines and other products and
services that are functionally equivalent to the foregoing.
"Competing Business” means any business, individual, partnership, firm, corporation or other entity which engages in any
business competing with the Business. In no event will the Company or any of its affiliates, including, but not limited to, Ramaco Royalty, be
deemed a Competing Business and Consultant’s services to and on behalf of Ramaco Royalty shall not violate this Article VI, provided,
however, should Ramaco Royalty cease to be affiliated with Company and/or Consultant cease to be affiliated with Ramaco Royalty, the
exclusions from non-competition identified herein shall no longer apply.
"Governmental Authority” means any governmental, quasi-governmental, state, county, city or other political subdivision
of the United States or any other country, or any agency, court or instrumentality, foreign or domestic, or statutory or regulatory body
thereof.
"Legal Requirement” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization, or other directional requirement (including, without limitation, any of the foregoing that
relates to environmental standards or controls, energy regulations and occupational, safety and health standards or controls including those
arising under environmental laws) of any Governmental Authority.
"Prohibited Period” means the period of two years after the Resignation Date.
6 . 2 Non-Competition; Non-Solicitation. Consultant and the Company agree to the non-competition and non-solicitation
provisions of this Article VI in consideration for the compensation identified in Article IV and confidential information provided by the
Company to Consultant pursuant to Article V of this Agreement, to protect the trade secrets and confidential information of the Company or
its affiliates disclosed or entrusted to Consultant by the Company or its affiliates or created or developed by Consultant for the Company or
its affiliates, to protect the business goodwill of the Company or its affiliates developed through the efforts of Consultant and/or the business
opportunities disclosed or entrusted to Consultant by the Company or its affiliates and as an additional incentive for the Company to enter
into this Agreement.
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(a) Subject to the exceptions set forth in Section 6.2(b) below, Consultant expressly covenants and agrees that during
the Prohibited Period (i) Consultant will refrain from carrying on or engaging in any Competing Business and (ii) Consultant will not, and
Consultant will cause Consultant’s affiliates not to, own, manage, operate, join, become an employee of, partner in, owner or member of (or
an independent contractor to,) control or participate in, be connected with or loan money to, sell or lease equipment or property to, or
otherwise be affiliated with any business, individual, partnership, firm, corporation or other entity which engages in a Competing Business, as
Consultant expressly agrees that each of the foregoing activities would represent carrying on or engaging in a Competitive Business, as
prohibited by this Section 6.2(a).
(b) Notwithstanding the restrictions contained in Section 6.2(a), Consultant or any of Consultant’s affiliates may own an
aggregate of not more than 2% of the outstanding stock of any class of any corporation engaged in a Competing Business, if such stock is
listed on a national securities exchange or regularly traded in the over-the counter market by a member of a national securities exchange,
without violating the provisions of Section 6.2(a), provided that neither Consultant nor any of Consultant’s affiliates has the power, directly
or indirectly, to control or direct the management or affairs of any such corporation and is not involved in the management of such
corporation.
( c ) Consultant further expressly covenants and agrees that during the Prohibited Period, Consultant will not, and
Consultant will cause Consultant’s affiliates not to (i) engage or employ, or solicit or contact with a view to the engagement or employment
of, or recommend or refer to any person or entity (other than the Company or one of its affiliates) for engagement or employment any
person who is an officer or employee of the Company or any of its affiliates or (ii) canvass, solicit, approach or entice away or cause to be
canvassed, solicited, approached or enticed away from the Company or any of its affiliates any person or entity who or which is a customer
of any of such entities during the Consulting Term or during the period during which Consultant is employed by the Company.
(d) Before accepting employment with any other person or entity while providing consulting services to the Company or
during the Prohibited Period, Consultant will inform such person or entity of the restrictions and prohibitions contained in the Article VI. The
Company reserves the right to provide a copy of this Agreement to any such person or entity.
