Document:

EMPLOYMENT AGREEMENT

 

THIS
AGREEMENT is made and entered into this 10 day of June 2015, (the “Effective Date”) between Royal Energy
Resources, Inc., a Delaware corporation (the “Company”), and Ian Ganzer (“Employee”).

 

W
I T N E S S E T H:

 

WHEREAS,
the Company is engaged in the business of acquiring and operating natural resources assets, including coal, oil and gas (the “Business”);

 

WHEREAS,
the parties hereto desire to enter into an agreement for the Company’s employment of Employee on the terms and conditions
contained in this Agreement;

 

NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants and agreements contained in this Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:

 

1. Employment,
Title and Responsibilities. Subject to the terms and conditions of this Agreement, the Company hereby employs Employee,
and Employee hereby accepts employment with the Company, beginning as of the Effective Date. The
Employee shall be employed as Chief Operating Officer for the Company. The duties of the Employee shall include the duties described
in Exhibit A attached hereto, along with such other duties and projects typical of the office as may be assigned by the
Chief Executive Employee of the Company (the “Employee’s Services”).

 

2.  Time
Commitment. During the Term, Employee will devote Employee’s full business time, attention and energies to the diligent
and faithful performance of Employee’s duties as an Employee of Company. The Employee
will not, during the term of this Agreement directly or indirectly actively engage in any other business, either as Employee,
employer, consultant, principal, officer, director, advisor, or in any other capacity, either with or without compensation, without
the prior written consent of Company.

 

3. Compensation
and Benefits. In consideration of Employee’s services under this Agreement, Company will provide to Employee compensation
and other benefits as set forth on Exhibit A attached hereto. The Company
may withhold from any payments to Employee any taxes that are required by applicable law.

 

    	 

    	 

    

 

4.  Covenants
of Employee. Employee understands and acknowledges that the Company’s ability to develop and retain trade secrets,
customer lists, proprietary techniques, information regarding customer
needs and other confidential information relating to the Company Business is of the utmost importance to the Company’s success,
and Employee further acknowledges that Employee will develop and learn information in the course of Employee’s employment
that would be useful in competing unfairly with the Company. In light of these facts and in consideration of Employee’s
employment with the Company and the Company’s agreement to compensate Employee on the terms set forth in Section 4
of this Agreement, Employee covenants and agrees with Company as follows:

 

		4.1.	Confidential Information. Employee shall use his best efforts to protect Confidential
Information. During and after association with Company, Employee will not use (other than for Company) or disclose any of Company’s
Confidential Information. “Confidential Information” means information, without regard to form, relating to
Company’s customers, operation, finances, and business that derives economic value, actual or potential, from not being generally
known to other Persons, including, but not limited to, technical or nontechnical data, formulas, patterns, compilations (including
compilations of customer information), programs, models, concepts, designs, devices, methods, techniques, processes, financial
data or lists of actual or potential customers (including identifying information about customers), whether or not in writing.
Confidential Information includes information disclosed to Company by third parties that Company is obligated to maintain as confidential.
Confidential Information subject to this Agreement may include information that is not a trade secret under applicable law, but
information not constituting a trade secret only shall be treated as Confidential Information under this Agreement for a two (2)
year period after the date on which Employee’s employment with the Company is terminated (the “Termination Date”).
“Person” means any individual, corporation, limited liability company, bank, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or other entity.

 

		4.2.	Return of Materials. On the Termination Date or for any reason or at any time at
Company’s request, Employee will deliver promptly to Company all materials, documents, plans, records, notes, or other papers
and any copies in Employee’s possession or control relating in any way to Company’s Business, which at all times shall
be the property of Company, save and except those that may relate to GS Energy, LLC or Blue Grove Coal, LLC.

 

		4.3.	Solicitation of Employees and Independent Contractors. During Employee’s
employment hereunder and for two (2) years after the Termination Date, Employee will not induce, solicit,
or assist in the solicitation of, any Person employed or engaged by Company in any capacity
(including without limitation as an employee or independent contractor), to terminate such employment or other engagement, whether
or not such Person is employed or engaged pursuant to a contract with Company and whether or not such Person is employed or otherwise
engaged at will.

 

		4.4.	Non-Solicitation of Customers. During Employee’s
employment hereunder, and for a period of two (2) years after the Termination Date, Employee will not, except on behalf of the
Company or an affiliate of the Company, directly or indirectly, whether alone or with any other Person as a partner, officer, director,
employee, agent, shareholder, consultant, sales representative or otherwise solicit, induce or encourage any customer of the Company
to terminate the customer’s relationship with the Company or any way reduce the amount of business which the customer does
with the Company, save and except those that may relate to GS Energy, LLC and Blue Grove Coal, LLC.

 

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		4.5.	Disparagement. Employee shall not at any time make false, misleading or disparaging
statements about Company, including its products, services, management, Employees, and customers.

 

		4.6.	Prior Agreements. Employee warrants that Employee is not under any obligation,
contractual or otherwise, limiting or affecting Employee’s ability or right to perform freely Services for Company. Upon
execution of this Agreement, Employee will give Company a copy of any agreement, or notify Company of any agreement if a written
agreement is not available, with a prior employer or other Person purporting to limit or affect Employee’s ability or right
to perform Services for Company, to solicit customers or potential customers, to solicit the Employees or independent contractors
of a prior employer or other Person, or to use any type of information.

 

		4.7.	Future Employment or Contractual Opportunities. At any time before, and for one
year after, the Termination Date, Employee shall provide any prospective employer with a copy of this Agreement, and upon accepting
any employment with another Person, provide Company with the employer’s name and a description of the services Employee will
provide.

