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Item 9A. Controls and Procedures

2021-02-23 compared with 2020-02-20 · 164 added, 140 removed, 972 unchanged (24% of the section changed)

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We maintain controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act) as of December 31, 2019.

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 ("Exchange Act"), we have evaluated, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act) as of December 31, 2020.

Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures are effective as of December 31, 2020.

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Ernst & Young LLP, an independent registered public accounting firm, has made an independent assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020, as stated in their report that is included herein.

As permitted by SEC rules, we have excluded the mineral interest operations we acquired on January 3, 2019 in the AllDale Acquisition and August 2, 2019 in the Wing Acquisition as discussed below from our evaluations of the effectiveness of internal control over financial reporting for the year ended December 31, 2019 due to the size, complexity and the limited time available to complete the evaluations.

The operations excluded from our evaluations represent approximately 23.7% of our total assets at December 31, 2019 and approximately 2.7% of our total revenues for the year ended December 31, 2019.

Changes in Internal Controls Over Financial Reporting .

Other than the changes that have resulted or may result from the AllDale Acquisition and Wing Acquisition as discussed below, there have not been any changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act) in the three months ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

On January 3, 2019 (the "AllDale Acquisition Date"), we acquired all of the limited partner interests in AllDale Minerals, LP and AllDale Minerals II, LP (collectively, "AllDale I & II") not owned by Cavalier Minerals JV, LLC ("Cavalier Minerals") and the general partner interests in AllDale I & II (the "AllDale Acquisition").

As of the AllDale Acquisition Date, we now own 100% of the general partner interests and, including the limited partner interests we hold indirectly through our ownership in Cavalier Minerals, approximately 97% of the limited partner interests in AllDale I & II.

In addition, we assumed control and began accounting for AllDale I & II on a consolidated basis.

On August 2, 2019, we acquired approximately 9,000 net royalty acres in the Midland Basin, (the "Wing Acquisition").

For more information on the AllDale and Wing Acquisitions, please see "Item 8.

Financial Statements and Supplementary Data — Note 3.

Acquisitions."

At this time, we continue to evaluate the business and internal controls and processes around the mineral interests acquired in both the AllDale and Wing Acquisitions and are making various changes to their management and organizational structures based on our business plan.

We are in the process of implementing our internal control structure over the acquired businesses.

We expect to complete the evaluation and integration of the internal controls and processes of the mineral interests acquired in the AllDale and Wing Acquisitions in the first and third quarters of 2020, respectively.

There have not been any changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act) in the three months ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Report of Independent Registered Public Accounting Firm

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and the Partners of Alliance Resource Partners, L.P.

Opinion on Internal Controls over Financial Reporting

Opinion on Internal Control over Financial Reporting

We have audited Alliance Resource Partners, L.P.

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and subsidiaries (the Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria .

As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting , management’s assessment of, and conclusion on, the effectiveness of internal controls over financial reporting did not include the internal controls and processes of the mineral interests acquired in both the Wing and AllDale Acquisitions, which are included in the 2019 financial statements of the Partnership and constituted 23.9% and 48.9% of total and net assets, respectively, as of December 31, 2019 and 2.7% and 4.9% of revenues and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Partnership also did not include an evaluation of the internal control over financial reporting of the mineral interests acquired in both the Wing and AllDale Acquisitions.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, cash flows, and partners’ capital for each of the three years in the period ended December 31, 2019, the related notes and financial statement schedule, and our report dated February 20, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), cash flows and partners’ capital for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2), and our report dated February 23, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,

and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized

acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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* Indicates Chairman of Committee.

Craft III has been President, CEO and a Director since August 1999, Chairman of the Board of Directors since January 1, 2019, and indirectly owns our general partner.

Craft III has been President, Chief Executive Officer ("CEO") and a Director since August 1999, Chairman of the Board of Directors since January 1, 2019, and indirectly owns our general partner.

Previously Mr.

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and had previously been that company's General Counsel and Chief Financial Officer.

He is a former Chairman and current Board member of the National Coal Council, a Board Member of the National Mining Association, and a Director and Chairman of America’s Power.

Craft is a past Director and Chairman of the Kentucky Chamber of Commerce and a Director and Executive Committee member of the United States Chamber of Commerce.

He is a former Chairman and current Board member of the National Coal Council, a Board Member of the National Mining Association, and a Director and past Chairman of the America's Power.

Craft is a Director and former Chairman of the Kentucky Chamber of Commerce.

He has been a Director of BOK Financial Corporation (NASDAQ:

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Vice President—Finance of KCS Medallion Resources, Inc.;

and Vice President—

Finance, Secretary and Treasurer of Intercoast Oil and Gas Company.

and Vice President—Finance, Secretary and Treasurer of Intercoast Oil and Gas Company.

Cantrell is a Certified Public Accountant and holds Master of Accountancy and Bachelor of Accountancy degrees from the University of Oklahoma.

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Wynne has been Senior Vice President and Chief Operating Officer since March 2009.

Wynne joined the company in 1981 as a mining engineer and has held a variety of positions with the company prior to his appointment in July 1998 as Vice President—Operations.

