Document:

Exhibit

Exhibit 10.11

STIPULATION REGARDING WATER TREATMENT OBLIGATIONS
THIS STIPULATION (as it may be amended or modified from time to time, this “Stipulation”) is made and entered into as of July 12, 2016, by and among: (a) Alpha Natural Resources, Inc. (“ANR”), on behalf of itself and its debtor-affiliates (collectively with ANR, the “Debtors” or, when used in reference to such Debtors on or after the Effective Date (as defined herein), the “Reorganized Debtors”); (b) Contura Energy, Inc. (the “Purchaser”); (c) Citicorp North America, Inc. (the “First Lien Agent”); and (d) the United States Environmental Protection Agency (“EPA” and, collectively with the Debtors, the Purchaser and the First Lien Agent, the “Parties”).
WHEREAS, on August 3, 2015, the Debtors each filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”), which cases are being jointly administered under case number 15-33896 (KRH) (collectively, the “Chapter 11 Cases”);
WHEREAS, on May 25, 2016, the Debtors filed the Second Amended Joint Plan of Reorganization of Debtors and Debtors in Possession in the Chapter 11 Cases (as it may be modified, supplemented or amended, the “Plan”), the solicitation version of which is attached as Exhibit A to the Notice of Filing of Solicitation Versions of (A) Second Amended Joint Plan of Reorganization and (B) Related Second Amended Disclosure Statement (Docket No. 2594);
WHEREAS, on March 5, 2014, the United States of America, on behalf of EPA, and several states (collectively the “Government Plaintiffs”) filed Civil Action No. 2:14-cv-11609 (the “EPA Action”) in the United States District Court for the Southern District of West Virginia (the “West Virginia Court”) alleging that ANR and various subsidiaries (collectively, the “Complaint Debtors”) violated Sections 301 and 402 of the Federal Clean Water Act, 33 U.S.C. §§ 1311 and 1342 (the “Clean Water Act”), and analogous state provisions by discharging pollutants in violation of various of the Complaint Debtors’ National Pollutant Discharge Elimination System (“NPDES”) permits or without obtaining NPDES permits.
WHEREAS, on November 26, 2014, the West Virginia Court approved a consent decree (the “EPA Consent Decree”) between the Government Plaintiffs, and the Complaint Debtors and certain additional Debtors (collectively, the “Signatory Debtors”) resolving the EPA Action.
WHEREAS, the EPA Consent Decree applies to the Signatory Debtors’ Facilities and Future Facilities (as such terms are defined in the EPA Consent Decree) located in Kentucky, Pennsylvania, Tennessee, Virginia and West Virginia.
WHEREAS, pursuant the EPA Consent Decree, including the appendices attached thereto, may be modified only by a subsequent written agreement signed by all parties 

    

thereto. Where the modification constitutes a material change to the EPA Consent Decree, the modification shall be effective only upon approval by the West Virginia Court.
WHEREAS, the Debtors are parties to a transaction (the “Sale Transaction”) pursuant to that certain Asset Purchase Agreement (including all schedules and exhibits associated therewith) with the Purchaser and attached as Exhibit I.A.250 to the Plan to be entered into on or prior to the Effective Date (as defined in the Plan) providing for (a) the sale of certain of the Debtors’ assets (collectively, the “Purchased Assets”) to the Purchaser, (b) the assumption of certain of the Debtors’ liabilities by the Purchaser, (c) the transfer to the Purchaser of certain permits and (d) certain transactions necessary to effectuate the foregoing;
WHEREAS, the Debtors intend that the Reorganized Debtors will retain substantially all of the Debtors’ coal mining assets that are not sold pursuant to the Sale Transaction (collectively, the “Retained Assets”);
WHEREAS, contemporaneously herewith, the Debtors and the Purchaser have entered into: (a) that certain Reclamation Funding Agreement (the “Reclamation Funding Agreement”) with the applicable regulatory authorities (collectively, the “Regulatory Authorities”) for each of the states where the Reorganized Debtors will have Retained Assets following the Effective Date (collectively, the “States”) providing for, and allocating among the Regulatory Authorities, certain funds from the Purchaser and the Reorganized Debtors to support the Reorganized Debtors’ performance of their reclamation obligations; and (b) separate settlement agreements (collectively, the “State Settlement Agreements”) with each of the Regulatory Authorities to define the terms and framework for accomplishing mine land reclamation and associated environmental restoration in their respective states in accordance with the Surface Mining Control and Reclamation Act of 1977, as amended, 30 U.S.C. §§ 1201, et seq., its state analogues and other applicable mining and environmental related statutes and regulations;
WHEREAS, the State Settlement Agreement with respect to the State of Tennessee contemplates that, following the Effective Date, the Reorganized Debtors shall work in good faith with the United States Department of the Interior, Office of Surface Mining, Reclamation and Enforcement, in its capacity as the regulatory authority over surface mining operations in the State of Tennessee to establish a water treatment trust (the “Tennessee Water Treatment Trust”) to fund the performance of the Reorganized Debtors’ water treatment obligations in the State;
WHEREAS, the Parties desire to enter into this Stipulation to define the framework and funding for the fulfillment of the Reorganized Debtors’ and the Purchaser’s obligations under the EPA Consent Decree;
WHEREAS, the terms of this Stipulation are incorporated into the Plan, and the Parties intend that this Stipulation shall be subject to approval by the Bankruptcy Court in connection with confirmation of the Plan;

