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UNITED STATES BANKRUPTCY COURTFOR THE NORTHERN DISTRICT OF ALABAMASOUTHERN DIVISIONIn re:MISSION COAL COMPANY, LLC, et al.,1Debtors.)))))))Chapter 11Case No. 18-04177-TOM11(Jointly Administered)NOTICE OF FILING OF DEBTORS’ PROPOSED INDEPENDENTINVESTIGATION SETTLEMENT AND AMENDED PLAN SUMMARYPLEASE TAKE NOTICE that on February 8, 2019, the United States Bankruptcy Courtfor the Northern District of Alabama (the “Court”) entered an order (the “Disclosure StatementOrder”), (a) authorizing the Debtors and its affiliated debtors and debtors in possession(collectively, the “Debtors”), to solicit acceptances for the First Amended Joint Chapter 11 Planof Mission Coal Company, LLC and Certain of Its Debtor Affiliates (as modified, amended, orsupplemented from time to time, the “Plan”),2 (b) approving the Disclosure Statement for the FirstAmended Joint Chapter 11 Plan of Mission Coal Company, LLC and Certain of Its DebtorAffiliates (as modified, amended, or supplemented from time to time, the “Disclosure Statement”)as containing “adequate information” pursuant to section 1125 of the Bankruptcy Code,(c) approving the solicitation materials and documents to be included in the solicitation packages,and (d) approving procedures for soliciting, receiving, and tabulating votes on the Plan and forfiling objections to the Plan.PLEASE TAKE FURTHER NOTICE that the Debtors’ independent directors(the “Independent Directors”) and the Official Committee of Unsecured Creditors(the “Committee”) separately conducted extensive investigations into potential estate claims andcauses of action (the “Potential Claims”) arising out of prepetition transactions involving certainof the Debtors’ current and former equity owners and their affiliated non-Debtor entities(collectively, the “Settling Parties”). The Independent Directors completed their investigation (the“Independent Investigation”) in late February 2019 and quickly thereafter began engaging in1The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identificationnumber, include: Mission Coal Company, LLC (8465); Beard Pinnacle, LLC (0637); Oak Grove Land Company,LLC (6068); Oak Grove Resources, LLC (0300); Pinnacle Land Company, LLC (6070); Pinnacle MiningCompany, LLC (7780); Seminole Alabama Mining Complex, LLC (6631); Seminole Coal Resources, LLC(1795); Seminole West Virginia Mining Complex, LLC (7858); Seneca Coal Resources, LLC (1816); and SenecaNorth American Coal, LLC (5102). The location of the Debtors’ service address is: 7 Sheridan Square, Suite300, Kingsport, Tennessee 37660.2Capitalized terms not otherwise defined herein shall have the same meanings set forth in the Plan or DisclosureStatement, as applicable.KE 60290123Case 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 1 of 28Desc
extensive, good-faith negotiations with the Settling Parties and other parties in interest regardinga settlement of the Potential Claims. The Debtors have made extensive progress in theirnegotiations with the Settling Parties and are hopeful that they will finalize the terms of acomprehensive settlement of the Potential Claims (the “Proposed Settlement”) in the near term.The term sheet, attached hereto as Exhibit A (the “Settlement Term Sheet”), reflects the principleterms of the Proposed Settlement to which the Debtors would be willing to agree. The Debtors’Settlement Term Sheet has not yet been finalized or agreed to by the Debtors and the SettlingParties; however, the Settling Parties have agreed to most of the terms set forth in the SettlementTerm Sheet and the Debtors are hopeful that the Proposed Settlement will be agreed to by theSettling Parties in the near term. The Debtors have discussed the Settlement Term Sheet with theRequired DIP Lenders and the Required DIP Lenders are supportive of the Proposed Settlementset forth in the Settlement Term Sheet.PLEASE TAKE FURTHER NOTICE that the Debtors will file a revised Planincorporating the terms of the Proposed Settlement into the Plan on or before March 30, 2019 at6:00 p.m., prevailing Central Time. Attached hereto as Exhibit B is a summary of the materialPlan revisions to be implemented into