Wynne joined the company in 1981 as a mining engineer and has held a variety of positions with the company prior to his appointment

in July 1998 as Vice President—Operations.

Wynne has served the coal industry on the National Executive Committee for National Mine Rescue and previously as a member of the Coal Safety Committee for the National Mining Association.

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Torrence retired from Fluor Corporation in 2006 as a Senior Vice President of Project Development and Investments and after retirement has performed investment and business consulting services for various clients.

employed at Fluor from 1989 to 2006 where, among other roles, he was responsible for the global Project Investment and Structured Finance Group and served as Chairman of Fluor's Investment Committee.

Torrence was employed at Fluor from 1989 to 2006 where, among other roles, he was responsible for the global Project Investment and Structured Finance Group and served as Chairman of Fluor's Investment Committee.

In that position, Mr.

Torrence had executive responsibility for Fluor's global activities in developing and arranging third-party financing for some of Fluor's clients' construction projects.

executive responsibility for Fluor's global activities in developing and arranging third-party financing for some of Fluor's clients' construction projects.

Prior to joining Fluor in 1989, Mr.

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The Audit Committee has responsibility for the appointment, compensation and oversight of the work of our independent registered public accounting firm and assists the Board of Directors by conducting its own review of our:

● filings with the SEC pursuant to the Securities Act and the Exchange Act (i.e., Forms 10-K, 10-Q, and 8-K);

● filings with the SEC pursuant to the Securities Act of 1933 ("Securities Act") and the Exchange Act (i.e., Forms 10-K, 10-Q, and 8-K);

● press releases and other communications by us to the public concerning earnings, financial condition and results of operations, including changes in distribution policies or practices affecting the holders of our units, if such review is not undertaken by the Board of Directors;

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Such requests should be directed to Investor Relations at (918) 295-7674.

If any substantive amendments are made to the code of ethics or if there is a grant of a waiver, including any implicit waiver, from a provision of the code to the President and CEO, Chief Financial Officer, or Controller, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K.

If any substantive amendments are made to the code of ethics or if there is a grant of a waiver, including any implicit waiver, from a provision of the code to the President and CEO, Chief Financial Officer, or Chief Accounting Officer, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K.

Communications with the Board

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Tholen's then-effective annual base salary, plus (b) two times the then-effective standard payout for Mr.

Tholen under the STIP, plus (c) any unpaid installment(s) of the one-time signing bonus described above, which amount shall be paid at the time of Mr.

Tholen under the short-term incentive plan ("STIP"), plus (c) any unpaid installment(s) of the one-time signing bonus described above, which amount shall be paid at the time of Mr.

Tholen's termination of employment.

The foregoing description of the Tholen Employment Letter does not purport to be complete and is qualified in its entirety by reference to the full and complete text of the Tholen Employment Letter, which is attached hereto as Exhibit 10.61.

Role of the Compensation Committee

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aligned with those of our unitholders.

Craft has not received an increase in base salary since 2002, has not received a bonus under our short-term incentive plan ("STIP") since 2005 and did not receive any grants of LTIP awards from 2005 through 2015.

Craft has not received an increase in base salary since 2002, has not received a bonus under our STIP since 2005 and did not receive any grants of LTIP awards from 2005 through 2015.

On January 22, 2016, the Compensation Committee approved an LTIP award for Mr.

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Each of our Named Executive Officers (including Mr.

Craft) also receives supplemental retirement benefits through the SERP.

Craft) also receives supplemental retirement benefits through the Supplemental Executive Retirement Plan ("SERP").

In addition, all executive officers are entitled to customary benefits available to our employees generally, including group medical, dental, and life insurance and participation in our profit sharing and savings plan ("PSSP").

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Base salaries are reviewed annually to ensure continuing consistency with market levels, and adjustments to base salaries are made as needed to reflect movement in the competitive market as well as individual performance.

During 2019, base salaries for our Named Executive Officers other than Mr.

Craft and Mr.

Tholen were increased as follows:

Cantrell, from $284,000 to $304,000;

Davis, from $325,000 to $345,000;

Wynne, from $374,000 to $404,000.

None of our Named Executive Officers received an increase in salary in 2020.

Annual Cash Incentive Bonus Awards

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(EBITDA is defined as net income of ARLP before net interest expense, income taxes, depreciation, depletion and amortization and net income attributable to noncontrolling interest.) The aggregate cash available for awards under the STIP each year is dependent on our actual financial results for the year compared to the annual performance target, and it increases in relationship to our EBITDA, as adjusted, exceeding the minimum threshold.

The Compensation Committee may determine satisfactory

results and adjust the size of the pay-out pool in its sole discretion.

In 2019, the Compensation Committee approved a minimum financial performance target of $525.5 million in EBITDA from current operations, normalized by excluding any charges for unit-based and directors' compensation and affiliate contributions, if any.

For 2019, we exceeded the minimum performance target.

Awards to our Named Executive Officers each year are determined by and in the discretion of the Compensation Committee.

Our STIP Guidelines provide that achieving the minimum threshold is the minimum acceptable result for a performance pay-out to occur under the STIP, although the Compensation Committee may determine satisfactory results and adjust the size of the pay-out pool in its sole discretion.

