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SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Release (“Agreement”) is entered into by and between
Algoma Steel Inc., f/k/a Essar Steel Algoma, Inc. (“Algoma”) and Nevada Holdings, Inc., f/k/a
Southern Coal Sales Corporation (“Southern Coal”); James C. Justice Companies, Inc.; James
C. Justice Companies, LLC; Bluestone Industries, Inc.; Bluestone Coal Corporation; Bluestone
Mineral, Inc., f/k/a Mechel Bluestone; Bluestone Energy Sales Corporation, A&G Coal
Corporation, Tams Management Inc.; Encore Leasing LLC; Bluestone Resources Inc.; Justice
Family Farms, LLC; Bluestone Coal Sales Corporation, and Southern Coal Corporation
(collectively, “Justice Parties”)(each referred individually to herein as a “Party” and
collectively as the “Parties”).
RECITALS
WHEREAS, on or about November 1, 2015, Algoma and Southern Coal entered into a
Coal Supply Agreement, which was thereafter amended with the Amending Agreement to Coal
Supply Agreement dated April 25, 2016 and the Term Sheet dated September 22, 2016
(collectively, the “CSA”);
WHEREAS, on March 10, 2017, Algoma commenced a civil action against Southern
Coal by the filing of a complaint in the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”), styled Essar Steel Algoma Inc., et al. v. Southern Coal
Sales Corporation (Case No 15-12271 (BLS));
WHEREAS, on September 15, 2019, the Bankruptcy Court issued an order transferring
the case to the United States District Court for the Southern District of New York, where it was
styled Essar Steel Algoma, Inc. v. Southern Coal Sales Corporation, Case No. 1:17-mc-360-ATRWL (the “Lawsuit”);
WHEREAS, on April 23, 2018, Algoma filed an Amended Complaint in the Lawsuit, and
on December 7, 2018, Algoma filed a Second Amended Complaint in the Lawsuit adding the
Justice Parties as Defendants;
WHEREAS, in the Lawsuit, Algoma alleges, in sum and substance, that Southern Coal
breached the CSA by failing to provide coal in the quantity and quality set forth in the
agreement, and the Justice Parties were alter egos of Southern Coal;
WHEREAS, the Parties desire to enter into this Agreement in order to fully and finally
resolve and release all claims between them regarding the Lawsuit, without further litigation;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
releases, undertakings, and other provisions and agreements set forth herein, the sufficiency of
which is acknowledged by the Parties, the Parties agree as follows:

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TERMS
1.

Representation and Warranties of Southern Coal and Justice Parties.
a. Southern Coal and Justice Parties represent and warrant to Algoma as follows:
i. Validity. This Agreement has been duly executed and delivered by
Southern Coal and Justice Parties and is a legal, valid, and binding
obligation of Southern Coal and Justice Parties enforceable against
each of them, joint and severally, in accordance with its terms;
ii. Capacity. Southern Coal and Justice Parties each have the capacity to
execute, deliver, and carry out the terms and provisions of this
Agreement and the transactions contemplated thereby, including but
not limited to the ability to make the Payments referenced in Section 2
below;
iii. Security. Bluestone Resources, Inc. (“Bluestone Resources”), one of
the Justice Parties, represents and warrants that it has the financial
capacity to fully perform its obligations to Algoma pursuant to this
Agreement and the Coal Purchase and Sale Agreement, dated
September 22, 2021 (the “Settlement Coal Agreement”)1, and
guarantees the performance of Southern Coal and Justice Parties
pursuant to this Agreement the Settlement Coal Agreement;
iv. Corporate Structure. Bluestone Resources warrants that it will make
no changes to its corporate structure or assets that would have the
effect of reducing its financial capacity to satisfy the Settlement Value,
as defined in Paragraph 2 herein, owed to Algoma in the event of a
default of this Agreement or the Settlement Coal Agreement by
Southern Coal or the Justice Parties;
v. Reliance. Southern Coal and Justice Parties each expressly
acknowledge and confirm that the foregoing representations and
warranties are being specifically relied upon by Algoma as a material
inducement to Algoma to enter into this Agreement; and
vi. Survival. The foregoing representations and warranties shall survive
the execution and delivery of this Agreement and the documents,
agreements, and instruments to be executed or delivered herewith.