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NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the Parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan.
2. Assumption of Consent Decree Obligations
(a) The Reorganized Debtors shall assume their obligations under the EPA Consent Decree with respect to all of the Retained Assets. Notwithstanding anything to contrary herein, the Debtors shall continue to pay all stipulated penalties accruing under the EPA Consent Decree from August 3, 2015 through the Effective Date for both the Retained Assets and Purchased Assets. After the Effective Date, (a) the Reorganized Debtors shall pay all stipulated penalties accruing with respect to the Retained Assets and (b) the Purchaser shall pay all stipulated penalties accruing pursuant to subparagraph (b) hereof.
(b) The Advanced Water Treatment obligations at the Cumberland and Emerald mines will pass to one or more subsidiaries of the Purchaser, and such subsidiaries will comply with all Consent Decree obligations except for those set forth in Section V (Civil Penalty), Section VII (Injunctive Relief), Section VIII (Selenium Injunctive Relief), Paragraph 97(a)-(d) & (h), Paragraph 98, Paragraphs 116-118 and Appendices A and B. Such subsidiaries will agree to a modification of Paragraph 161 to provide that they may serve a request for termination of the Consent Decree only after completing the requirements of Section IX (Osmotic Pressure Injunctive Relief) and thereafter maintaining consistent satisfactory compliance with the Consent Decree for a period of two years.
(c) The Debtors will continue to cooperate and work in good faith with EPA to develop appropriate modification language with respect to the assumption of obligations under the Consent Decree by the Reorganized Debtors and the Purchaser, as applicable.
(d) Nothing herein shall relieve the Debtors of their obligation to ensure that the Advanced Water Treatment requirements at the Cumberland and Emerald mines are implemented unless and until a modification of the EPA Consent Decree is entered by the West Virginia Court providing for assumption of those obligations by the Purchaser.
3. Funding of the Reorganized Debtors’ Water Treatment Obligations
(a) The Reorganized Debtors will provide EPA and the Regulatory Authorities for the states in which their water treatment occurs (i) an annual summary of the expenditures on their water treatment for the previous year, (ii) an explanation of any material deviance (greater than 20%) in such expenditures from the prior year and (iii) a certification of a senior executive officer that an amount sufficient to cover the water treatment costs expected to occur in the following year has been included in the budget for that year. In addition, the Reorganized Debtors will provide EPA with copies of any 

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budgets delivered to the Regulatory Authorities in accordance with the terms of the State Settlement Agreements.
(b) The First Lien Lender Contribution
(i) On the Effective Date, the Reorganized Debtors, with the consent of the First Lien Lenders, shall pay from the First Lien Lenders’ collateral an additional $5 million (which otherwise would have been part of the First Lien Lender Distribution) to support the Reorganized Debtors’ compliance with their water treatment obligations (the “First Lien Lender Contribution”).
(ii) The First Lien Lender Contribution will be allocated equally among the States to be used for water treatment and other approved projects to improve water quality.
(iii) On or prior to the Effective Date, the Reorganized Debtors shall create either of the following accounts (in either case, a “Water Treatment Restricted Cash Account”) with respect to each State to receive such State’s share of the First Lien Lender Contribution: (i) a segregated subaccount within the each State’s Restricted Cash Reclamation Account (as defined in the applicable State Settlement Agreement); or (ii) a separate segregated restricted cash account.
(c) The Reorganized Debtor Contribution
(i) The Reorganized Debtors shall contribute $15 million into the Water Treatment Restricted Cash Accounts from 2017 through 2023 (the “Reorganized Debtor Contribution”) to fund compliance with their water treatment obligations.
(ii) The Reorganized Debtor Contribution shall be paid in the following annual total amounts in equal quarterly installments on the first day of each calendar quarter beginning on July 1, 2017:

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	YEAR
	PAYMENT DATES
	AGGREGATE ANNUAL PAYMENT AMOUNT

	2017
	July 1, October 1
	$1,000,000

	2018
	January 1, April 1, July 1, October 1
	$1,500,000

	2019
	January 1, April 1, July 1, October 1
	$2,500,000

	2020
	January 1, April 1, July 1, October 1
	$2,500,000

	2021
	January 1, April 1, July 1, October 1
	$2,500,000

	2022
	January 1, April 1, July 1, October 1
	$2,500,000

	2023
	January 1, April 1, July 1, October 1
	$2,500,000

	Total
	 
	$15,000,000

(iii) The Reorganized Debtor Contribution for 2017 shall be divided equally among the States. Thereafter, (x) Reorganized Debtors shall provide twenty percent of the Aggregate Annual Payment Amount to the Tennessee Water Treatment Trust until such requirement is terminated pursuant to subparagraph (iv) below, and (y) the remainder of the annual Reorganized Debtors Contribution shall be divided among the other states according to the percentage of actual expenditures on water treatment in each State in the prior year; provided that, each state shall receive a minimum of at least $25,000 each year. The Reorganized Debtors will track their spending on water treatment in each State and submit a report to the applicable Regulatory Authority and EPA by September 30 of each year detailing such expenditures for the period from July 1 to June 30 of the previous year. The foregoing provision shall be included in the Reclamation Funding Agreement.
(iv) Once the Tennessee Water Treatment Trust has been fully funded in accordance with its terms, subsequent Reorganized Debtor Contribution amounts shall be allocated among the other States in accordance with Section 3(c)(iii)(y) hereof.
(d) The Reorganized Debtors will cooperate and work in good faith with each Regulatory Authority to develop the minimum balance (the “Minimum Balance”) that will be maintained in the Water Treatment Restricted Cash Account for that State. The Minimum Balance may be adjusted by agreement between the Reorganized Debtors and the applicable Regulatory Authority on an annual basis; provided that, nothing herein requires the Reorganized Debtors to designate more than $1,000,000 as the aggregate amount of Minimum Balances among the Water Treatment Restricted Cash Accounts in 2016. The Reorganized Debtors shall provide EPA with a copy of the written agreement that establishes the Minimum Balance for each State.
(e) Funds in the Water Treatment Restricted Cash Accounts that are in excess of the Minimum Balance established for that account may be utilized to pay for water 