 

		4.8.	Work For Hire Acknowledgment; Assignment. Employee acknowledges that work on and
contributions to documents, programs, and other expressions in any tangible medium (collectively, “Works”) are
within the scope of Employee’s employment and part of Employee’s duties, responsibilities, or assignment. Employee’s
work on and contributions to the Works will be rendered and made by Employee for, at the instigation of, and under the overall
direction of, Company, and all such work and contributions, together with the Works, are and at all times shall be regarded, as
“work made for hire” as that term is used in the United States Copyright Laws. Without limiting this acknowledgment,
Employee assigns, grants, and delivers exclusively to Company all rights, titles, and interests in and to any such Works, and all
copies and versions, including all copyrights and renewals. Employee will execute and deliver to Company, or its successors and
assigns, any assignments and documents Company requests for the purpose of complete, exclusive, perpetual, and worldwide ownership
of all rights, titles, and interests of every kind and nature, including all copyrights in and to the Works, and Employee constitutes
and appoints Company as its agent to execute and deliver any assignments or documents Employee fails or refuses to execute and
deliver, this power and agency being coupled with an interest and being irrevocable.

 

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		4.9.	Inventions, Ideas and Patents. Employee shall disclose promptly to Company, and
only to Company, any invention or idea of Employee (developed alone or with others) conceived or made during Employee’s employment
by Company or within six months of the Termination Date. Employee assigns to Company any such invention or idea in any way connected
with Employee’s employment or related to Company’s Business, its research or development, or demonstrably anticipated
research or development and will cooperate with Company and sign all papers deemed necessary by Company to enable it to obtain,
maintain, protect, and defend patents covering such inventions and ideas and to confirm Company’s exclusive ownership of
all rights in such inventions, ideas and patents, and irrevocably appoints Company as its agent to execute and deliver any assignments
or documents Employee fails or refuses to execute and deliver promptly, this power and agency being coupled with an interest and
being irrevocable. This constitutes written notification that this assignment does not apply to an invention for which no equipment,
supplies, facility or trade secret information of Company was used, and which was developed entirely on Employee’s own time,
unless (a) the invention relates (i) directly to Company’s Business, or (ii) to Company’s actual or demonstrably anticipated
research or development, or (b) the invention results from any work performed by Employee for Company.

 

		4.10.	Property of Company. Employee acknowledges and agrees that all business Employee
generates because of his affiliation with the Company is and shall be the sole property of the Company. All receivables, premiums,
commissions, fees and other compensation generated by the Employee’s services are the property of the Company. The Employee
is hereby prohibited from invoicing customers of the Company except with the express written consent of the Company. All checks
or bank drafts representing payment for goods or services sold or rendered by the Company are property of the Company, and all
monies or other consideration in whatever form received by the Employee from a customer of the Company shall be tendered immediately
to the Company. 
	 	 	 
	 	5.	Term;
                                         Termination.

                   

		5.1.	Expiration of Term. The employment relationship created
by this Agreement shall exist on an at will basis until terminated voluntarily by the Employee, without cause by the Company or
with cause by the Company in accordance with Section 5.2 below (the period during which Employee is employed under this
Agreement being herein referred to as the “Term”). 

 

		5.2.	Termination For Cause. Employee’s employment under this
Agreement may be terminated by the Company immediately upon the occurrence of one of the following events, and if so terminated,
the Company shall have no further liability to Employee whatsoever for compensation, benefits or damages other than those that
have accrued prior to termination:

 

(a)the commission of any act by Employee
which, if prosecuted, would constitute a felony;

 

(b)any material act or omission involving malfeasance
or negligence in the performance of employment duties which has a materially adverse effect on the Company and which has not been
corrected in 30 days after written notice from the Company;

 

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(c)failure or refusal by Employee to comply with
the policies of the Company contained in any Company Handbook or with the provisions of this Agreement if not cured within ten
(10) days after the receipt of written notice from the Board of Directors;

 

(d)Employee’s prolonged absence without the
consent of the Company;

 

(e)Employee’s gross neglect of his duties
or willful insubordination to the Board of Directors or his superior officers;

 

(f)the
death of Employee. 

 

If the Company terminates
the Employee for any other reason than those listed in subparagraphs (a) through (f) of this section, then the Company will pay
the Employee severance in the amount set forth in Exhibit A. If the Employee voluntarily resigns or is terminated according
for any of the reasons set forth in subparagraphs (a) through (f) above, then no severance will be payable.

 

6.  Setoff.
All amounts due or payable to Employee by Company pursuant to this Agreement are subject to reduction
and offset to the extent permitted by applicable law for any amounts due or payable to Company
by Employee.

 

7.  No
Conflicting Obligations. Employee represents and warrants that Employee is not subject to any noncompetition agreement,
nondisclosure agreement, employment agreement, or any other contract of any nature whatsoever,
oral or written, with any Person other than Company, or any other obligation of any nature, which will or could cause a breach
of or default in, or which is in any way inconsistent with, the terms and provisions of this Agreement.

 

8.  Miscellaneous.

 

		8.1.	Agreement Binding. This Agreement will inure to the benefit
of and be binding upon Company and its successors and assigns, and Employee and Employee’s heirs, executors, administrators
and personal representatives. This Agreement may not
be assigned by Employee or by Company, except that Company may assign its rights under this Agreement without the written consent
of Employee to any affiliate of Company or in connection with any transfer of Company or of all or any substantial part of the
Company Business (and such assignment will not constitute a termination of Employee’s employment by Company for purposes
of this Agreement) (“Permitted Assignment”); provided, however, that such affiliate or transferee will be obligated
to perform this Agreement in accordance with its terms. Company will be released from all of its obligations under this Agreement
upon a Permitted Transfer.

 

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		8.2.	Entire Agreement. This Agreement, including any attachments,
contains the entire agreement between the parties with respect to employment of Employee by the Company and no statement, promise
or inducement made by either party hereto, or any agent of either party, which is
not contained in this Agreement, will be valid or binding; and this Agreement may not be enlarged, amended, modified or altered
except in a writing signed by Company and Employee and specifically referencing this Agreement. The provisions of this Agreement
do not in any way limit or abridge any rights of Company or any affiliate under the laws of unfair competition, trade secret, copyright,
patent, trademark or any other applicable laws, all of which are in addition to and cumulative of the rights of Company under this
Agreement.

 

		8.3.	Provisions Severable. If any provision or covenant of
this Agreement is held by any court to be invalid, illegal or unenforceable, either in whole or in part, then such invalidity,
illegality or unenforceability will not affect the validity, legality or enforceability of the remaining provisions
or covenants of this Agreement, all of which will remain in full force and effect.
If any covenant in Section 4 is held to be unreasonable, arbitrary, or against public policy, such covenant will
be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area,
or all of them, as a court of competent jurisdiction may determine to be reasonable, not arbitrary, and not against public policy,
will be effective, binding, and enforceable against Employee.

 

		8.4.	Prior Agreements. The terms and conditions of all prior agreements between the
Company and Employee concerning the employment of Employee with the Company are hereby terminated and superseded by the terms and
conditions of this Agreement.

 

		8.5.	Remedies. Employee acknowledges that if Employee breaches
or threatens to breach Employee’s covenants and agreements in this Agreement, then Employee’s actions may cause irreparable
harm and damage
to Company which could not be adequately compensated in damages. Accordingly, if Employee breaches or threatens to breach this
Agreement, then Company will be entitled to injunctive relief, in addition to any other rights or remedies of Company under this
Agreement or otherwise. Employee will indemnify Company and its affiliates and hold them harmless against and in respect of all
claims, demands, losses, costs, expenses, obligations, liabilities and damages, including reasonable attorneys’ fees, resulting
from or relating to any breach by Employee of Employee’s representations, warranties, covenants and agreements under this
Agreement.

 

		8.6.	Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and conditions of this Agreement will not be deemed
a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or
of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver and specifically
referencing this Agreement.

 

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		8.7.	Notices. All notices and other communications required
or permitted to be given or made under this Agreement will be in writing and delivered personally or sent by pre-paid, first class
certified or registered mail, return receipt requested,
or by facsimile transmission, to the intended recipient of this Agreement at such recipient’s address or facsimile number
set forth below the person’s signature to this Agreement. Any such notice or communication will be deemed to have been duly
given immediately (if given or made in person or by facsimile confirmed by mailing a copy of this Agreement to the recipient in
accordance with this Section 8.7 on the date of such facsimile), or three days after mailing (if given or made by mail),
and in proving same it will be sufficient to show that the envelope containing the same was delivered to the delivery or postal
service and duly addressed, or that receipt of a facsimile was confirmed by the recipient as provided above. Any Person entitled
to notice may change the address(es) or facsimile number(s) to which notices or other communications to such Person will be delivered,
mailed or transmitted by giving notice of this Agreement to the parties hereto in the manner provided in this Agreement.

 

		8.8.	Covenants Independent; Survival.

 

(a)The
covenants, agreements, representations, and warranties of Employee contained in this Agreement are separate and independent from
the covenants, agreements, representations and warranties of Employee contained in any other agreement or document in favor of
Company or any of its affiliates, and this Agreement will in no way affect or be affected by the scope or continuing validity
of any such covenant, agreement, representation or warranty of Employee.

 

(b)Employee’s
obligations pursuant to Sections 4 will survive the Termination Date and any termination of this Agreement. Except as required
by law or the express terms of any Employee benefit plan in which Employee participates, neither Employee nor Employee’s
heirs, executors, administrators or personal representatives, will be entitled to any salary, bonus or other compensation or any
benefits during or for any period after the Termination Date.

 

		8.9.	Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which will be deemed an original, and it will not be necessary in making proof of this Agreement
to produce or account for more than one such counterpart.

 

		8.10.	Headings. Section
and other headings contained in this Agreement are for reference purposes only and are in no way intended
to define, interpret, describe or otherwise limit the scope, extent or intent of this Agreement or any of its provisions.

 

		8.11.	Withholding. Anything
in this Agreement to the contrary notwithstanding, all payments required to be made by Company under this Agreement to Employee
will be subject to the withholding of such amounts relating to taxes or other charges as Company may reasonably determine it should
withhold pursuant to any applicable law or regulation.

 

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		8.12.	Tax Consequences. Company will have no obligation to any
Person entitled to the benefits of this Agreement with respect to any tax obligation any such Person incurs as a result of or attributable
to this Agreement, including all supplemental agreements
and Employee benefits plans incorporated by reference therein, or arising from any
payments made or to be made under this Agreement or thereunder.

 

		8.13.	Governing Law. This Agreement and the rights and obligations
of the parties under this Agreement will be governed
by and construed and enforced in accordance with the laws of the State of West Virginia, without regard to its
principles of conflicts of law.

 

		8.14.	Construction. The
language in all parts of this Agreement will be construed, in all cases, according to its fair meaning, and not for or against
either party hereto. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that
the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed
in the interpretation of this Agreement.

 

		8.15.	Obligations Contingent. The
obligations of Company under this Agreement, including its obligation to pay the compensation provided for in this Agreement, are
contingent upon Employee’s performance of Employee’s obligations under this Agreement. The duties, covenants and agreements
of Employee under this Agreement, being personal, may not be delegated.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

	 	EMPLOYEE:
	 	 	 
	 	 
	 	Name: Ian Ganzer
	 	 	 
	 	ROYAL ENERGY RESOURCES, INC.:
	 	 	 
	 	By:	 
	 	Title:	Chief Executive Officer
	 	Name:	William L. Tuorto

 

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Exhibit A

 

Compensation and Benefit Terms

 

	Employee’s Services	 	Chief Operating Officer.
	 	 	 
	Base Salary	 	None, while the Management Agreement between Blue Grove Coal, LLC, a subsidiary of the Company, and Ian Ganzer is in force.  If the Management Agreement terminates for any reason, the Employee shall be entitled to such salary that the Employee and the Company mutually agree.
	 	 	 
	Cash Signing Bonus	 	$100,000
	 	 	 
	Equity Signing Bonus	 	
        $150,000 payable in shares of common stock of the Company, determined
        based on the average closing price of the common stock for the 7 days prior to the Effective Date.

         

        The shares of common stock shall vest on a monthly basis, pro rata,
        over 24 months after the Effective Date. Any unvested shares shall be forfeited by the Employee if the Employee’s employment
        relationship with the Company terminates for any reason prior to the end of the vesting period.

	 	 	 
	Expense Reimbursement	 	All reasonable out-of-pocket expenses will be reimbursed if approved in advance and documented by receipts, and are subject to the Company’s policy on expense reimbursements as announced from time to time. 
	 	 	 
	Sick
    Leave/Vacation/Personal Time Off	 	Two weeks’ time off is accrued for every year that Employee works for the Company, which may be used as sick leave, vacation or person time off at the discretion of Employee.  Any time off not taken during any one-year period will expire.  No cash will be payable for any time off that is not utilized, or which has accrued at the time of Employee’s termination of employment for any reasons.  
	 	 	 
	Health, Dental, Life Insurance	 	None.
	 	 	 
	Retirement Plans	 	None. 
	 	 	 
	Severance	 	None.
	 	 	 
	Profits Participation	 	If the Company acquires a certain coal mine in Ohio currently under consideration while the Employee is employed hereunder, the Employee shall be granted a net profits participation of 10% in the coal mine, calculated based on net income of the coal mine determined under generally accepted accounting principles, including the cost of any financing directly related to the acquisition, improvement or capitalization of the mine. The net profits shall be paid on a quarterly basis within ten days after the preparation of the Company’s quarterly financial statements, and shall be subject to adjustment at the end of each year based upon the annual audit of the mine’s operations. The net profits interest shall terminate (a) upon a sale of the mine or the Company subsidiary which owns the mine (in which event net profits shall include any net profit upon the sale of the mine or the Company subsidiary, payable in whatever form of consideration the Company receives in the sale), (b) in the event the Employee voluntarily terminates his employment hereunder, or (c) the Employee is terminated for cause by the Company. 

 

    	9MANAGEMENT AGREEMENT

 

This MANAGEMENT AGREEMENT
(“Agreement”), is entered into as of the 10th day of June, 2015 (the “Agreement Date”),
by and between BLUE GROVE COAL, LLC, a West Virginia limited liability company (“Operator”) and BLACK OAK RESOURCES,
LLC, a West Virginia limited liability company (“Manager”).

 

WITNESSETH, THAT:

 

WHEREAS, the Operator is
the exclusive operator, duly licensed and permitted by the West Virginia Department of Environmental Protection (the “WVDEP”),
of that certain surface coal mine, located in the Bradshaw Area of the County of McDowell, State of West Virginia, encompassing
acreage leased or owned by G.S. Energy, LLC (“GS Energy”), which is an affiliate of the Operator, with an estimated
28.7 million tons of recoverable coal (the “Mine”);

 

WHEREAS, Operator and Manager
desire to enter into this Agreement to set forth the terms and conditions upon which Manager shall perform certain services relating
to the operation of the Mine.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. APPOINTMENT
OF MANAGER. The Manager is hereby appointed as the “general manager” of the
Mine, to “exclusively” manage the day-to-day operations of the Mine as hereinafter described. 

 

2. DUTIES
AND RESPONSIBILITIES OF MANAGER. Subject to Section 3 herein, the Manager shall
have the following exclusive authority to take actions on behalf of the Operator in the management of the Mine: 

 

		(a)	Supervise and control all of the finances of the Mine, including
payroll, taxes, accounting, bookkeeping, record-keeping, accounts payable, and accounts receivable, banking, financial records
and reporting functions as they pertain to the Mine. Manager shall prepare and maintain financial statements for the Mine according
to generally accepted accounting principles consistently applied and shall provide the Operator with weekly operating reports and
statements including but not limited to cash flow statements, income statements, accounts payable and accounts receivable reports
and such other reports and information as may be requested by Operator from time to time. 

 

		(b)	Select, employ and terminate as necessary all personnel necessary
to operate the Mine, including employees, consultants, contractors, and third-party miners; 

 

		(c)	Supervise and control the purchase of all materials and supplies;

 

		(d)	Manage the acquisition by lease or purchase of any equipment and
facilities necessary to operate the Mine (“Equipment”); 

 

		(e)	Manage the repair and maintenance of all equipment and facilities
located at the Mine as necessary to maintain such equipment and facilities in good repair, order and condition, normal wear and
tear excepted, as well as the retirement or disposition of any equipment or facilities no longer needed at the Mine; 

 

		(f)	Manage the mining of coal from the Mine, including the determination
of areas to mine; 

 

		(g)	Manage the purchase, mixing, storage and use of foreign coal, coal
refuse, including gob, slurry, course coal and such other coal fines (the “Third Party Coal Products”);

 

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		(h)	Manage all product sales from the Mine, including negotiating and
entering into contracts for the sale of product on the spot market or longer-term contract sales (“Sales Contracts”),
and any activities incidental thereto, including product testing; 

 

		(i)	Manage all delivery arrangements for the sale of product from the
Mine or the purchase of Third Party Coal Products (“Transportation Contracts”), including trucking and rail
arrangements; 

 

		(j)	Manage all activities necessary to comply with all permits, licenses,
laws and regulations pertaining to the mining of ore from the Mine, including environmental laws, health and safety laws, reclamation
and closure plans, etc.;

 

		(k)	Commence, defend and control all legal actions, arbitrations, investigations
and proceedings that arise due to events occurring in connection with the Mine, provided that simultaneous notice of any material
action in any such action shall be provided to the Operator; and

 

		(l)	Manage and supervise such other activities that the Operator designates
from time to time.

 

3. OPERATOR
OVERSIGHT. The authority granted the Manager herein shall be subject to the following:

 

		(a)	The Manager shall prepare monthly budgets (“Budgets”)
from time to time as requested by the Operator, which Budgets shall be subject to the final approval of the Operator. The Manager
may not, without the approval of the Operator, exceed the expenses set forth in an approved Budget beyond the variance limits applicable
to the Budget;

 

		(b)	The Manager may not execute any contract which obligates the Operator
or GS Energy for a term longer than 30 days or for an amount greater than $50,000.00, without the express written approval of the
Operator, including any Transportation Contract, Sales Contract, contract to purchase Third Party Coal Products, employment contract,
service contract, lease or loan agreement; 

 

		(c)	The Manager may not settle any disputed claim, legal account, investigation
or proceeding without the approval of the Operator except to the extent the monetary cost is already included in an approved Budget,
and the settlement does not impose any injunctive or other non-monetary relief on the Operator or GS Energy.

 

4. RIGHTS
GRANTED SUBJECT TO THIRD PARTY TERMS AND CONDITIONS. The rights granted by Operator hereunder
shall be subject to all terms, conditions, and provisions of any and all governmental consents, permits or other authorizations,
as the same may be amended or supplemented from time to time, including without limitation all reclamation plans and other documents
or instruments supplemental thereto, and also subject to any and all deeds, leases, and instruments of record or apparent from
an examination of the Mine (all herein collectively, “Consents”). Manager shall observe all such terms, conditions
and provisions contained in such Consents during the Term, or accruing from or arising out of Manager’s activities during
the Term. 

 

5. NOTIFICATION
OF OPERATIONS TO OPERATOR; PLAN APPROVAL. Manager shall provide to Operator for its reasonable
approval, if so requested, prior to the conduct of business activities or operations with respect to any portion of the Mine in
particular, or the Mine in general, all reasonably relevant details of such operations to be conducted, which shall show equipment
location, utility sources, roadways, and other relevant plans for Manager’s operations. 

 

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6.  INDEMNIFICATION.

 

		(a)	General Indemnity. Manager shall indemnify, defend and hold
harmless Operator and GS Energy, their affiliated companies, and all of their members, directors, officers, employees, agents and
representatives (i) from any inaccuracy in any representation or warranty made by Manager hereunder or any breach of this Agreement
by Manager, and (ii) against all claims, liabilities, demands, damages, fines, penalties, causes of action, losses or expenses
and costs of litigation, including attorneys fees and costs (“collectively, “Claims”) to the extent arising
out of any penalty, damage or charge imposed for any violation of any laws or ordinances affecting the use and occupancy of the
Mine by Manager or those holding under Manager, arising out of any failure of Manager in any respect to comply with and perform
all of the requirements and provisions of this Agreement, or resulting from injury or death of persons or damage to property, including,
without limitation, the person and property of Operator or Manager, or their respective agents, employees and invitees, occurring
on the Mine or on the adjoining streets or ways, or in any manner directly or indirectly growing out of or in connection with the
use and occupancy or disuse of the Mine, or any part thereof, or any improvements now or hereafter located thereon by Manager or
any person holding under Manager. Without limiting the foregoing, the Claims covered hereunder include, but are not limited to,
settlements, judgments, court costs, attorneys’ fees and other litigation expenses, fines and penalties arising out of actual
or alleged injury to or death of any person, including employees of Operator or Manager, or loss of or damage to property, including
property of Operator or Manager, or breach of contract. The provisions of this Subsection shall survive the termination of this
Agreement for one (1) year. 

 

		(b)	Indemnity – Manager Operations. Without limiting the
generality of Subsection (a) above, Manager covenants and agrees to indemnify and save harmless Operator and GS Energy from and
against any and all Claims, by or on behalf of any person, firm, corporation, or governmental body for damages, injuries, death,
penalties, fines, assessments, or otherwise, to the extent caused by, arising out of, resulting from, or as a consequence of the
acts or omissions of Manager, its officers, agents, employees, licensees, or contractors or any one or more of them in the prosecution
of its duties and responsibilities hereunder, or in any manner pertaining to the use and enjoyment of the Mine by Manager under
the provisions hereof, and from and against any and all costs, counsel fees, expenses, and liabilities incurred in or about any
such claim, action or enforcement proceeding brought thereon, and if Operator be made a party or parties to any litigation on account
of any such claim, demand, etc., Manager shall pay all damages and costs recovered against Operator and the same shall be due forthwith
after notice thereto to Manager. There shall be included in the amount to be paid by Manager to Operator under this Section all
reasonable attorneys’ fees and other expenses which may be incurred by Operator. Manager further covenants and agrees that
all employees of Manager and/or any and all other persons performing work on the Mine will be fully covered by or insured at all
times by Worker’s Compensation, and to that end Manager shall comply with all applicable Worker’s Compensation laws,
rules and regulations and shall make all necessary contributions and/or other payments and shall provide Operator with satisfactory
evidence of such payments upon request. The provisions of this Section shall survive the termination of this Agreement. 

 

		(c)	Indemnity
                                         – Hazardous Material. Without limiting the generality of Subsection (a) above,
                                         
	 	 	 
	 	i.	Manager
                                         hereby indemnifies Operator and agrees to hold Operator harmless from and against any
                                         and all loss, liability, damage, injury, cost, expense, notice of violation, fine, penalty,
                                         assessment, order or enforcement or permit proceeding, including, but not limited to,
                                         attorneys’ fees and claims of any kind whatsoever paid, incurred or suffered by,
                                         or asserted against Operator for, with respect to, or as a direct or indirect result
                                         of the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous
                                         Materials on the Mine during the Term, but only

 

		A.	to the extent arising out of, in connection with or related to, the
use of the Mine by Manager, and

 

    	3

    	 

    

 

		B.	including, without limiting the generality of the foregoing, any
loss, liability, damage, injury, cost, expense or claim asserted or arising under any Environmental Law for an event or condition
described in (A) above; provided, however that the foregoing indemnity does cover any condition that exists before or as of the
date of this Agreement, including the continuation of such continuation during the term of this Agreement. The provisions of this
Subsection shall survive the termination of this Agreement for a period of three years.

 

As used herein the term “Environmental
Law” shall mean any federal, state or local law, statute, decree, decision, order, ordinance, code, rule or regulation, including,
without limiting the generality of the foregoing, the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended, the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Toxic Substance Control
Act of 1976, the Comprehensive Environmental response, Compensation and Liability Act of 1980 (codified in scattered sections of
26 U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C. §9601, et seq.); the Clean Water Act of 1977 (33 U.S.C. §1251, et seq.);
the Clean Air Act (42 U.S.C. §7401, et seq.); the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901, et
seq.); the Safe Drinking Water Act (21 U.S.C. §349, 42 U.S.C. §§201 and 300f through 300j-9); the Toxic Substances
Control Act (15 U.S.C. §2601, et seq.), and any federal, state or local so-called “Superfund” or “Superlien”
law or ordinance relating to the emission, discharge, release, threatened release into the environment of any pollutant, contaminant,
chemical, hazardous, toxic or dangerous waste, substance or material (including, without limitation, ambient air, surface water,
groundwater or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport,
or handling of such substances and any and all regulations, codes, plans, orders, decrees, judgments, injunctions, notices or demand
letters issued, entered, promulgated or approved thereunder.

 

The term “Hazardous Material”
shall mean any pollutants, contaminants, chemicals, hazardous, toxic or dangerous waste, substance or material, or any other substance
or material regulated or controlled pursuant to any Environmental Law now or at any time hereafter in effect, including any other
substances defined as “hazardous substances” or “toxic substances” in any Environmental Law.

 

		(d)	Indemnity Limitation. Notwithstanding the foregoing, Manager’s indemnification pursuant
to this Section 6 shall be limited to the aggregate amount of Management Fee’s earned by Manager pursuant to this Agreement.

 

7. COMPLIANCE
WITH LAWS. Manager agrees to comply with all applicable laws, statutes, ordinances, rules
and regulations relating to the work undertaken by Manager, and shall, without limiting the generality of the foregoing, comply
with all of the terms and provisions of the Federal Mine Safety and Health Act of 1977, as now or hereafter amended (“MSH
Act”), and all rules and regulations made and adopted pursuant thereto.

 

8. RESPONSIBLE
OPERATOR.  For purposes of the MSH Act, during the Term, Manager shall be deemed to be
the responsible operator with respect to any claim for black lung benefits filed under the MSH Act (“benefits”)
by or on account of any one of Manager’s employees or former employees unless Operator subsequently employs the same. In
addition, Manager shall provide security in compliance with MSH Act for the payment of benefits and shall require any other person
who operates, controls, or supervises at any time on the Mine, or who otherwise may be liable for the payment of benefits or to
secure the payment of benefits to or on account of employees or former employees under MSH Act in accordance with applicable laws
and regulations to provide such security, and shall provide Operator, at least annually, and more often upon reasonable request,
with appropriate certification that such security has provided. Manager shall notify Operator immediately in writing of any change
or alteration in the status of any such security.

 

    	4

    	 

    

 

9. NO
VIOLATIONS. Manager represents and warrants that it is not, nor is it “owned or
controlled” by, an entity that is (i) ineligible to receive additional surface mining permits or (ii) under investigation
to determine whether its eligibility to receive such permits should be revoked, i.e., “permit blocked.” As used in
this Agreement “owned or controlled” or words of similar import shall be defined as set forth in 30 C.F.R. Section
773.5 (1991), as the same may be revised, amended or superseded.

 

10. COMPENSATION
TO MANAGER. During the Term of this Agreement, the Manager shall be entitled to a management
fee (the “Management Fee”) equal to 75% of all Adjusted Net Profits generated by the Mine. Adjusted Net Profits
shall be calculated on a monthly basis, and the Management Fee due to the Manager shall be paid to the Manager within two (2)
days after the calculation of Adjusted Net Profits, but in no event later than fifteen (15) days after the end of the month. For
purposes of this Agreement, “Net Profits” and “Adjusted Net Profits” shall be calculated
as follows: 

 

		(a)	Net Profits and Net Losses shall be the net profits or losses of
the Mine calculated on an accrual basis in accordance with generally accepted accounting principles, except as adjusted below.

 

		(b)	In calculating Net Profits and Net Losses, the Mine shall be entitled
to all revenues from the sale of product mined from the Mine or purchased and resold by the Mine. The Mine shall bear all cost
of operating the Mine (“Operating Expenses”), including employee costs, Permit costs, insurance, supplies, transportation
costs, etc., except as provided below.

 

		(c)	Adjusted Net Profits for any calendar month shall equal the cumulative
Net Profits and Net Losses for the Mine from the commencement of this Agreement to the end of the calendar month for which Net
Profits and Net Losses are being calculated, minus the aggregate amount Net Profits and Net Losses for which the Operator has paid
the Manager its 75% share in prior periods.

 

11. TERM
AND TERMINATION.

 

		(a)	Term. This Agreement shall have an initial term of two years
(the “Term”), provided that such Term may be extended by written agreement of the Parties; provided that the
Term may be terminated as provided below. 

 

		(b)	Termination
                                         by Manager. This Agreement may be terminated by the Manager under the following circumstances:
                                         
	 	 	 
	 	i.	A
                                         failure to pay any amount due hereunder if such default is not cured within five (5)
                                         days after written notice of default to the Operator;
	 	 	 
	 	ii.	In
                                         the event the Operator breaches any representation, warranty or covenant herein, and
                                         such breach has not been cured within fifteen (15) days after written notice of breach
                                         by the Manager;

 

		(c)	Termination
                                         by Operator. This Agreement may be terminated by the Operator under the following
                                         circumstances: 
	 	 	 
	 	i.	Immediately
                                         in the event of an Insolvency Event or Serious Illegal Conduct involving the Manager;
	 	 	 
	 	ii.	In
                                         the event the Manager breaches any representation, warranty or covenant herein, and such
                                         breach has not been cured within fifteen (15) days after written notice of breach by
                                         the Operator;

 

    	5

    	 

    

 

	 	iii.	A
                                         failure to pay any amount due hereunder if such default is not cured within five (5)
                                         days after written notice of default to the Manager;
	 	 	 
	 	iv.	In
                                         the event that certain Call Option is terminated, pursuant to the Exchange Agreement
                                         of Operator and Royal Energy Resources, Inc., dated of even date herewith.

  

Upon a termination of this
Agreement, the non-breaching Party shall have the right to sue for and recover any costs or damages (including attorney’s
fees) by reason of any such default. Any such termination shall become effective on the date specified in the written notice by
non-breaching Party to the breaching Party.

 

All rights and remedies
of the non-breaching Party herein enumerated shall be cumulative, and none shall exclude any other right or remedy allowed by law
or equity, and such rights and remedies may be exercised and enforced concurrently and whenever and as often as the occasion therefore
arises. The failure or forbearance on the part of a non-breaching Party to enforce any of its rights or remedies in connection
with any default shall not be deemed a waiver of such default, nor a consent to any continuation thereof, nor a waiver of the same
default at any subsequent date.

 

“Insolvency Event”
shall mean, with respect to any Party, any of the following events: (a) a case or proceeding shall have been commenced against
such person seeking a decree or order in respect of such person (i) under the Bankruptcy Code, as now constituted or hereafter
amended or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such person or of any substantial part of such
Person’s assets, or (iii) ordering the winding-up or liquidation of the affairs of such person, and such case or proceeding
shall remain undismissed or unstayed for ninety (90) days or more or such court shall enter a decree or order granting the relief
sought in such case or proceeding; or (b) the commencement by such person of a voluntary case under the Bankruptcy Code, as now
constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law,
or the consent by such person to the entry of an order for relief in an involuntary case under any such law, or the consent by
such person to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of such person for any substantial part of such person’s assets, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such person generally to pay its debts as such debts become due, or the taking
of action by such person in furtherance of any of the foregoing.

 

“Serious Illegal
Conduct” means any of the following conduct or events involving a Party: (i) the Party or its affiliates having been
convicted of or having pled guilty or nolo contendere (“no contest”) in a domestic, foreign or military court to any
felony, or (ii) the Party or its affiliates having been convicted of or having pled guilty or nolo contendere in a domestic, foreign
or military court to a misdemeanor involving any fraud, false statements or omissions, wrongful taking of property, bribery, perjury,
forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses.

 

12. ADDITIONS,
CHANGES, ALTERATIONS AND DEMOLITION. Manager shall not construct or demolish improvements
upon the Mine and/or make additions to or structural changes or alterations in, upon or with respect to any or all of the improvements
to the Mine without the prior written consent of Operator, which shall not be unreasonably withheld. Where permitted, such work
shall be performed in a good and workmanlike manner within the amounts estimated for such items in an approved Budget. Any improvements
or additions to the Mine or Equipment shall, at the expiration or other termination of the Term of this Agreement, be deemed a
part of the Mine and shall be surrendered to Operator in good condition and repair, reasonable wear and tear and damage by fire
or other casualty excepted. Notwithstanding the foregoing, Manager acknowledges the Mine, and all its associated parts and components,
of whatever kind or nature, shall be the exclusive property of Operator or GS Energy, free and clear of any lien or encumbrance
of Manager.

 

    	6

    	 

    

 

13. MECHANIC
OR CONSTRUCTION LIENS. Manager shall not permit, create, incur or impose, or cause or
suffer others to permit, create, incur or impose, any lien or other obligation against the Mine or Equipment or Operator by reason
of any work performed or materials furnished by, to or for the account of Manager; and Manager shall indemnify and hold Operator
harmless, without limit as to time or amount, from any loss or damage (including attorney’s fees and other costs of litigation)
and any and all claims or demands by any contractor, subcontractor, materialman, laborer or any other third person against the
Mine or Equipment or Operator, relating to or arising because of such work or materials. Manager may, however, contest any lien
or other obligation against the Mine or Equipment by resorting to the same procedures herein provided for contesting taxes and
other impositions, including making the deposits and taking the other actions permitted; provided that in any event, Operator
must first be reasonably satisfied that it and the Mine or Equipment are secure from loss or damage.

 

14. OPERATOR’S
ENTRY FOR INSPECTION. Operator and its representatives shall have the right at all reasonable
times during the business hours of Manager to enter upon the Mine for the purpose of examining and inspecting the Mine and operations
thereupon. 

 

15. ABANDONMENT
OF MANAGER’S PROPERTY. If Manager fails to remove any personal property belonging
to it within one hundred and twenty (120) days after any termination of this Agreement, such personal property shall be deemed
to have been abandoned by Manager and shall become the property of Operator.

 

16. SURRENDER
AT TERMINATION. At the termination of this Agreement for any reason, Manager shall quietly
and peaceably surrender possession of the Mine and any improvements located thereupon to Operator, maintained as herein provided
and free of any and all Claims thereto.

 

17. NOTICES.
Whenever this Agreement require that notice be provided to a Party, notice shall be delivered in writing to such Party at the
address listed below. Notice will be deemed to have been validly given if delivered (i) in person to the individual intended to
receive such notice, (ii) by registered or by certified mail, postage prepaid to the address indicated in the Agreement within
four (4) Days after being sent, or (iii) by facsimile, by the time stated in a machine-generated confirmation that notice was
received at the facsimile number of the intended recipient.

 

If to Manager:

 

Black Oak Resources,
LLC

Attn: Ian Ganzer

304 Waitman Street

Morgantown, West Virginia
26501

 

If to Operator:

 

C/O: Royal Energy Resources,
Inc.

Attn: William L. Tuorto

56 Broad Street,
Suite 2

Charleston, South
Carolina 29401

 

    	7

    	 

    

18. ARBITRATION
OF DISPUTES. 

 

		(a)	If a dispute or disagreement arising out of, or relating to, the
formation, interpretation, performance or breach of this Agreement exists between the Parties hereto (a “Dispute”),
then any Party to the Dispute shall first submit the reasons for its position, in writing, to the other Party, and such other Party
shall be required to within seven (7) days to submit the reasons for its position, in writing, to the first Party and to then enter
into good faith negotiations to attempt to resolve the Dispute. If the Dispute cannot be settled by good faith negotiation between
the Parties within thirty (30) days after the last written submission is due, then any Party to the Dispute may submit the Dispute
to binding arbitration. Any such arbitration shall be conducted by a panel of three arbitrators in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, except to the extent modified herein. Judgment on the
award rendered may be entered in any court having jurisdiction thereof. The arbitrators shall not be empowered to award punitive
or exemplary damages. The Parties to the Dispute shall, within thirty (30) days of receipt of notice that the dispute has been
submitted to arbitration, appoint three arbitrators. If three arbitrators cannot be selected by the mutual consent of the Parties,
said arbitrators shall be appointed by the American Arbitration Association. Unless otherwise determined by the arbitrators, the
Partners shall bear their respective costs incurred in connection with the procedures described in this Section 20, except that
the Parties involved in an arbitration shall share equally the fees and expenses of the arbitrator. The arbitrators shall be required
to make a decision within sixty (60) days of the appointment of the arbitrators. The arbitrator(s) shall not have the authority
to modify any provision of this Agreement or to award punitive damages. Except for arbitration proceedings with respect to termination
of this Agreement, during the continuance of any arbitration proceeding, the Parties shall continue to perform their respective
obligations under this Agreement. Any such arbitration proceeding shall take place in Charleston, West Virginia, unless all Parties
to such Dispute agree to a different venue.

 

		(b)	Any Party that is found to be a losing Party in any arbitration shall
be required to pay the reasonable attorneys’ fees, expert witness fees, and costs of the Party determined to be the prevailing
Party.

 

		(c)	The Parties hereby waive trial by jury in any action or proceeding
to which they may be Parties, arising out of, or in connection with or in any way pertaining to, this Agreement. This waiver is
knowingly, willingly and voluntarily made by the Parties hereto.

 

19. NO
WAIVER. No waiver of any default of Manager hereunder shall be implied from any omission
by Operator to take any action on account of such default if such default persists or is repeated, and no express waiver shall
affect any default other than the default specified in the express waiver and that only for the time and to the extent therein
stated. One or more waivers of any covenant, term or condition of this Agreement by Operator shall not be construed as a waiver
of a subsequent breach of the same covenant, term or condition. The consent or approval by Operator to or of any act by Manager
requiring Operator’s consent or approval shall not be deemed to waive or render unnecessary Operator’s consent or
approval to or of any subsequent similar act by Manager. 

 

20. HEADINGS
AND TITLES. The headings of the several Sections and Subsections contained herein are
for convenience only and do not define, limit or construe the contents of such Sections.

 

21. ASSIGNMENT
AND SUBLETTING. The Manager may not assign or delegate any of its rights, duties or obligations
hereunder without the written consent of Operator, which may be unreasonably withheld or delayed. The Manager may not be a party
to any merger, consolidation or change of control of more than ten percent (10%) of the beneficial ownership or control of Manager
without the prior written consent of the Operator, which may be unreasonably withheld. No assignment or delegation shall release
Manager from any of its primary obligations hereunder. 

 

22. SUCCESSORS
AND ASSIGNS. Except as otherwise herein provided, this Agreement shall be binding upon
and inure to the benefit of the Parties and their respective heirs, personal representatives, successors, purchasers, of assets,
equity or otherwise, merger entities and any assigns, of and by any nature or kind.

 

    	8

    	 

    

 

23. SEVERABILITY.
If any clause, provision or section of this Agreement is ruled invalid by any court of
competent jurisdiction the validity of such clause, provision or section shall not affect any of the remaining provisions hereof.

 

24. EXCLUSIVITY.
Operator acknowledges and agrees that Manager shall have the exclusive right to manage
and operate the Mine during the Term of this Agreement, and that Operator shall not conduct mining operations on the Mine, or
allow any third party to conduct mining operations on the Mine, whether as lessee, licensee or in any other capacity, without
the prior consent of the Manager. 

 

25. CHOICE
OF LAW/VENUE. This Agreement shall be governed by and construed according to the laws
of the State of West Virginia.

 

26. RELATIONSHIP
OF THE PARTIES. Notwithstanding any provision hereof, for all purposes of this Agreement,
each Party shall be and act as an independent contractor and not as a partner, joint venturer or agent of the other Party and
shall not have authority to bind, nor attempt to bind the other Party to any contract or agreement.

 

27. ENTIRE
AGREEMENT. This Agreement embodies the entire understanding between the Parties with
respect to the subject matter hereof and thereof, and supersedes all prior negotiations, representations, understandings or other
writings. No revision, modification or amendment of this Agreement shall be binding upon the Parties hereto unless reduced to
writing and signed by both Parties.

 

28. EXECUTION
AND COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of
whom shall be deemed an original and all of which together shall constitute but one and the same instrument, and a facsimile transmission
copy shall have the same force and effect as the original. All signatories to this Agreement certify that they have actual authority
to sign and to bind their principals.

 

IN WITNESS WHEREOF,
the parties have entered into this Agreement as of the date stated in the introductory paragraph of this Agreement.

 

	BLUE GROVE COAL, LLC	 	BLACK OAK RESOURCES, LLC
	 	 	 
	 	 	 
	By (Signature)	 	By (Signature)
	 	 	 
	 	 	 
	(Typed or Printed Name)	 	(Typed or Printed Name)
	 	 	 
	 	 	 
	(Title)	 	(Title)

 

    	9

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