Compensation Committee approved a minimum financial performance target of $482.3 million in EBITDA from current operations, normalized by excluding any charges for unit-based and directors' compensation.

For 2020, we did not achieve the minimum performance target and no performance pay-out was awarded.

If a performance pay-out pool is approved by the Compensation Committee, individual awards to our Named Executive Officers each year are determined by and in the discretion of the Compensation Committee.

However, the Compensation Committee does not establish individual target payout amounts for the Named Executive Officers' STIP awards.

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The Compensation Committee believes the STIP performance criteria for 2021 will be reasonably difficult to achieve and therefore support our key compensation objectives discussed above.

The Compensation Committee maintains discretion to grant cash bonus awards outside of the STIP to address special situations.

During 2020, certain Named Executive Officers received a discretionary cash bonus award.

These bonuses were determined following the Compensation Committee’s review and discussion of retention and incentive concerns amidst the unique impacts of the COVID-19 pandemic.

These actions were taken by the Compensation Committee in recognition of the difficulty of managing our business through the unprecedented impacts of the COVID-19 pandemic and based on its determination that such actions were prudent and necessary to help retain and motivate our management team.

Equity Awards under the LTIP

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Our LTIP is sponsored by Alliance Coal.

Under the LTIP, grants may be made of either (a) restricted units or (b) options to purchase common units, although to date, no grants of options have been made.

Under the LTIP, grants may be made of either (a) restricted units, (b) options to purchase common units (although to date, no grants of options have been made) or c) following an amendment of the LTIP in 2020, cash awards.

The Compensation Committee has authority to determine the participants to whom restricted units are granted, the number of restricted units to be granted to each such participant, and the conditions under which the restricted units may become vested, including the duration of any vesting period.

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or notional units that upon vesting entitle the participant to receive an ARLP common unit.

Restricted units granted under the LTIP vest at the end of a stated period from the grant date (which is currently approximately three years for all outstanding restricted units), provided we achieve an aggregate performance target for that period.

Restricted units granted under the LTIP vest at the end of a stated period from the grant date, provided we achieve an aggregate performance target for that period.

However, if a grantee's employment is terminated for any reason prior to the vesting of any restricted units, those restricted units will be automatically forfeited, unless the Compensation Committee, in its sole discretion, determines otherwise.

The number of units actually distributed upon satisfaction of the applicable vesting requirements is reduced to cover the income tax withholding requirement for each individual participant based upon the fair market value of the common units as of the date of distribution.

The number of units actually distributed upon satisfaction of the applicable vesting requirements is reduced to cover the income tax

withholding requirement for each individual participant based upon the fair market value of the common units as of the date of distribution.

At the Compensation Committee's discretion, grants of restricted units under the LTIP may include the contingent right to receive quarterly distributions in an amount equal to the cash distributions we make to unitholders during the vesting period ("DERs").

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The performance target applicable to restricted unit awards under the LTIP is based on a normalized EBITDA measure, with that measure typically being similar to the STIP measure for the year of the grant.

The target, however, requires achieving an aggregate performance level for the three-year period.

The target, however, requires achieving an aggregate performance level for the vesting period.

We typically issue grants under the LTIP at the beginning of each year, with the exceptions of new employees who begin employment with us at some other time and job promotions that may occur at some other time.

The compensation expense associated with LTIP grants is recognized over the vesting period in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 718, Compensation — Stock Compensation .

However, no grants under the LTIP have yet been made in 2021.

The compensation expense associated with LTIP grants is recognized over the vesting period in accordance with FASB Accounting Standards Codification ("ASC") 718, Compensation — Stock Compensation .

Our general partner's policy is to grant restricted units pursuant to the LTIP to serve as a means of incentive compensation for performance.

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If we issue new common units upon payment of the restricted units instead of purchasing them, the total number of common units outstanding will increase.

Grants for 2019 under the LTIP, made January 23, 2019, will cliff vest on January 1, 2022, provided we achieve a target level of aggregate EBITDA for current operations, excluding any charges for unit-based and directors' compensation, for the period January 1, 2019 through December 31, 2021.

Grants for 2020 under the LTIP, made January 22, 2020, will cliff vest on January 1, 2023, provided we achieve a target level of aggregate EBITDA for current operations, excluding any charges for unit-based and directors' compensation, for the period January 1, 2020 through December 31, 2022.

The LTIP provides the Compensation Committee with discretion to determine the conditions for vesting (as well as all other terms and conditions) associated with any award under the plan, and to amend any of those conditions so long as an amendment does not materially reduce the benefit to the participant.

The Compensation Committee believes the performance-related vesting conditions of all outstanding awards under the LTIP will be reasonably difficult to satisfy and therefore support our key compensation objectives discussed above.

2018 LTIP Grants .

On December 10, 2020 the Compensation Committee determined that the performance vesting requirement with respect to the restricted units granted under the LTIP on January 24, 2018 (the "2018 Grants") had been met, and approved amending the terms of the 2018 Grants to accelerate the date of vesting of the restricted units from January 1, 2021 to December 14, 2020 and to provide for settlement of the 2018 Grants in cash rather than units.