2.

Consideration.
a. In settlement of Algoma’s claims asserted in the Second Amended Complaint,
Southern Coal and Justice Parties agree to pay to Algoma either: (1) a lump

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The specifics of Bluestone Coal Sales Corporation’s and Bluestone Resources’ obligations regarding coal delivery
are set forth in the Settlement Coal Agreement, attached hereto as Ex. A and incorporated herein by reference.

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sum cash payment in the amount of $4,425,000.00 (Four million Four
Hundred Twenty-Five Thousand United States Dollars), paid upon execution
of this Agreement, or (2) over a three-year period, cash payments and/or coal
deliveries pursuant to the Settlement Coal Agreement among Algoma and
Bluestone Coal Sales Corporation totaling $5,750,000.00 (Five Million, Seven
Hundred Fifty Thousand United States Dollars) (the “Settlement Value”) in
the following amounts and at the following times:
i. Assuming Southern Coal and the Justice Parties do not elect to make a
single lump sum settlement payment, Southern Coal / Bluestone Coal
Sales Corporation shall give written notice to Algoma upon execution
of this Agreement of its election to either: (1) make a cash settlement
payment in the amount of $1,916,666.00 (One Million, Nine Hundred
Sixteen Thousand, Six Hundred Sixty-Six United States Dollars),
which payment Algoma must receive upon execution of this
Agreement; or (2) make deliveries in the 2021 shipping season of a
total of
net tons of coal, as set forth in the Settlement Coal
Agreement;
ii. Prior to July 31, 2021, Southern Coal / Bluestone Coal Sales
Corporation shall give written notice to Algoma of its election to
either: (1) make a cash settlement payment in the amount of
$1,916,666.00 (One Million, Nine Hundred Sixteen Thousand, Six
Hundred Sixty-Six United States Dollars), which payment Algoma
must receive on or before July 31, 2021; or (2) make deliveries in the
2022 shipping season of a total of
net tons of coal, as set forth
in the Settlement Coal Agreement;
iii. Prior to July 31, 2022, Southern Coal / Bluestone Coal Sales
Corporation shall give written notice to Algoma of its election to
either: (1) make a cash settlement payment in the amount of
$1,916,666.00 (One Million, Nine Hundred Sixteen Thousand, Six
Hundred Sixty-Six United States Dollars), which payment Algoma
must receive on or before July 31, 2022; or (2) make deliveries in the
2023 shipping season of a total of
net tons of coal, as set forth
in the Settlement Coal Agreement;
iv. Additionally, Southern Coal shall pre-pay to Algoma interest on the
outstanding Settlement Value.
1. Such interest payments shall be calculated using the US (Fed)
prime interest rate as of the date of execution of this
Agreement. The Parties expressly agree, however, that the
interest rate used to calculate the interest payment shall not be
less than 3%, nor shall it be more than 6%. In other words, if
the US prime interest rate is less than 3% at the time of the
execution of this agreement, the interest payment shall be