6.3 Relief. Consultant and the Company agree and acknowledge that the limitations as to time, geographical area and scope of
activity to be restrained as set forth in Section 6.2 are reasonable and do not impose any greater restraint than is necessary to protect the
legitimate business interests of the Company. Consultant and the Company also acknowledge that money damages would not be sufficient
remedy for any breach of this Article VI by Consultant, and the Company or its affiliates will be entitled to enforce the provisions of this
Article VI by specific performance and injunctive relief as remedies for such breach or any threatened breach, and by terminating payments
then owing to Consultant under this Agreement or otherwise. Such remedies will not be deemed the exclusive remedies for a breach of this
Article VI but will be in addition to all remedies available at law or in equity, including the recovery of damages from Consultant and
Consultant’s agents. However, if it is determined that Consultant has not committed a breach of this Article VI, then the Company will
resume the payments and benefits due under this Agreement
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and pay to Consultant all payments and benefits that had been suspended pending such determination.
6 . 4 Reasonableness; Enforcement. Consultant hereby represents to the Company that Consultant has read and understands,
and agrees to be bound by, the terms of this Article VI. Consultant acknowledges that the scope and duration of the covenants contained in
this Article VI are the result of arm’s-length bargaining and are fair and reasonable in light of (a) the nature and wide geographic scope of the
operations of the Business, (b) Consultant’s level of control over and contact with the Business in all jurisdictions in which it is conducted,
and (c) the amount of Confidential Information that Consultant is receiving in connection with the performance of Consultant’s services
hereunder. It is the desire and intent of the parties that the provisions of this Article VI be enforced to the fullest extent permitted under
applicable Legal Requirements, whether now or hereafter in effect and therefore, to the extent permitted by applicable Legal Requirements,
Consultant and the Company hereby waive any provision of applicable Legal Requirements that would render any provision of this Article
VI invalid or unenforceable.
6 . 5 Reformation. The Company and Consultant agree that the foregoing restrictions are reasonable under the circumstances
and that any breach of the covenants contained in this Article VI would cause irreparable injury to the Company. Consultant understands
that the foregoing restrictions may limit Consultant’s ability to engage in certain business activities anywhere in the Restricted Area during the
Prohibited Period, but acknowledges that Consultant will receive sufficient consideration from the Company to justify such restriction.
Further, Consultant acknowledges that Consultant’s skills are such that Consultant can be gainfully engaged or employed in noncompetitive
employment, and that the agreement not to compete will not prevent Consultant from earning a living. Nevertheless, if any of the aforesaid
restrictions are found by a court of competent jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions herein set forth to be modified by the court making such determination so as to be
reasonable and enforceable and, as so modified, to be fully enforced. By agreeing to this contractual modification prospectively at this time,
the Company and Consultant intend to make this provision enforceable under the law or laws of all applicable States, Provinces and other
jurisdictions so that the entire agreement not to compete and this Agreement as prospectively modified will remain in full force and effect and
will not be rendered void or illegal. Such modification will not affect the payments made to Consultant under this Agreement.