The 2018 Grants vested on December 14, 2020 at a price of $4.99 per unit and were settled in cash.

2019 and 2020 LTIP Grants.

During the first quarter of 2020, it was determined the vesting performance requirement with respect to the restricted units granted under the LTIP on January 23, 2019 (the "2019 Grants") was not probable of being satisfied, and previously recognized expense for the 2019 Grants was reversed.

During the fourth quarter of 2020, it was determined the vesting performance requirement with respect to the restricted units granted under the LTIP on January 22, 2020 (the "2020 Grants") was not probable of being satisfied, and previously recognized expense for the 2020 Grants was reversed.

In December 2020, the 2019 Grants to all participants were canceled, the 2020 Grant to Mr.

Tholen was canceled, and the Compensation Committee approved amending the terms of the 2020 Grants to participants other than Mr.

The amendments to the 2020 Grants revised the vesting performance requirement and increased the number of restricted units granted under the amended 2020 Grants.

The amended 2020 Grants will vest on January 1, 2023, subject to the satisfaction of the vesting requirements.

In addition, in 2020 the Compensation Committee approved new 2020 service-based vesting LTIP awards.

These awards will be settled in cash provided that the participant remain employed at the time of payment, which will be paid 75% in February 2022 and 25% in February 2023 for all participants other than Mr.

Tholen, and will be paid one-half in February 2022 and one-half in February 2023 for Mr.

The restricted units granted to Mr.

Tholen in February 2020 (as well as restricted units granted to him in 2019) were cancelled in December 2020 and replaced with a cash service award that is payable one-half in February 2022 and one-half in February 2023, subject to his continued service on such dates.

As with the bonus awards above, these LTIP actions were taken by the Compensation Committee in recognition of the difficulty of managing our business through the unprecedented impacts of the COVID-19 pandemic and based on its determination that such actions were prudent and necessary to help retain and motivate our management team.

Unit Options .

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All of our Named Executive Officers currently participate in the SERP.

Under the terms of the SERP, a participant is entitled to receive on December 31 of each year an allocation of phantom units having a fair market value equal to his or her percentage allocation multiplied by the sum of the participant's base salary and cash bonus received that year, then reduced by any supplemental contribution that was made to our defined

contribution PSSP for the participant that year.

A participant's cumulative notional phantom unit account balance earns the equivalent of common unit distributions, which are added to the notional account balance in the form of additional phantom units.

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Other Compensation-Related Matters

Trading in Derivatives

It is our general partner's policy that directors and all officers, including the Named Executive Officers, may not purchase or sell options on ARLP's common units.

Securities Trading Policy;

Prohibitions on Hedging and Trading in Derivatives

To ensure alignment of the interests of our unitholders with our directors and all officers, including Named Executive Officers, the general partner's Securities Trading Policy prohibits any employee, officer, or director of the Partnership or any of its subsidiaries from engaging in trading involving (1) options or other derivative securities relating to ARLP units;

(2) debt securities of ARLP or its affiliates;

(3) hedging transactions involving ARLP securities;

or (4) purchases of ARLP units on margin.

Tax Deductibility of Compensation

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Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Annual Report on Form 10-K with management.

Based on our Compensation Committee's review of and the

discussions with management with respect to the Compensation Discussion and Analysis, our Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Based on our Compensation Committee's review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The foregoing report is provided by the following directors, who constitute all the members of the Compensation Committee:

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Business—Employees— Administrative Services Agreement ."

In 2019, Alliance Coal was not reimbursed base salary for any of our NEOs.

In 2020 and 2019, Alliance Coal was not reimbursed base salary for any of our Named Executive Officers.

In 2018, prior to the Simplification Transactions on May 31, 2018, the percentage of base salary reimbursed to Alliance Coal was 5% for Mr.

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for more information on the Simplification Transactions.

In 2017, the percentage of base salary reimbursed to Alliance Coal was 5% for Mr.

Craft, 6% for Mr.

Cantrell and 9% for Mr.

(2) The discretionary bonus paid to Mr.

Tholen in 2019 represents the first installment of his signing bonus.

(2) The amounts for Messrs.

Cantrell, Davis and Wynne represent cash bonuses paid in December 2020.

The amounts for Mr.

Tholen represent the first and second installments of his signing bonus.

Please see "Item 11.

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Tholen's employment.

(3) The Unit Awards represent the aggregate grant date fair value of equity awards granted (computed in accordance with FASB ASC 718, using the same assumptions as used for financial reporting purposes, more fully described in "Item 8.

Financial Statements and Supplementary Data— Note 16 – Compensation Plans ") to each Named Executive Officer

under the LTIP in the respective year.

(3) Restricted units granted in February 2020 were determined to be improbable of vesting and amended during the fourth quarter of 2020 for all LTIP participants other than Mr.

Tholen, including Messrs.

Cantrell, Davis and Wynne.

The amendments modified the performance vesting requirement and granted additional restricted units.

The modified performance vesting requirement makes it probable the awards will vest.

As a result, the amounts for 2020 for Messrs.