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calculated using a 3% interest rate. If the US prime interest
rate is more than 6% at the time of the execution of this
Agreement, the interest payment shall be calculated using a 6%
interest rate.
2. Upon execution of this Agreement, Southern Coal shall make
the interest payment to Algoma for the full cash Settlement
Value for the period of April 1, 2020 to March 31, 2021.
3. On April 1, 2021, Southern Coal shall make the interest
payment to Algoma for the remaining cash Settlement Value
for the period of April 1, 2021 to March 31, 2022.
4. On April 1, 2022, Southern Coal shall make the interest
payment to Algoma for the remaining cash Settlement Value
for the period of April 1, 2022 to March 31, 2023.
v. Additionally, should Southern Coal / Bluestone Coal Sales
Corporation elect to make coal deliveries to Algoma pursuant to the
Settlement Coal Agreement in lieu of a cash settlement payment, and
should Algoma properly terminate the Settlement Coal Agreement
pursuant to Paragraph 17 therein, Southern Coal / Bluestone Coal
Sales Corporation must pay to Algoma within seven (7) days in a
single lump sum payment the remaining Settlement Value due and
owing to Algoma as of the date of its termination of the Settlement
Coal Agreement.
vi. The Payments shall be made by wire transfer of immediately available
funds using the following wire transfer instructions:
Bank Name: Royal Bank of Canada
602 Queen Street East
Sault Ste. Marie, ON P6A 2A4
Account Number:
Transit #: 04362
Bank #: 3
SWIFT Code: ROYCCAT2
All payments shall be deemed made at the time Southern Coal and/or
Justice Parties initiate the wire transfer in accordance with the
referenced wire transfer instructions.
vii. In the event that Southern Coal / Bluestone Coal Sales Corporation
fails to provide written notice to Algoma of its election to provide a
cash settlement payment or provide coal deliveries by the deadlines set
forth herein, or in the event Southern Coal / Bluestone Sales
Corporation fails to make an interest payment as set forth in Paragraph

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2(a)(iv), an Event of Default has occurred as defined in Paragraph 2(b)
herein, and Algoma may pursue recovery pursuant to the Consent
Judgment as set forth in Paragraph 3 herein.
b. Security
i. Southern Coal’s performance of its obligations pursuant to this
Agreement and Bluestone Coal Sales Corporation’s performance of its
obligations pursuant to the Settlement Coal Agreement shall be
guaranteed by Bluestone Resources.
ii. Prior to execution of this Agreement, Bluestone Resources shall
provide to Algoma a comfort letter from its independent auditors,
suitable to Algoma, showing that Bluestone Resources maintains the
financial capacity to perform its obligations and Southern Coal’s
obligations pursuant to this Agreement and Bluestone Coal Sales
Corporation’s obligations pursuant to the Settlement Coal Agreement.
iii. Bluestone Resources shall provide an updated comfort letter to
Algoma upon reasonable request from time to time.
c. Event of Default
i. It is expressly agreed that the failure of Southern Coal / Bluestone
Coal Sales Corporation to provide notice of its election to make a
settlement payment or coal deliveries for each year by the dates set
forth above shall constitute an “Event of Default.”
ii. Additionally, should Bluestone Resources fail to provide Algoma a
comfort letter evidencing that it has the financial ability to perform its
obligations pursuant to this Agreement, that failure shall constitute an
Event of Default.
iii. Additionally, should Southern Coal / Bluestone Coal Sales
Corporation elect to make a cash settlement payment for any year, the
failure of Southern Coal / Bluestone Coal Sales Corporation to make
the settlement payment by the payment deadline set forth herein shall
constitute an Event of Default.
iv. Additionally, should Southern Coal /Bluestone Coal Sales Corporation
elect to make coal deliveries in lieu of a cash settlement payment for
any year, the failure of Southern Coal / Bluestone Coal Sales
Corporation at the end of any shipping calendar quarter to make pro
rata deliveries of the settlement coal amount, as set forth in the
Settlement Coal Agreement, shall constitute an Event of Default.

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v. Additionally, should Southern Coal / Bluestone Coal Sales
Corporation fail to make any interest payment as set forth in Paragraph
2(a)(iv), that failure shall constitute an Event of Default.
vi. Additionally, should Algoma properly terminate the Settlement Coal
Agreement pursuant to Paragraph 17 therein, and should Southern
Coal/Bluestone Coal Sales Corporation subsequently fail to pay
Algoma the remaining Settlement Value due and owing to it within
seven (7) days, that failure shall constitute an Event of Default.
vii. It is also agreed that the filing by Southern Coal or Bluestone Coal
Sales Corporation or Bluestone Resources for any form of dissolution
or bankruptcy protection shall constitute an Event of Default, the
occurrence of which shall permit Algoma to enforce the Consent
Judgment defined below in Section 3.
viii. Algoma is not obligated to notify Southern Coal or the Justice Parties
of any Event of Default.
ix. Upon the occurrence of any Event of Default, the remaining settlement
balance is accelerated and immediately due and owing to Algoma.
x. If an Event of Default occurs, Algoma shall be permitted to enforce
the Consent Judgment defined below in Section 3.
3.

Consent Judgment. Contemporaneously with the execution of this Agreement,
Algoma, Southern Coal, and Bluestone Resources also will execute a consent
judgment and stipulation of entry of judgment.
a. The Parties agree that the court in the Litigation shall retain jurisdiction for
purposes of enforcing this Agreement.
b. The stipulation of entry of judgment (“Stipulation of Entry”) shall provide
for entry of the Consent Judgment in the event that Southern Coal, Bluestone
Resources, Bluestone Sales Corporation and/or the Justice Parties default
under their payment obligations under this Agreement or deliveries or other
obligations pursuant to the Settlement Coal Agreement. The Stipulation of
Entry shall be in the form attached hereto as Exhibit B.
c. Southern Coal’s, Bluestone Resources’, Bluestone Coal Sales Corporation’s,
and the Justice Parties’ obligations to make the Payments pursuant to this
Agreement and/or Coal Deliveries pursuant to the Settlement Coal Agreement
shall be secured with a proposed consent judgment in favor of Algoma in the
form attached hereto as Appendix to Exhibit B (the “Consent Judgment”).
The Consent Judgment and Stipulation of Entry will be filed by Algoma
subject to the following conditions:

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i. Execution of the Consent Judgment by Southern Coal and Bluestone
Resources and their counsel shall occur before or concurrently with the
execution of this Agreement. In this regard, Southern Coal and
Bluestone Resources direct their counsel of record to execute the
referenced Consent Judgment and deliver it to counsel for Algoma.
Algoma shall have no obligations under this Agreement until receiving
the executed Stipulation of Entry and Consent Judgment from
Southern Coal and Bluestone Resources.
ii. Algoma will forebear from filing and enforcing the Consent Judgment
unless or until the occurrence of an Event of Default. If an Event of
Default occurs, Algoma may file the Consent Judgment with the Court
and seek to enforce it. Any payments or coal deliveries made by
Southern Coal or Bluestone Coal Sales Corporation prior to an Event
of Default will be credited against the Consent Judgment amount.
iii. If Southern Coal, Bluestone Resources, and/or Bluestone Coal Sales
Corporation timely make the Payments and/or coal deliveries as
provided in Section 2 and the Settlement Coal Agreement, Algoma
will forebear from filing and enforcing the Consent Judgment, and
instead will file a notice of satisfaction of judgment and dismissal with
prejudice with the Court following receipt of the final Payment, and
the Consent Judgment will be held confidential in accordance with
Section 8 below.
iv. Southern Coal and Bluestone Resources expressly agree to the entry
and/or domestication of the Consent Judgment in any state where
Southern Coal, Bluestone Resources, and/or the Justice Parties have
assets.
d. If the Court requires additional papers from the Parties in connection with the
Stipulation of Entry or Consent Judgment or requires that the substance of
those documents takes a form different than Exhibit B, Southern Coal shall
provide that documentation to Algoma by the Court’s deadline or in any case,
within one week of any such request by Algoma or the Court.
e. If the Consent Judgment is not ordered or entered by the Court for any reason,
this Agreement will remain in full effect. Algoma may pursue any and all
remedies available at law and equity to enforce the Agreement, regardless of
whether the Court enters the Consent Judgment.
4.

Release by Algoma. As further inducement and consideration for this
Agreement, Algoma, for itself and its present, former and future parent
corporations, predecessors, successors, subsidiary corporations, related
companies, divisions, general and limited partnerships, limited liability
companies, affiliates, trusts, representatives, agents, and attorneys, and their
respective present, former, and future directors, officers, shareholders, managers,

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members, partners, employees, trustees, insurers, assigns, transferees, principals,
agents, and attorneys agrees to fully, finally, forever, and unconditionally release,
acquit, covenant not to sue and forever discharge Southern Coal and the Justice
Parties and their present, former and future parent corporations, predecessors,
successors, subsidiary corporations, related companies, divisions, general and
limited partnerships, limited liability companies, affiliates, trusts, representatives,
agents, and attorneys, and their respective present, former, and future directors,
officers, shareholders, managers, members, partners, employees, trustees,
insurers, assigns, transferees, principals, agents, and attorneys to the fullest extent
permitted by law, of and from any and all claims that arise out of, are in any way
related to, or are based in whole or in part on the subject matter of the Lawsuit;
provided, however, that any obligations created by or set forth in this Agreement
or the Settlement Coal Agreement shall not be released.
5.

Release by Southern Coal and Justice Parties. As further inducement and
consideration for this Agreement, Southern Coal and Justice Parties and their
present, former and future parent corporations, predecessors, successors,
subsidiary corporations, related companies, divisions, general and limited
partnerships, limited liability companies, affiliates, trusts, representatives, agents,
and attorneys, and their respective present, former, and future directors, officers,
shareholders, managers, members, partners, employees, trustees, insurers, assigns,
transferees, principals, agents, and attorneys, agree to fully, finally, forever, and
unconditionally release, acquit, covenant not to sue and forever discharge Algoma
and its present, former and future parent corporations, predecessors, successors,
subsidiary corporations, related companies, divisions, general and limited
partnerships, limited liability companies, affiliates, trusts, representatives, agents,
and attorneys, and their respective present, former, and future directors, officers,
shareholders, managers, members, partners, employees, trustees, insurers, assigns,
transferees, principals, agents, and attorneys to the fullest extent permitted by law,
of and from any and all claims that arise out of, are in any way related to, or are
based in whole or in part on the subject matter of the Lawsuit; provided, however,
that any obligations created by or set forth in this Agreement and the Settlement
Coal Agreement shall not be released.

6.

Effective Date. This Agreement is effective as of the date that the Agreement,
Settlement Coal Agreement, Stipulation of Entry, and Consent Judgment are fully
executed by each and all of the Parties that are signatories to those documents.

7.

Time is of the Essence. Time is of the essence in the Payments and performance
of each of the obligations set forth herein and with respect to all conditions to be
satisfied.

8.

Confidentiality. The Parties agree to keep confidential the terms of this
Agreement. Should any Party disclose the terms of this Agreement, then that
Party shall be liable to any Party damaged by such breach. Because the Court
requires that this Agreement be filed on the public docket in order to retain
jurisdiction to enforce this Agreement, the Parties also agree that they will jointly

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request that the Court approve the filing of a redacted version of this Agreement
that redacts confidential information, such as pricing, quantity, and quality
information. Nothing in this Agreement is intended to interfere with the Parties’
rights to disclose the terms of this Agreement to their attorneys, financial advisors
and/or accountants, law enforcement, regulators, or as required by law, including
any valid legal subpoena issued under the authority of any court of competent
jurisdiction.
9.

Governing Law and Jurisdiction. This Agreement shall be interpreted under
the laws of the State of New York, without giving effect to conflict of law
principles. The Parties consent to the personal jurisdiction of the federal and state
courts located in the State of New York.

10.

Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if
any provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining
provisions of this Agreement, it being the Parties’ intention that each and every
provision of this Agreement be enforced to the fullest extent permitted by
applicable law.

11.