the Plan, as well as a summary of who will be impacted bysuch revisions, and how such parties will be impacted, whether positively, negatively, or not at all(the “Amended Plan Summary”). Exhibit B also sets forth some of the material benefits that theDebtors would receive from the Proposed Settlement, to the extent it is agreed to by the SettlingParties.PLEASE TAKE FURTHER NOTICE that the deadline for filing objections to the Plan,including the Proposed Settlement, is April 1, 2019, at 9:00 a.m., prevailing Central Time (the“Confirmation Objection Deadline”). Any objection to the Plan must: (a) be in writing;(b) conform to the Bankruptcy Rules, the Bankruptcy Local Rules, and any orders of the Court;(c) state, with particularity, the basis and nature of any objection to the Plan and, if practicable, aproposed modification to the Plan that would resolve such objection; and (d) be filed with theCourt (contemporaneously with a proof of service). Failure to appear at the Confirmation Hearingto prosecute any written objection may result in such objection being overruled without furthernotice.PLEASE TAKE FURTHER NOTICE that the hearing at which the Court will considerConfirmation of the Plan (the “Confirmation Hearing”), including the Independent InvestigationSettlement (if any), will commence on April 3, 2019, at 10:00 a.m., prevailing Central Time,before the Honorable Tamara O. Mitchell, at the United States Bankruptcy Court for the NorthernDistrict of Alabama, Southern Division, Courtroom #3, Robert S. Vance Federal Building, 1800Fifth Avenue North, Birmingham, Alabama 35203.PLEASE TAKE FURTHER NOTICE that in the event that the Debtors and the SettlingParties are unable to finalize the terms of a Proposed Settlement on or before the ConfirmationHearing, the Debtors intend to remove the Proposed Settlement from the Plan and the SettlingParties as Released Parties pursuant to the Plan. The Debtors reserve all rights to, among otherthings, (i) continue negotiating with the Settling Parties and all parties in interest and amend theProposed Settlement, as necessary, or (ii) amend, supplement, or withdraw their Plan at any time.2Case 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 2 of 28Desc
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy of theDisclosure Statement, the Plan, the Plan Supplement, or related documents, you should contactOmni Management Group, the notice and claims agent retained by the Debtors in the chapter 11cases (the “Notice and Claims Agent”), by: (a) calling the Notice and Claims Agent at (888) 5856494 (U.S. and Canada) or (818) 906-8300 (International), (b) visiting the Debtors’ restructuringwebsite at: http://www.omnigmgt.com/missioncoal, (c) writing to the Notice and Claims Agent atOmni Management Group, Re: Mission Coal Company, LLC, et al., 5955 DeSoto Ave., Suite 100,Woodland Hills, CA 91367; and/or (d) emailing missioninfo@omnimgt.com and requesting papercopies of the corresponding materials previously received in electronic format. You may alsoobtain copies of any pleadings filed in the chapter 11 cases for a fee via PACER at:https://ecf.alnb.uscourts.gov.[Remainder of Page Intentionally Left Blank]3Case 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 3 of 28Desc
Birmingham, AlabamaDated: March 27, 2019/s/ Daniel D. SparksDaniel D. SparksBill D. BensingerCHRISTIAN & SMALL LLP505 North 20th Street, Suite 1800Birmingham, Alabama 35203Telephone:(205) 795-6588Facsimile:(205) csattorneys.com- and James H.M. Sprayregen, P.C.Brad Weiland (admitted pro hac vice)Melissa N. Koss (admitted pro hac vice)KIRKLAND & ELLIS LLPKIRKLAND & ELLIS INTERNATIONAL LLP300 North LaSalleChicago, Illinois 60654Telephone:(312) 862-2000Facsimile:(312) iland@kirkland.commelissa.koss@kirkland.com- and Stephen E. Hessler, P.C. (admitted pro hac vice)Ciara Foster (admitted pro hac vice)KIRKLAND & ELLIS LLPKIRKLAND & ELLIS INTERNATIONAL LLP601 Lexington AvenueNew York, New York 10022Telephone:(212) 446-4800Facsimile:(212) ster@kirkland.comCo-Counsel to the DebtorsCase 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 4 of 28Desc