Cantrell, Davis, and Wynne include $409,822, $521,981 and $603,944, respectively, representing the grant date fair value of the restricted units when originally granted in February 2020, and $213,857, $272,385 and $315,156, respectively, representing the fair value of the same restricted units at the date of modification in December 2020.

The fair value of the modified awards was calculated by taking the fair value of the modified awards at the date of modification minus the fair value of the original awards immediately prior to modification.

Since the original awards granted in February 2020 were determined to be improbable of vesting, the fair value of the original awards immediately prior to modification was zero.

The 2020 amounts also include the grant date fair value of the additional restricted units granted in December 2020.

Tholen, the 2020 amount represents the grant date fair value of the restricted units when originally granted in February 2020.

The restricted units granted to Mr.

Tholen in February 2020 (as well as the restricted units granted to him in 2019) were canceled in December 2020 and replaced with a cash service award that is payable one-half in February 2022 and one-half in February 2023.

Craft did not receive any grants under the LTIP during 2020.

See the Grants of Plan-Based Awards Table below for additional detail.

(4) Other than the restricted units which were modified in December 2020 and discussed in footnote (3) above, the Unit Awards represent the aggregate grant date fair value of restricted units granted pursuant to FASB ASC 718, using the same assumptions as used for financial reporting purposes and which are more fully described in "Item 8.

Financial Statements and Supplementary Data—Note 17 – Common Unit-Based Compensation Plans,"

to each Named

Executive Officer under the LTIP in the respective year.

The restricted units that were granted in 2018 were settled in cash at $4.99 per unit in December 2020.

The cash settlement is included in "All Other Compensation"

in 2020 as discussed in footnote (6).

The restricted units that were granted in 2019 were canceled in December 2020 since it was determined that the vesting requirements for these restricted units were not probable of being satisfied.

Please see "Item 11.

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(5) Amounts represent the STIP bonus earned for the respective year.

STIP payments are made in the first quarter of the year following the year in which they are earned.

STIP payments typically are made in the first quarter of the year following the year in which they are earned, however the STIP payment to Mr.

Tholen was made in December 2020.

Please see "Item 11.

Compensation Discussion and Analysis—Compensation Program Components— Annual Cash Incentive Bonus Awards ."

(5) For all Named Executive Officers, the amounts represent the sum of the (a) SERP phantom unit contributions valued at the market closing price of our common units on the date the phantom unit was granted, (b) profit sharing savings plan employer contribution and (c) perquisites in excess of $10,000.

(6) For all Named Executive Officers, the amounts represent the sum of the (a) SERP phantom unit contributions valued at the market closing price of our common units on the date the phantom unit was granted, (b) profit sharing savings plan employer contribution, (c) perquisites in excess of $10,000 and (d) cash settlement in December 2020 of restricted units that were granted under the LTIP in 2018.

A reconciliation of the 2020 amounts shown is as follows:

Profit Sharing Plan

Cash Settlement of

Perquisites (a)

LTIP grants (b)

Eberley Davis

Craft, perquisites and other personal benefits comprised of club dues of $12,961.

Cantrell, perquisites and other personal benefits totaling $11,601 comprised of club dues of $9,951 and other perquisites of $1,650.

Tholen, perquisites and other personal benefits comprised of relocation related expenses of $259,004.

Tholen began employment and became a Named Executive Officer on December 23, 2019, therefore compensation for 2018 and 2017 is not presented in the table.

b) In December 2020, we accelerated the vesting requirements for restricted units that were granted under the LTIP in 2018 and settled these restricted units in cash rather than units at a price of $4.99 per unit.

Tholen began employment and became a Named Executive Officer on December 23, 2019, therefore compensation for 2018 is not presented in the table.

Grants of Plan-Based Awards Table

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February 14, 2020

August 14, 2019

November 14, 2019

December 17, 2020

January 23, 2019

February 8, 2020

December 17, 2020

December 31, 2020

February 5, 2020

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February 14, 2020

August 14, 2019

November 14, 2019

December 17, 2020

January 23, 2019

February 8, 2020

December 17, 2020

December 31, 2020

Eberley Davis

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February 14, 2020

August 14, 2019

November 14, 2019

December 17, 2020

January 23, 2019

February 8, 2020

December 17, 2020

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February 5, 2020

August 14, 2019

November 14, 2019

December 31, 2019

January 23, 2019

February 5, 2020

February 14, 2020

December 17, 2020

December 31, 2020

February 5, 2020

August 14, 2019

November 14, 2019

December 31, 2019

January 23, 2019

February 14, 2020

December 17, 2020

December 31, 2020

(1) In accordance with the provisions of the SERP, a participant's cumulative notional phantom unit account balance earns the equivalent of common unit distributions when we pay a distribution to our common unitholders, which is added to the account balance in the form of phantom units.

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for additional information regarding the STIP awards.

(4) These amounts represent awards pursuant to our STIP.

On January 23, 2019, the Compensation Committee set the EBITDA target amount for use in determining the total plan payout.

The discretionary payout allocations to all participating employees is determined after the year is completed.

