IN THE CIRCUIT COURT OF KANAWHA COUNTY, WEST 
Eamon.

Clerk
Cathy 'mri

Mania-M1 

MAR '25 .02.:

   
   

  

HAROLD D. WARD, Director, Division of
Mining and Reclamation, West Virginia
Department of Environmental Protection,
Plaintiff,
v. CIVIL ACTION NO. 520 '3 22,
ERP ENVIRONMENTAL FUND, INC.,

Defendant.

MOTION FOR TEMPORARY RESTRAINING ORDER
AND PRELIMINARY INJUNCTION AND TEMPORARY AND
PRELIMINARY APPOINTMENT OF A SPECIAL RECEIVER

After years of operating on a shoe-string budget with a challenging organizational and
management structure and accruing, in the process, hundreds of violations of the surface mining
and water pollution laws, the Defendant has reached the end of the line. The Defendant is
woefully insolvent, has no cash, has no operating cash ?ow, has laid off all its management and
employees, and, but for DEP and the Defendant?s surety bond issuer stepping in and providing
limited emergency funding over the past few weeks, would not have been able to carry on even
the very limited operations it has maintained up to now. Meanwhile, the violations and unabated
enforcement orders have continued to mount and indeed accelerate. Just in the last month, DEP
issued roughly forty orders to show cause relating to unabated cessation orders relating to dozens
of outstanding and unabated violations of their permits and surface mining and water pollution
control laws. And even more problematically the Defendant?s cessation of operations has left
the Defendant?s many mining sites unmanned, unsecured, unmaintained, and in various stages of

land and water disturbance and incomplete reclamation that, without immediate and decisive

action, will begin to threaten imminent and identi?able harm to the public?s health and safety on
many of its mine sites.

Of particular concern to DEP is the Defendant?s Tygart River Mine complex in Marion
County commonly referred to as the ?Martinka? mine. The Martinka underground mine has
been shuttered for years. But water naturally builds up in the mine. To avoid ?artesianing??the
topping of water above the mine?s natural ?pool? that would result in uncontrolled, untreated and
contaminated discharge of polluted water from the minefthe Martinka mine must be constantly
pumped with the removed water treated for contaminants. The costs associated with the
pumping and discharge have run nearly $900,000 annually. As the Defendant?s operating cash
?ow has deteriorated and now dried up completely, the Defendant has engaged in only
intermittent and sporadic pumping and treatment of the Martinka ?mine pool.? Without
consistent pumping and treatment, the water in the mine steadily rose at the rate of about one
foot per week to levels that risked artesianing and sending contaminated water into the Tygart
River, the source of drinking water for thousands of West Virginians. Faced with an immediate
threat to the public health and safety, DEP (and the Defendant?s surety bond issuer) stepped in
with limited emergency funding to pump the mine pool down and treat the polluted water. But
without further immediate action on the part of this Court particularly with the advent of spring,
the situation will reverse and the water levels will rise, with the concomitant threat to the public
health and safety.

The situation at Martinka represents the proverbial canary in the coal mine and signals
the serious issues involved in the Defendant?s cessation of operations. Without immediate
funding and effective management oversight of its environmental liabilities and operations, any

one or all of Defendant?s mine sites in West Virginia could soon become the next Martinka,

placing the environment and the health and safety of many thousands of West Virginians at
signi?cant risk on a much broader scale. Indeed, DEP stands poised at the precipice of having to
revoke the Defendant?s permits, forfeiting the associated surety bonds, and transferring the
responsibility for cleaning up the Defendant?s mess to the State?s Special Reclamation Fund,
potentially bankrupting the Defendant?s principal surety and administratively and ?nancially
overwhelming the Special Reclamation Fund, the State?s principal backstop for all revoked and
forfeited mine sites in West Virginia.

DEP has determined, however, after an initial review and investigation of the
Defendant?s assets and ?nancial situation, that it need not take such a drastic and risky step at
this point. The Defendant has signi?cant assets, the effective, ef?cient, and well-managed
liquidation of which may generate substantial proceeds that might be employed in bringing its
operations into compliance with the law. DEP has also had extensive discussions with the
Defendant?s surety bond issuer. The surety stands ready to immediately provide substantial
interim funding to address pressing environmental compliance issues while DEP and the surety
explore a long-term solution.

But DEP and the surety have each independently determined that the Defendant?s present
organizational and management structure cannot ensure either the effective liquidation of the
Defendant?s assets, the proper management of the funds available, or the managerial or
employee resources to bring it into compliance with the law. To put the matter bluntly, neither
DEP nor the surety is willing to permit the Defendant to continue its operations and attempt
environmental compliance under its current organizational and management structure. Each is
willing, on the other hand, to fund and facilitate the Defendant?s compliance with its

environmental obligations under the supervision and control of a quali?ed and capable receiver.

 administrative enforcement powers have proven, and in light of the Defendant?s
?nancial condition will continue to prove, incapable of addressing the Defendant?s far-?ung and
ever-expanding failure to comply with the surface mining and water pollution control laws and
regulations. Accordingly, DEP, pursuant to the enforcement powers granted to it by the West
Virginia Surface Mining and Reclamation Act and Water Pollution Control Act, now seeks
injunctive relief Compelling Defendant to comply with and focus its resources on its remediation
and reclamation obligations under the surface mining and water pollution laws for the protection
of the environment and the health and safety of the people of West Virginia. Moreover, ancillary
to exercising its enforcement powers through such injunctive relief, DEP also seeks the
appointment of a special receiver under applicable West Virginia law, with extensive experience
as a mining professional and substantial ?nancial backing, to take control of the Defendant?s
assets, operations, and affairs and carry out the immediate and ongoing reclamation and
remediation obligations in accordance with such injunctive relief. It is only with the
appointment of a special receiver that the Defendant?s operations can be appropriately funded
and managed in compliance with the law.

DEP acknowledges the extraordinary nature of the relief it requests herein. The
exigencies of this case, however, demand extraordinary relief and, DEP submits, these
circumstances present a textbook situation for the application of such extraordinary relief. Thus,
pursuant to the power granted by the West Virginia Surface Mining and Reclamation Act and the
West Virginia Water Pollution Control Act, DEP requests that this Court (1) enter a temporary
restraining order immediately, and without preliminary hearing, compelling the Defendant to
bring its operations into compliance with all applicable environmental laws and regulations, (2)

enter a preliminary injunction compelling the Defendant?s ongoing compliance with the

applicable environmental laws and regulations pending entry of a ?nal judgment in this action,
after an evidentiary hearing to be held within, but not after, ten days of the entry of the temporary
restraining order, and (3) appoint a special receiver immediately and without a preliminary
hearing on a temporary basis and, after the further evidentiary hearing, pending entry of ?nal
judgment in this action to take control of the Defendant?s assets, operations, and affairs to ensure
the Defendant?s compliance with the environmental laws for the bene?t of all the Defendant?s
stakeholders.

FACTUAL BACKGROUND

The af?davit of Harold D. Ward, the Deputy Secretary and Acting Director of the
Division of Mining and Reclamation of the West Virginia Department of Environmental
Protection (the ?Ward Af?davit?), ?led concurrently herewith, sets forth in detail the pertinent
and salient facts relating to this Motion. DEP incorporates the Ward Af?davit herein as though
set forth in full.

ARGUMENT

Given the breadth and depth of the Defendant?s violations of the environmental laws and
regulations, the Defendant?s failure to abate innumerable cessation orders DEP has issued, and
the imminent and identi?able threats to the public health and safety resulting therefrom, the need
for immediate injunctive relief, both on a temporary and preliminary basis, could not be plainer.
Nor, under the facts and circumstances of this case, could it be made more apparent that the
Defendant does not have either the ?nancial, operational, managerial, or organizational ability to
bring its own operations into compliance with the law. The Court should, therefore, enter a
temporary order requiring the Defendant to bring its operations into compliance with the law and

appointing a special receiver over the Defendant and set down this Motion for an evidentiary

hearing to consider entry of a preliminary injunction and appointment of a special receiver
pending the entry of a ?nal judgment in this action.

I. The issuance of an ex parte temporary restraining order is appropriate
because there is substantial risk that immediate and irreparable injury, loss
or damage will occur before a preliminary hearing may be convened.

West Virginia recognizes three species of ?injunction? under its rules of civil procedure:
the temporary restraining order, the preliminary injunction, and the permanent injunction.
Camden-Clark Memorial Hosp. Corp. v. Turner, 212 W. Va. 752, 758, 575 362, 368
(2002). ?Under Rule 65 a temporary restraining order differs from a preliminary injunction,
though both serve the same purpose of maintaining the status quo. A temporary restraining order
is generally limited in duration to 10 days, whereas a preliminary injunction generally remains
until a ?nal determination on the merits of the action. A temporary restraining order may be
obtained ex parte, but under Rule 65(a)(l) a preliminary injunction cannot be obtained without
notice.? Franklin D. Cleckley, Robin J. Davis Louis J. Palmer, LITIGATION HANDBOOK ON
WEST VIRGINIA RULES OF CIVIL PROCEDURE 1028 (2002). Unlike the preliminary injunction, an
ex parte temporary restraining order is appropriate when ?the circumstances show that
?immediate and irreparable injury, loss, or damage will result to the applicant before the adverse
party? can be heard.? Camden-Clark Memorial Hosp, 212 W. Va. at 757, 575 at 367.

As set forth in detail in the Ward Af?davit, DEP has issued numerous notices of violation
of the West Virginia surface mining laws and rules, numerous cessation orders, and numerous
orders to Show cause to Defendant, all outlining the many violations of West Virginia law that
have occurred and are now continuing under its permits. These violations remain outstanding

and unabated by Defendant. And the Defendant has failed to respond in any manner to 

further orders with respect to those violations.

Courts have recognized that ?an injunction is normally the proper remedy for violations
of an environmental statute,? United States v. Prod. Plated Plastics, Inc., 762 F. Supp. 722, 729
(W.D. Mich. 1991), particularly in situations such as this where the applicable statute expressly
provides for injunctive relief, see United States v. Oakland Cannabis Buyers Coop, 532 US.
483, 497-98 (2001) (?Once Congress, exercising its delegated powers has decided the order of
priorities in a given area, it is . . . for the courts to enforce them when enforcement is sought.
Courts of equity cannot, in their discretion, reject the balance that Congress has struck in a
statute?). Indeed, both statutes involved in the instant case?the West Virginia Surface Coal
Mining and Reclamation Act and Water Pollution Control Act?expressly authorize the Court to
issue temporary injunctive relief. See W.VA. CODE 22-3-l7(j) 

In the instant case, moreover, there is with each passing day these Violations go unabated
a signi?cant risk that the risk of harm to the public health and the environment will only
increase. Of most immediate concern is Martinka. Without consistent pumping and treatment of
water, Martinka?s mine pool will continue to rise, threatening to artesian and send polluted water
into the Tygart River and the public water supply. That threat is particularly acute at this time of
the year as water levels rise at accelerated rates in spring. Yet the Defendant has no operational
resources or ability to address that threat. Thus, even a short delay in addressing the issue would
threaten injury, loss, and damage before a hearing might be had. And with no ability to address
any other issues that may arise on any of its sites at any time given its cessation of operations,
there is a substantial ongoing threat of further harm to the public health and safety.

This Court should accord determination in that regard great weight. DEP, to
which the environmental regulation of the State?s mining sites has been entrusted, is uniquely

quali?ed to assess and determine the threat to public health and safety that mining presents. That

is, in fact, its statutory mandate and what it does on a daily basis. The West Virginia Legislature
vested DEP with the authority to ?administer and enforce the provisions of [the surface mining
law] as it relates to surface mining to accomplish the purposes of [the law]? W. Va. Code 22-3-
and perform any and all acts necessary to carry out the purposes and requirements
of [water pollution 1aw],? W. Va. Code In accordance with that authority, DEP
oversees and implements the extensive permitting requirements under both laws. W. Va. Code
22-3-9, 22-3-18, 22-3-19, 22-3-21 (relating to the surface mining law); W. Va. Code 22-
(12), (13), 22?11-8 22-11?1 1 (relating to the water pollution law). It evaluates
and oversees the implementation of the complex and technical requirements regarding mining
and reclamation. Code 22-3-10 22-3?23. It promulgates rules establishing and
implements water quality standards. W. Va. Code 22-11-7b. DEP employs mining supervisors
and inspectors, W. Va. Code 22-3?5 22-3-6, who conduct extensive, ongoing inspections of
surface mining operations to ensure that operators comply with the applicable mining and water
treatment requirements. W. Va. Code 22-3-15. In the exercise of its powers over the thirty-
plus years West Virginia has administered those laws, DEP (or its predecessor) has also overseen
the reclamation of, and ongoing water treatment at, hundreds of mining sites in West Virginia.
As the United States Court of Appeals has noted, ?traditional principles of equity? hold
that ?when the United States or a sovereign state sues in its capacity as protector of the public
interest, a court may rest an injunction entirely upon a determination that the activity at issue
constitutes a risk of danger to the public.? United States v. Marine Shale Processors, 81 F.3d
1329, 1359 (5th Cir. 1996); see also Environmental Defense Fund v. Lamphier, 714 F.2d 331,
337-38 (4th Cir. 1983) (?Where the plaintiff is a sovereign and where the activity may endanger

the public health, injunctive relief is proper, without resort to balancing [of Indeed, as

Justice Holmes noted long ago, sovereigns are ?somewhat more certainly entitled to speci?c
relief than a private party might be.? Georgia v. Tennessee Copper Co., 206 US. 230, 237
(1907).

DEP submits that, given the risk of imminent and identi?able threat to public health and
safety and the environment, it is essential that a temporary restraining order be entered so as to
provide a bridge to more permanent relief after an evidentiary hearing on request for
preliminary injunction.

II. A preliminary injunction is both necessary and appropriate to ensure that
Defendant abates its continuing and ongoing violations of applicable law.

By this motion, DEP also seeks preliminary injunctive relief pursuant to Section 17 of the
West Virginia Surface Mining and Reclamation Act, W.VA. CODE 22-3-170), and Section 22
of the Water Pollution Control Act, W. VA. CODE 22-11-22. Speci?cally, Section 170) gives
the director authority to ?institute a civil action for relief, including permanent and temporary
injunction, restraining order or any other appropriate order, in the circuit court of Kanawha
County or any court of competent jurisdiction to compel compliance and enjoin such violations,
failures or refusals? pertaining to any order and decision of the director. W. VA. CODE 22-3-
170). Similarly, the director may seek ?om the circuit courts of this State, a temporary or
preliminary injunction compelling compliance with and enjoining violations of the Water
Pollution Control Act. W. VA. CODE 

The Supreme Court has also long held that a court of equity has jurisdiction to enter a
preliminary injunction. See, Syl. pt. 3, Weatherholt v. Weatherholt, 234 W. Va. 722, 769
872 (2015) (citing syl. pt. 4, Johnson v. Gould, 60 84, 53 SE. 798 (1906)).
Deciding whether to grant a preliminary injunction ?calls for the exercise of sound judicial

discretion in view of all the circumstances of the particular case; regard being had to the nature

of the controversy, the object for which the injunction is being sought, and the comparative
hardship or convenience to the respective parties involved in the award or denial of the writ.?
pt. 2, Camden-Clark Mem?l Hosp. Corp. v. Turner, 212 W. Va. 752, 575 SE. 2d 362 (2002).
In ruling upon a motion for injunctive relief, West Virginia courts use a balance of hardship test.
Jefferson County Bd. 0f Educ. v. Je?erson County Educ. Ass ?11, 183 15, 24, 393 
653, 662 (1990). Under this standard, the court must consider, in ?exible interplay, the
following four factors:

(1) the likelihood of irreparable harm to the plaintiff without injunction;

(2) the likelihood of harm to the defendant with an injunction;

(3) the plaintiff?s likelihood of success on the merits; and

(4) the public interest.
Camden-Clark Memorial Hosp. Corp, 212 at 756, 575 at 366 (citing Jefferson662). In this case, DEP can demonstrate that all of the factors
weigh heavily in favor of injunctive relief.