Exhibit AProposed Settlement Term SheetCase 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 5 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEWDEBTORS’ PROPOSED SETTLEMENT TERM SHEET1March 27, 2019The terms and conditions described herein are part of a comprehensive compromise, each elementof which is consideration for the other elements and an integral aspect of a proposed settlement(the “Settlement”) to be effectuated solely through the Plan. This term sheet (the “Term Sheet”)does not constitute an offer of securities or a solicitation of the Plan. The transactionscontemplated by this Term Sheet are subject to conditions to be set forth in the Plan, approval bythe the Bankruptcy Court, confirmation of the Plan, and the occurrence of the Plan Effective Date,as provided below. This Term Sheet is proffered in the nature of a settlement proposal infurtherance of settlement discussions, and is entitled to protection from any use or disclosure toany party or person pursuant to Federal Rule of Evidence 408 and any other rule of similar import.THIS SETTLEMENT TERM SHEET SHALL BE A BINDING AGREEMENT ON THEPARTIES UPON EXECUTION BY AND THROUGH UNDERSIGNED COUNSEL, SUBJECTTO ANY NECESSARY COURT APPROVALS.Parties:Debtors:-All Debtors.Settling Parties:1Thomas ClarkeAna ClarkeKenneth McCoyJason McCoyCharles EbetinoDavid Fortner,Robert McAtee,Michael Zervos,Bay Point Capital Partners LPMission Coal Financing, LLCENCECo Inc.Iron Management, LLC,Iron Management II, LLC,Iron Management III, LLC,Iron Management IV, LLC,Iron Management V, LLC,Iron Group, Inc.,Lara Natural Resources, LLCBlue Ridge Natural Mineral Resources, LLCMerida Natural Reserves, LLCCoking Coal Leasing, LLCERP Environmental Fund, Inc.Terms used but not defined herein have the meaning ascribed to them in the First Amended Joint Chapter 11Plan of Mission Coal Company, LLC and Certain of its Debtor Affiliates [Docket No. 771] (as amended andsupplemented from time to time, the “Plan”).Case 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 6 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEWSettlement Considerationfrom Settling Parties otherthan Bay Point CapitalPartners, LP:-ERP Federal Mining Complex, LLCERP Mineral Reserves, LLCERP Compliant Fuels, LLCERP Compliant Coke, LLCERP Steel Works, LLCERP Aviation, LLCKing Aire, Inc.Cedar Creek Aviation, LLCMonterey Coal Resources, LLCVirginia Conservation Legacy Fund, Inc.VCLF Land Trust, Inc. Cash consideration payable on the Plan Effective Date of 9 million, to be distributed pursuant to the terms of the Plan. A note in the amount of 1 million, to be issued by Thomas Clarkeon the Plan Effective Date, payable to the Reorganized Debtors inequal quarterly installments commencing on the last day of thecalendar quarter following the Plan Effective Date and terminatingon the third anniversary of the Plan Effective Date (the “ClarkeNote”).2 The Clarke Note shall bear interest payable in cash andaccruing at a 5% rate. The documentation evidencing the ClarkeNote shall be consistent with the above terms, and shall otherwisebe in form and substance reasonably satisfactory to the Debtors. On the Plan Effective Date, Thomas Clarke, and Kenneth McCoyand Jason McCoy collectively, shall each enter into certainassumption agreements assuming the Debtors’ liability on accountof certain Allowed Priority Tax Claims, as outlined below (the“Assumption Agreements”).3 The Assumption Agreements shallbe consistent with the terms below, and shall otherwise be in formand substance satisfactory to the Debtors and the Required DIPLenders.o23The Clarke Assumption Agreement. Assumption of certainAllowed Priority Tax Claims by Thomas Clarke in anamount equal to the lesser of (a) 50% of the amount ofAllowed Priority Tax Claims and (b) 6 million (theWithin five days of filing this Term Sheet with the Bankruptcy Court, Thomas Clarke shall meet and conferwith the Debtors and the Required DIP Lenders in good faith to provide an appropriate level of financialdisclosure for the Debtors and the Required DIP Lenders to ascertain his ability s to comply with hisobligations under the Clarke Note. The settlement shall be subject to the Debtors satisfaction of ThomasClarke’s financial wherewithal, to be determined by the Debtors’ sole discretion (in consultation with theRequired DIP Lenders).Within five days of filing this Term Sheet with the Bankruptcy Court, Thomas Clarke, Kenneth McCoy, andJason McCoy, respectively, shall meet and confer with the Debtors and the Required DIP Lenders in goodfaith to provide an appropriate level of financial disclosure for the Debtors and the Required DIP Lenders toascertain the ability of such individuals to comply with their obligations under the Assumptions Agreements.The settlement shall be subject to the Debtors satisfaction of such parties’ financial wherewithal, to bedetermined in the Debtors’ sole discretion (in consultation with the Required DIP Lenders).Case 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 7 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEW“Clarke Assumption Agreement”). The liabilities assumedpursuant to the Clarke Assumption Agreement shall bepayable to the applicable taxing authorities in equalquarterly instalments, commencing on the last day of thecalendar quarter following the Plan Effective Date andterminating on the fifth anniversary of the Plan EffectiveDate, with interest to accrue at the Federal Judgment Rateof interest for the week ending 3/1/19 (2.59%). TheDebtors shall be forever released and absolved from anyAllowed Priority Tax Claims assumed pursuant to theClarke Assumption Agreement. In the event of a paymentdefault by Thomas Clarke under the Clarke AssumptionAgreement (after giving effect to all applicable graceperiods), the Internal Revenue Service, the AlabamaDepartment of Revenue, and the West Virginia State TaxDepartment shall have the right to pursue Thomas Clarkedirectly and personally for any Allowed Priority TaxClaims assumed by Thomas Clarke hereunder. For theavoidance of doubt, under the Clarke AssumptionAgreement, Thomas Clarke shall not be liable for, pay for,fund, finance, or assume any trust fund tax obligationsincluded in the Allowed Priority Tax Claims.The McCoy Assumption Agreement. Assumption of certainAllowed Priority Tax Claims by Kenneth McCoy and JasonMcCoy in an amount equal to the lesser of (a) 50% of theamount of Allowed Priority Tax Claims and (b) 6 million(the “McCoy Assumption Agreement”, and together withthe Clarke Assumption Agreement, the “AssumptionAgreements”). The liabilities assumed pursuant to theMcCoy Assumption Agreement shall be payable to theapplicable taxing authorities in equal quarterly instalments,commencing on the last day of the calendar quarterfollowing the Plan Effective Date and terminating on thefifth anniversary of the Plan Effective Date, with interest toaccrue at the Federal Judgment Rate of interest for the weekending 3/1/19 (2.59%). The Debtors shall be foreverreleased and absolved from any Allowed Priority TaxClaims assumed pursuant to the McCoy AssumptionAgreement. In the event of a payment default by KennethMcCoy or Jason McCoy under the McCoy AssumptionAgreement (after giving effect to all applicable graceperiods), the Internal Revenue Service, the AlabamaDepartment of Revenue, and the West Virginia State TaxDepartment shall have the right to pursue Kenneth McCoyand Jason McCoy directly and personally for any AllowedPriority Tax Claims assumed by Kenneth McCoy and JasonMcCoy hereunder. Kenneth McCoy and Jason McCoyshall be jointly and severally liable with respect to any andCase 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 8 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEWall of their obligations under the McCoy AssumptionAgreements.oThe Assumptions Agreements shall be included as part ofthe Plan Supplement.oPayment terms under the Assumption Agreements shallinclude a 60-day grace period to cure any defaultsthereunder and the option to prepay full amount at any timeto taxing authorities without penalty. The MCF Note and all claims related thereto shall be cancelled,deemed surrendered as to the Debtors, and the Debtors shall haveno further liabilities or obligations thereunder, on the Plan EffectiveDate; provided, that, in lieu of cancellation, the Settling Parties may(a) direct that the MCF Note be satisfied (as opposed to released) inexchange for the releases provided hereby or (b) provide for theassumption of the MCF Note from the Debtors to another entity notaffiliated with the Debtors; provided, that the satisfaction and/orassumption of the MCF Note shall not in any manner participate inany distributions from the Debtors or their estates to unsecuredcreditors or otherwise. Assignment to the Reorganized Debtors by ERP Federal MiningComplex, LLC of all proceeds from the sale of real property owned.Settlement Considerationfrom Bay Point CapitalPartners, LP Cash consideration payable on the Plan Effective Date of 6 million, to be distributed pursuant to the terms of the Plan. Thispayment includes advancing the 4 million “holdback” under theCCL Lease.Settlement Considerationfrom Debtors The Settling Parties (other than Bay Point) shall direct the Debtorsto provide such treatment of the ERP Federal Note and the ERPMineral Note as may be reasonable and appropriate to mitigate taxexposure to such Settling Parties, including by providing for theassignment, release or transfer of any such notes on termsreasonably acceptable to such Settling Parties. The Debtors shall assume and assign to the purchaser of the OakGrove Mining Complex (as a true lease) the CCL Lease with thefollowing modifications: (a) the total amount owing under the CCLLease shall be adjusted by 341,823.17 to account for the 4 millionpurchase price holdback when the CCL Lease was consummated,(b) no payments shall be due in respect of the CCL Lease until the15th of the month following the Plan Effective Date, (c) the term ofthe CCL Lease shall run for a period of 43 months from the monthfollowing the Plan Effective Date, and (d) the monthly payments inrespect of the CCL Lease shall be adjusted to reflect (i) the advanceof the 4 million holdback, (ii) the revised maturity of the CCLLease, and (iii) a rate of return of 10% per annum (reduced from aCase 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 9 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEW15% per annum rate of return originally contemplated). Themonthly payments under the assumed and assigned CCL Lease areset forth on Exhibit B to this term sheet.4Releases4 The Settling Parties and Released Parties under the Settlement shallbe deemed “Released Parties” and “Releasing Parties” pursuant toand as defined in the Plan. Further, the Plan shall be modified asdeemed necessary by the Settling Parties and the Released Partiesto make clear that the release granted by the Debtors to the SettlingParties and the Released Parties under the Plan shall be a generalrelease of Claims (but solely as they related to Claims held by orthat belong to the Debtors) and shall include all Claims of any kindor nature whatsoever (whether in tort or contract, or equity or law)arising before the Plan Effective Date (but solely as they relate toClaims held by or that belong to the Debtors), including, withoutlimitation, (a) any and all Claims related to any and all transfers offunds by and between the Debtors and any Released Party,including Avoidance Actions, (b) all “D&O claims,” includingclaims for breach of fiduciary duty and corporate waste, (c) any andall Claims related to or arising from allegations of fraud or anyactual, willful misconduct and/or gross negligence, (d) any and allClaims asserted in the proposed complaint attach to the “standingmotion” filed by the Committee and (e) all claims asserted againstthe Released Parties in the Cliffs Litigation that belong to theDebtors. Notwithstanding the foregoing (and for the avoidance of doubt),nothing in this Term Sheet, the Settlement or the Plan (including thereleases set forth therein) shall release (a) any Claims, rights orobligations as between or among the Settling Parties and/or theReleased Parties, (b) any rights of the Settling Parties and ReleasedParties under the Plan or the Settlement, (c) except as expresslymodified by this Settlement, any rights of CCL or Bay Point underthe CCL Lease, including, without limitation, the right to file UCC1 financing statements on and after the Plan Effective Date, (d)except as expressly modified by this Settlement, any rights of BayPoint under the Loan and Security Agreement between CCL, asborrower, and Bay Point, as lender, dated as of May 21, 2018, andany other Loan Documents (as defined in such Loan and SecurityAgreement), except to the extent any such rights could be assertedat any time against the Debtors or the Reorganized Debtors, whichrights shall be forever released pursuant to this Term Sheet, theSettlement, and the Plan, and (e) any rights of third parties that haveproperly opted out of the releases in the Plan. For the avoidance ofdoubt, none of the rights of any Settling Party shall be exercised ina manner that will interfere with the Debtors’ sale of any or all ofThe information on Exhibit B for the time period before May 15, 2019 is for informational purposes only insupport of the recalculated monthly payments.Case 18-04177-TOM11Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 10 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEWtheir assets as part of the chapter 11 process, or the rights of anypurchaser thereof.Defined Terms:Case 18-04177-TOM11 In addition to being “Releasing Parties” pursuant to and as definedin the Plan, on the Plan Effective Date, the Settling Parties shallrelease, except as provided herein, all Claims asserted or filedagainst the Debtors in their Chapter 11 Cases, including anyasserted priority or administrative expense Claims. The release of the Debtors set forth herein shall not affect anydefenses of the Settling Parties against any person or any applicableinsurance policies in favor of the Released Parties. “Allowed Priority Tax Claims” means: the final Allowed PriorityClaims for prepetition Federal Excise Tax, Alabama SeveranceTax, Alabama Sales & Use Tax, West Virginia Severance Tax, andWest Virginia Sales & Use Tax. “Filed Priority Tax Claims” means: all proofs of claim asserting aPriority Claim for Federal Excise Tax, Alabama Severance Tax,Alabama Sales & Use Tax, West Virginia Severance Tax, and WestVirginia Sales & Use Tax. “Bankruptcy Court” means the United States Bankruptcy Court forthe Northern District of Alabama, Southern Division or such othercourt having jurisdiction over the Chapter 11 Cases, including tothe extent of the withdrawal of reference under 28 U.S.C. § 157, theUnited States District Court for the Northern District of Alabama. “CCL” means Coking Coal Leasing, LLC. “CCL Lease” means the Master Equipment Lease Agreement datedas of May 21, 2018 by and between CCL and Oak Grove Resources,LLC with respect to certain shields. “Chapter 11 Cases” means the chapter 11 cases jointlyadministered under Case No. 18-04177-TOM11, before theBankruptcy Court. “Cliffs Litigation” means the following matters:oThe United States District Court for the District ofDelaware matter styled Cliffs Natural Resources Inc., et al.v. Seneca Coal Resources, LLC, et al., Case No. 17-00567;oThe Third Circuit appeal styled Cliffs Natural ResourcesInc., et al. v. Seneca Coal Resources, LLC, et al., Case No.18-02041;Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 11 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEWCase 18-04177-TOM11oThe Delaware Superior Court matter styled ClevelandCliffs Inc. f/k/a Cliffs Natural Resources Inc., et al. v.Seneca Coal Resources, LLC, et al., C.A. No. N18C-05058-CCLD; andoThe Delaware Court of Chancery matter styled ClevelandCliffs Inc. f/k/a Cliffs Natural Resources Inc., et al. v.Seneca Coal Resources, LLC, et al., C.A. No. 2018-0478SG. “Debtors” means Mission Coal Company, LLC; Beard Pinnacle,LLC; Oak Grove Land Company, LLC; Oak Grove Resources,LLC; Pinnacle Land Company, LLC; Pinnacle Mining Company,LLC; Seminole Alabama Mining Complex, LLC; Seminole CoalResources, LLC; Seminole West Virginia Mining Complex, LLC;Seneca Coal Resources, LLC; and Seneca North American Coal,LLC. “ERP Federal Note” means that certain promissory note dated asof December 31, 2016 issued by ERP Federal Mining Complex,LLC to Seminole Coal Resources, LLC and Seneca Coal Resources,LLC in an amount of up to 21,500,000. “ERP Minerals Note” means that certain promissory note dated asof June 30, 2017 issued by ERP Mineral Reserves, LLC to SeminoleCoal Resources, LLC and Seneca Coal Resources, LLC in anamount of up to 11,805,000 “IRS” means the Internal Revenue Service. “MCF Note” means the second lien note issued by MCF to theDebtors. “Oak Grove” means Oak Grove Land Company, LLC and OakGrove Resources, LLC “Plan” means the Debtors’ chapter 11 plan of reorganization,including all exhibits, supplements (including the PlanSupplement), appendices, and schedules, as may be altered,amended, modified, or supplemented from time to time inaccordance with the terms hereof. For the avoidance of doubt, theSettling Parties shall have no obligation to support the Plan if theDebtors alter the Plan in any manner inconsistent with this TermSheet. “Taxing Authorities” means the Internal Revenue Service and/orapplicable state tax agencies owed priority taxes including WestVirginia State Tax Department and the Alabama Department ofRevenue.Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 12 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEWOther ProvisionsCase 18-04177-TOM11 The Debtors shall file a revised Plan consistent with andincorporating the terms of the Settlement and shall seek approval ofthe Settlement through such Plan. Three days prior to the Confirmation Hearing, the Settling Partiesshall produce to the Debtors and the Required DIP Lendersdocuments demonstrating the existence of 9 million cashconsideration payable on the Plan Effective Date, which shallconsist of 2.5 million to be funded by Thomas Clarke, 2.5 millionto be funded by Kenneth McCoy and 4 million to be funded byBay Point. The documents that Bay Point will produce inconnection with this provision (“Proof of Payment”) shall constituteBay Point’s trade secrets, as well as confidential and proprietycommercial information. Proof of Payment shall not be providedto any party other than the Settling Parties and the advisors to theCommittee and the Required DIP Lenders without Bay Point’swritten consent. Three days prior to the Confirmation Hearing, Kenneth and JasonMcCoy shall provide evidence to the Debtors and the Required DIPLenders of the existence of 6 million of the remaining cashconsideration payable on the Plan Effective Date. Findings of fact/conclusions of law in confirmation order shallinclude:oSettlement is approved and has been entered into in goodfaith.oThe Releases are deemed to be for reasonably equivalentvalue and not subject to avoidance in any mannerwhatsoever.oPrepetition First Lien Loan from the First Lien Lenders wasdeemed paid in full and satisfied by the DIP Facility.oThe Claims asserted in the Cliffs Litigation are herebydetermined to be property of the estate and existing planinjunctions prohibit Cliffs from pursuing anything relatedto such Claims against the Released Parties. Plan to include a channeling injunction prohibiting applicabletaxing authorities from pursuing claims against individuals whilepayments under the Assumption Agreements are not in default,including within the 60-day grace period to cure any defaults. Plan to provide that Allowed Priority Tax Claims shall be paidpursuant to the terms of the Assumption Agreements filed with thePlan Supplement.Doc 1121 Filed 03/27/19 Entered 03/27/19 22:51:12Main DocumentPage 13 of 28Desc
CONFIDENTIAL AND SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCEDRAFT - SUBJECT TO FURTHER REVIEW The Settling Parties (other than Bay Point) shall (a) vote each oftheir Claims, if any, to accept the Plan, and support confirmationand consummation of the Plan, (b) not opt out of the releasesprovided for in the Plan. The Settling Parties shall not change,withdraw, amend, or revoke (or cause to be changed, withdrawn,amended, or revoked) such ballot(s) to accept the Plan. In addition to the Debtors’ rights to objection to Filed Priority TaxClaims, the Plan shall provide that Thomas Clarke, Jason McCoy,and Ken McCoy have standing and the right to object to all FiledPriority Tax Claims, and that notwithstanding
- ERP Federal Mining Complex, LLC - ERP Mineral Reserves, LLC - ERP Compliant Fuels, LLC - ERP Compliant Coke, LLC - ERP Steel Works, LLC - ERP Aviation, LLC - King Aire, Inc. - Cedar Creek Aviation, LLC - Monterey Coal Resources, LLC - Virginia Conservation Legacy Fund, Inc. - VCLF Land Trust, Inc. Settlement Consideration from Settling .