(4) Column not applicable for 2020 as no awards were earned by Named Executive Officers pursuant to our STIP in 2020.

Please see "Item 11.

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for additional information regarding the STIP awards.

(5) Grants of restricted units under our LTIP are not subject to minimum thresholds, targets or maximum payout conditions.

(5) Grants of restricted units under our LTIP are generally not subject to minimum thresholds, targets or maximum payout conditions.

However, the vesting of these grants is subject to the satisfaction of certain performance criteria.

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(6) These awards are grants of restricted units pursuant to our LTIP.

As discussed in footnote (3) to the Summary Compensation Table, the restricted units granted to Named Executive Officers on February 5, 2020 were modified on December 17, 2020, with the exception of the restricted units that were granted to Mr.

Tholen on February 5, 2020, which were canceled on December 17, 2020 and replaced with a cash service award that is expected to vest on January 1, 2023.

This column includes the original awards granted on February 5, 2020 that will not vest or be received by the Named Executive Officers because they were modified or canceled in December 2020.

The grants of restricted units on December 17, 2020 include the modified February 5, 2020 awards, which are equal to the number of original

awards granted on February 5, 2020 for those Named Executive Officers that received a grant, as well as additional restricted units that were granted to each Named Executive Officer.

Craft and Tholen were not granted restricted units on December 17, 2020.

Please see "Item 11.

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Compensation Discussion and Analysis—Compensation Components— Supplemental Executive Retirement Plan ."

(8) We calculated the fair value of LTIP awards to our NEOs, with the exception of Mr.

Tholen, using a value of $19.93 per unit, the unit price applicable to our February 2019 grants.

We calculated the fair value of the LTIP award to Mr.

Tholen using a value of $10.64 per unit, the price applicable to his December 2019 grant.

(8) We calculated the fair value of LTIP awards granted on February 5, 2020 to our Named Executive Officers using a value of $9.62 per unit, the closing unit price on the grant date.

We calculated the fair value of the LTIP awards modified and granted on December 17, 2020 using a value of $5.02 per unit, the closing unit price on that date.

We calculated the fair value of SERP phantom unit awards using the market closing price on the date the phantom unit award was granted.

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The cash available generally increases in relationship to our EBITDA, as adjusted, exceeding the minimum financial performance target and is subject to adjustment by the Compensation Committee in its discretion.

The Compensation Committee maintains discretion to grant cash bonus awards outside of the STIP to address special situations.

Please see "Item 11.

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Long-Term Incentive Plan

Under the LTIP, grants may be made of either (a) restricted units or (b) options to purchase common units, although to date, no grants of options have been made.

Under the LTIP, grants may be made of either (a) restricted units, (b) options to purchase common units, although to date, no grants of options have been made, and (c) cash awards.

Annual grant levels for designated participants (including our Named Executive Officers) are recommended by our general partner's Chairman, President and CEO, subject to the review and approval of the Compensation Committee.

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Eberley Davis

(1) Percentages were calculated using the base salary and discretionary bonus of the NEOs.

The only discretionary bonus we provided to our NEOs in 2019 was to Mr.

Tholen as part of his signing bonus.

(1) Percentages were calculated using the base salary and discretionary bonus of the Named Executive Officers.

The only discretionary bonus we provided in 2020 to our Named Executive Officers were to Mr.

Incentive awards paid pursuant to our STIP are deemed to be performance-based non-equity incentive compensation awards and are not included within the discretionary bonus amounts.

(2) Total Compensation includes $409,822, $521,981, $862,779 and $603,944 for Messrs.

Cantrell, Davis, Tholen and Wynne, respectively that reflect the grant date fair value of restricted units granted in February 2020 that were determined to be improbable of vesting under the original vesting requirements as discussed in footnote (3) to the Summary Compensation Table.

Outstanding Equity Awards at 2020 Fiscal Year End Table

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(1) Amounts represent restricted units awarded under the LTIP that were not vested as of December 31, 2020.

Subject to our achieving financial performance targets, the units vested, or will vest, as follows:

Eberley Davis

As a result of the cancellation of restricted units granted in 2019 and the cash settlement or cancellation of restricted units granted in 2018, the only restricted units that remain awarded under the LTIP at December 31, 2020 were the restricted units granted in 2020.

Subject to our achieving financial performance targets, these units will vest on January 1, 2023.

Please see "Item 11.

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Eberley Davis

(1) Amounts represent the number and value of restricted units granted under the LTIP that vested in 2019.

All of these units vested on January 1, 2019 and are valued at $17.34 per unit, the closing price on December 31, 2018, the final market trading day of 2018.

(1) Amounts represent the number and value of restricted units granted under the LTIP that vested in 2020 and entitled the participants to receive ARLP common units.

These units vested on January 1, 2020 and are valued at $10.82 per unit, the closing price on December 31, 2019, the final market trading day of 2019.

Amounts presented in this table do not reflect the cash settlement in December 2020 of restricted units that were granted in 2018.

The cash settlement of these units are included within the "All Other Compensation"

column of the Summary Compensation Table for the 2020 year.

Please see "Item 11.