Binding on Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Parties and their predecessors, heirs, executors,
administrators, representatives, successors, assignees, licensees, and transferees.
No Party may transfer its respective rights or obligations under this Agreement to
any third party without the prior written consent of the other Party, which may be
withheld in a Party’s sole, subjective, and absolute discretion and without regard
to any good faith obligation or reasonable business judgment.

12.

Unknown Claims. Each of the Parties acknowledges that there is risk that
subsequent to the execution of this Agreement, it may discover facts or may
discover, suffer, or incur actions or causes of action which were unknown or
unanticipated at the time of this Agreement which may have materially affected
their respective decisions to give the releases contained in this Agreement
(collectively, the “Unknown Claims”). Despite this knowledge and
understanding, each of the Parties understands and agrees: (1) that it is assuming
the risk of each and every category of every Unknown Claim, and (2) that it is
releasing all claims of every kind or nature whatsoever, known or unknown,
foreseen or unforeseen, suspected or unsuspected, and in connection herewith.

13.

No Assignment. Each Party warrants, covenants, and represents that, as of the
Effective Date, it has not assigned, transferred, or conveyed or purported to have
assigned, transferred, or conveyed, to any person or entity, any of the released
claims.

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14.

Attorneys’ Fees. Upon an Event of Default, it is acknowledged and agreed that
Algoma shall be entitled to reasonable attorneys’ fees in enforcing the Consent
Judgment, which includes, but is not limited to, any collection or garnishment
action instituted by Algoma against Southern Coal, Bluestone Resources, the
Justice Parties, or any one of them.

15.

Counterparts. This Agreement may be executed in one or more counterparts and
provided to the other Parties by email or facsimile, each of which shall be deemed
an original, and all of which shall collectively constitute one complete original
Agreement.

16.

Descriptive Headings: Construction. The headings in this Agreement are
intended for convenient references only and shall not in any way limit, amplify, or
be used in interpreting the terms of this Agreement. The masculine, feminine, or
neutral gender in the singular or plural shall be deemed to include the others
wherever the context of this Agreement so requires. This Agreement shall not be
construed against any party hereto as the drafter of this Agreement.

17.

Voluntary Agreement. The Parties each represent and warrant to the others that
they are represented by legal counsel of their choice, that they have consulted
with such counsel regarding this Agreement, that they are fully aware of the terms
and provisions contained herein and their effect, and that they have voluntarily
and without coercion or duress of any kind entered into this Agreement.

18.

Entire Agreement. This Agreement, together with the Settlement Coal
Agreement, sets forth the entire and integrated agreement of the Parties with
respect to the subject matter hereof and supersedes all prior negotiations,
representations, or agreements, either written or oral. All prior communications,
negotiations, agreements or drafts relating to this Agreement are merged into and
superseded by this Agreement and the Settlement Coal Agreement. No provisions
hereof may be amended, nor any right hereunder waived, except by written
instrument executed by all Parties.

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement and Release
to be executed as of the date indicated below.

_______________________________
ALGOMA STEEL INC.
By: ___________________________
John Naccarato
VP, Strategy
Title: _________________________
September 22, 2020
Date: _________________________

_______________________________
NEVADA HOLDINGS, INC., f/k/a
SOUTHERN COAL SALES CORPORATION
JAMES C. JUSTICE COMPANIES, INC.
JAMES C. JUSTICE COMPANIES, LLC
BLUESTONE INDUSTRIES, INC.
BLUESTONE COAL CORPORATION
BLUESTONE MINERAL, INC., f/k/a
MECHEL BLUESTONE
BLUESTONE ENERGY SALES
CORPORATION
A&G COAL CORPORATION
TAMS MANAGEMENT, INC.
ENCORE LEASING LLC
BLUESTONE RESOURCES, INC.
JUSTICE FAMILY FARMS, LLC
BLUESTONE COAL SALES
CORPORATION
SOUTHERN COAL CORPORATION
James C. Justice III
By: ___________________________
President
Title: _________________________
September 22, 2020
Date: _________________________

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