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treatment expenses, water treatment system installations and reclamation activities that benefit water quality. The use of funds for water treatment expenses, including, without limitation, funds expended on chemicals, utilities, pond cleaning and maintenance of structures and systems, shall be included in the Semi-Annual Budget (as defined in the State Settlement Agreements) provided to the Regulatory Authority and EPA but shall not require the prior approval of the applicable Regulatory Agency or EPA. Any use of funds to install water treatment systems or to conduct reclamation activities that will benefit water quality shall be subject to the budgeting and approval provisions of the Reclamation Funding Agreement. EPA and the applicable Regulatory Authority shall have the right to audit all expenditures from the Water Treatment Restricted Cash Accounts.
(f) For the avoidance of doubt, the funding to be provided to the Water Treatment Restricted Cash Accounts pursuant to this Stipulation or to the Restricted Cash Reclamation Accounts (as defined in the Reclamation Funding Agreement) pursuant to the Reclamation Funding Agreement shall be used solely to fund the Reorganized Debtors’ obligations thereunder and shall not be used to assist or subsidize the Purchaser’s compliance with the EPA Consent Decree.
(g) The Reorganized Debtors hereby acknowledge their obligation to conduct water treatment and otherwise fully comply with applicable NPDES Permits, the Clean Water Act, and analogous state provisions with respect to the Retained Assets, without any limitation relating to the dollar amounts included in or required to be deposited by this Stipulation.
4. Releases.
(a) EPA agrees that, as of the Effective Date:
(i) EPA shall and does hereby release the Debtors’ directors, officers and employees and the First Lien Lenders, the First Lien Agent, the DIP Lenders, the DIP Agent and any affiliate of any of the foregoing and their respective directors, officers and employees for any civil claims, violations or conditions under the Clean Water Act relating to the Debtors’ assets and operations arising prior to the Effective Date, provided, however, that nothing in the foregoing shall release or affect the liability of (A) any director, officer or employee of the Reorganized Debtors for any claims or violations with respect to Retained Assets arising after the Effective Date, whether or not the conditions giving rise to such claims or violations arose prior to or after the Effective Date, or (B) any director, officer or employee of the Purchaser for any claims or violations with respect to the Purchased Assets arising after the Effective Date, whether or not the conditions giving rise to such claims or violations arose prior to or after the Effective Date.
(ii) EPA shall and does hereby release the Purchaser, all of its subsidiaries and their respective directors, officers and employees for (A) any civil claims, violations or conditions under the Clean Water Act relating to the Retained Assets arising prior to the 

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Effective Date and (B) any civil claims or violations under the Clean Water Act relating to the Purchased Assets arising prior to the Effective Date, provided, however, that nothing in the foregoing shall release or affect any liability or obligation of the Purchaser, any of its subsidiaries or any director, officer or employee thereof for any claims or violations with respect to the Purchased Assets under the Clean Water Act to which the Purchaser, its subsidiaries, or any director, officer, or employee thereof is subject to because the Purchaser or any of its subsidiaries is the owner, lessee, permittee, controller, or operator of real property or a mining operation after the Effective Date (whether or not such liability, obligation, claim or cause of action is based in whole or in part on acts or omissions prior to the Effective Date), and further provided that the Purchaser, its subsidiaries, or any director, officer, or employee thereof shall not be liable for penalties or fines for days of violation prior to the Effective Date. For avoidance of doubt, none of: (A) the relationships between the Reorganized Debtors and the Purchaser based on the post-Effective Date temporary exchange of administrative and other similar ministerial services and temporary ministerial collaboration between the Reorganized Debtors and the Purchaser, in each case solely to the extent necessary to effectuate the Sale Transaction; (B) the funding obligations of the Purchaser arising under the Reclamation Funding Agreement; or (C) the consummation of the Sale Transaction, shall be construed to classify or give any right to EPA to classify or treat the Purchaser or its subsidiaries or their respective shareholders, directors, officers or employees as an owner or controller of the Reorganized Debtors.
(iii) EPA shall and does hereby release the Reorganized Debtors and their directors, officers and employees for any civil claims, violations or conditions with respect to the Purchased Assets under the Clean Water Act, except to the extent that the Reorganized Debtors or their directors, officers, employees and agents are also employed by, or are otherwise the owner, lessee, permittee, controller, or operator of the Purchased Assets or the Purchaser after the Effective Date, and except as provided in Paragraph 2(d) herein. For avoidance of doubt, none of: (A) the relationships between the Reorganized Debtors and the Purchaser based on the post-Effective Date temporary exchange of administrative and other similar ministerial services and temporary ministerial collaboration between the Reorganized Debtors and the Purchaser, in each case solely to the extent necessary to effectuate the Sale Transaction; (B) the funding obligations of the Purchaser arising under the Reclamation Funding Agreement; and (C) the consummation of the Sale Transaction, shall be construed to classify or give any right to EPA to classify or treat the Reorganized Debtors or their subsidiaries or their respective shareholders, directors, officers or employees as an owner or controller of the Purchaser.
(b) The language attached hereto as Annex A shall be incorporated into the Plan and the order confirming the Plan (the “Confirmation Order”).
5. Events of Default.
(a) Each of the following (each, an “Event of Default”) shall constitute an event of default under this Stipulation:

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(i) The failure of the Reorganized Debtors, with the consent of the First Lien Lenders, to make the First Lien Lender Contribution within ten days after it is due in accordance with the terms of this Stipulation;
(ii) The failure of the Reorganized Debtors to timely contribute any Reorganized Debtor Contribution within ten days after the date that such contribution is due in accordance with the terms of this Stipulation;
(iii) The failure of the Reorganized Debtors or the Purchaser to timely comply with their obligations in accordance with EPA Consent Decree, and any modifications or amendments; and
(iv) The filing by the Reorganized Debtors of a voluntary petition for relief under the Bankruptcy Code, or the filing against the Reorganized Debtors of an involuntary petition that is not dismissed within 60 days.
(b) If an Event of Default occurs, EPA may provide notice to the Reorganized Debtors and the Purchaser of such Event of Default (the “Notice of Default”). The Reorganized Debtors and the Purchaser shall have until the date that is 30 days from the date of their receipt of the Notice of Default (the “Cure Deadline”) to cure any Event of Default arising pursuant to Section 5(a)(iii) hereof.
(c) Upon the occurrence of an Event of Default and, with respect to any Event of Default arising pursuant to Section 5(a)(iii) hereof, its continuation until after the Cure Deadline, EPA may:
(i) terminate this Stipulation;
(ii) deliver a notice of termination of the right to use cash in the Water Treatment Restricted Cash Accounts and require that all funds in such accounts be delivered to the applicable Regulatory Authority;
(iii) take any other regulatory or enforcement action permitted by law.
(d) EPA shall not be required upon the occurrence of an Event of Default to take any or all of the foregoing actions, and its failure to do so at any time shall not constitute a waiver on the part of EPA of any right to take any action upon the occurrence of any Event of Default.
(e) The termination of this Stipulation shall have no effect on the obligations of the Reorganized Debtors and the Purchaser hereunder or the obligations of the Reorganized Debtors and the Purchaser under the Reclamation Funding Agreement, or any of the releases granted under this Stipulation.
(f) Nothing in this Stipulation shall be deemed or construed to limit or otherwise affect the authority or ability of EPA to take regulatory action against the Reorganized Debtors with respect to any mines owned or operated by Reorganized Debtors after the 

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Effective Date, whether before, during, or after the occurrence of an Event of Default or in the absence of an Event of Default.
(g) Nothing in this Stipulation shall be deemed or construed to limit or otherwise affect the authority or ability of EPA to take regulatory action against the Purchaser with respect to any mines owned or operated by the Purchaser after the Effective Date, whether before, during, or after the occurrence of an Event of Default or in the absence of an Event of Default.
(h) An Event of Default by the Reorganized Debtors of the type described in Section 5(a)(ii) through (iv) shall not be construed to require the Purchaser to cure such defaults or otherwise make the Purchaser liable for such defaults. Similarly, an Event of Default by the Purchaser of the type described in Section 5(a)(iii) hereof shall not be construed to require the Reorganized Debtors to cure such default or otherwise make the Reorganized Debtors liable for such default.
6. Conditions to Effectiveness. The following shall be conditions to the effectiveness of this Stipulation:
(a) This Stipulation shall have been approved by the Bankruptcy Court; 
(b) The Plan, as it may be amended consistent with the terms of this Stipulation, shall be confirmed on or before July 15, 2016;
(c) The Effective Date shall occur on or before July 31, 2016;
7. Stipulation and the Plan. This Stipulation shall be incorporated by reference into the Confirmation Order. To the extent this Stipulation conflicts or is otherwise inconsistent with the terms of the Plan or the Confirmation Order, the Stipulation shall govern.
8. Third Party Beneficiaries. The Parties acknowledge and agree that nothing in this Stipulation is intended to benefit or create any right or cause of action in, or on behalf of, any person other than the Parties hereto (and their affiliated persons and entities who are intended to be beneficiaries of the releases and settlements set forth herein).
9. Successors and Assigns. The provisions of this Stipulation shall be binding on the Parties and their successors and assigns, including any trustee appointed under the Bankruptcy Code and shall inure to the benefit of the Parties and their successors and assigns.
10. Entire Agreement. This Stipulation, together with all documents and other agreements referenced herein, including the EPA Consent Decree, constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof, and there are no representations, understandings, or agreements relative hereto which are not fully expressed herein or therein.

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11. Governing Law. This Stipulation shall be governed by and construed under federal law without regard for the conflicts of laws provisions thereof.
12. Authority and Validity. Each non-governmental Party otherwise represents, warrants and acknowledges, as of the Effective Date and, in the case of the Debtors, subject to approval by the Bankruptcy Court, that: (a) it has all the requisite authority (i) to execute and deliver this Stipulation and the other documents and instruments contemplated hereby, to which it is contemplated to be a party, (ii) to perform its obligations under this Stipulation and the other documents and instruments contemplated hereby to which it is contemplated to be a party and (iii) to consummate the transactions contemplated herein and therein; (b) such Party’s execution and delivery of, and performance under, this Stipulation and the other documents and instruments contemplated hereby to which it is contemplated to be a party and the consummation of the transactions contemplated herein and therein have been duly authorized by all necessary action, and no other action or proceeding is necessary to authorize and approve this Stipulation or the other documents and instruments contemplated hereby to which it is contemplated to be a party or any of the transactions contemplated herein or therein; (c) this Stipulation has been duly executed and delivered by such Party and constitutes a legal, valid and binding agreement by it, enforceable against it in accordance with the terms of this Stipulation; and (d) the execution, delivery and performance by such Party (when such performance is due) of this Stipulation does not and shall not (i) violate any provision of law, rule or regulation applicable to it or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it is a party. With respect to EPA, the undersigned represents and warrants that he/she has authority to enter into this Settlement Agreement.
13. No Reliance. Each Party represents and warrants that in entering into this Stipulation it is relying on its own judgment, belief and knowledge and, as applicable, on that of any attorney it has retained to represent it in this matter. In entering into this Stipulation, no Party is relying on any representation or statement made by any other Party or any person representing such other Party.
14. Modification or Amendment. This Stipulation may be modified or amended only by written agreement executed by each of the Parties and, with regards to any provision impacting the First Lien Lenders and the First Lien Agent, the written consent of the First Lien Lenders or the First Lien Agent, as applicable.
15. Further Assurances. From and after the Effective Date, each of the Parties agrees to use their respective commercially reasonable efforts to execute or cause to be executed and deliver or cause to be delivered all such agreements, instruments and documents and take or cause to be taken all such further actions as may reasonably be necessary from time to time to carry out the intent and purpose of this Stipulation and to consummate the transactions contemplated hereby and thereby.
16. Construction. This Stipulation has been drafted through a cooperative effort of all Parties, and none of the Parties shall be considered the drafter of this Stipulation so as 