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(4) Amounts represent the Named Executive Officer's cumulative notional account balance of phantom units valued at $4.48, the closing price of our common units on December 31, 2020, the final market trading day of 2020.

The amounts include aggregate phantom unit quarterly distributions, changes in market value and the following aggregate

amounts contributed since inception to each Named Executive Officer's SERP notional account balance including the amounts contributed in the last fiscal year shown in the table above:

The amounts include aggregate phantom unit quarterly distributions, changes in market value and the following aggregate amounts contributed since inception to each Named Executive Officer's SERP notional account balance including the amounts contributed in the last fiscal year shown in the table above:

Craft, $670,927;

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Wesley, our only employee directors, received no director compensation for 2020, and all compensation that Mr.

Craft received in

his capacity as an employee is set forth above within the Summary Compensation Table.

Craft received in his capacity as an employee is set forth above within the Summary Compensation Table.

The directors of MGP devote 100% of their time as directors of MGP to the business of the ARLP Partnership.

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(1) Columns are not applicable.

(2) Amounts represent the grant date fair value of equity awards in 2019 related to deferrals of annual retainer and distributions earned on deferred units (computed in accordance with FASB ASC 718, using the same assumptions as used for financial reporting purposes).

(2) Amounts represent the grant date fair value of equity awards in 2020 related to deferrals of distributions earned on deferred units (computed pursuant to FASB ASC 718, using the same assumptions as used for financial reporting purposes and which are more fully described in "Item 8.

Financial Statements and Supplementary Data—Note 17 – Common Unit-Based Compensation Plans ").

Please see Narrative to Director Compensation Table , below.

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Directors have the option to defer all or part of their cash compensation pursuant to the Directors' Deferred Compensation Plan by completing an election form prior to the beginning of each calendar year.

Druten elected to defer all of his cash compensation in 2019 pursuant to the Directors' Deferred Compensation Plan (including the annual retainer described above).

No director elected to defer cash compensation in 2020.

Pursuant to the Directors' Deferred Compensation Plan, a notional account is established for deferred amounts of cash compensation and credited with notional common units of ARLP, described in the plan as "phantom"

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The payment election must be made prior to each plan year;

if no election is made, the account will be paid on the January 1 on or next following the director's separation from

if no election is made, the account will be paid on the January 1 on or next following the director's separation from service.

The Directors' Deferred Compensation Plan is administered by the Compensation Committee, and the Board of Directors may change or terminate the plan at any time;

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To determine the annual total compensation of our median employee and our CEO, we took the following steps:

● Using the same median employee identified in 2017 and 2018, we combined all of the elements of such employee's compensation for the 2019 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $100,278, comprised of such employee's W-2 compensation of $95,556 and contributions in the amount of $4,722 that we made on the employee's behalf to our 401(k) plan for the 2019 year.

● We determined that, as of December 31, 2020, our employee population consisted of approximately 2,924 individuals with the vast majority of these individuals located in the United States.

This population consisted of our full-time and part-time employees, as we do not have seasonal workers.

● We used a consistently applied compensation measure to identify our median employee of comparing the amount of salary or wages reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2020.

● We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis.

Since the vast majority of our employees, including our CEO, are located in the United States, we did not make any cost of living adjustments in identifying the median employee.

● After we identified our median employee, we combined all of the elements of such employee's compensation for the 2020 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $72,549, comprised of such employee's W-2 compensation of $66,602 and contributions in the amount of $5,947 that we made on the employee's behalf to our 401(k) plan for the 2020 year.

● With respect to the annual total compensation of our CEO, we used the amount reported in the "Total"

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Eberley Davis

Timothy Whelan

All directors and executive officers as a group (13 persons)

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Administrative Services

On April 1, 2010, effective January 1, 2010, ARLP entered into an Administrative Services Agreement with our general partner, our Intermediate Partnership, AGP, and ARH II.

On April 1, 2010, effective January 1, 2010, ARLP entered into an Administrative Services Agreement with our general partner, our Intermediate Partnership, AGP, and Alliance Resource Holdings II, Inc.

("ARH II").

Under the Administrative Services Agreement, certain employees, including some executive officers, provided administrative services for AGP and ARH II and their respective affiliates.

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paid by us on their behalf.

Effective March 2020, Alliance Royalty, LLC ("Alliance Royalty") entered into an expense reimbursement agreement with Mr.

Craft's affiliate, JC Resources LP ("JC Resources") regarding the salaries of the oil & gas technical personnel hired by Alliance Coal in 2020.

During 2020, Alliance Royalty was reimbursed $0.5 million by JC Resources.

We do not expect further reimbursement from JC Resources as the agreement was not extended into 2021.

SGP Land/Craft Foundations

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The cumulative annual minimum lease requirement of $6.0 million was met in 2015.

MC Mining paid earned royalties of $0.3 million, $0.1 million and $0.6 million in 2019, 2018 and 2017 respectively.

MC Mining paid no earned royalties in 2020 and paid $0.3 million and $0.1 million in 2019 and 2018 respectively.

As of January 1, 2019 the property subject to this lease is owned by the Joseph W.

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Omnibus Agreement

We are party to an omnibus agreement with ARH, MGP and AGP, which govern potential competition among us and the other parties to this agreement.