ARTICLE VII
DISPUTE RESOLUTION
7.1 Arbitration. All claims or disputes between Consultant and the Company or its parents, subsidiaries and affiliates (including,
without limitation, claims relating to the validity, scope, and enforceability of this Article VII and claims arising under any federal, state or
local law regarding the terms and conditions of Consultant’s engagement or prohibiting discrimination in engagement of contractors or
governing the service provider relationship in any way) will be submitted for final and binding arbitration in Houston, Texas in accordance
with the then-applicable rules for resolution of employment disputes of the American Arbitration Association ("AAA”). The arbitration will
be conducted by a single arbitrator chosen pursuant to the then-applicable rules for resolution of employment disputes of the AAA, and the
parties will each bear
9
half the costs of such arbitration. For the avoidance of doubt, the division of costs referenced in the previous sentence applies to the costs
of the AAA only, and does not include attorney or expert fees or other fees or costs incurred by the parties. The arbitrator will apply the
substantive law of the State of Texas (excluding Texas choice-of-law principles that might call for the application of some other state’s law),
or federal law, or both as applicable to the claims asserted. The results of the arbitration and the decision of the arbitrator will be final and
binding on the parties and each party agrees and acknowledges that these results will be enforceable in a court of law. No demand for
arbitration may be made after the date when the institution of legal or equitable proceedings based on such claim or dispute would be barred
by the applicable statute(s) of limitations. In the event either party must resort to the judicial process to enforce the provisions of this
Agreement, the award of an arbitrator or equitable relief granted by an arbitrator, the party successfully seeking enforcement will be entitled
to recover from the other party all costs of such litigation including, but not limited to, reasonable attorneys’ fees and court costs. To the
fullest extent permitted by law, all proceedings conducted pursuant to this agreement to arbitrate, including any order, decision or award of
the arbitrator, will be kept confidential by all parties. Notwithstanding the foregoing, Consultant and the Company further acknowledge and
agree that a court of competent jurisdiction residing in Houston, Texas will have the power to maintain the status quo pending the arbitration
of any dispute under this Article VII, and this Article VII will not require the arbitration of any application for emergency, temporary or
preliminary injunctive relief (including temporary restraining orders) by either party pending arbitration, including, without limitation, any
application for emergency, temporary or preliminary injunctive relief for any claim arising out of Article V or Article VI of this Agreement;
provided, however, that the remainder of any such dispute beyond the application for such emergency, temporary or preliminary injunctive
relief shall be subject to arbitration under this Article VII. THE PARTIES ACKNOWLEDGE THAT, BY SIGNING THIS
AGREEMENT, THEY ARE KNOWINGLY AND VOLUNTARILY WAIVING ANY RIGHTS THAT THEY MAY HAVE TO
A JURY TRIAL OR, EXCEPT AS EXPRESSLY PROVIDED HEREIN, A COURT TRIAL OF ANY CLAIM THAT IS
SUBJECT TO THIS ARTICLE VII.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and
shall be deemed to have been duly given (a) when received if delivered personally or by courier, (b) on the date receipt is acknowledged if
delivered by certified mail, postage prepaid, return receipt requested or (c) one day after transmission if sent by facsimile transmission with
confirmation of transmission, as follows:
If to the Company, addressed to: Ramaco Resources, Inc.
250 West Main Street, Suite 1800
Lexington, Kentucky 40507
Attention: General Counsel
If to Consultant, addressed to: Michael D. Bauersachs
12180 Morestead Ct.
Glen Allen, VA 23059
10
or the Consultant’s last address in the Company’s records or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be effective only upon receipt.
8.2 Applicable Law; Submission to Jurisdiction.
This Agreement is entered into under, and shall be governed for all purposes by, the laws of the State of Kentucky, without regard
to conflicts of laws principles thereof.
8 . 3 No Waiver. No failure by either party hereto at any time to give notice of any breach by the other party of, or to require
compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
8.4 Severability. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement,
and all other provisions shall remain in full force and effect.
8 . 5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which together will constitute one and the same agreement.
8 . 6 Headings. The Section headings have been inserted for purposes of convenience and shall not be used for interpretive
purposes.
8 . 7 Gender and Plurals. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the
singular number includes the plural and conversely.
8 . 8 Affiliate and Subsidiary. As used in this Agreement, (a) the term "affiliate” as used with respect to a particular person or
entity shall mean any other person or entity which owns or controls, is owned or controlled by, or is under common ownership or control
with, such particular person or entity, and (b) the term "subsidiary” as used with respect to a particular entity shall mean a direct or indirect
subsidiary of such entity.