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to give rise to any presumption of convention regarding construction of this document. All terms of this Stipulation were negotiated at arms’-length, and this Stipulation was prepared and executed without fraud, duress, undue influence or coercion of any kind exerted by any of the Parties upon the other. In the event of any inconsistency between the terms of this Stipulation and the Plan, the terms of this Stipulation shall govern.
17. Headings. Titles and headings in this Stipulation are inserted for convenience of reference only and are not intended to affect the interpretation or construction of the Stipulation.
18. Execution in Counterpart. This Stipulation may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. All signatures of the Parties to this Stipulation may be transmitted by facsimile or by electronic mail, and such transmission will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces and will be binding upon such party.
19. Severability. If any provision of this Stipulation is determined to be prohibited or unenforceable, then such provision shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.
(Remainder of Page Intentionally Blank; Signatures to Follow)

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IN WITNESS WHEREOF, the Parties hereto have executed this Stipulation as of the date set forth above.
	
		
	ALPHA NATURAL RESOURCES, INC., 
on behalf of itself and its debtor-affiliates 

_________________________________
By:
Its:

	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

___________________________________
By:
Its:

	 
	 

	

CONTURA ENERGY, INC.

___________________________________
By:
Its:

	CITICORP NORTH AMERICA, INC.,
AS FIRST LIEN AGENT

___________________________________
By:
Its:

12Document

Exhibit 10.12

	
		
	JONES DAY 
North Point 
901 Lakeside Avenue 
Cleveland, Ohio 4414
Telephone:  (216) 586-3939 
Facsimile:  (216) 579-0212 
David G. Heiman (admitted pro hac vice) 
Carl E. Black (admitted pro hac vice) 
Thomas A. Wilson (admitted pro hac vice)
	HUNTON & WILLIAMS LLP 
Riverfront Plaza, East Tower 
951 East Byrd Street 
Richmond, Virginia 23219 
Telephone:  (804) 788-8200 
Facsimile:  (804) 788-8218 
Tyler P. Brown (VSB No. 28072) 
J.R. Smith (VSB No. 41913) 
Henry P. (Toby) Long, III (VSB No. 75134) 
Justin F. Paget (VSB No. 77949)

Attorneys for Debtors and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT 
FOR THE EASTERN DISTRICT OF VIRGINIA 
RICHMOND DIVISION
	
			
	

In re: 
Alpha Natural Resources, Inc., et al.,
DebtorsParty Two Name
	 
	Chapter 11 
 
Case No. 15-33896 (KRH) 
 
(Jointly Administered

STIPULATION AND AGREED ORDER AMONG THE DEBTORS, THE RETIREE COMMITTEE AND THE FIRST LIEN AGENT: (I) RESOLVING MOTION OF THE DEBTORS, PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE, FOR AN ORDER AUTHORIZING DEBTORS TO TERMINATE CERTAIN UNVESTED NON-PENSION BENEFITS; AND (II) GRANTING CERTAIN RELATED RELIEF
Alpha Natural Resources, Inc. ("ANR") and certain of its direct and indirect subsidiaries, as debtors and debtors in possession (collectively, the "Debtors"), the official committee of retired employees appointed in the above-captioned chapter 11 cases (the "Retiree Committee") and Citicorp North America, Inc. (the "First Lien Agent" and, collectively with the Debtors and the Retiree Committee, the "Parties"), as administrative and collateral agent under the Debtors' prepetition first lien secured credit facility (the "First Lien Credit Facility"), by and through each of their undersigned counsel, hereby enter into this stipulation and agreed order 

    

(this "Stipulation and Order") regarding the provision of non-pension benefits to the Debtors' non-union former employees and retirees as of the Effective Date, including, but not limited to, the Parties' resolution of the Motion of the Debtors, Pursuant to Section 363 of the Bankruptcy Code, For an Order Authorizing Debtors to Terminate Certain Unvested Non-Pension Benefits (Docket No. 797) (the "Retiree Benefit Motion").1

Recitals 
1.    On August 3, 2015 (the "Petition Date"), the Debtors commenced their reorganization cases (the "Bankruptcy Cases") by filing voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Virginia (the "Bankruptcy Court"). 
2.    By order of the Bankruptcy Court (Docket No. 129), the Bankruptcy Cases have been consolidated for procedural purposes only and are being jointly administered. 
3.    The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 
4.    On February 8, 2016, the Debtors filed the Debtors' Omnibus Motion for Entry of: (I) an Order Establishing Bidding and Sale Procedures for the Potential Sale of Certain Mining Properties and Related Assets; (II) One or More Orders Approving the Sale of Such Assets; (III) an Order Approving Settlements Related to Unencumbered Assets and the Pre-Petition Lenders' Diminution Claims; and (IV) an Order Approving Amendments to Certain Case Milestones in Connection with the DIP Credit Agreement (Docket No. 1464) (the "Sale Motion") 

		
	 
	Capitalized terms not otherwise defined herein have the meanings given to them in the Retiree Benefit Motion.