A. There is no dispute that the Defendant is in material and continuing
default of its obligations under its permits and applicable law.

As noted, the Ward Af?davit outlines the Defendant?s many and mounting violations of
West Virginia law that have occurred and are now continuing under its permits. These violations
remain outstanding and unabated by Defendant. The Defendant has, in fact, acknowledged and
agreed that it is in material default of its obligations under its permits and its reclamation
agreement with DEP. And even if Defendant were not in agreement, it has failed to challenge any
of the orders issued by DEP or the assessment of civil penalties per available administrative
remedies. There is, therefore, no question regarding the Defendant?s ongoing and continuing

violations of the law. Indeed, as the United States Supreme Court has noted, such violations,

10

standing alone, may merit the issuance of injunctive relief where, as here, the legislature has
speci?ed injunctive relief as the remedy for such violations. See United States v. Oakland
Cannabis Buyers? Coop, 532 US. at 497-98.

B. The Defendant?s failure to comply with the environmental laws threatens
immediate and irreparable harm to the public and the environment.

Both the surface mining and water pollution control acts were designed explicitly to
address imminent and identi?able threats to the environment and the public health and safety.
See, W. VA. CODE (enumerating the wide-ranging adverse effects of
unreclaimed surface?mining operations). West Virginia?s history is, indeed, littered with
catastrophic examples of the need to ensure proper controls and compliance with the mining
laws. And, in this case, the situation at Martinka amply illustrates that the threats posed are more
than simply theoretical; they are real, immediate, and irreparable. DEP submits that the existing
and ongoing threats to the public health and safety and the environment that the legislature
identi?ed and acknowledged in enacting the surface mining and water pollution control acts
warrant the issuance of an injunction requiring the Defendant to comply with applicable law
pending a ?nal judgment with respect to its acknowledged and ongoing violations of the law.

As noted above, determination in that regard may, standing alone, justify the
issuance of injunctive relief. See United States v. Marine Shale Processors, 81 F.3d at 1359
(?when the United States or a sovereign state sues in its capacity as protector of the public
interest, a court may rest an injunction entirely upon a determination that the activity at issue
constitutes a risk of danger to the 

Moreover, courts have recognized that environmental harm ?by its nature, can seldom be
adequately remedied by money damages and is often permanent or at least of long duration, i. 

irreparable.? Amoco Prod. Co. v. Village of Gambell, 480 US. 531, 545 (1987); see also Nat ?l

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Audubon Soc?y v. Dept. of Navy, 422 F.3d 174, 201 (4th Cir. 2005); Ohio Valley Environmental
Coalition v. US. Army Corps of Engineers, 528 F. Supp. 2d 625, 631 (SD. W. Va. 2007)
(?because damage to the environment is often irreversible, this harm is frequently justi?cation
for a restraining order or an injunction?), rev ?d on other grounds, 556 F.3d 177 (4th Cir. 2009);
United States v. Prod. Plated Plastics, Inc., 762 F. Supp. 722, 729 (W.D. Mich. 1991) (?an
injunction is normally the proper remedy for violations of an environmental statute?).

C. The Defendant will suffer no cognizable harm from the issuance of a
preliminary injunction compelling its compliance with applicable law.

In the face of a defendant?s established violations of the law, the Court?s role in entering
an injunction is limited, particularly when it comes to balancing the harm to the enjoined party.
As the Fourth Circuit Court of Appeals has stated, ?[w]here the plaintiff is a sovereign and where
the activity may endanger the public health, injunctive relief is proper, without resort to
balancing [of harms].? Environmental Defense Fund v. Lamphter, 714 F.2d at 337-38. Even if
the Court were to engage in a balancing of the harms, the ?balance of harms will usually favor
the issuance of an injunction to protect the environment.? Amoco, 480 US. at 545. When a
sovereign sues to enforce a law that authorizes injunctive relief with respect to a defendant?s
violations of the law, the balancing of equities weighs heavily in the sovereign?s favor because
legislature ?has already balanced the equities and has determined that, as a matter of public
policy, an injunction should issue where the defendant is engaged in, or is about to engage in,
any activity which the statute prohibits.? Burlington N. RR. Co. v. Bair, 957 .2d 599, 601-02
(8th Cir. 1992) (citing Atchison, T. SF. Ry. v. Lennen, 640 F.2d 255, 259, 261 (10th Cir.
1981)). In this context, the Court?s responsibility is ?crafting a remedy that is protective of

public health, and this responsibility necessarily takes preeminence over all other

12

considerations.? United States v. Alisa] Water Corp, 326 F. Supp. 2d 1010, 1027 (ND. Cal.
2002)

Indeed, the only harm that will befall the Defendant if injunctive relief is granted will be
this Court?s directive to Defendant to comply with its existing legal obligations to abate
violations and reclaim and remediate its mining sites. The ?harm? then is something that
Defendant is already legally required to do under its permits and West Virginia law. Indeed, the
Defendant took on these obligations with full knowledge of the extent and expense of such
endeavors when it acquired and took the transfer of its permits in 2015 and 2016. The Defendant
must comply with the terms and conditions of its permits and West Virginia law even if it is

?nancially painful to do so.

D. The public interest overwhelmingly favors compelling the Defendant to
comply with the environmental laws and regulations governing its business.

Where, as in this case, a defendant indisputably has violated statutes, the question for a
court considering whether to issue an injunction ?is simply whether a particular means of
enforcing the statute should be chosen over another permissible means . . . . To the extent the
[court] considers the public interest and the conveniences of the parties, the court is limited to
evaluating how such interest and conveniences are affected by the selection of an injunction over
other enforcement mechanisms.? United States v. Oakland Cannabis Buyers? Coop, 5 32 U.S.
483, 497-98 (2001) (internal citations and quotations omitted).

The State legislature enacted the surface mining and water pollution control laws in
accordance with the federal surface mining and water pollution control laws to expand the State?s
protection of the public and the environment from the adverse effects of unregulated coal mining
operations through effective control of those operations, while assuring coal production

necessary to the nation's energy requirements and the state's economic well-being. Cumutte v.

13

Callaghan, 188 W. Va. 494, 496, 425 170, 172 (1992). ?It is remedial legislation that has
as one of the primary purposes the protection of the public from the potentially destructive
effects that mining may have on our lands, forests and waters.? Am?co, Inc. v. Dodge Fuel Corp,
209 W. Va. 644, 646, 550 622, 624 (2001). The Defendant, with its eyes wide open,
knowingly assumed the operation of former mine sites with enormous environmental issues and
obligations associated with them. Indeed, it entered into an extensive reclamation agreement
with DEP g0verning its reclamation and remediation obligations in connection with and pursuant
to its agreement to take the transfer of its permits. Plainly, the equities of this case weigh in
favor of the issuance of a preliminary injunction compelling the Defendant to comply with
permits, laws, and regulations it knowingly assumed.

West Virginia law authorizes the Court to appoint a special receiver under
the circumstances present here.

West Virginia law authorizes the Court to appoint a special receiver to ensure the
Defendant?s compliance with the law. Speci?cally, West Virginia law states:

A court of equity may, in any proper case pending therein, in which funds or

property of a corporation, ?rm or person is involved, and there is danger of the

loss or misappropriation of the same or a material part thereof, appoint a special

receiver of such funds or property, or of the rents, issues and pro?ts thereof, or

both.
W. VA. CODE 53-6-1. To warrant the appointment of a special receiver under Section 53-6-1,
the party seeking the appointment must show that (1) he has a clear right to the property itself,
that he has some lien upon it, or that the property constitutes a special fund to which he has a

right to resort for the satisfaction of the claim; and that (2) the possession of the property by the

possessor was obtained in fraud, or that the property itself, or the income arising from it, is in

14

danger of loss from the neglect, waste, misconduct or insolvency of the possessor. State ex. rel.
Battle v. Hereford, 148 W. Va. 97, 105, 133 86, 91 (1963).1
Both of those conditions are satis?ed here.

A. DEP has liens and other interests in the Defendant?s property.

As set forth in the Ward Af?davit, DEP has liens in the Defendant?s property pursuant to
a settlement agreement and deposit account control agreement executed by the parties in
connection with Patriot Coal Corporation?s bankruptcy case in 2015. Therein, the Defendant
granted DEP a security interest in various of its assets, including the proceeds from Defendant?s
coal sales and other sources and the proceeds realized upon phased bond releases. Indeed, the
agreements required the Defendant to deposit all such funds and proceeds into a deposit account
over which DEP has had full and complete control and, accordingly, a possessory security
interest in all of the Defendant?s cash ?ow since 2015 or 2016. Thereafter and on at least two
different occasions, the Defendant has granted DEP a security interest in other assets, including
equipment, real property, and coal reserves. In granting DEP security interests in the foregoing,
Defendant gave DEP a security interest in virtually all of Defendant?s business operations, thus
entitling DEP to seek the appointment of a special receiver under Section 53?6-1.

B. The Defendant?s property is in danger of loss from neglect, waste,
misconduct or insolvency.

In connection with its second bankruptcy ?ling in 2015, Patriot Coal Corporation divided
its permits and mining sites in two. It transferred one set of permits and sites with substantial
ongoing operations and reserves to Blackhawk Mining, a well-known mining company with a

management steeped in the mining business. Just as it prepared to leave behind the remainder,

 

Further, this Court has jurisdiction over this matter because a suit is pending before this Court involving the
property or funds of a corporation, firm, or person.

15

the permits and mine sites that included Patriot?s massive and most intractable legacy
environmental obligations and liabilities, in a liquidating trust, the Defendant?s principal stepped
forward to assume those permits and the obligation to remediate and reclaim those mining sites.

From its birth in the fall of 2015 and after agreeing to assume hundreds of millions of
dollars of environmental liabilities, the Defendant has faced persistent ?nancial, organizational,
and management challenges.

Prior to assuming those obligations and liabilities, the Defendant and its principal had,
literally, no experience in owning or operating a coal company, mining coal, or reclaiming and
remediating former mining sites. Its principal?s prior occupation had been in the nursing home
business. To reclaim and remediate the sites, the Defendant employed a former Patriot mining
engineer with an undermanned staff and no prior experience as an executive of?cer of a coal
company and no ?nancial experience. To be clear, DEP does not take issue with this mining
engineer?s management. He did the best that he could do under the circumstances, even for
longer than might have been expected. But the Defendant?s ?nances and corporate structure
imposed almost impossible burdens and, now, the Defendant?s new reality requires different
management capabilities than its now-former management possessed.

The Defendant started out with virtually no cash, equity, or assets; it proposed to commit
only the limited proceeds from the mining of coal incidental to reclamation, the uncertain cash
?ow from a separate coal mining operation, the potential proceeds of settlements in connection
with the Patriot bankruptcy, and the subsequent anticipated release of cash collateral and other
?nancial assurance that Patriot had pledged to surety bond issuers or received from others to
back its environmental obligations. Aside from the limited proceeds of incidental mining and the

release of certain cash collateral, none of the other sources of cash ?ow ever materialized. The

16

other two sources supported the Defendant?s operations, albeit only in ?ts and spurts, for the
better part of four years. But those sources have completely dried up; the Defendant does not
even have the ability to mine coal incidental to reclamation to generate cash.

To make matters worse, immediately after acquiring the Patriot permits, the Defendant?s
principal embarked on an acquisition binge. That acquisition binge, at a minimum, often
diverted the attention of the Defendant?s management from the operation of its own business, as
it got pulled into the principal?s other acquisitions or bids. The Defendant?s principal largely
disappeared from the scene at that time as he made bids for and acquired other mines and
businesses and assets in other industries, including iron ore and steel-making, throughout the
United States and beyond. At a minimum, he largely left his under-experienced, under-staffed
management team to fend for themselves in a very dif?cult, if not virtually impossible, situation.
DEP also believes that that acquisition binge and the resulting distractions may have adversely
affected the Defendant?s ability to liquidate assets that might have been used (and may yet be
used) for reclamation and remediation.

To offset its intermittent cash ?ow crunches and almost constant shortage of funds, the
Defendant incurred massive amounts of debt and encumber its limited assets. The Defendant has
advised DEP that it amassed and currently owes more than $15 million in debt to its vendors and
suppliers. In turn, most of those vendors and suppliers, some of whom provide critical services
that the Defendants require in order to comply with their environmental obligations, cut off the
Defendant?s credit and have declined to do business at all with the Defendant absent the payment
of its arrearages. It has accrued liabilities associated with its former union employees, including
large liabilities to its health care provider. To satisfy its obligations under a federal consent

order, the Defendant granted liens in certain of its real property, property that might have been

17

otherwise liquidated and sold and devoted to environmental remediation, to environmental
groups. A little over a year ago, the Defendant (or its predecessor by merger into the Defendant)
transferred a massive and potentially valuable asset, the Hobet dragline, to a related company in
connection with what appears to be an effort to encumber that asset to secure a $4 million-plus
debt its principal and other third parties owe to a law ?rm. More recently, and in fact as recently
as only three months ago, the Defendant also granted liens in real property to the law ?rm. Thus,
not only has the Defendant transferred and encumbered its assets rather than liquidating them
and using them for reclamation and compliance, but it also diverted their value to pay the
obligations of other persons and entities, including its principal.

These and likely other yet-to-be-discovered facts relating to the Defendant?s operations
over the years establish the depth and breadth of the Defendant?s ?nancial distress and the
organizational and management issues that have impeded the Defendant?s ability to continue to
operate and manage its properties in compliance with the law and for the bene?t of all its
stakeholders. The Defendant has no currently available sources of cash with which to continue
its operations. Parties with funds that might be used to ensure its ability to perform its principal
function?the reclamation and remediation of its mining sites in compliance with the law??are
unwilling to provide funds to the Defendant, given the foregoing circumstances and the resulting
loss of con?dence in the Defendant?s ability to manage its ?nances, operations, and affairs. The
situation is ever more acute in light of the resignation of Defendant?s management and employee
layoffs. Simply put, despite having assets with some substantial value and potential sources of
funding, the Defendant simply cannot operate its business and assets in compliance with the law,
a circumstance that will inevitably result in the complete loss of all the Defendant?s properties

and assets to the detriment of all the Defendant?s stakeholders and the State of West Virginia.

18

It is, accordingly, essential that a special receiver be appointed to take control of the
Defendant?s assets and properties to ensure their proper and effective management and use,
including securing and committing the same to the Defendant?s legal obligations to comply with
the law.