8.9 Successors. This Agreement shall be binding upon and inure to the benefit of the Company and any successor or assign of
the Company. The Company shall use commercially reasonable efforts, but makes no enforceable promise, to require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the
Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if
no succession had taken place. Except as provided in the preceding sentences, this Agreement, and the rights and obligations of the parties
hereunder, are personal and neither this Agreement, nor any right, benefit or obligation of either party hereto, shall be subject to voluntary or
involuntary assignment, alienation or transfer, whether by operation of law or otherwise, without the prior written consent of the other party.
In addition, any payment owed to Consultant hereunder after the date of Consultant’s death shall be paid to Consultant’s estate.
11
8.10 Survival; Continuing Obligations. Termination of this Agreement shall not affect any right or obligation of any party which is
accrued or vested prior to such termination. Without limiting the scope of the preceding sentence, the provisions of Article V, Article VI
and Article VII will survive any termination of the consulting relationship and/or of this Agreement.
8.11 Entire Agreement. Except as provided in any signed written agreement contemporaneously or hereafter executed by the
Company and Consultant and any agreement referred to within this Agreement, this Agreement constitutes the entire agreement of the
parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements
between the parties with respect to the engagement of Consultant by the Company. Without limiting the scope of the preceding sentence, all
understandings and agreements preceding the date of execution of this Agreement and relating to the subject matter hereof including, without
limitation, any prior employment or consulting agreement between Consultant and the Company, are hereby null and void and of no further
force and effect.
8.12 Modification; Waiver. Any modification to or waiver of this Agreement will be effective only if it is in writing and signed by
the parties to this Agreement.
8.13 Delayed Payment Restriction.
(a) "Code” will mean the Internal Revenue Code of 1986, as amended.
(b) "Section 409A Payment Date” will mean the earlier of (a) the date of Consultant’s death or (b) the date that is six
months after Consultant’s "separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and
applicable administrative guidance issued thereunder.
( c ) Each payment and benefit hereunder is intended to be exempt from Section 409A of the Code pursuant to the
short-term deferral exemption as specified in Treasury Regulation § 1.409A-1(b)(4), and the provisions of this Agreement will be
administered, interpreted and construed accordingly. Notwithstanding any provision in this Agreement to the contrary, if any payment or
benefit provided for herein would be subject to additional taxes and interest under Section 409A of the Code if Consultant’s receipt of such
payment or benefit is not delayed until the Section 409A Payment Date, then such payment or benefit will not be provided to Consultant (or
Consultant’s estate, if applicable) until the Section 409A Payment Date.
[Signature Page Follows]
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of December 31, 2020.
RAMACO RESOURCES, INC.
By: /s/ Randall W. Atkins
Randall W. Atkins
Executive Chairman
MICHAEL D. BAUERSACHS
/s/ Michael D. Bauersachs
EXHIBIT A
RELEASE
This Release (this "Release”) constitutes the release referred to in that certain Separation and Consulting Agreement (the
"Agreement”) dated as of December [Day], 2020, between Michael D. Bauersachs ("Executive”), and Ramaco Resources, Inc., a
Delaware corporation (the "Company”).
1. General Release.
(a) For good and valuable consideration, including additional rights and privileges to which Executive would not
otherwise be entitled, Executive hereby releases, discharges and forever acquits the Company, its affiliates and subsidiaries, the past, present
and future stockholders, members, partners, directors, managers, employees, agents, attorneys, heirs, legal representatives, successors and
assigns of the foregoing, as well as all employee benefit plans maintained by the Company or any of its affiliates or subsidiaries and all
fiduciaries and administrators of any such plan, in their personal and representative capacities (collectively, the "Company Parties”), from
liability for, and hereby waives, any and all claims, rights, damages, or causes of action of any kind related to Executive’s employment with
any Company Party, the termination of such employment, and any other acts or omissions related to any matter on or prior to the date of
this Agreement (collectively, the "Released Claims”).
(b) The Released Claims include without limitation those arising under or related to: (i) the Age Discrimination in
Employment Act of 1967; (ii) Title VII of the Civil Rights Act of 1964; (iii) the Civil Rights Act of 1991; (iv) sections 1981 through 1988 of
Title 42 of the United States Code; (v) the Employee Retirement Income Security Act of 1974, including, but not limited to, sections 502(a)
(1)(A), 502(a)(1)(B), 502(a)(2), and 502(a)(3) to the extent the release of such claims is not prohibited by applicable law; (vi) the
Immigration Reform Control Act; (vii) the Americans with Disabilities Act of 1990; (viii) the National Labor Relations Act; (ix) the
Occupational Safety and Health Act; (x) the Family and Medical Leave Act of 1993; (xi) any state or federal anti-discrimination law; (xii)
any state or federal wage and hour law; (xiii) any other local, state or federal law, regulation or ordinance; (xiv) any public policy, contract,
tort, or common law; (xv) costs, fees, or other expenses including attorneys’ fees incurred in these matters; (xvi) any employment contract,
incentive compensation plan or stock option plan with any Company Party or to any ownership interest in any Company Party except as
expressly provided in the Agreement and any stock option or other equity compensation agreement between Executive and the Company;
and (xvii) compensation or benefits of any kind not expressly set forth in the Agreement or any such stock option or other equity
compensation agreement.
(c) In no event will the Released Claims include (i) any claim which arises after the date of this Release, (ii) any rights of
defense or indemnification which would be otherwise afforded to Executive under the Certificate of Incorporation, By-Laws or similar
governing documents of the Company or its subsidiaries, or any indemnity agreement entered into with Executive, (iii) any rights of defense
or indemnification which would be otherwise afforded to Executive under any director or officer liability or other insurance policy maintained
by the
Company or its subsidiaries, (iv) any rights of Executive to benefits accrued under any employee benefit plan or arrangement, or (v) any
rights under the Agreement.
(d) Notwithstanding this release of liability, nothing in this Release prevents Executive from filing any non-legally
waivable claim (including a challenge to the validity of this Agreement) with the Equal Employment Opportunity Commission ("EEOC”) or
comparable state or local agency or participating in any investigation or proceeding conducted by the EEOC or comparable state or local
agency.
(e) This Release is not intended to indicate that any such claims exist or that, if they do exist, they are meritorious.
Rather, Executive is simply agreeing that, in exchange for the consideration recited in the first sentence of Section 1(a) of this Release, any
and all potential claims of this nature that Executive may have against the Company Parties, regardless of whether they actually exist, are
expressly settled, compromised and waived.
(f) By signing this Release, Executive is bound by it. Anyone who succeeds to Executive’s rights and responsibilities,
such as heirs or the executor of Executive’s estate, is also bound by this Release. This Release also applies to any claims brought by any
person or agency or class action under which Executive may have a right or benefit. THIS RELEASE INCLUDES MATTERS
ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT,
INCLUDING STRICT LIABILITY, OF ANY OF THE COMPANY PARTIES.
2. Covenant Not to Sue; Executive’s Representation. Executive agrees not to bring or join any lawsuit against any of the
Company Parties in any court relating to any of the Released Claims, except to enforce any terms of the Agreement. Executive represents
that Executive has not brought or joined any claim, lawsuit or arbitration against any of the Company Parties in any court or before any
administrative agency or arbitral authority and has made no assignment of any rights Executive has asserted or may have against any of the
Company Parties to any person or entity, in each case, with respect to any Released Claims. Executive expressly represents that, as of the
date Executive executes this Release, Executive has been provided all leaves (paid and unpaid) and paid all wages and compensation owed
to Executive by the Company Parties with the exception of all payments owed as a condition of Executive’s executing (and not revoking)
this Release.
3. Acknowledgments. By executing and delivering this Release, Executive acknowledges that:
(a) Executive has carefully read this Release;
(b) Executive has had at least twenty-one (21) days to consider this Release before the execution and delivery hereof to
the Company;
(c) Executive has been and hereby is advised in writing that Executive may, at Executive’s option, discuss this Release
with an attorney of Executive’s choice and that Executive has had adequate opportunity to do so; and
(d) Executive fully understands the final and binding effect of this Release; the only promises made to Executive to sign
this Release are those stated in the Agreement and herein; and Executive is signing this Release voluntarily and of Executive’s own free will,
and that Executive understands and agrees to each of the terms of this Release.
4 . Revocation Right. Executive may revoke this Release within the seven day period beginning on the date Executive signs
this Release (such seven day period being referred to herein as the "Release Revocation Period”). To be effective, such revocation must
be in writing signed by Executive and must be delivered to the Chief Executive Officer of the Company before 11:59 p.m., Houston, Texas
time, on the last day of the Release Revocation Period. This Release is not effective, and no further consideration will be provided to
Executive, unless the expiration of the Release Revocation Period expires without Executive’s revocation. If an effective revocation is
delivered in the foregoing manner and timeframe, this Release will be of no force or effect and will be null and void ab initio.
Executed on this ____ day of _______, 2021.
STATE OF ____________ §
COUNTY OF __________ §
Michael D. Bauersachs
BEFORE ME, the undersigned authority personally appeared Michael D. Bauersachs, by me known or who produced valid
identification as described below, who executed the foregoing instrument and acknowledged before me that he subscribed to such
instrument on this ___day of ________, 2021.
NOTARY PUBLIC in and for the State of ____________
My Commission Expires:
Identification produced:
Subsidiaries of Ramaco Resources, Inc.
Entity
Ramaco Development, LLC
RAM Mining, LLC
RAMACO Coal Sales, LLC
Ramaco Resources, LLC
RAMACO Resources Land Holdings, LLC
Ramaco Coal, Inc.
State of Formation
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Exhibit 21.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-215913) of Ramaco Resources, Inc. of
our report dated February 18, 2021, with respect to the consolidated balance sheets of Ramaco Resources, Inc. as of December 31, 2020
and 2019, and the related consolidated statements of operations, equity, and cash flows for each of the years in the three-year period
ended December 31, 2020, which report appears in the December 31, 2020 Annual Report on Form 10-K of Ramaco Resources, Inc.
Exhibit 23.1
/s/ Briggs & Veselka Co.
Briggs & Veselka Co.
Houston, Texas
February 18, 2021
CONSENT OF WEIR INTERNATIONAL, INC.
Weir International, Inc., as independent mining engineers and geologists, hereby consents to the use by Ramaco Resources, Inc. (the
"Company”) of information contained in our reserves and resource studies relating to the proven and probable coal reserves of the
Company’s Berwind, RAM Mine, Knox Creek and Elk Creek properties in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2020 (and any amendments thereto) and incorporation by reference of such information in the Company’s Registration
Statement on Form S-8 (File No. 333-215913). We also consent to the reference to Weir International, Inc. in those filings and any
amendments thereto.
Exhibit 23.2
WEIR INTERNATIONAL, INC.
/s/ Fran X. Taglia
Fran X. Taglia
President
February 18, 2021
CONSENT OF TRUE LINE, INC.
True Line, Inc., as independent mining engineers, hereby consents to the use by Ramaco Resources, Inc. (the "Company”) of information
contained in our reserves and resource studies relating to the proven and probable coal reserves of the "Company’s Berwind, RAM
Mine, Knox Creek and Elk Creek properties in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (and
any amendments thereto) and incorporation by reference of such information in the Company’s Registration Statement on Form S-8 (File
No. 333-215913). We also consent to the reference to True Line, Inc. in those filings and any amendments thereto.
Exhibit 23.3
TRUE LINE, INC.
/s/ Jim Corner
Jim Corner, PE, PS
February 18, 2021
Exhibit 31.1
Certification of Chief Executive Officer
pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities Exchange Act OF 1934, as amended
I, Randall W. Atkins, certify that:
20
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2020 of Ramaco Resources, Inc. (the "registrant”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation;
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 18, 2021
/s/ Randall W. Atkins
Randall W. Atkins
Chairman and Chief Executive Officer
Exhibit 31.2
Certification of Chief Financial Officer
pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities Exchange Act OF 1934, as amended
I, Jeremy R. Sussman, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2020 of Ramaco Resources, Inc. (the "registrant”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation;
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 18, 2021
/s/ Jeremy R. Sussman
Jeremy R. Sussman
Chief Financial Officer
Exhibit 32.1
Certification of
Chief Executive Officer
under Section 906 of the
Sarbanes Oxley Act of 2002, 18 U.S.C. § 1350
In connection with the Annual Report on Form 10-K for the year ended December 31, 2020 of Ramaco Resources, Inc. (the "Company”),
as filed with the Securities and Exchange Commission on the date hereof (the "Report”), Randall W. Atkins, Chief Executive Officer of the
Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his
knowledge:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
0
Date: February 18, 2021
/s/ Randall W. Atkins
Randall W. Atkins
Chairman and Chief Executive Officer
Certification of
Chief Financial Officer
under Section 906 of the
Sarbanes Oxley Act of 2002, 18 U.S.C. § 1350
Exhibit 32.2
In connection with the Annual Report on Form 10-K for the year ended December 31, 2020 of Ramaco Resources, Inc. (the "Company”),
as filed with the Securities and Exchange Commission on the date hereof (the "Report”), Jeremy R. Sussman, Chief Financial Officer of the
Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his
knowledge:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: February 18, 2021
/s/ Jeremy R. Sussman
Jeremy R. Sussman
Chief Financial Officer
Exhibit 95.1
Federal Mine Safety and Health Act Information
We work to prevent accidents and occupational illnesses. We have in place health and safety programs that include extensive employee training, safety
incentives, drug and alcohol testing and safety audits. The objectives of our health and safety programs are to provide a safe work environment, provide
employees with proper training and equipment and implement safety and health rules, policies and programs that foster safety excellence.
Our mining operations are subject to extensive and stringent compliance standards established pursuant to the Federal Mine Safety and Health Act of 1977
(the "Mine Act”). MSHA monitors and rigorously enforces compliance with these standards, and our mining operations are inspected frequently. Citations
and orders are issued by MSHA under Section 104 of the Mine Act for violations of the Mine Act or any mandatory health or safety standard, rule, order or
regulation promulgated under the Mine Act.
The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act”) requires issuers to include in periodic reports filed with the SEC certain
information relating to citations or orders for violations of standards under the Mine Act. We present information below regarding certain mining safety and
health violations, orders and citations, issued by MSHA and related assessments and legal actions and mine-related fatalities with respect to our coal mining
operations. In evaluating this information, consideration should be given to factors such as: (i) the number of violations, orders and citations will vary
depending on the size of the coal mine, (ii) the number of violations, orders and citations issued will vary from inspector to inspector and mine to mine, and
(iii) violations, orders and citations can be contested and appealed, and in that process, are often reduced in severity and amount, and are sometimes
dismissed.
The following tables include information required by the Dodd-Frank Act for the current year. The mine data retrieval system maintained by MSHA may show
information that is different than what is provided herein. Any such difference may be attributed to the need to update that information on MSHA’s system
and/or other factors. The tables below do not include any orders or citations issued to independent contractors at our mines.
Mine or Operating Name /
MSHA Identification Number
Active Operations
Eagle Seam Deep Mine 46-09495
Coal Creek Prep Plant (VA) 44-05236
Elk Creek Prep Plant 46-02444
Stonecoal Branch Mine No. 2 46-08663
Ram Surface Mine No. 1 46-09537
Highwall Miner No. 1 46-09219
Berwind Deep Mine 46-09533
No. 2 Gas Deep Mine 46-09541
Tiller No.1 44-06804
Mine or Operating Name /
MSHA Identification Number
Active Operations
Eagle Seam Deep Mine 46-09495
Coal Creek Prep Plant (VA) 44-05236
Elk Creek Prep Plant 46-02444
Stonecoal Branch Mine No. 2 46-08663
Ram Surface Mine No. 1 46-09537
Highwall Miner No. 1 46-09219
Berwind Deep Mine 46-09533
No. 2 Gas 46-09541
Tiller No.1 44-06804
Section
104(a)
S&S
Citations(1)
Section
104(b)
Orders(2)
Section
104(d)
Citations and
Orders(3)
Section
110(b)(2)
Violations(4)
Section
107(a)
Orders(5)
Total Dollar
Value of MSHA
Assessments
Proposed
(in thousands)(6)
23
9
2
43
0
0
30
19
0
0
0
0
0
0
0
0
0
0
0
0
0
3
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$
$
$
$
$
$
$
$
$
45
1
14
100
2
0
68
46
0
Total Number
of
Mining Related
Fatalities
Received Notice of
Pattern of
Violations Under
Section 104(e)
(yes/no)(7)
Legal Actions
Pending as of
Last
Day of Period
Legal Actions
Initiated During
Period
Legal Actions
Resolved During
Period
0
0
0
0
0
0
0
0
0
No
No
No
No
No
No
No
No
No
7
0
1
17
0
0
21
13
0
68
0
1
98
0
0
53
21
0
61
0
0
102
0
0
32
8
0
The number of legal actions pending before the Federal Mine Safety and Health Review Commission as of December 31, 2020 that fall into each of the
following categories is as follows:
Mine or Operating Name /
MSHA Identification Number
Active Operations
Eagle Seam Deep Mine 46-09495
Coal Creek Prep Plant (VA) 44-05236
Elk Creek Prep Plant 46-02444
Stonecoal Branch Mine No. 2 46-08663
Ram Surface Mine No. 1 46-09537
Highwall Miner No. 1 46-09219
Berwind Deep Mine 46-09533
No. 2 Gas 46-09541
Tiller No.1 44-06804
Contests of
Citations and
Orders
Contests of
Proposed
Penalties
Complaints for
Compensation
Complaints of
Discharge /
Discrimination /
Interference
Applications
for Temporary
Relief
Appeals of
Judge’s
Ruling
0
0
0
0
0
0
0
0
0
7
0
0
17
0
0
21
13
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(1) Mine Act section 104(a) S&S citations shown above are for alleged violations of mandatory health or safety standards that could significantly and
substantially contribute to a coal mine health and safety hazard. It should be noted that, for purposes of this table, S&S citations that are included in
another column, such as Section 104(d) citations, are not also included as Section 104(a) S&S citations in this column.
(2) Mine Act section 104(b) orders are for alleged failures to totally abate a citation within the time period specified in the citation.
(3) Mine Act section 104(d) citations and orders are for an alleged unwarrantable failure (i.e., aggravated conduct constituting more than ordinary
negligence) to comply with mandatory health or safety standards.
(4) Mine Act section 110(b)(2) violations are for an alleged "flagrant” failure (i.e., reckless or repeated) to make reasonable efforts to eliminate a known
violation of a mandatory safety or health standard that substantially and proximately caused, or reasonably could have been expected to cause, death or
serious bodily injury.
(5) Mine Act section 107(a) orders are for alleged conditions or practices which could reasonably be expected to cause death or serious physical harm before
such condition or practice can be abated and result in orders of immediate withdrawal from the area of the mine affected by the condition.
(6) Amounts shown include assessments proposed by MSHA on all citations and orders, including those citations and orders that are not required to be
included within the above chart.
(7) Mine Act section 104(e) written notices are for an alleged pattern of violations of mandatory health or safety standards that could significantly and
substantially contribute to a coal mine safety or health hazard.