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seeking to commence a process for the sale of certain of their assets (collectively, the "Core Assets"). To facilitate this process, the lenders under the First Lien Credit Facility (collectively, the "First Lien Lenders") agreed to establish an entity (the "Stalking Horse Bidder" or "NewCo") to serve as a stalking horse bidder by credit bidding $500 million of the secured debt due the First Lien Lenders for the Core Assets. By an order entered on March 11, 2016 (Docket No. 1764), the Bankruptcy Court approved, among other things, (a) the procedures for the sale of the Core Assets subject to the Sale Motion and (b) the form of asset purchase agreement supporting the stalking horse bid made by the First Lien Lenders on behalf of the Stalking Horse Bidder (as such agreement may be modified, supplemented or amended, the "Stalking Horse APA").
5.    On March 7, 2016, the Debtors filed the Joint Plan of Reorganization of Debtors and Debtors in Possession (as it may be modified, supplemented or amended, the "Plan") and a related disclosure statement (Docket No. 1703). References herein to the Debtors shall include the reorganized Debtors following the effective date of the Plan (the "Effective Date"). 2
6.    As of the Petition Date, the Debtors provided certain non-pension benefits to the Debtors' non-union former employees and retirees and their eligible spouses, surviving spouses and eligible dependents (collectively, the "Non-Union Retirees"), including, without limitation: (a) the Non-Pension Retiree Benefits, as such term is defined in the Retiree Benefit Motion; and (b) the supplemental monthly subsidies to certain non-union retirees and spouses 

		
	 
	The First Lien Agent subsequently allocated $175 million of the stalking horse credit bid to the Debtors' interest in the Pennsylvania Land Resources natural gas business in the Marcellus Shale in southwestern Pennsylvania (the "PLR Assets"). See Docket No. 1809. Consistent with the Sale Motion and Sale Procedures Order, on April 12, 2016, the Debtors filed a motion (Docket No. 2055) seeking to designate an alternative stalking horse bidder with respect to the PLR Assets, which motion was granted by the Bankruptcy Court pursuant to an order (Docket No. 2237), entered on April 26, 2016. Accordingly, as of the date hereof, the Stalking Horse Bidder retains a credit bid in the amount of $325 million for the Core Assets other than the PLR Assets.

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who took part in the Voluntary Retirement Program (collectively, the "VRP Benefits" and collectively with the Non-Pension Retiree Benefits, the "Retiree Benefits"). 
7.    On November 3, 2015, the Debtors filed the Retiree Benefit Motion and the Declaration of Judy Tweed Hill (Docket No. 799) in support thereof requesting authority to terminate the Non-Pension Retiree Benefits in the ordinary course of business in accordance with the terms of the applicable governing documents. 
8.    The following responses were filed to the Retiree Benefit Motion (collectively, the "Responses"): 
		
	(a)
	the Response to Motion of the Debtors, Pursuant to Section 363 of the Bankruptcy Code, for an Order Authorizing Debtors to Terminate Certain Unvested Non-Pension Benefits (Docket No. 877) filed by Michael J. Quillen, et al. (collectively, the "Retiree Movants"); 

		
	(b)
	the Response to Motion of the Debtors, Pursuant to Section 363 of the Bankruptcy Code, for an Order Authorizing Debtors to Terminate Certain Unvested Non-Pension Benefits (Docket No. 879) filed by Harold Melton; 

		
	(c)
	the Objection to Motion of the Debtors, Pursuant to Section 363 of the Bankruptcy Code, for an Order Authorizing Debtors to Terminate Certain Unvested Non-Pension Benefits (Docket No. 880) filed by David Canterbury, et al.; 

		
	(d)
	The United Mine Workers of America’s (I) Response and Limited Objection to Debtors’ Motion to Terminate Certain Unvested Non-Pension Obligations; (II) Statement in Support of Motion for Continuance; and (III) Statement Regarding the Motion to Appoint Retiree Committee (Docket No. 907); 

		
	(e)
	the Response (Docket No. 914) filed by Donald E. Keener, Jr.; 

		
	(f)
	the Response (Docket No. 915) filed by Timothy M. Talley; 

		
	(g)
	the Response (Docket No. 916) filed by Randy Miller; 

		
	(h)
	the Response (Docket No. 928) filed by Roy West; and 

4
    

		
	(i)
	the Response (Docket No. 929) filed by Don Rey Reed. 

9.    On November 10, 2015, the Retiree Movants filed the Motion to Appoint Official Retiree Committee Pursuant to 11 U.S.C. § 1114 and Memorandum of Law in Support Thereof (Docket No. 868) (the "Retiree Committee Motion"). 
10.    By an order entered on November 19, 2015 (Docket No. 970) (the "Retiree Committee Appointment Order"), the Court granted the relief requested in the Retiree Committee Motion and directed the appointment of an official committee of retired employees in these chapter 11 cases pursuant to section 1114(d) of the Bankruptcy Code. 
11.    On December 1, 2015, the Office of the United States Trustee for Region Four filed a notice of its appointment of the Retiree Committee (Docket No. 1017). 
12.    Following the appointment, the Retiree Committee, with the assistance of its professionals, began to investigate the allegations made in the Motion, initiated discovery regarding the same and took up the cause delineated in the various Responses. 
13.    Thereafter, the Parties have negotiated in good faith regarding the Retiree Benefits and have agreed to a resolution of the Retiree Benefit Motion and certain other relief with respect to the Retiree Benefits as set forth herein. 
14.    The Retiree Committee is authorized to resolve the Retiree Benefit Motion on the terms set forth in, and to enter into, this Stipulation and Order with respect to the Retiree Benefits in accordance with the Retiree Committee Appointment Order and sections 1114(b)(2) and (d) of the Bankruptcy Code. Retiree Committee Appointment Order, at 2; see also 11 U.S.C. §§ 1114(b)(2), (d). 

5
    

Decretals
IT IS HEREBY STIPULATED AND AGREED THAT: 
1.    The Retiree Benefit Motion is RESOLVED as set forth herein, and the Responses are overruled. 
2.    The Debtors are authorized to modify the Retiree Benefits, consistent with the relief sought in the Retiree Benefit Motion, as such relief is modified hereby. 
3.    As soon as practicable following the entry of this Stipulation and Order, the Retiree Committee shall: (a) establish a voluntary employees' beneficiary association (the "VEBA") within the meaning of section 501(c)(9) of the U.S. Internal Revenue Code of 1986, as amended (the "IRC"); and (b) provide the Debtors, NewCo and/or the First Lien Lenders (where applicable) with written notice (the "Notice")3 that (i) the Retiree Committee has established the VEBA and (ii) the VEBA can accept contributions made as instructed therein. Nothing in this Stipulation and Order is intended to mandate or provide for the type, nature or duration of benefits or payments that may be offered or provided by the VEBA, and all decisions with respect thereto shall be within the sole discretion of the trustees of the VEBA (collectively, the "VEBA Trustees"). The Retiree Committee shall establish the VEBA solely for the benefit of the Debtors' eligible Non-Union Retirees who are receiving, or have fulfilled all necessary requirements for eligibility to receive, Retiree Benefits as of the Effective Date other than the Retained Benefits (as defined below) and the Life Insurance Plans (as defined in the Retiree Benefit Motion) (collectively, the "VEBA Beneficiaries"). For the avoidance of doubt, the 

		
	 
	The Notice shall include the VEBA trust documents, which shall be in a form reasonably acceptable to the Debtors.

    

Retiree Committee shall be responsible for electing or appointing the VEBA Trustees, and the Debtors shall have no obligations regarding the establishment or administration of the VEBA. 
4.    The First Lien Agent, at the direction of the required First Lien Lenders, agrees that, subject to the occurrence of the Effective Date, NewCo shall provide funding to the VEBA in an aggregate nominal amount of $13 million (the "VEBA Funding") for the benefit of the VEBA Beneficiaries pursuant to the following schedule:4 
		
	(a)
	$3.0 million to be paid by NewCo within 10 business days after the later of the Effective Date or the Debtors' receipt of the Notice; 

		
	(b)
	$3.0 million to be paid by NewCo on January 1, 2017; 

		
	(c)
	$3.5 million to be paid by NewCo on January 1, 2018; 

		
	(d)
	$2.5 million to be paid by NewCo on January 1, 2019; and 

		
	(e)
	$1.0 million to be paid by NewCo on January 1, 2020. 

5.     The Debtors (and, following the Effective Date, the Reorganized Debtors (as such term is defined in the Plan)) and NewCo shall reasonably cooperate with the Retiree Committee and the VEBA Trustees (as applicable) to facilitate the establishment of, and the orderly transition of the Debtors' obligations related to Retiree Benefits to, the VEBA, including but not limited to providing reasonable administrative assistance and all necessary books and records relating to the Retiree Benefits (the "VEBA Administrative Assistance"). 
6.    This Stipulation and Order shall not modify, impair or otherwise alter, and the Debtors and the Reorganized Debtors shall retain their obligations to provide in the ordinary course, and subject to all of the Debtors' and Reorganized Debtors' rights with respect thereto 

		
	 
	With respect to those dates set forth below that are not business days, the First Lien Lenders (or NewCo as directed by the First Lien Lenders) shall make the applicable payment to the VEBA on the first business day thereafter.

7
    

under applicable nonbankruptcy law, welfare benefits (medical (including prescription), dental and vision) payable to 53 former employees of Massey Energy Coal Company who were determined to be totally and permanently disabled as of December 31, 2011 and any eligible spouses, surviving spouses and dependents (collectively, the "Retained Benefits"). The Debtors shall not seek to terminate the Retained Benefits during the pendency of these chapter 11 cases. Except as set forth above with respect to the Retained Benefits and the provision of the VEBA Administrative Assistance, as of the Effective Date, the Debtors and the Reorganized Debtors shall have no further obligations with respect to the Retiree Benefits. 
7.    The Debtors shall transfer to NewCo, and the First Lien Agent, at the direction of the required First Lien Lenders, agrees that NewCo shall assume, the Life Insurance Plans and all obligations thereunder pursuant to the Stalking Horse APA, subject to all of NewCo's rights under applicable nonbankruptcy law with respect thereto. Except as set expressly forth above with respect to the Life Insurance Plans, the VEBA Funding and the VEBA Administrative Assistance, as of the Effective Date, none of the First Lien Agent, the First Lien Lenders and NewCo shall have any obligations whatsoever with respect to the Retiree Benefits. 
8.    As of the Effective Date, all of the Debtors' obligations with respect to the Retiree Benefits, other than the Retained Benefits, the Life Insurance Plans, and the VEBA Administrative Assistance, shall be deemed transferred to the VEBA (regardless of the date of establishment of the VEBA or whether the Debtors have received the Notice). 
9.    Other than as expressly set forth herein, as of the Effective Date, the Debtors, their estates, the First Lien Agent, the First Lien Lenders, NewCo and each of their respective past and present parents, subsidiaries, affiliates, general partners, limited partners, shareholders, administrators, liquidators, directors, officers, employees, managers, agents, 

8
    

attorneys, solicitors, trustees, fiduciaries, accountants and advisors, and each of the predecessors, successors (including the Reorganized Debtors) and assigns of the foregoing: (a) shall have no obligation to any of the VEBA Beneficiaries or any of his or her respective spouses, dependents, heirs, distributees, executors, administrators, officers, directors, agents, representatives, successors or assigns under or relating to the Retiree Benefits (with the exception of the Retained Benefits as set forth in paragraph 7 above and the Life Insurance Plans as set forth in paragraph 8 above); and (b) shall incur no liability for any claim related to any of the foregoing. 
10.    From and after the date of entry of this Stipulation and Order, the Retiree Committee, the VEBA Beneficiaries and all other former employees of the Debtors or any of their predecessors shall be forever estopped and barred from seeking further relief in these Bankruptcy Cases, pursuant to sections 105(a), 363(b) and/or 1114 of the Bankruptcy Code or otherwise under any other statute or regulation, relating to the provision of the Retiree Benefits (with the exception of the Retained Benefits as set forth in paragraph 6 above and the Life Insurance Plans as set forth in paragraph 7 above). 
11.    The Retiree Committee hereby agrees to support any Plan filed by the Debtors, provided that such Plan is not inconsistent with the terms of this Stipulation and Order and such Plan provides the equivalent treatment with respect to the Retiree Benefits as provided in this Stipulation and Order. The Debtors', the First Lien Agent's the First Lien Lenders' and NewCo's obligations under this Stipulation and Order are conditioned upon (a) the consummation of the sale of the Core Assets other than the PLR Assets to NewCo, (b) confirmation of the Plan and (c) the occurrence of the Effective Date. In the event that any of the foregoing conditions fails to occur by August 1, 2016, unless otherwise agreed by the Parties, (a) this Stipulation and Order shall be of no further force and effect, (b) the Retiree Benefit Motion 

9
    

shall be reinstated and (c) the rights of each of the Parties with respect to the matters addressed herein shall be restored to their state as of the date hereof. In such event, the Stipulation and Order shall not be construed as or be deemed to be evidence of an admission or concession on the part of any Party. 
12.    The modification or termination of any Retiree Benefits as set forth herein shall not give rise to any claim against any of the Debtors, NewCo, the First Lien Agent or the First Lien Lenders and neither the Debtors, NewCo, the First Lien Agent, the First Lien Lenders nor the Retiree Committee, nor any of their affiliates, successors (including the reorganized Debtors), directors, officers, employees, agents, representatives, retained professionals, attorneys, actuaries, financial advisors and assigns, shall have or incur any liability to any person (as defined in Section 101(41) of the Bankruptcy Code) or entity for any pre- or postpetition act taken or omitted to be taken in connection with, or related to formulating, negotiating, preparing, disseminating, implementing or administering this Stipulation and Order, any contract, instrument, release or other agreement or document created or entered into in connection with this Stipulation and Order, or any other pre- or post-petition act taken or omitted to be taken in connection with or in contemplation of this Stipulation and Order. Notwithstanding anything to the contrary herein, nothing in this paragraph shall negate the obligations as provided in this Stipulation and Order.
13.    Nothing in the Retiree Benefit Motion or this Stipulation and Order shall be deemed or construed as an approval or assumption of any agreement or contract pursuant to section 365 of the Bankruptcy Code or a waiver of the right of the Debtors.
14.    The requirements set forth in Bankruptcy Rule 6004(a) are satisfied.

10
    

15.    This Court shall retain jurisdiction over any and all matters arising from or related to the implementation, interpretation or enforcement of this Stipulation and Order.

SO ORDERED:
	
			
	Dated:
	July 15, 2016
	/s/ Kevin R. Huennekens

	 
	Richmond, Virginia
	UNITED STATES BANKRUPTCY JUDGE

11
    

STIPULATED AND AGREED
	
			
	/s/ Henry P. (Toby) Long, III
	 
	/s/ Lynn Lewis Tavenner

	David G. Heiman (admitted pro hac vice)
Carl E. Black (admitted pro hac vice)
Thomas A. Wilson (admitted u
JONES DAY
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telephone: (216) 586-3939
Facsimile: (216) 579-0212
	 
	Lynn Lewis Tavenner (VSB No. 30083)
Paula S. Beran (VSB No. 34679)
David N. Tabakin (VSB No. 82709)
TAVENNER & BERAN, PLC
20 North Eighth Street, Second Floor
Richmond, Virginia 23219
Telephone: (804) 783-8300
Facsimile: (804) 783-0178

	 
	 
	 

	Tyler P. Brown (VSB No. 28072)
J.R. Smith (VSB No. 41913)
Henry P. (Toby) Long, III (VSB No. 75134)
Justin F. Paget (VSB No. 77949)
HUNTON & WILLIAMS LLP
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Telephone: (804) 788-8200
Facsimile: (804) 788-8218
	 
	 

ATTORNEYS FOR DEBTORS 
AND DEBTORS IN POSSESSION
	
			
	/s/ Henry P. (Toby) Long, III
	 
	/s/ Damon P. Meyer

	 
	 
	Damian S. Schaible
Eli Vonnegut
Damon P. Meyer
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Facsimile: (212) 701-5800

	 
	 
	Dion W. Hayes
Sarah B. Boehm
K. Elizabeth Sieg
McGUIREWOODS LLP
800 East Canal Street
Richmond, Virginia 23219
Telephone: (804) 775-1000
Facsimile: (804) 775-1061 
 
ATTORNEYS FOR THE  
FIRST LIEN AGENT

    

LOCAL RULE 9022-1 CERTIFICATION
I, Henry P. (Toby) Long, III, hereby certify that the foregoing proposed agreed order was served on all necessary parties.

	
	
	/s/ Henry P. (Toby) Long, III

	 

- 13 -

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