C. DEP provided notice to the Defendant of its request for a special
receiver.

Section 53-6-1 provides, with respect to real estate, that ?no such receiver shall be
appointed of any real estate, or of the rents, issues and pro?ts thereof, until reasonable notice of
the application therefor has been given to the owner or tenant thereof.? W. VA. CODE 53-6? 1.
And while not explicitly provided for in the statute, it has generally been held that notice is
required for the application for a special receiver of personal property. Batson v. Findley, 52 W.
Va. 343, 43 SE. 142 (1903). However, exceptions to the foregoing exist where notice would be
unreasonable, would likely defeat the purpose for which a special receiver is necessary, or in
cases of great emergency. Baltimore Bargain House v. St. Clair, 58 W. Va. 565, 52 S.E. 660
(1906). DEP submits that the facts and circumstances of the instant case warrant such immediate
relief without notice. But that being said, the undersigned states that DEP has, in fact, provided
notice of its application for the appointment of a special receiver to Defendant in advance of this
?ling.

IV. The Court has the power to appoint a special receiver to ensure
compliance with its injunctive relief.

?[T]he appointment of a receiver is not a matter of right. The power to appoint is a
discretionary one, to be exercised with great circumspection. The discretion is not arbitrary or
absolute, but sound and judicial.? Id. at 662. But, as courts in other jurisdictions have held, the
appointment of a receiver to enforce the terms of an injunction is a matter within the discretion

of the trial judge. See Consolidated Rail Corp. v. Fore River Ry., 861 F.2d 322, 326 (lst
l9

Cir.l988); Van 0ss v. Premier Petroleum Co., 1 13 Me. 180, 189, 93 A. 72, 75 (1915); see also
Department of Environmental Protection v. Emerson, 563 A.2d 762 (Me. 1989) (appointing a
receiver after the owner of a tire storage and disposal facility violated a preliminary injunction
requiring him to comply with the waste management, ?re protection, and water quality laws).
When more traditional remedies such as further injunctive orders and contempt proceedings have
not succeeded in obtaining compliance, ?a court of equity is justi?ed, particularly in aid of an
outstanding injunction, in turning to less common ones, such as receivership, to get the job
done.? Morgan v. McDonough, 540 F.2d 527, 533 (lst Cir.1976).

In fact, several state and federal courts have granted motions by environmental regulatory
agencies to impose receiverships on environmental violators. See, United States v.
Government of Guam, 2008 WL 732796 (D. Guam, Mar. 17, 2008) (appointing receiver to bring
land?ll into compliance with consent decree, court orders, and injunctions); United States v.
Alisal Water Corp, 326 F. Supp. 2d 1010 (N .D. Cal. 2002) (appointing receiver to ensure
defendant?s compliance with federal safe drinking water act); United States v. Acadia Woods
Add. #2 Sewer Co., 41 F. Supp. 2d 632 (WD. La. 1999) (appointing receiver to run defendants?
sewage treatment plants to secure compliance with clean water act); United States v. Alder Creek
Water 1984 WL 178394 (D. Or. Apr. 23, 1984) (appointing receiver in safe drinking water
act case after defendant failed to comply with a court order to lessen the health risks posed by
defendant?s water systems and to comply with the act?s reporting and monitoring requirements),
823 F.2d 343 (9th Cir. 1987); United States v. City of Detroit, 476 F. Supp. 512 (ED.
Mich. 1979) (appointing administrator to run City?s wastewater treatment plant to obtain
compliance with clean water act); Town ofGreenwich v. Dep ?t of ransp. 1979 WL 30063 (D.

Conn. Nov. 7, 1979) (appointing receiver to take control of Connecticut Department of

20

Transportation to close down power plant for violating clean air act regulations); State ex rel.
Celebrezze v. Gibbs, 573 62 (Ohio 1991) (appointing receiver to correct sewage
treatment de?ciencies at industrial park); Emerson, supra (appointing receiver to oversee
operation of tire disposal facility and insure compliance with terms of preliminary injunction);
Ohio v. ChemaDyne Corp, 1981 WL 5234 (Ohio App. Oct. 28, 1981) (appointing receiver to
oversee removal of hazardous waste from defendants? property).

Those courts have recognized that appointing a receiver to ensure compliance with the
environmental laws is particularly appropriate when

0 there is a threat to public health and safety, see, e. g, Alisa] Water Corp, 326 F.
Supp. 2d at 1027 (?the Court has the responsibility in this case of crafting a
remedy that is protective of public health, and this responsibility necessarily takes
preeminence over all other considerations?); Government of Guam, 2008 WL
732796, at *2 threat to public health may render legal remedies inadequate in
environmental cases?);

0 the defendant has a history of noncompliance, see, e. Alisal Water Corp, 326
F. Supp. 2d at 1022 n.7 (?The duration and extent of Defendants? history of non?
compliance leads the Court to conclude that the drastic remedy of a receivership
is not only justi?ed but also City of Detroit, 476 F. Supp. at 517?18;
Acadia Treatment Systems, 41 F. Supp. 2d at 633;

the defendant lacks the management and personnel necessary to bring itself into
compliance, see, Alisa] Water Corp, 326 F. Supp. 2d at 1024 (?Defendants
lack the managerial competence to operate compliant drinking water systems?);
Government of Guam, 2008 WL 732796, at 10 (?The Government of Guam
lacks the resources, experienced personnel, and necessary support to comply with
the Consent Decree on its own?); or

the defendant lacks the ?nancial resources to ensure compliance, see, e. Alisa]
Water Corp, 326 F. Supp. 2d at 1014 (?Defendants lack the ?nancial wherewithal
to operate compliant drinking water systems. In light of these ?ndings, the Court
concludes that the usual remedies are inadequate and that some form of
receivership is necessary to get the job done?); Acadia Treatment Systems, 41 F.
Supp. 2d at 634 the named defendants in this proceeding nor any
subsidiary corporation or corporations or of?cers thereof have the ?nancial ability
to conduct the current business of defendants in an environmentally sound manner
to protect the public health or to secure the necessary capital from a lending
institution to do 

21

Each of these circumstances is present in this case and merits the appointment of a special
receiver to ensure the Defendant?s compliance with the law and orders of this Court.

A. There is an immediate threat to the public health and safety.

As noted above, DEP has determined that the Defendant?s cessation of operations poses
an immediate threat to the public health and safety. Martinka amply demonstrates that threat,
as DEP had demonstrated the severity of the threat by stepping in to provide funding to keep
the pumps at Martinka operating and continue water treatment. And now with the Defendant
having laid off all its management and employees, it simply has no ability to address any threat
to the public health and safety.

B. The Defendant has not, and simply cannot, comply with the law.

DEP has issued hundreds of notices of violations and cessation orders and forty show
cause orders. The Defendant has neither abated the violations nor responded to the show cause
orders. The Defendant has, in fact, af?rrnatively acknowledged in writing that it is and
remains in material default of its obligations and, moreover, that it lacks management,
employees and available sources of funds with which to comply with the law in the future.

C. The Defendant lacks the management and employee resources
to comply with the law.

Having run out of cash and having no sources of cash flow, the Defendant has laid off
its entire staff. It laid off its reclamation personnel more than ninety days ago. In the past
week, it laid off all employees who conducted water testing required under the surface mining
laws. It has laid off its principal executive of?cer and the Defendant?s manager. At this point,
it appears that the Defendant has no management or employee resources with which to comply

with its obligations under the surface mining and water pollution control laws.

22

D. The Defendant lacks the ?nancial resources to comply with the law.

As noted, the Defendant has acknowledged its lack of ?nancial resources with which to
comply with the law.

Given the Defendant?s inability to abate existing violations or comply with the law in the
future, the equities of the situation presently before this Court counsel in favor of the
appointment of a well-funded special receiver to ensure the Defendant?s compliance with the law
and orders of this Court compelling such compliance.

E. The appointment of Doss Special Receiver LLC as special receiver
will ensure the Defendant?s compliance with the law.

DEP seeks to have Doss Special Receiver LLC, a newly formed West Virginia limited
liability company appointed as the special receiver in this matter. DEP submits that Doss Special
Receiver has the resources to perform all of its obligations as the court-appointed special
receiver.

First and foremost, Doss Special Receiver has the requisite skills to assess and manage
the Defendant?s operations and assets to ensure its compliance with the law. Doss Engineering,
Inc. formed Doss Special Receiver for the purpose of acting as the special receiver in this case.
Doss Engineering is the sole member and manager of Doss Special Receiver, and it and, in
particular, its principal, R.B. (Barry) Doss, will perform the functions of the special receiver on
behalf of Doss Special Receiver. Both Mr. Doss and Doss Engineering, whose of?ce is located
in Shrewsbury in Kanawha County, approximately thirty miles east of Charleston, are well
known and well respected within the West Virginia mining industry. Mr. Doss is a professional
engineer and surveyor, certi?ed surface and underground mine foreman, and holds a master?s
degree in business administration. He has approximately forty years of experience in the coal

mining industry, having held positions as diverse as equipment operator, permit engineer,

23

production engineer, engineering manager, mine manager, and engineering consultant. He
formed Doss Engineering in 1999 to provide consulting, environmental, and engineering services
to the mining, construction, and natural resource industries. In addition to Mr. Doss, Doss
Engineering has a staff of seven full-time and one part-time employees with deep experience in
all areas affecting the mining industry, including engineering, environmental and permitting
technicians, watershed resource and environmental scientists, geologists, and environmental
biologists. Doss Engineering has worked with coal companies, reclamation companies, mineral
and landowners, law ?rms, and others with interests in coal in West Virginia and Central
Appalachia. Both DEP and the Defendant?s surety bond issuer have had long experience in
dealing with Doss Engineering and Mr. Doss and have con?dence in their ability to perform the
functions of the special receiver. The Plaintiff also requests that the Court approve the
compensation of the special receiver on the terms set forth in the proposed orders attached hereto
as Exhibits A and B, which compensation the Plaintiff submits is appropriate and reasonable
under the circumstances of this case.

Second, Doss Special Receiver has a commitment of funding from the Defendant?s
surety. The funding commitment assures that the special receiver will have funding for an initial
90-day period to allow the special receiver to assess the Defendant?s assets, liabilities,
operations, and affairs to develop, if possible, a longer-term plan for ensuring the Defendant?s
compliance with the law. The funding is designed to allow the special receiver to address certain
imminent issues relating to the Defendant?s permitted sites, including Martinka. The Plaintiff
also requests that the Court approve the funding facility on the terms set forth in the proposed
orders attached hereto as Exhibits A and B, which funding the Plaintiff submits is appropriate

and reasonable under the circumstances of this case.

24

In connection with the special receiver?s appointment, DEP also seeks an order
setting the receivership surety bond required under Section 53-6?1 at $250,000. DEP
submits that such a bond adequately secures the special receiver?s faithful performance of
his obligations under the terms of the receivership order.

V. The Court has the power in connection with the appointment of a

special receiver to enjoin creditors and other parties from interfering
with the special receiver?s administration and activities.

As set forth in more detail the proposed forms of order attached hereto, DEP seeks to
enjoin all persons from interfering with the operation of the receivership or disturbing the assets,
liabilities, and operations of the receivership. The notion that a court may enjoin such actions
has been settled for years. See, Zacartas v. Stanford Int?l Bank, Ltd., 945 F.3d 883 (5th Cir.
2019) (?It is axiomatic that a district court has broad authority to issue blanket stays of litigation
to preserve the property placed in receivership pursuant to SEC action?) (quoting S.E. C. v.
Stanford 1721?] Bank, Ltd, 424 F.App?x 338, 340 (5th Cir. 201 Davis v. Butters Lumber Co,
132 NC. 233, 43 SE. 650, 652 (1903) (noting, in 1903, that a receiver?s right to enjoin a creditor
from taking actions that ?prevented or interfered with the collection of the assets of the bank
which passed to him as receiver[] is well settled?). As the North Carolina Supreme Court noted
in Davis:

It is the policy, and usually the rule, of the court to compel all claims to assets in

the hands of the receiver to be litigated in the [receivership action]. This course

prevents confusion and con?icts, and saves costs and expenses.
Id. at 653. As the Fifth Circuit noted:

Courts of Appeals have upheld orders enjoining broad classes of individuals from

taking any action regarding receivership property. Such orders can serve as an

important tool permitting a district court to prevent dissipation of property or

assets subject to multiple claims in various locales, as well as preventing
piecemeal resolution of issues that call for a uniform resolt.

Zacarias, 945 F.3d at 897, quoting Schauss v. Metals Depository Corp, 757 F.2d 649, 653 (5th

25

Cir. 1985); see also Liberte Capital Group, LLC v. Capwill, 462 .3d 543 (6th Cir. 2006) (?Once
assets are placed in receivership, a district court?s equitable purpose demands that the court be
able to exercise control over claims brought against those assets. The receivership court has a
valid interest in both the value of the claims themselves and the costs of defending any suit as a
drain on receivership assets?); United States v. Acorn Tech. Fund, LP, 429 F.3d 438, 443 (3d
Cir. 2005) (?The purposes of a receivership are varied, but the purpose of imposing a stay of
litigation is clear. A receiver must be given a chance to do the important job of marshaling and
untangling a company?s assets without being forced into court by every investor or claimant?).
As one court put it, such a bar works to prevent the proverbial ?race for receivership
assets.? Rupert v. Winter, 2012 WL 13102348, at *9 (N .D. Tex. Jan. 24, 2012). In that regard,
this type of injunction is, as the Second Circuit Court of Appeals noted, similar to the automatic
stay of litigation issued in bankruptcy cases:

he receivership accomplishes what a bankruptcy would. The receivership

protects the assets of the estate, just as a stay would in bankruptcy. An anti-

litigation injunction is simply one of the tools available to courts to help further

the goals of the receivership. While such injunctions are to be used sparingly,
there are situations in which they are entirely appropriate.

S.E. C. v. Byers, 609 F.3d 87, 92 (2d Cir. 2010).

To that end, courts that have appointed receivers to assume control over a defendant?s
assets and operations have issued orders enjoining a wide array of parties from interfering in a
wide array of ways with the receiver?s administration and activities. In Davis, for example, the
court enjoined a creditor from suing to collect, attach, and garnish a debt owed by a bank in
receivership. Similarly, a New York appeals court af?rmed the entry of an injunction barring a
mortgage creditor from proceeding with a foreclosure action to allow the receiver to sell a
dissolving corporation?s assets, describing the court?s power to protect a receiver against actions

brought without its consent as an ?inherent power of the court.? In re French, 181 AD. 719,

26

732, 168 N.Y.S. 988, 998 (App. Div. 1918); see also SEC v. Wencke, 622 F.2d 1363, 1369 (9th
Cir. 1980) (?The power of a district court to impose a receivership or grant other forms of
ancillary relief does not in the ?rst instance depend on a statutory grant of power from the
securities laws. Rather, the authority derives from the inherent power of a court of equity to
fashion effective relief?). In SEC v. Byers, 609 F.3d 87, 89 (2d Cir. 2010), the United States
Court of Appeals for the Second Circuit af?rrned a District Court order barring creditors and
others from ?ling involuntary bankruptcy petitions with respect to property in a receivership, as
part of the court?s ?authority and discretion to enter anti-litigation orders.?

Notably, where a state court assumes in rem or quasi in rem jurisdiction over property, its
bar against suits applies with equal force whether the barer suit is brought in state or federal
court. See Princess Lida of hum Taxis v. Thompson, 305 U.S. 456, 466 (1939) (?We have
said that the principle applicable to both federal and state courts that the court ?rst assuming
jurisdiction over property may maintain and exercise that jurisdiction to the exclusion of the
other, is not restricted to cases where property has been actually seized under judicial process
before a second suit is instituted, but applies as well where suits are brought to marshal assets,
administer trusts, or liquidate estates, and in suits of a similar nature where, to give effect to its
jurisdiction, the court must control the property?). ?In such cases, [the Supreme Court] has said
that the state or federal court having custody of such property has exclusive jurisdiction to
proceed.? Donovan v. City of Dallas, 377 U.S. 408, 468 (1964), citing Princess Lida, 305 U.S.
at 465-68; see also SEC v. Wencke, 622 .2d at 1369 (?The power of the district court to issue a
stay, effective against all persons, of all proceedings against the receivership entities rests as
much on its control over the property placed in receivership as on its jurisdiction over the parties

to the securities fraud action?).

27

Thus, this Court, having taken control of the Defendant?s property pursuant to the
receivership order, may broadly enjoin the Defendant, those individuals and entities associated
with the Defendant, as well as the Defendant?s creditors and other parties in interest, from taking
any action that interferes with the special receiver?s control over the Defendant?s property,
business, and affairs.

WHEREFORE, DEP respectfully requests that this Court grant Emergency
Motion and:

(1) enter an order substantially in the form attached hereto as Exhibit A requiring the
Defendant on a temporary basis to take all necessary and appropriate actions to abate
existing violations of its mining and water pollution control permits and bring its
operations into immediate compliance with the permits and the federal Surface
Mining Control and Reclamation Act and Clean Water Act and the state counterparts
thereto and the rules promulgated thereunder and appointing Doss Special
Receiver LLC as special receiver on a temporary basis on the terms set forth therein,
in each case pending the conduct of a hearing to consider the Plaintiff? motion for
entry of a preliminary injunction;

(2) after a hearing to consider the Plaintiff?s motion for entry of a preliminary
injunction, enter an order substantially in the form attached hereto as Exhibit 
requiring the Defendant on a preliminary basis to take all necessary and appropriate
action abate existing violations of its mining and water pollution control permits and
bring its operations into immediate compliance with the permits and the federal
Surface Mining Control and Reclamation Act and Clean Water Act and the state

counterparts thereto and the rules promulgated thereunder and appointing Doss

28



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EXHIBIT A

Exhibit A

IN THE CIRCUIT COURT OF KANAWHA COUNTY, WEST VIRGINIA

HAROLD D. WARD, Director, Division of
Mining and Reclamation, West Virginia
Department of Environmental Protection,

Plaintiff,
v. CIVIL ACTION NO.

ERP ENVIRONMENTAL FUND, INC.,

Defendant.

TEMPORARY RESTRAINING ORDER AND ORDER
TEMPORARILY APPOINTING A SPECIAL RECEIVER FOR
PROPERTY, ASSETS, AND OPERATIONS

Upon consideration of the emergency motion of the Plaintiff for entry of a preliminary
injunction and order appointing a special receiver of the Defendant?s property, assets, and
operations and the declaration of the Plaintiff in support thereof; and it appearing that 
there exist imminent and identi?able threats to the public health and safety that require
immediate and ongoing action to prevent such threats and an exigent need for immediate and
ongoing funding and competent management to ensure the Defendant?s compliance with laws
designed to prevent such threats that warrant and require immediate, preliminary relief; and it
appearing that the Plaintiff has given the Defendant notice of its motion and the relief requested
herein and that the Defendant has consented to or acquiesced in the relief requested, it is hereby
ORDERED that:

1. This Court has personal jurisdiction over the Defendant, which holds mining and
water pollution control permits issued by the Plaintiff and operates active coal mining sites

within the State of West Virginia.

Exhibit A

2. This Court has subject matter jurisdiction and venue over this action pursuant to
and in accordance with W. Va. Code 22-3-170).

3. This Court has the power to issue the temporary relief granted hereby pursuant to
W. Va. Code 22-3-170) and West Virginia Rule of Civil Procedure 65(3).

4. The Plaintiff?s emergency motion, to the extent that it seeks entry of a temporary
restraining order and the appointment of a special receiver on a temporary basis, is hereby
granted.

Iniunetive Relief

5. The Defendant shall be and hereby is enjoined from violating the terms and
conditions of its mining and water pollution control permits and the West Virginia Surface Coal
Mining and Reclamation Act and the West Virginia Water Pollution Control Act and the rules
promulgated thereunder, pending the hearing to consider entry of a preliminary injunction and
the preliminary appointment of a special receiver.

Appointment of a Receiver

6. Pending the hearing to consider entry of a preliminary injunction and the
preliminary appointment of a special receiver, a Special Receiver is hereby appointed pursuant to
W. Va. Code 53-6-1 on a temporary basis, subject to the Court?s oversight, supervision, and
further approval, as needed, to assume full operation, management, and control of the
Defendant?s assets and operations, oversee, manage, and direct the acts, conduct, operations,
assets, liabilities, and ?nancial conditions of the Defendant, and in consultation with the
applicable environmental regulatory agencies, develop a plan and schedule for compliance with
the Defendant?s permits and take all necessary and appropriate action to bring the Defendant?s

operations into compliance with the Defendant?s permits, the federal Surface Mining Control and

Exhibit A

Reclamation Act and the federal Clean Water Act and the state counterparts thereto and the rules
promulgated thereunder, and the orders of the applicable environmental regulatory agencies, all
for the protection of the public and the environment and the preservation of the Defendant?s
business and assets for the bene?t of all parties having an interest in the Defendant and its
business, assets, and affairs.

7. The Plaintiff and the Special Receiver have advised the Court that due to the
number and current status of the permits the Defendant holds, it is impractical to abate all
existing violations and commence or maintain reclamation work simultaneously on all of the
Defendant?s permitted sites and outfalls and the Defendant holds several permits and
property interests outside the State of West Virginia. The Special Receiver shall prioritize
abatement and reclamation based upon criteria and input of the applicable regulatory authorities
and Defendant?s reclamation bond sureties taking into consideration such factors as site
conditions, the need for public safety, environmental protection, ef?cient scheduling, cash ?ow
and operational concerns. The Plaintiff and the Special Receiver shall take all reasonable steps
necessary or appropriate to secure in states outside the State of West Virginia the same
authorities and protections for the Special Receiver as are set forth in this Order.

8. Doss Special Receiver, LLC, a West Virginia limited liability company, is hereby
appointed as the Special Receiver for the purposes set forth in the immediately preceding
decretal paragraph. Doss Special Receiver, LLC is a wholly owned subsidiary of Doss
Engineering, Inc., a West Virginia corporation, and Barry Doss is the sole manager of Doss
Special Receiver, LLC. No individual or entity may succeed or replace Doss Special Receiver,
LLC, Doss Engineering, Inc., or Barry Doss and no change in control of Doss Special Receiver,

LLC may occur, in each case without the express written consent of the Plaintiff and a further

Exhibit A

order of this Court. Without limiting the generality of the foregoing, Doss Special Receiver,
LLC may retain and compensate Doss Engineering, Inc., either directly or on behalf of the
receivership estate, to provide consulting and other services to the receivership estate.

9. The Special Receiver and its owner, manager, employees, agents, attorneys and
other professionals hired by it with respect to performing its duties hereunder shall have no
personal liability and shall have no claim asserted against them relating to the performance of the
Special Receiver?s duties under this Order, except for claims for actual damages (and not
consequential damages) due to their gross negligence, gross or willful misconduct, malicious acts
or the failure to comply with Orders of this Court. In any event, the liability of the Special
Receiver or persons acting on its behalf shall be limited to the assets of Defendant?s estate.

10. Without limiting the generality of the immediately preceding decretal paragraph,
the Special Receiver and its owner, manager, employees, agents, attorneys and other
professionals hired by it are not, and shall not be construed as or deemed to be, an agent, owner,
operator, or controller of the Defendant or its operations for the purposes of the Surface Mining
Control and Reclamation Act and the Clean Water Act and the state counterparts thereto and the
rules and regulations thereunder, the applicant violator system, or any other applicable
environmental law, solely on account of the performance of the Special Receiver?s duties under
this Order, and the Plaintiff shall work with federal and other state regulatory authorities as
necessary to ensure that the Special Receiver and its owner, manager, employees, agents,
attorneys and other professionals hired by it are not either held liable under such laws or
rendered ineligible for permits in West Virginia or elsewhere as a result of their actions pursuant

to this Order.

Exhibit A

11. The Special Receiver shall be compensated on an hourly basis at the hourly rates
set forth in Exhibit A hereto, which terms and conditions are hereby approved, and no additional
orders or approvals by the Court or any other party shall be necessary with respect to such
compensation or the payment thereof to the Special Receiver.

12. Within thirty days of the date hereof, the Special Receiver shall obtain a surety
bond in the amount of $250,000 pursuant to and in accordance with W. Va. Code 53?6-1, a
copy of which bond shall be ?led with the Court.

13. The Special Receiver is hereby authorized to borrow money on the terms and
subject to the conditions set forth in Exhibit hereto, which terms and conditions are hereby
approved (as so approved, the ?Funding Facility?).

Creation of Receivershin Estate

14. Immediately upon entry of this Order, a receivership estate shall be deemed
created for the Defendant, which estate shall be under the sole and exclusive control,
supervision, and management of the Special Receiver.

15. All of the Defendant?s real property, personal property, both tangible and
intangible and including intellectual property, leases (whether as lessor or lessee) of real or
personal property, permits, assets, books, records, ?xtures, equipment, inventory, as-extracted
assets, reserves, and any other real, personal, tangible, or intangible property of the Defendant of
any kind or nature whatsoever, wherever located, shall be deemed immediately transferred to the
Defendant?s receivership estate under the management, operation, and control of the Special
Receiver without any further action on the part of the Defendant or the Special Receiver.

Without limiting the generality of the foregoing, the assets transferred shall include all rights of

Exhibit A

the Defendant in, to, or under any insurance policy and insurance proceeds, including any policy
or proceeds applicable to any of the liabilities transferred to the receivership.

16. All persons, including the Defendant, all of its officers, directors, employees,
stock or equity holders, any secured or unsecured creditors of the Defendant, and any other
persons, are ordered to turn over to the Special Receiver all cash, keys, documents, deposits,
payments received, books and records, equipment, software, and any other property of the
Defendant, including water samples and the results of the testing thereof, in their possession,
custody, or control or that come into their possession, custody, or control after the entry of this
Order.

17. The banks and other ?nancial institutions where the Defendant has account
relationships are authorized and directed to comply with all instructions given by the Special
Receiver in furtherance of the authority vested in him in this Order and any other Order entered
in connection with this action.

18. Any person claiming to own property situated on the Defendant?s property or
used by the Defendant in connection with the operation of its business or property is enjoined
from removing said property absent the actual written consent of the Special Receiver or upon
further Order of the Court.

19. All existing claims, liens, and encumbrances against the Defendant or its
properties or assets shall be deemed to constitute claims, liens, or encumbrances against the
Defendant?s receivership estate.

20. The Special Receiver shall have no liability or responsibility for the payment or
discharge of any claims, liens, or encumbrances against the Defendant?s receivership estate. The

Special Receiver shall not be liable for any employee-related liabilities of the Defendant, other

Exhibit A

than the amounts the Special Receiver may speci?cally agree in writing to pay. The Special
Receiver, subject to the terms and conditions of this Order, shall be liable for any employee-
related liabilities relating to any employees that the Special Receiver may hire.

21. No person shall ?le suit or take other legal or enforcement action against the
Special Receiver without an Order of this Court permitting the suit or action.

22. Notwithstanding anything to the contrary herein, nothing shall empower the
Special Receiver or the Defendant to carry on any business or activity which the Defendant is not
lawfully entitled to carry on or exempt the Special Receiver or the Defendant from
complying with statutory or regulatory provisions relating to the public health and safety or the
environment.

23. Any and all costs, expenses, and liabilities of the receivership and the receivership
estate created hereby, including, without limitation, the debts and liabilities incurred by the
Special Receiver under the Funding Facility, the costs and expenses of the Special Receiver, the
fees and expenses of any professionals retained by the Special Receiver, and the costs and
expenses of the operation of the Defendant?s business, shall constitute claims against the
Defendant?s receivership estate, shall be paid as a ?rst-priority expense from the net proceeds of
the operations or income of the Defendant and the sale of the Defendant?s properties and assets,
and shall be senior to any valid, enforceable, and unavoidable liens and security interests in any
collateral that were properly perfected by the date hereof, it being understood that the debts
and liabilities under the Funding Facility shall be subordinate to any such valid, enforceable,
unavoidable, and properly perfected liens and security interests, nothing in this action or
Order shall make the Plaintiff responsible for the payment of the costs, expenses, and liabilities

of the receivership and the receivership estate created hereby, and (0) nothing in this (or any

Exhibit A

other) paragraph shall affect the Special Receiver?s right to payment of his compensation and
expenses from the Funding Facility.

24. All persons having oral or written agreements with the Defendant for the supply
of goods or services are hereby restrained pending the hearing to consider entry of a preliminary
injunction and the preliminary appointment of a special receiver from discontinuing, altering,
interfering with or terminating the supply of such goods or services as may be required by the
Special Receiver.

25. The Special Receiver shall be entitled to the continued use of the Defendant?s
current telephone numbers, facsimile numbers, internet addresses and domain names, provided in
each case that the normal prices or charges for all such goods or services received after the date
of this Order shall be paid by the Special Receiver in accordance with the normal payment
practices of the Defendant or such other practices as may be agreed upon by the supplier or
service provider and the Special Receiver or as may be ordered by this Court.

Powers of 

26. The Special Receiver is hereby empowered and authorized, but not obligated, to
act at once in respect of the Defendant?s assets, property, business, and affairs and, without in
any way limiting the generality of the foregoing, the Special Receiver is hereby expressly
empowered and authorized to do any of the following where the Special Receiver considers it
necessary, appropriate, or desirable:

a. To take possession of and exercise control over the Defendant?s property and any
and all proceeds, receipts and disbursements arising out of or from the Defendant?s

property;

b. To receive, preserve and protect the Defendant?s property, or any part or parts
thereof, including, but not limited to, the changing of locks and security codes, the
relocating of property to safeguard it, the engaging of independent security
personnel, the taking of physical inventories and the placement of such insurance
coverage as may be necessary or desirable;

Exhibit A

To manage, operate and carry on the business of the Defendant, including the
powers to enter into any agreements, incur any obligations in the ordinary course of
business, cease to carry on all or any part of the Defendant?s business, or cease to
perform any contracts of the Defendant;

To negotiate and enter into ?nancings, incur debt, or grant liens as necessary,
desirable, or appropriate in the management of the Defendant?s business, assets, or
affairs, subject to Court approval;

To retain, hire, or discharge employees on behalf of the receivership estate (none of
whom are, or shall be deemed to be, employees of the Court or the Special
Receiver) and to establish their wages, salaries, and bene?ts;

To engage consultants, appraisers, agents, experts, auditors, accountants, managers,
counsel and such other persons from time to time and on whatever basis, including
on a temporary basis, to assist with the Special Receiver?s powers and duties,
including without limitation those conferred by this Order, in each case subject to
Court approval; provided, that, no such Court approval shall be required with
respect to the Special Receiver?s engagement of Doss Engineering, Inc.; (2)
accountants, legal counsel or such other persons in the normal and ordinary course
of the receivership estate?s business or operations, or (3) such other third-party
contractors as may be deemed necessary by the Special Receiver to conduct the
receivership estate?s operations, including but not limited to, with respect to any
and all reclamation activities;

To purchase, lease, repair or replace machinery, equipment, inventories, supplies,
premises or other assets to continue the business of the Defendant or any part or
parts thereof;

To receive and collect all monies and accounts now owed or hereafter owing to the
Defendant and to exercise all remedies of the Defendant in collecting such monies,
including, without limitation, to enforce any security held by the Defendant;

To settle, extend or compromise any indebtedness owing to or by the Defendant,
subject to Court approval;

To execute, assign, issue and endorse documents of whatever nature in respect of
any of the Defendant?s property, whether in the Special Receiver?s name or in the
name and on behalf of the Defendant, for any purpose pursuant to this Order;

To undertake environmental or workers? health and safety assessments of the
defendant?s property and operations; To enter into consent orders, consent decrees,
or other agreements with applicable environmental regulatory agencies with respect
to the Defendant?s environmental obligations, including the Defendant?s
environmental obligations under this Order;

Exhibit A

To cause the Defendant to perform any bonding and reclamation obligations so as
to comply with applicable state and federal laws and regulations and effect the
release of bonds for the bene?t of the Defendant;

To investigate, pursue, make, file, represent, defend against, and enter an
appearance in any demand, lawsuit, action, claim, petition, filing, litigation, and
proceeding, whetherjudicial or administrative, against any person for and on behalf
of the Defendant, its interests, and its property;

To initiate, prosecute and continue the prosecution of any and all proceedings and
to defend all proceedings now pending or hereafter instituted with respect to the
Defendant, the Defendant?s property or the Special Receiver, and to settle or
compromise any such proceedings subject to Court approval;

To direct the litigation strategy of the Defendant in any lawsuit, proceeding, action,
administrative proceeding, or similar proceeding, including, without limitation,
acting on behalf of and representing the Defendant?s and its interests in any
bankruptcy proceeding involving the Defendant;

To market any or all of the Defendant?s property, including advertising and
soliciting offers in respect of the Defendant?s property or any part or parts thereof
and negotiating such terms and conditions of sale as the Special Receiver in its
discretion may deem appropriate;

To sell, convey, transfer, lease or assign the Defendant?s property or any part or
parts thereof outside the ordinary course of business,

i. Without the approval of this Court in respect of any transaction not
exceeding $50,000 up to an aggregate consideration for all such
transactions does not exceed $500,000; and

ii. With the approval of this Court;

To apply for any order or orders necessary to convey the Defendant?s property or
any part or parts thereof to a purchaser or purchasers thereof free and clear of any

liens or encumbrances affecting such property;

To report to, meet with, and discuss with such affected persons as the Special
Receiver deems appropriate all matters relating to the Defendant?s property, assets,
operations, and affairs and the receivership, and to share information, subject to
such terms as to confidentiality as the Special Receiver deems advisable;

To register a copy of this Order and any other Orders in respect of the Defendant?s
property against title to any of the Defendant?s property;

To apply for any permits, licenses, approvals, or permissions as may be required by

any governmental authority and any renewals, modifications, extensions, or releases
thereof for and on behalf of and in the name of the Defendant;

10

Exhibit A

v. To review all the Defendant?s insurance policies, including workers? compensation,
disability, general liability, and hazard insurance, and to cancel, renew, extend,
retain, modify, purchase, or otherwise deal with such insurance, engage the agent of
record therefor, and name the receivership estate as an additional insured or loss
payee, as the Special Receiver deems appropriate for the Defendant and its
properties? preservation and protection;

w. To exercise any shareholder, partnership, joint venture or other rights which the
Defendant may have;

x. To exercise any and all rights, powers, duties, and privileges of the Defendant,
including, without limitation, any attorney-client or other similar privilege;

y. To ?le a petition in bankruptcy and prosecute a bankruptcy case and any related
proceedings for the Defendant;

2. To make any and all other signi?cant decisions affecting the Defendant or its
business, affairs, or properties in the exercise of its reasonable business judgment;
and

aa. To take any steps reasonably incidental to the exercise of these powers or the
performance of its duties;

And in each case where the Special Receiver takes any such actions or steps, it shall be
exclusively authorized and empowered to do so to the exclusion of all other persons, including
the Defendant and its of?cers, directors, agents, representatives, and employees, and without
interference from any other person.

27. With respect to the exercise of the powers speci?ed in the preceding decretal
paragraph, the Special Receiver shall be vested, exclusively, with the standing and all authority
of the board of directors, shareholders, members, managers and of?cers of the Defendant and
shall exclusively have all the duties, powers, and authority thereof under its certi?cates or
articles of incorporation, operating agreements, bylaws, and any other organizational documents
with respect thereto.

28. The Special Receiver may defend against any lawsuit, action, claim, petition,

?ling, litigation, or proceeding brought against him in its capacity as a Special Receiver or

11

Exhibit A

against or pertaining to the Defendant. Any and all costs and expenses, including attorneys? fees,
arising from or incurred in connection with such legal actions or suits shall be paid as operating
expenses of the receivership estate(s).

29. The Special Receiver shall not be responsible for the preparation and ?ling of any
tax returns for the Defendant or its subsidiaries or af?liates (including any income, personal
property, commercial activity, gross receipts, sales and use, or other tax returns) for any tax
period ending prior to the date of the Special Receiver?s appointment, it being understood that
the Special Receiver shall be responsible for the preparation and ?ling of any tax returns for the
Defendant for tax periods ending during the tenure of the Special Receiver.

30. The Special Receiver may recommend to the Court that it be authorized to
perform any other duties and responsibilities it reasonably believes may be necessary or
appropriate to further the objectives of the receivership, including but not limited to leasing,
selling, assigning, transferring or conveying the Defendant?s property or any interest therein or
performing any capital improvements thereto, or such other or further relief as it may deem
necessary or appropriate to further the objectives of the receivership.

31. The Special Receiver shall prepare and ?le with the Court on a basis a
report of the Special Receiver?s actions taken pursuant to this Order and an accurate accounting
of all monies collected, disbursements made, and expenses incurred. Copies of such reports and
accountings shall be served on all counsel of record and unrepresented parties herein
simultaneously with their ?ling.

32. All actions taken by the Special Receiver pursuant to the authorizations contained

in this Order shall be valid, binding, and enforceable acts of the Defendant.

12

Exhibit A

Injunctions Against Interference with 

33. All persons, including but not limited to the Defendant and its officers, agents,
servants, employees, attorneys, and all persons in active concert or participation with them, are
enjoined from in any way interfering with the operation of the receivership or in any way
disturbing the assets, liabilities, and operations of the receivership, pending the hearing to
consider entry of a preliminary injunction and the preliminary appointment of a special receiver.

34. The Defendant is hereby enjoined from taking any action with respect to the
operation or management of its properties, assets, business, and affairs, except as requested by
the Special Receiver, pending the hearing to consider entry of a preliminary injunction and the
preliminary appointment of a special receiver.

35. All of?cers, directors, employees, attorneys, accountants, and equity interest
holders of the Defendant are directed to use their best efforts to ensure a smooth transition of
the operation of the Defendant?s business and assets to the Special Receiver, are prohibited
from interfering with the Special Receiver in the exercise of its rights, powers, duties, and
privileges hereunder or taking any action inconsistent with the terms and provisions of this
Order, (6) shall fully cooperate with the Special Receiver in carrying out its rights, privileges,
and duties under this Order, including responding to all reasonable requests for
information or documentation and execution of documents, and are barred from commencing
a case under the Bankruptcy Code or other insolvency proceeding for or on behalf of the
Defendant.

36. Any and all existing proceedings against or in respect of the Defendant or its
property are hereby stayed and suspended pending the hearing to consider entry of a preliminary

injunction and the preliminary appointment of a special receiver, provided. however, that nothing

13

Exhibit A

in this Order shall prevent any person from commencing a proceeding regarding a claim that
might otherwise become barred by statute or an existing agreement if such proceeding is not
commenced before the expiration of the stay provided by this paragraph or affect any state or
federal regulatory agency?s police and regulatory authority in respect of the Defendant and the
Defendant?s assets and operations, including any action, suit or proceeding that is taken in
respect of the Defendant by or before the regulatory agency, other than the enforcement of a
payment order by the regulatory agency.

37. No person shall ?le suit or take other legal or enforcement action against the
Defendant or the Defendant?s property, including the commencement of an involuntary case
under the Bankruptcy Code or other insolvency proceeding against the Defendant or the
Defendant?s property, except any action taken by a state or federal regulatory agency
pursuant to its police and regulatory authority in respect of the Defendant and the Defendant?s
assets and operations, including any action, suit or proceeding that is taken in respect of the
Defendant by or before the regulatory agency, other than the enforcement of a payment order by
the regulatory agency with respect to payment obligations incurred prior to the Special
Receiver?s appointment, with the written consent of the Special Receiver, or in
accordance with an Order of this Court permitting the suit or action.

38. The exercise of all rights and remedies against the Defendant, the Special
Receiver, or the Defendant?s property, including, without limitation, the exercise of setoff rights
and the creation, perfection or enforcement of a lien, are hereby stayed and suspended except
with the written consent of the Special Receiver or an Order of this Court permitting the exercise

of such rights and remedies.

14

Exhibit A

39. Nothing in this Order shall be interpreted to alter, diminish or enlarge the rights or
obligations of any person who has issued surety bonds on behalf of the Defendant (a ?Surety?) or
the rights of any bene?ciary of surety bonds issued on behalf of the Defendant as to any third
party, including any Surety or governmental authority, nor shall anything in this Order be
deemed to enjoin any Surety or governmental authority from asserting any rights, claims, or
defenses against any third party, including any Surety or governmental authority. For the
avoidance of doubt, any Surety and governmental authority shall retain any and all rights
afforded to it under the Surface Mining Coal and Reclamation Act and the Water Pollution
Control Act, the state counterparts thereto, and the rules and regulations promulgated thereunder.
Termination of Receivership Order

40. The Special Receiver may apply to the Court to terminate this Order in the event
that

a. All or substantially all of the Defendant?s mining permits shall have been
revoked pursuant to ?nal orders of the regulatory agencies that issued those
permits; or

b. The Special Receiver determines that it lacks the ability to comply with its
obligations under this Order, including for a lack of suf?cient funding; or

c. The Special Receiver is unable to reach agreements with appropriate
regulatory authorities or any Surety as to the prioritization of reclamation and
compliance efforts; or

d. Is unable to ensure it has the necessary authority and protections to manage or
dispose of liabilities, obligations or properties arising from operations or

properties outside of West Virginia; or

15

Exhibit A

e. A case under the Bankruptcy Code or other insolvency proceeding is
commenced and has not been dismissed or suspended within sixty days
thereafter.

In any of these events, the Special Receiver shall be entitled to an order terminating this Order
upon at least ten (10) days? notice to all parties in interest in the receivership. If the Court
terminates this Order then the Special Receiver shall cooperate with the Defendant or any
successor receiver in an orderly transfer of estate property.
Scope of this Order

41. To the fullest extent permissible by law given this Court?s in rem jurisdiction over
the Defendant?s property, assets, operations, and affairs, this Order is intended to and shall 
apply to all persons without regard to their residence or domicile or contacts within the State of
West Virginia and to all federal, state, and local governmental authorities having jurisdiction and
power over the Defendant?s property, assets, operations, and affairs and be given Full Faith
and Credit in accordance with the Constitution of the United States.
Retention of Jurisdiction

42. This Court shall retain jurisdiction with respect to all matters arising from or
related to the receivership estate, the Special Receiver, the management and operation of the
Defendant?s business, properties, and affairs, and the implementation of this Order.
Expiration of Order; Further Proceedings on Plaintiff?s Motion for Preliminary Relief

43. This Order, including the injunctions and the appointment of the Special Receiver
provided herein, shall continue in full force and effect pending the closing of the hearing to
consider the Plaintiff?s motion for entry of a preliminary injunction and the preliminary

appointment of a special receiver.

16

Exhibit A

44. The Court shall conduct a video or telephonic hearing to consider the Plaintiff? 
motion for entry of a preliminary injunction and the preliminary appointment of a special
receiver on 2020, at 

45. Counsel for the Plaintiff is directed to serve a copy of this Order and its motion
upon the Defendant and all known creditors, employees, equity interest holders, regulatory
agencies, owners and controllers, and other parties interest of the Defendant within three
business days from the entry of this Order. Service thereof shall constitute adequate notice of the
hearing and the relief requested in the Plaintiff?s motion. The costs and expenses associated with
such service shall constitute an expense of the receivership estate and be reimbursed, upon the
submission of an appropriate invoice therefor, by the Special Receiver.

46. Responses, if any, to the relief requested in the Plaintiff?s motion shall be ?led
with the Court and served upon the Plaintiff, c/o Bailey Glasser, LLP, 209 Capitol Street,
Charleston, West Virginia 25301, Attn: Kevin W. Barrett, kbarrett@baileyglasser.com the
Special Receiver, c/o Jackson Kelly PLLC, 500 Lee Street East, Suite 1600, Charleston, WV
25301, Attn: Robert G. McLusky, and Indemnity National
Insurance Company, c/o Barth Thompson, 202 Berkeley Street, Charleston, WV 25302, Attn:
Stephen L. Thompson, in each case so that it is received by
2020.

47. Parties who wish to appear at the video or telephonic hearing are directed to
contact Mr. Barrett at (304) 345-6555 or by email at kbarrett@baileyglasser.com.

Dated: March 2020

 

Circuit Court Judge

17

Exhibit A

EXHIBIT A
COMPENSATION OF SPECIAL RECEIVER

For the work contemplated by the Order, Doss Special Receiver, LLC will bill and be
paid on an hourly basis at Mr. Doss? customary rate (less a 15% discount) as shown on
the attached rate sheet for Doss Engineering, Inc.:

0 Provided that the Special Receiver shall be paid for a minimum of 60 hours work
per month regardless how many hours are expended, but not more than 120 hours
per month.

The Special Receiver shall be entitled to use the services of Doss Engineering, Inc. at the
rates in the attached term sheet (less a 10% discount). 

Upon entry of the Order, the Special Receiver shall be entitled to a lump sum payment of
$18,500 to cover the initial costs of professional services (including Mr. Doss?) and of
procuring additional insurance.

In the event that the Order is terminated, the Special Receiver withdraws as Receiver or
the Surety elects to stop funding the Special Receiver then upon the presentation of a
?nal bill the Surety shall pay the Special Receiver within 10 days.

18

0m 5W 
pm SW SW

Exhibit A

 

RATE FEE SCHEDULE Con?dential
As of January 1, 2020
Principal I Professional Engineer $150.00 hour
Litigation Due Diligence Support Quoted on Request
Senior Mining Engineer Project Manager $90.00 hour
Senior Geologist $85.00 hour
Staff Engineer $75.00 hour
Senior Aquatic Biologist! Taxonomist $75.00 hour
Staff Geologist $65.00 hour
Staff Biologist $65.00 hour
Engineering/ Environmental Technician
Auto-Cad $60.00 hour
Permitting Of?ce $50.00 hour
Field $40.00 hour
Laboratory $30.00 hour
Clerical/ Administrative $37.50 hour
2-man Survey Crew $85.00 I hour
2?man GPS Survey Crew $120.00 hour
UAV Drone Pilot $75.00 hour
Mileage $0.75 mile
Misc. Materials, Other Direct Expenses Cost 10%
Travel At Cost
Payment Terms: Net 30 days

from receipt of invoice

 

Rates are effective January 1, 2020, but are subject to change without notice.

19

Exhibit A

EXHIBIT
FUNDING FACILITY TERM SHEET

ERP ENVIRONMENTAL FUND, INC.

1,000,000 Senior Secured Receivership Delayed Draw Term Loan Facility

Summary of Terms and Conditions

THIS SUMMARY OF TERMS AND CONDITIONS (THE DOES NOT
CONSTITUTE A LEGALLY BINDING OBLIGATION OR COMMITMENT, UNLESS AND
UNTIL IT IS FULLY EXECUTED AND DELIVERED BY ALL PARTIES HERETO AND ALL
CONDITIONS PRECEDENT SET FORTH BELOW HAVE BEEN SATISFIED OR WAIVED.
The terms outlined below in this Term Sheet are the terms and conditions for a senior secured
receivership delayed draw term loan credit facility to be made available to ERP Environmental
Group, Inc. This Term Sheet; a credit agreement containing substantially the terms and subject
the conditions setforth in the Term Sheet. if any; the Temporary Order, the Preliminary Order,
and any other order entered by the Court in connection with this Term Sheet (cottectiveiy, the
"Orders shall constitute the exclusive and definitive documentation and agreement among the
parties (the ?Receivership acilitjy Documents 

 

 

 

 

Borrower: ERP Environmental Fund, Inc., (?Borrower?), by and through Doss Special
Receiver, LLC, as its proposed Special Receiver (the ?Receiver?) in a
proceeding (the ?Receivership?) to be ?led in the Circuit Court of Kanawha
County, West Virginia (the ?Court?). The date of the commencement of the
Receivership will be referred to as the ?Receivership Date.?

Lender: Indemnity National Insurance Company, a Mississippi corporation (?Lender?).

Funding A maximum amount of 1,000,000 in the aggregate, as follows:

Facility:

A senior secured US. dollar denominated delayed draw term loan facility in an
aggregate principal amount of up to $1,000,000 (the ?Receivership Facility?
and the loans made thereunder, the ?Receivership Loans?). The Receivership
Loans may be drawn in multiple installments, with up to $325,000 of
Receivership Loans available upon entry of the Temporary Order.

 

Security and
Priority:

 

 

The obligations of the Borrower under the Receivership Facility shall have the
priority afforded to them pursuant to the Orders and shall be secured by a
perfected security interest and lien on all real and personal property of the
Borrower, whether now owned or hereafter acquired (the ?Collateral?), without
any requirement for the execution, delivery, recording or ?ling of any security
agreement, mortgage, deed of trust, ?nancing statement or similar document,
instrument or agreement covering such Collateral.

 

 

20

Exhibit A

 

Upon entry of the Preliminary Order (as de?ned below), the Lender?s lien on
the Collateral shall be superior to and shall prime any and all pre-existing liens
and security interests in the Collateral.

The Lender shall be deemed to have consented to the release of its liens such
that the Receiver can effectuate the sale of the property of the Borrower, subject
to the terms of Orders, provided, that the proceeds of such sale(s) shall only be
used for those purposes identi?ed in the Orders, subject to a budget to be
negotiated by the Lender and the Receiver.

The Receiver, on behalf of the Borrower, shall execute and deliver to Lender all
such mortgages, security agreements, deeds of trust or other documents and
instruments as may be reasonably required by the Lender to evidence and secure
the Receivership Facility. The Lender shall be solely responsible for all costs
associated with the preparation and ?ling of any requested ?nancing documents.

 

Purpose:

Amounts that may be made available under the Receivership Facility shall be
used by the Receiver to fund the costs of administering the Receivership and for
the general operating expenses of the Borrower in complying with the speci?c
tasks identi?ed in the applicable Orders. All expenditures from the
Receivership Loans, other than the initial Receivership Loan of $325,000, shall
be subject to a budget to be prepared by the Receiver and approved by the
Lender (the ?Budget?) subject to permitted variances to be agreed upon by the
Receiver and the Lender.

 

Interest:

The Receivership Loans shall bear interest at the rate of two percent per
annum. All interest shall be computed on the basis of a year consisting of 360
days and shall be calculated based on the daily principal amount outstanding for
such period. All interest shall be payable in kind and shall be paid in full on the
Termination Date (as de?ned below).

 

Maturity:

The Receivership Facility shall mature upon the ?Termination Date,? which,
with respect to the Receivership Facility. shall be the earliest of the date that
is twenty-four (24) months after the Receivership Date and the acceleration
of the Receivership Loans and the termination of the Receivership Facility in
accordance with the Receivership Facility Documents.

 

 

Conditions
Precedent to
Initial
Credit
Extension:

 

The obligation of the Lender to make the initial Receivership Loan is subject to
the satisfaction (or waiver by the Lender) of the following conditions:

The Receivership Date shall have occurred on or before March 27, 2020;
and

A temporary order creating the Receivership estate, appointing Doss
Special Receiver, LLC as Receiver. and approving the Receivership
Facility and this Term Sheet (the ?Temporary Order"), shall have been
entered by the Court, in form and substance acceptable to Lender, within
seven (7) days of the Receivership Date.

 

 

21

Exhibit A

 

Conditions
Precedent to
Subsequent

Credit

Extensions:

The obligation of the Lender to make any Receivership Loans after the initial
Receivership Loan is subject to the satisfaction (or waiver by the Lender) of the
following conditions:

Each of the Receivership Facility Documents shall continue to be in full
force and effect and no Event of Default (as de?ned below) shall have
occurred and be continuing;

A preliminary order reaf?rming the Temporary Order and granting
certain other relief, including, but not limited to, the priming liens
identi?ed herein (the ?Preliminary Order?), shall have been entered by
the Court, in form and substance acceptable to Lender;

The Borrowerf Receiver shall have complied in all material respects with
all agreements and covenants required to be performed or complied with
by it under the Receivership Facility Documents;

The Receiver shall have provided the Lender with a Budget and, if
applicable, the Borrower shall have been conducting its business in
accordance with the Budget;

A request for borrowing shall have been made by the Receiver;

The Orders shall be in full force and effect and shall not have been
vacated, revised, or modi?ed or stayed in any respect; and

The making of such advance shall not violate any requirement of law and
shall not be enjoined temporarily, preliminarily or permanently.

 

 

Events
Default:

of

The occurrence of any of the following events, unless waived by the Lender in
writing, shall constitute an ?Event of Default? and collectively ?Events of
Default?:

The failure of Borrower to pay principal or interest at the Termination
Date or as otherwise set forth in the Receivership Facility Documents;

The Receiver shall fail to observe or to perform any other covenant.
obligation, condition or agreement contained in the Receivership Facility
Documents;

The Receiver shall make any expenditure of the proceeds of the
Receivership Loans or the Collateral that is in excess, subject to any
permitted variances, of the amounts permitted by the Budget;

The Receivership is dismissed or terminated;

A voluntary or involuntary petition in bankruptcy, or other state or federal
law proceeding for the rearrangement of debts, is ?led by or against the
Borrower;

Doss Special Receiver, LLC resigns or is terminated as the Receiver (or
Barry Doss ceases to be the manager of Doss Special Receiver, LLC) and
is not replaced by a substitute receiver (or manager) satisfactory to the
Lender within thiity (30) days of such resignation or termination;

Withoat the express written consent of Lender, any surety bond issued by
the Lender in favor of the Borrower is forfeited by the obligee;

The applicable Order shall not be in force and shall have been vacated,

 

 

revised, or modi?ed or stayed in any respect; and

 

22

Exhibit A

 

The Court approves any alternative ?nancing which, without the written
consent of the Lender, primes the liens and security interests granted to
the Lender pursuant to this Term Sheet.

Any Event of Default shall be deemed not to be continuing if the events, acts or
conditions that gave rise to such Event of Default have been remedied or cured
or have ceased to exist.

Upon the occurrence of an Event of Default, the Lender may declare the
termination, reduction or restriction of any further commitment to the extent any
such commitment remains, (ii) all obligations to be immediately due and
payable without presentment, demand, protest, or other notice of any kind, all
of which are expressly waived by the Borrower, and the termination of the
Receivership Facility; and and upon the giving of ?ve (5) calendar days'
notice to the Borrower, exercise all other rights and remedies provided for the
in the Receivership Facility Documents and applicable law, including, but not
limited, the exercise of any and all rights in the Collateral. In the event that the
Receivership Facility is terminated for any reason other than as identi?ed in 
above, and the Borrower does not have suf?cient cash on hand to pay the
outstanding fees and expenses of the Receiver, the Lender shall pay any unpaid
amount to the Receiver within ten (I. 0) days of such request by the Receiver.

 

 

 

 

Reporting: The Receiver shall provide the Lender with all information reasonably
requested by the Lender in connection with the Borrower and the Receivership
Facility. including, but not limited to, budgets, budget variances, accounts
receivable and payable statements, general ledgers, etc.

Governing This Term Sheet shall be governed by the laws of the state of New York without

Law: regard to its con?ict of law principles.

 

 

ERP ENVIRONMENTAL FUND, INC.

 

By its Special Receiver, Doss Engineering, LLC,
By its Manager, R. Barry Doss

INDEMNITY NATIONAL INSURANCE COMPANY

 

Thomas Elkins, President

23

EXHIBIT 

Exhibit 

IN THE CIRCUIT COURT OF KANAWHA COUNTY, WEST VIRGINIA

HAROLD D. WARD, Director, Division of
Mining and Reclamation, West Virginia
Department of Environmental Protection,

Plaintiff,
v. CIVIL ACTION NO.

ERP ENVIRONMENTAL FUND, IN C.,

Defendant.

PRELIMINARY INJUNCTION AND ORDER PRELIMINARILY
APPOINTING A SPECIAL RECEIVER FOR 
PROPERTY, ASSETS, AND OPERATIONS

Upon consideration of the emergency motion of the Plaintiff for entry of a preliminary
injunction and order appointing a special receiver of the Defendant?s property, assets, and
operations and the declaration of the Plaintiff in support thereof; and upon the record of the
evidentiary hearing held before the Court to consider the Plaintiff?s emergency motion; and it
appearing that there exist imminent and identi?able threats to the public health and safety
that require immediate and ongoing action to prevent such threats and an exigent need for
immediate and ongoing funding and competent management to ensure the Defendant?s
compliance with laws designed to prevent such threats that warrant and require immediate,
preliminary relief; and this Court having entered an Order granting the Plaintiff request for a
temporary restraining order and temporarily appointing a special receiver (the ?Temporary
Order?); and it appearing that the Defendant has consented to the relief requested and granted

herein, it is hereby ORDERED that:

Exhibit 

1. This Court has personal jurisdiction over the Defendant, which holds mining and
water pollution control permits issued by the Plaintiff and operates active coal mining sites
within the State of West Virginia.

2. This Court has subject matter jurisdiction and venue over this action pursuant to
and in accordance with W. Va. Code 

3. This Court has the power to issue the preliminary relief granted hereby pursuant
to W. Va. Code 22?3-170) and West Virginia Rule of Civil Procedure 65(a).

4. The Plaintiff?s emergency motion, to the extent that it seeks entry of a preliminary
injunction and the appointment of a special receiver on a preliminary basis, is hereby granted.
Injunctive Relief

5. The Defendant shall be and hereby is enjoined from violating the terms and
conditions of its mining and water pollution control permits and the West Virginia Surface Coal
Mining and Reclamation Act and the West Virginia Water Pollution Control Act and the rules
promulgated thereunder, pending the entry of a ?nal judgment in this action.

Appointment of a Receiver

6. Pending the entry of a ?nal judgment in this action, a Special Receiver is hereby
appointed pursuant to W. Va. Code 53-6-1 on a preliminary basis, subject to the Court?s
oversight, supervision, and further approval, as needed, to assume full operation,
management, and control of the Defendant?s assets and operations, oversee, manage, and
direct the acts, conduct, operations, assets, liabilities, and ?nancial conditions of the Defendant,
and in consultation with the applicable environmental regulatory agencies, develop a plan and
schedule for compliance with the Defendant?s permits and take all necessary and appropriate

action to bring the Defendant?s operations into compliance with the Defendant?s permits, the

Exhibit 

federal Surface Mining Control and Reclamation Act and the federal Clean Water Act and the
state counterparts thereto and the rules promulgated thereunder, and the orders of the applicable
environmental regulatory agencies, all for the protection of the public and the environment and
the preservation of the Defendant?s business and assets for the bene?t of all parties having an
interest in the Defendant and its business, assets, and affairs.

7. The Plaintiff and the Special Receiver have advised the Court that due to the
number and current status of the permits the Defendant holds, it is impractical to abate all
existing violations and commence or maintain reclamation work simultaneously on all of the
Defendant?s permitted sites and outfalls and the Defendant holds several permits and
property interests outside the State of West Virginia. The Special Receiver shall prioritize
abatement and reclamation based upon criteria and input of the applicable regulatory authorities
and Defendant?s reclamation bond sureties taking into consideration such factors as site
conditions, the need for public safety, environmental protection, ef?cient scheduling, cash ?ow
and operational concerns. The Plaintiff and the Special Receiver shall take all reasonable steps
necessary or appropriate to secure in states outside the State of West Virginia the same
authorities and protections for the Special Receiver as are set forth in this Order.

8. Doss Special Receiver, LLC, a West Virginia limited liability company, is hereby
appointed as the Special Receiver for the purposes set forth in the immediately preceding
decretal paragraph. Doss Special Receiver, LLC is a wholly owned subsidiary of Doss
Engineering, Inc., a West Virginia corporation, and Barry Doss is the sole manager of Doss
Special Receiver, LLC. No individual or entity may succeed or replace Doss Special Receiver,
LLC, Doss Engineering, Inc., or Barry Doss and no change in control of Doss Special Receiver,

LLC may occur, in each case without the express written consent of the Plaintiff and a further

Exhibit 

order of this Court. Without limiting the generality of the foregoing, Doss Special Receiver,
LLC may retain and compensate Doss Engineering, Inc., either directly or on behalf of the
receivership estate, to provide consulting and other services to the receivership estate.

9. The Special Receiver and its owner, manager, employees, agents, attorneys and
other professionals hired by it with respect to performing its duties hereunder shall have no
personal liability and shall have no claim asserted against them relating to the performance of the
Special Receiver?s duties under this Order, except for claims for actual damages (and not
consequential damages) due to their gross negligence, gross or willful misconduct, malicious acts
or the failure to comply with Orders of this Court. In any event, the liability of the Special
Receiver or persons acting on its behalf shall be limited to the assets of Defendant?s estate.

10. Without limiting the generality of the immediately preceding decretal paragraph,
the Special Receiver and its owner, manager, employees, agents, attorneys and other
professionals hired by it are not, and shall not be construed as or deemed to be, an agent, owner,
operator, or controller of the Defendant or its operations for the purposes of the Surface Mining
Control and Reclamation Act and the Clean Water Act and the state counterparts thereto and the
rules and regulations thereunder, the applicant violator system, or any other applicable
environmental law, solely on account of the performance of the Special Receiver?s duties under
this Order, and the Plaintiff shall work with federal and other state regulatory authorities as
necessary to ensure that the Special Receiver and its owner, manager, employees, agents,
attorneys and other professionals hired by it are not either held liable under such laws or
rendered ineligible for permits in West Virginia or elsewhere as a result of their actions pursuant

to this Order.

Exhibit 

11. The Special Receiver shall be compensated on an hourly basis at the hourly rates
set forth in Exhibit A hereto, which terms and conditions are hereby approved, and no additional
orders or approvals by the Court or any other party shall be necessary with respect to such
compensation or the payment thereof to the Special Receiver.

12. Within thirty days of the date hereof, the Special Receiver shall obtain a surety
bond in the amount of $250,000 pursuant to and in accordance with W. Va. Code 53-6?1 a
copy of which bond shall be filed with the Court.

13. The Special Receiver is hereby authorized to borrow money on the terms and
subject to the conditions set forth in Exhibit hereto, which terms and conditions are hereby
approved (as so approved, the ?Funding Facility?).

Creation of Receivership Estate

14. Immediately upon entry of this Order, a receivership estate shall be deemed
created for the Defendant, which estate shall be under the sole and exclusive control,
supervision, and management of the Special Receiver.

15. All of the Defendant?s real property, personal property, both tangible and
intangible and including intellectual property, leases (whether as lessor or lessee) of real or
personal property, permits, assets, books, records, ?xtures, equipment, inventory, as-extracted
assets, reserves, and any other real, personal, tangible, or intangible property of the Defendant of
any kind or nature whatsoever, wherever located, shall be deemed immediately transferred to the
Defendant?s receivership estate under the management, operation, and control of the Special
Receiver without any further action on the part of the Defendant or the Special Receiver.

Without limiting the generality of the foregoing, the assets transferred shall include all rights of

Exhibit 

the Defendant in, to, or under any insurance policy and insurance proceeds, including any policy
or proceeds applicable to any of the liabilities transferred to the receivership.

16. All persons, including the Defendant, all of its of?cers, directors, employees,
stock or equity holders, any secured or unsecured creditors of the Defendant, and any other
persons, are ordered to turn over to the Special Receiver all cash, keys, documents, deposits,
payments received, books and records, equipment, software, and any other property of the
Defendant, including water samples and the results of the testing thereof, in their possession,
custody, or control or that come into their possession, custody, or control after the entry of this
Order.

17. The banks and other financial institutions where the Defendant has account
relationships are authorized and directed to comply with all instructions given by the Special
Receiver in furtherance of the authority vested in him in this Order and any other Order entered-
in connection with this action.

18. Any person claiming to own property situated on the Defendant?s property or
used by the Defendant in connection with the operation of its business or property is enjoined
from removing said property absent the actual written consent of the Special Receiver or upon
further Order of the Court.

19. All existing claims, liens, and encumbrances against the Defendant or its
properties or assets shall be deemed to constitute claims, liens, or encumbrances against the
Defendant?s receivership estate.

20. The Special Receiver shall have no liability or responsibility for the payment or
discharge of any claims, liens, or encumbrances against the Defendant?s receivership estate. The

Special Receiver shall not be liable for any employee-related liabilities of the Defendant, other

Exhibit 

than the amounts the Special Receiver may speci?cally agree in writing to pay. The Special
Receiver, subject to the terms and conditions of this Order, shall be liable for any employee?
related liabilities relating to any employees that the Special Receiver may hire.

21. No person shall ?le suit or take other legal or enforcement action against the
Special Receiver without an Order of this Court permitting the suit or action.

22. Notwithstanding anything to the contrary herein, nothing shall empower the
Special Receiver or the Defendant to carry on any business or activity which the Defendant is not
lawfully entitled to carry on or exempt the Special Receiver or the Defendant from
complying with statutory or regulatory provisions relating to the public health and safety or the
environment.

23. Any and all costs, expenses, and liabilities of the receivership and the receivership
estate created hereby, including, without limitation, the debts and liabilities incurred by the
Special Receiver under the Funding Facility, the costs and expenses of the Special Receiver, the
fees and expenses of any professionals retained by the Special Receiver, and the costs and
expenses of the operation of the Defendant?s business, shall constitute claims against the
Defendant?s receivership estate, shall be paid as a ?rst-priority expense from the net proceeds of
the operations or income of the Defendant and the sale of the Defendant?s properties and assets,
and shall be senior to any valid, enforceable, and unavoidable liens and security interests in any
collateral that were properly perfected by the date hereof, it being understood that the debts
and liabilities under the Funding Facility shall be subordinate to any such valid, enforceable,
unavoidable, and properly perfected liens and security interests, nothing in this action or
Order shall make the Plaintiff responsible for the payment of the costs, expenses, and liabilities

of the receivership and the receivership estate created hereby, and (0) nothing in this (or any

Exhibit 

other) paragraph shall affect the Special Receiver?s right to payment of his compensation and
expenses from the Funding Facility.

24. All persons having oral or written agreements with the Defendant for the supply
of goods or services are hereby restrained pending further Order of this Court from
discontinuing, altering, interfering with or terminating the supply of such goods or services as
may be required by the Special Receiver.

25. The Special Receiver shall be entitled to the continued use of the Defendant?s
current telephone numbers, facsimile numbers, internet addresses and domain names, provided in
each case that the normal prices or charges for all such goods or services received after the date
of this Order shall be paid by the Special Receiver in accordance with the normal payment
practices of the Defendant or such other practices as may be agreed upon by the supplier or
service provider and the Special Receiver or as may be ordered by this Court.

Powers of the Receiver

26. The Special Receiver is hereby empowered and authorized, but not obligated, to
act at once in respect of the Defendant?s assets, property, business, and affairs and, without in
any way limiting the generality of the foregoing, the Special Receiver is hereby expressly
empowered and authorized to do any of the following where the Special Receiver considers it
necessary, appropriate, or desirable:

a. To take possession of and exercise control over the Defendant?s property and any
and all proceeds, receipts and disbursements arising out of or from the Defendant?s

property;

b. To receive, preserve and protect the Defendant?s property, or any part or parts
thereof, including, but not limited to, the changing of locks and security codes, the
relocating of property to safeguard it, the engaging of independent security
personnel, the taking of physical inventories and the placement of such insurance
coverage as may be necessary or desirable;

Exhibit 

To manage, operate and carry on the business of the Defendant, including the
powers to enter into any agreements, incur any obligations in the ordinary course of
business, cease to carry on all or any part of the Defendant?s business, or cease to
perform any contracts of the Defendant;

To negotiate and enter into ?nancings, incur debt, or grant liens as necessary,
desirable, or appropriate in the management of the Defendant?s business, assets, or
affairs, subject to Court approval;

To retain, hire, or discharge employees on behalf of the receivership estate (none of
whom are, or shall be deemed to be, employees of the Court or the Special
Receiver) and to establish their wages, salaries, and bene?ts;

To engage consultants, appraisers, agents, experts, auditors, accountants, managers,
counsel and such other persons from time to time and on whatever basis, including
on a temporary basis, to assist with the Special Receiver?s powers and duties,
including without limitation those conferred by this Order, in each case subject to
Court approval; provided, that, no such Court approval shall be required with
respect to the Special Receiver?s engagement of Doss Engineering, Inc; (2)
accountants, legal counsel or such other persons in the normal and ordinary course
of the receivership estate?s business or operations, or (3) such other third?party
contractors as may be deemed necessary by the Special Receiver to conduct the
receivership estate?s operations, including but not limited to, with respect to any
and all reclamation activities;

To purchase, lease, repair or replace machinery, equipment, inventories, supplies,
premises or other assets to continue the business of the Defendant or any part or
parts thereof;

To receive and collect all monies and accounts now owed or hereafter owing to the
Defendant and to exercise all remedies of the Defendant in collecting such monies,
including, without limitation, to enforce any security held by the Defendant;

To settle, extend or compromise any indebtedness owing to or by the Defendant,
subject to Court approval;

To execute, assign, issue and endorse documents of whatever nature in respect of
any of the Defendant?s property, whether in the Special Receiver?s name or in the
name and on behalf of the Defendant, for any purpose pursuant to this Order;

To undertake environmental or workers? health and safety assessments of the
defendant?s property and operations; To enter into consent orders, consent decrees,
or other agreements with applicable environmental regulatory agencies with respect
to the Defendant?s environmental obligations, including the Defendant?s
environmental obligations under this Order;

Exhibit 

To cause the Defendant to perform any bonding and reclamation obligations so as
to comply with applicable state and federal laws and regulations and effect the
release of bonds for the bene?t of the Defendant;

To investigate, pursue, make, ?le, represent, defend against, and enter an
appearance in any demand, lawsuit, action, claim, petition, filing, litigation, and
proceeding, whether judicial or administrative, against any person for and on behalf
of the Defendant, its interests, and its property;

To initiate, prosecute and continue the prosecution of any and all proceedings and
to defend all proceedings now pending or hereafter instituted with respect to the
Defendant, the Defendant?s property or the Special Receiver, and to settle or
compromise any such proceedings subject to Court approval;

To direct the litigation strategy of the Defendant in any lawsuit, proceeding, action,
administrative proceeding, or similar proceeding, including, without limitation,
acting on behalf of and representing the Defendant?s and its interests in any
bankruptcy proceeding involving the Defendant;

To market any or all of the Defendant?s property, including advertising and
soliciting offers in respect of the Defendant?s property or any part or parts thereof
and negotiating such terms and conditions of sale as the Special Receiver in its
discretion may deem appropriate;

To sell, convey, transfer, lease or assign the Defendant?s property or any part or
parts thereof outside the ordinary course of business,

i. Without the approval of this Court in respect of any transaction not
exceeding $50,000 up to an aggregate consideration for all such
transactions does not exceed $500,000; and

ii. With the approval of this Court;

To apply for any order or orders necessary to convey the Defendant?s property or
any part or parts thereof to a purchaser or purchasers thereof free and clear of any
liens or encumbrances affecting such property;

To report to, meet with, and discuss with such affected persons as the Special
Receiver deems appropriate all matters relating to the Defendant?s property, assets,
operations, and affairs and the receivership, and to share information, subject to
such terms as to confidentiality as the Special Receiver deems advisable;

To register a copy of this Order and any other Orders in respect of the Defendant?s
property against title to any of the Defendant?s property;

To apply for any permits, licenses, approvals, or permissions as may be required by
any governmental authority and any renewals, modi?cations, extensions, or releases
thereof for and on behalf of and in the name of the Defendant;

10

Exhibit 

v. To review all the Defendant?s insurance policies, including workers? compensation,
disability, general liability, and hazard insurance, and to cancel, renew, extend,
retain, modify, purchase, or otherwise deal with such insurance, engage the agent of
record therefor, and name the receivership estate as an additional insured or loss
payee, as the Special Receiver deems appropriate for the Defendant and its
properties? preservation and protection;

w. To exercise any shareholder, partnership, joint venture or other rights which the
Defendant may have;

x. To exercise any and all rights, powers, duties, and privileges of the Defendant,
including, without limitation, any attomey?client or other similar privilege;

y. To ?le a petition in bankruptcy and prosecute a bankruptcy case and any related
proceedings for the Defendant;

z. To make any and all other signi?cant decisions affecting the Defendant or its
business, affairs, or properties in the exercise of its reasonable business judgment;
and

aa. To take any steps reasonably incidental to the exercise of these powers or the
performance of its duties;

And in each case where the Special Receiver takes any such actions or steps, it shall be
exclusively authorized and empowered to do so to the exclusion of all other persons, including
the Defendant and its of?cers, directors, agents, representatives, and employees, and without
interference from any other person.

27. With respect to the exercise of the powers speci?ed in the preceding decretal
paragraph, the Special Receiver shall be vested, exclusively, with the standing and all authority
of the board of directors, shareholders, members, managers and of?cers of the Defendant and
shall exclusively have all the duties, powers, and authority thereof under its certi?cates or
articles of incorporation, operating agreements, bylaws, and any other organizational documents
with respect thereto.

28. The Special Receiver may defend against any lawsuit, action, claim, petition,

?ling, litigation, or proceeding brought against him in its capacity as a Special Receiver or

11

Exhibit 

against or pertaining to the Defendant. Any and all costs and expenses, including attomeys? fees,
arising from or incurred in connection with such legal actions or suits shall be paid as operating
expenses of the receivership estate(s).

29. The Special Receiver shall not be responsible for the preparation and ?ling of any
tax returns for the Defendant or its subsidiaries or af?liates (including any income, personal
property, commercial activity, gross receipts, sales and use, or other tax returns) for any tax
period ending prior to the date of the Special Receiver?s appointment, it being understood that
the Special Receiver shall be responsible for the preparation and ?ling of any tax returns for the
Defendant for tax periods ending during the tenure of the Special Receiver.

30. The Special Receiver may recommend to the Court that it be authorized to
perform any other duties and responsibilities it reasonably believes may be necessary or
appropriate to further the objectives of the receivership, including but not limited to leasing,
selling, assigning, transferring or conveying the Defendant?s property or any interest therein or
performing any capital improvements thereto, or such other or further relief as it may deem
necessary or appropriate to further the objectives of the receivership.

31. The Special Receiver shall prepare and ?le with the Court on a basis a
report of the Special Receiver?s actions taken pursuant to this Order and an accurate accounting
of all monies collected, disbursements made, and expenses incurred. Copies of such reports and
accountings shall be served on all counsel of record and unrepresented parties herein
simultaneously with their ?ling.

32. All actions taken by the Special Receiver pursuant to the authorizations contained

in this Order shall be valid, binding, and enforceable acts of the Defendant.

12

Exhibit 

Iniunctions Against Interference with Receivershin

33. All persons, including but not limited to the Defendant and its of?cers, agents,
servants, employees, attorneys, and all persons in active concert or participation with them, are
enjoined from in any way interfering with the operation of the receivership or in any way
disturbing the assets, liabilities, and operations of the receivership, pending further Order of this
Court.

34. The Defendant is hereby enjoined from taking any action with respect to the
operation or management of its properties, assets, business, and affairs, except as requested by
the Special Receiver, pending further Order of this Court.

35. All of?cers, directors, employees, attorneys, accountants, and equity interest
holders of the Defendant are directed to use their best efforts to ensure a smooth transition of
the operation of the Defendant?s business and assets to the Special Receiver, are prohibited
from interfering with the Special Receiver in the exercise of its rights, powers, duties, and
privileges hereunder or taking any action inconsistent with the terms and provisions of this
Order, shall fully cooperate with the Special Receiver in carrying out its rights, privileges,
and duties under this Order, including responding to all reasonable requests for
information or documentation and execution of documents, and are barred from commencing
a case under the Bankruptcy Code or other insolvency proceeding for or on behalf of the
Defendant.

36. Any and all existing proceedings against or in respect of the Defendant or its
property are hereby stayed and suspended pending further Order of this Court, provided,
however, that nothing in this Order shall prevent any person from commencing a proceeding

regarding a claim that might otherwise become barred by statute or an existing agreement if such

13

Exhibit 

proceeding is not commenced before the expiration of the stay provided by this paragraph or 
affect any state or federal regulatory agency?s police and regulatory authority in respect of the
Defendant and the Defendant?s assets and operations, including any action, suit or proceeding
that is taken in respect of the Defendant by or before the regulatory agency, other than the
enforcement of a payment order by the regulatory agency.

37. No person shall ?le suit or take other legal or enforcement action against the
Defendant or the Defendant?s property, including the commencement of an involuntary case
under the Bankruptcy Code or other insolvency proceeding against the Defendant or the
Defendant?s property, except any action taken by a state or federal regulatory agency
pursuant to its police and regulatory authority in respect of the Defendant and the Defendant?s
assets and operations, including any action, suit or proceeding that is taken in respect of the
Defendant by or before the regulatory agency, other than the enforcement of a payment order by
the regulatory agency with respect to payment obligations incurred prior to the Special
Receiver?s appointment, with the written consent of the Special Receiver, or in
accordance with an Order of this Court permitting the suit or action.

38. The exercise of all rights and remedies against the Defendant, the Special
Receiver, or the Defendant?s property, including, without limitation, the exercise of setoff rights
and the creation, perfection or enforcement of a lien, are hereby stayed and suspended except
with the written consent of the Special Receiver or an Order of this Court permitting the exercise
of such rights and remedies.

39. Nothing in this Order shall be interpreted to alter, diminish or enlarge the rights or
obligations of any person who has issued surety bonds on behalf of the Defendant (a ?Surety?) or

the rights of any bene?ciary of surety bonds issued on behalf of the Defendant as to any third

14

Exhibit 

party, including any Surety or governmental authority, nor shall anything in this Order be
deemed to enjoin any Surety or governmental authority from asserting any rights, claims, or
defenses against any third party, including any Surety or governmental authority. For the
avoidance of doubt, any Surety and governmental authority shall retain any and all rights
afforded to it under the Surface Mining Coal and Reclamation Act and the Water Pollution
Control Act, the state counterparts thereto, and the rules and regulations promulgated thereunder.
Termination of Receivership Order
40. The Special Receiver may apply to the Court to terminate this Order in the event
that
a. All or substantially all of the Defendant?s mining permits shall have been
revoked pursuant to ?nal orders of the regulatory agencies that issued those
permits; or
b. The Special Receiver determines that it lacks the ability to comply with its
obligations under this Order, including for a lack of suf?cient funding; or
c. The Special Receiver is unable to reach agreements with appropriate
regulatory authorities or any Surety as to the prioritization of reclamation and
compliance efforts; or
d. Is unable to ensure it has the necessary authority and protections to manage or
dispose of liabilities, obligations or properties arising from operations or
properties outside of West Virginia; or
e. A case under the Bankruptcy Code or other insolvency proceeding is
commenced and has not been dismissed or suspended within sixty days

thereafter.

15

Exhibit 

In any of these events, the Special Receiver shall be entitled to an order terminating this Order
upon at least ten (10) days? notice to all parties in interest in the receivership. If the Court
terminates this Order then the Special Receiver shall cooperate with the Defendant or any
successor receiver in an orderly transfer of estate property.
Scope of this Order

41. To the fullest extent permissible by law given this Court?s in rem jurisdiction over
the Defendant?s property, assets, operations, and affairs, this Order is intended to and shall 
apply to all persons without regard to their residence or domicile or contacts within the State of
West Virginia and to all federal, state, and local governmental authorities having jurisdiction and
power over the Defendant?s property, assets, operations, and affairs and be given Full Faith
and Credit in accordance with the Constitution of the United States.
Retention of urisdictigg

42. This Court shall retain jurisdiction with respect to all matters arising from or
related to the receivership estate, the Special Receiver, the management and operation of the
Defendant?s business, properties, and affairs, and the implementation of this Order.
Notice of Entry of Order

43. Counsel for the Plaintiff is directed to serve a copy of this Order upon the
Defendant and all known creditors, employees, equity interest holders, regulatory agencies,
owners and controllers, and other parties interest of the Defendant within ?ve business days from
the entry of this Order. The costs and expenses associated with such service shall constitute an
expense of the receivership estate and be reimbursed, upon the submission of an appropriate

invoice therefor, by the Special Receiver.

16

Exhibit 

44. This Order supersedes and replaces the Temporary Order previously entered by
the Court, but shall not be deemed to affect the rights of any person under the Temporary Order
for any acts or actions undertaken pursuant thereto prior to the date hereof.

Dated: March 2020

 

Circuit Court Judge

17

Exhibit 

EXHIBIT A
COMPENSATION OF SPECIAL RECEIVER

For the work contemplated by the Order, Doss Special Receiver, LLC will bill and be
paid on an hourly basis at Mr. Doss? customary rate (less a 15% discount) as shown on
the attached rate sheet for Doss Engineering, Inc.:

0 Provided that the Special Receiver shall be paid for a minimum of 60 hours work
per month regardless how many hours are expended, but not more than 120 hours
per month.

The Special Receiver shall be entitled to use the services of Doss Engineering, Inc. at the
rates in the attached term sheet (less a 10% discount).

Upon entry of the Order, the Special Receiver shall be entitled to a lump sum payment of
$18,500 to cover the initial costs of professional services (including Mr. Doss?) and of
procuring additional insurance.

In the event that the Order is terminated, the Special Receiver withdraws as Receiver or
the Surety elects to stop funding the Special Receiver then upon the presentation of a
?nal bill the Surety shall pay the Special Receiver within 10 days.

18

RATE FEE SCHEDULE
As ofJanuary 1, 2020

Exhibit 

on?denrinl

 

Principal Professional Engineer
Litigation Due Diligence Support
Senior Mining Engineer Project Manager
Senior Geologist
Staff Engineer
Senior Aquatic Biologist Taxonomist
Staff Geologist
Staff Biologist
Engineering Environmental Technician
Auto-Cad
Permitting Of?ce
Field
Laboratory
Clerical lAdministrative
2?man Survey Crew
2-man GPS Survey Crew
UAV Drone Pilot
Mileage

Misc. Materials, Other Direct Expenses
Travel

Payment Terms:

$150.00 hour

Quoted on Request

$90.00 hour
$85.00 hour
$75.00 hour
$75.00 hour
$65.00 hour
$65.00 hour
$60.00 hour
$50.00 hour
$40.00 hour
$30.00 hour
$37.50 hour
$85.00 hour
$120.00 hour
$75.00 hour
$0.75 mile
Cost+10%

At Cost

Net 30 days

from receipt of invoice

 

Rates are effective January 1, 2020, but are subject to change without notice.

19

Exhibit 

EXHIBIT
FUNDING FACILITY TERM SHEET

ERP ENVIRONMENTAL FUND, INC.

33 1,000,000 Senior Secured Receivership Delayed Draw Term Loan Facility

Summarv of Terms and Conditions

THIS SUMMARY OF TERMS AND CONDITIONS (THE DOES NOT
CONSTITUTE A LEGALLY BINDING OBLIGATION OR COMMITMENT, UNLESS AND
UNTIL IT IS FULLY EXECUTED AND DELIVERED BY ALL PARTIES HERETO AND ALL
CONDITIONS PRECEDENT SET FORTH BELOW HAVE BEEN SATISFIED OR WAIVED.
The terms outlined below in this Term Sheet are the terms and conditions for a senior secured
receivership delayed draw term loan credit facility to be made available to ERP Environmental
Group, Inc. This Term Sheet; a credit agreement containing substantially the terms and subject
the conditions set forth in the Term Sheet, if any; the Temporary Order, the Preliminary Order,
and any other order entered by the Court in connection with this Term Sheet (collectively, the
?0rders?), shall constitute the exclusive and de?nitive documentation and agreement among the
parties (the ?Receivership Facility Documents?).

 

 

 

 

Borrower: ERP Environmental Fund, Inc., (?Borrower?), by and through Doss Special
Receiver, LLC, as its proposed Special Receiver (the ?Receiver?) in a
proceeding (the ?Receivership?) to be ?led in the Circuit Court of Kanawha
County, West Virginia (the ?Court?). The date of the commencement of the
Receivership will be referred to as the ?Receivership Date.?

Lender: Indemnity National Insurance Company, a Mississippi corporation (?Lender?).

Funding A maximum amount of $1,000,000 in the aggregate, as follows:

Facility:

A senior secured US. dollar denominated delayed draw term loan facility in an
aggregate principal amount of up to $1,000,000 (the ?Receivership Facility?
and the loans made thereunder, the ?Receivership Loans?). The Receivership
Loans may be drawn in multiple installments, with up to $325,000 of
Receivership Loans available upon entry of the Temporary Order.

 

Security and
Priority:

 

 

The obligations of the Borrower under the Receivership Facility shall have the
priority afforded to them pursuant to the Orders and shall be secured by a
perfected security interest and lien on all real and personal property of the
Borrower, whether now owned or hereafter acquired (the ?Collateral?), without
any requirement for the execution, delivery, recording or ?ling of any security
agreement, mortgage, deed of trust, ?nancing statement or similar document,
instrument or agreement covering such Collateral.

 

 

20

Exhibit 

 

Upon entry of the Preliminary Order (as de?ned below), the Lender?s lien on
the Collateral shall be superior to and shall prime any and all pre-existing liens
and security interests in the Collateral.

The Lender shall be deemed to have consented to the release of its liens such
that the Receiver can effectuate the sale of the property of the Borrower, subject
to the terms of Orders, provided, that the proceeds of such sale(s) shall only be
used for those purposes identi?ed in the Orders, subject to a budget to be
negotiated by the Lender and the Receiver.

The Receiver, on behalf of the Borrower, shall execute and deliver to Lender all
such mortgages, security agreements, deeds of trust or other documents and
instruments as may be reasonably required by the Lender to evidence and secure
the Receivership Facility. The Lender shall be solely responsible for all costs
associated with the preparation and ?ling of any requested ?nancing documents.

 

Purpose:

Amounts that may be made available under the Receivership Facility shall be
used by the Receiver to fund the costs of administering the Receivership and for
the general operating expenses of the Borrower in complying with the speci?c
tasks identi?ed in the applicable Orders. All expenditures from the
Receivership Loans, other than the initial Receivership Loan of $325,000, shall
be subject to a budget to be prepared by the Receiver and approved by the
Lender (the ?Budget?) subject to permitted variances to be agreed upon by the
Receiver and the Lender.

 

Interest:

The Receivership Loans shall bear interest at the rate of two percent per
annum. All interest shall be computed on the basis of a year consisting of 360
days and shall be calculated based on the daily principal amount outstanding for
such period. All interest shall be payable in kind and shall be paid in full on the
Termination Date (as de?ned below).

 

Maturity:

The Receivership Facility shall mature upon the ?Termination Date,? which,
with respect to the Receivership Facility, shall be the earliest of the date that
is twenty-four (24) months after the Receivership Date and the acceleration
of the Receivership Loans and the termination of the Receivership Facility in
accordance with the Receivership Facility Documents.

 

Conditions
Precedent to
Initial
Credit
Extension:

The obligation of the Lender to make the initial Receivership Loan is subject to
the satisfaction (or waiver by the Lender) of the following conditions:

The Receivership Date shall have occurred on or before March 27, 2020;
and

A temporary order creating the Receivership estate, appointing Doss
Special Receiver, LLC as Receiver, and approving the Receivership
Facility and this Term Sheet (the ?Temporary Order?), shall have been
entered by the Court, in form and substance acceptable to Lender, within
seven (7) days of the Receivership Date.

 

 

 

 

21

Exhibit 

 

Conditions
Precedent to
Subsequent
Credit
Extensions:

The obligation of the Lender to make any Receivership Loans after the initial
Receivership Loan is subject to the satisfaction (or waiver by the Lender) of the
following conditions:

Each of the Receivership Facility Documents shall continue to be in full
force and effect and no Event of Default (as de?ned below) shall have
occurred and be continuing;

A preliminary order reaf?rming the Temporary Order and granting
certain other relief, including, but not limited to, the priming liens
identi?ed herein (the ?Preliminary Order?), shall have been entered by
the Court, in form and substance acceptable to Lender;

The Borrower Receiver shall have complied in all material respects with
all agreements and covenants required to be performed or complied with
by it under the Receivership Facility Documents;

The Receiver shall have provided the Lender with a Budget and, if
applicable, the Borrower shall have been conducting its business in
accordance with the Budget;

A request for borrowing shall have been made by the Receiver;

The Orders shall be in full force and effect and shall not have been
vacated, revised, or modi?ed or stayed in any respect; and

The making of such advance shall not violate any requirement of law and
shall not be enjoined temporarily, preliminarily or permanently.

 

 

Events of
Default:

 

The occurrence of any of the following events, unless waived by the Lender in
writing, shall constitute an ?Event of Default? and collectively ?Events of
Default?:

The failure of Borrower to pay principal or interest at the Termination
Date 'or as otherwise set forth in the Receivership Facility Documents;

The Receiver shall fail to observe or to perform any other covenant,
obligation, condition or agreement contained in the Receivership Facility
Documents;

The Receiver shall make any expenditure of the proceeds of the
Receivership Loans or the Collateral that is in excess, subject to any
permitted variances, of the amounts permitted by the Budget;

The Receivership is dismissed or terminated;

A voluntary or involuntary petition in bankruptcy, or other state or federal
law proceeding for the rearrangement of debts, is ?led by or against the
Borrower;

Doss Special Receiver, LLC resigns or is terminated as the Receiver (or
Barry Doss ceases to be the manager of Doss Special Receiver, LLC) and
is not replaced by a substitute receiver (or manager) satisfactory to the
Lender within thirty (30) days of such resignation or termination;

Without the express written consent of Lender, any surety bond issued by
the Lender in favor of the Borrower is forfeited by the obligee;

The applicable Order shall not be in force and shall have been vacated,
revised, or modi?ed or stayed in any respect; and

 

 

22

Exhibit 

 

The Court approves any alternative ?nancing which, without the written
consent of the Lender, primes the liens and security interests granted to
the Lender pursuant to this Term Sheet.

Any Event of Default shall be deemed not to be continuing if the events, acts or
conditions that gave rise to such Event of Default have been remedied or cured
or have ceased to exist.

Upon the occurrence of an Event of Default, the Lender may declare the
termination, reduction or restriction of any further commitment to the extent any
such commitment remains, (ii) all obligations to be immediately due and
payable without presentment, demand, protest, or other notice of any kind, all
of which are expressly waived by the Borrower, and the termination of the
Receivership Facility; and and upon the giving of five (5) calendar days?
notice to the Borrower, exercise all other rights and remedies provided for the
in the Receivership Facility Documents and applicable law, including, but not
limited, the exercise of any and all rights in the Collateral. In the event that the
Receivership Facility is terminated for any reason other than as identified in 
above, and the Borrower does not have suf?cient cash on hand to pay the
outstanding fees and expenses of the Receiver, the Lender shall pay any unpaid
amount to the Receiver within ten (10) days of such request by the Receiver.

 

 

 

 

Reporting: The Receiver shall provide the Lender with all information reasonably
requested by the Lender in connection with the Borrower and the Receivership
Facility. including, but not limited to, budgets, budget variances, accouhts
receivable and payable statements, general ledgers, etc.

Governing This Term Sheet shall be governed by the laws of the state of New York without

Law: regard to its conflict of law principles.

 

ERP ENVIRONMENTAL FUND, INC.

 

By its Special Receiver, Doss Engineering, LLC,
By its Manager, R. Barry Doss

INDEMNITY NATIONAL INSURANCE COMPANY

 

Thomas Elkins, President

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