We are party to an omnibus agreement with Alliance Resource Holdings, Inc.

("ARH"), MGP and AGP, which govern potential competition among us and the other parties to this agreement.

Pursuant to the terms of the omnibus agreement, ARH and AGP agreed, and caused their controlled affiliates to agree, for so long as management controls MGP, not to engage in the business of mining, marketing or transporting coal in the United States, unless it first offers us the opportunity to engage in a potential activity or acquire a potential business, and the Board of Directors, with the concurrence of its Conflicts Committee, elects to cause us not to pursue such opportunity or acquisition.

In addition, ARH has the ability to purchase businesses, the majority value of which is not mining, marketing or transporting coal, provided ARH offers us the opportunity to purchase the coal assets following their acquisition.

In addition, ARH has the ability to purchase businesses, the majority value of which is not mining, marketing or transporting coal, provided ARH offers us

the opportunity to purchase the coal assets following their acquisition.

The restriction does not apply to the assets retained and business conducted by ARH at the closing of our initial public offering.

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Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Cash Flows

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Long-Lived Asset Impairments

Goodwill Impairment

Property, Plant and Equipment

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Employee Benefit Plans

Compensation Plans

Common Unit-Based Compensation Plans

Supplemental Cash Flow Information

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Subsequent Events

Selected Quarterly Financial Data (Unaudited)

Supplemental Oil & Gas Reserve Information (Unaudited)

(a)(2) Financial Statement Schedule.

Schedule II – Valuation and qualifying accounts

Schedule I – Condensed Financial Information of Registrant

All other schedules are omitted because they are not applicable or the information is shown in the financial statements or notes thereto.

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Exhibit Description

Form of Common Unit Certificate (Included as Exhibit A to the Second Amended and Restated Agreement of Limited Partnership of Alliance Resource Partners, L.P., included in this Exhibit Index as Exhibit 3.1).

Form of Common Unit Certificate (Included as Exhibit A to the Fourth Amended and Restated Agreement of Limited Partnership of Alliance Resource Partners, L.P., included in this Exhibit Index as Exhibit 3.1).

Indenture, dated as of April 24, 2017, by and among Alliance Resource Operating Partners, L.P.

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Seventh Amendment to the Receivables Financing Agreement, dated as of January 16, 2019

000-26823 19624803

Subscription Agreement for Partnership Interest - General Partner Interest dated December 14, 2018 by and among Alliance Resource Partners, L.P., AllDale Minerals, LP and AllDale Mineral Management, LLC.

000-26823 19624803

Subscription Agreement for Partnership Interest - Limited Partner Interest dated December 14, 2018 by and among Alliance Resource Partners, L.P., AllDale Minerals, LP and AllDale Mineral Management, LLC.

000-26823 19624803

Subscription Agreement for Partnership Interest - General Partner Interest dated December 14, 2018 by and among Alliance Resource Partners, L.P., AllDale Minerals II, LP and AllDale Mineral Management II, LLC.

000-26823 19624803

Subscription Agreement for Partnership Interest - Limited Partner Interest dated December 14, 2018 by and among Alliance Resource Partners, L.P., AllDale Minerals II, LP and AllDale Mineral Management II, LLC.

000-26823 19624803

AllDale Minerals, LP Joinder Agreements dated January 3, 2019 by and among Alliance Royalty, LLC, AllRoy GP, LLC and AllDale Minerals, LP.

000-26823 19624803

Incorporated by Reference

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AllDale Minerals II, LP Joinder Agreements dated January 3, 2019 by and among Alliance Royalty, LLC, AllRoy GP, LLC and AllDale Minerals II, LP.

000-26823 19624803

Purchase and Sale Agreement by and between Wing Resources LLC, and Wing Resources II LLC, as sellers, and Alliance Resource Partners, L.P., as buyer, dated as of June 21, 2019 .

000-26823 19997858

Eighth Amendment to the Receivables Financing Agreement, dated as of October 22, 2019.

000-26823 191192460

Employment letter to Kirk Tholen, dated October 21, 2019.

Fifth Amended and Restated Credit Agreement, dated as of March 9, 2020, by and among Alliance Resource Operating Partners, L.P., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

Fifth Amendment to the Alliance Coal and Restated Alliance Coal, LLC 2000 Long-Term Incentive Plan.

Ninth Amendment to the Receivables Financing Agreement, dated as of January 15, 2021.

Code of Ethics for Principal Executive Officer and Senior Financial Officers

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Cantrell, Senior Vice President and Chief Financial Officer of Alliance Resource Management GP, LLC, the general partner of Alliance Resource Partners, L.P., dated February 23, 2021, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Incorporated by Reference

Exhibit Description

Certification of Joseph W.

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Incorporated by Reference

Exhibit Description

Federal Mine Safety and Health Act Information

Report of Netherland, Sewell & Associates, Inc., dated February 7, 2020

Report of Netherland, Sewell & Associates, Inc., dated January 14, 2021

Interactive Data File (Form 10-K for the year ended December 31, 2020 filed in Inline XBRL).

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures