Exhibit 10.1

 

SHARE PURCHASE AGREEMENT

 

THIS AGREEMENT made as of the 17th day of November, 2010,

 

BETWEEN:

 

AUDLEY CAPITAL MANAGEMENT LIMITED, a company existing under the laws of
Guernsey, AUDLEY EUROPEAN OPPORTUNITIES MASTER FUND LIMITED, a company existing
under the laws of Guernsey, AUDLEY INVESTMENT I, a company existing under the
laws of the Cayman Islands, and AUDLEY INVESTMENT II,  a company existing under
the laws of the Cayman Islands,

 

(hereinafter, collectively, called the “Vendor”),

 

- and -

 

WALTER ENERGY, INC., a corporation incorporated under the laws of Delaware,

 

(hereinafter called the “Purchaser”),

 

WITNESSES THAT in consideration of the respective covenants, agreements,
representations and warranties contained herein and for other good and valuable
consideration (the receipt and sufficiency of which are acknowledged by each
party), the parties covenant and agree as follows:

 

ARTICLE 1
INTERPRETATION

 

1.1          Defined Terms.

 

For the purpose of this Agreement, unless the context otherwise requires, the
following terms shall have the respective meanings set out below and grammatical
variations of such terms shall have corresponding meanings:

 

“Acquisition Proposal” means (a) any plan of arrangement, amalgamation, merger,
acquisition, consolidation, share exchange, recapitalization or reorganization
involving the Corporation; (b) any sale of any material assets of the
Corporation; (c) any take-over bid for, or offer to purchase, acquire or
subscribe for, any securities of the Corporation; or (d) any similar transaction
or business combination involving the Corporation or any of its subsidiaries.

 

“Affiliate” has the meaning given to it in the Securities Act (Ontario);

 

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“Business Day” means any day, other than a Saturday or a Sunday, on which banks
in Toronto, Ontario, New York, New York and London, England are open for
business;

 

“Common Shares” means the common shares in the capital of the Corporation;

 

“Competition Act Approval” means (a) the issuance of an advance ruling
certificate pursuant to section 102 of the Competition Act (Canada) by the
Commissioner of Competition, or (b) (i) the expiry, termination or waiver of any
applicable waiting periods under Part IX of the Competition Act (Canada), and
(ii) the Commissioner advising the Purchaser, in writing, on terms satisfactory
to the Purchaser, acting reasonably, that she does not intend to make an
application under Part VIII of the Competition Act (Canada) in respect of the
transactions contemplated by this Agreement;

 

“Contract” means any agreement, indenture, contract, lease, deed of trust,
licence, option, instrument or other commitment, whether written or oral;

 

“Corporation” means Western Coal Corp., a corporation existing under the laws of
the Province of British Columbia;

 

“Encumbrance” means any encumbrance, lien, charge, hypothec, pledge, mortgage,
title retention agreement, security interest of any nature, adverse claim,
exception, reservation, easement, right of occupation, any matter capable of
registration against title, option, right of pre-emption, privilege or any
Contract to create any of the foregoing;

 

“Foreign Antitrust Clearance” means any applicable approval or clearance shall
have been received from a Governmental Entity outside Canada or the U.S. and/or
any applicable waiting/suspensory period shall have expired or been terminated
or waived by a Governmental Entity in relation to any Foreign Antitrust Filing
identified by either party and which Foreign Antitrust Filing the Purchaser,
acting reasonably, has agreed is required to be made to consummate the
transactions contemplated by this Agreement;

 

“Foreign Antitrust Filing” means a filing that must be made by either party (or
both parties) to a Governmental Entity outside Canada or the U.S. under any
applicable antitrust, competition, foreign investment or similar law applicable
to the purchase and sale of the Initial Shares or the Remaining Shares, as the
case may be;

 

“Governmental Entity” means: (a) any multinational, federal, provincial,
territorial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau, agency or entity, domestic or foreign; (b) any stock exchange,
including the New York Stock Exchange; (c) any subdivision, agent, commission,
board or authority of any of the foregoing; or (d) any quasi-governmental or
private body, including any tribunal, commission, regulatory agency or
self-regulatory organization, exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing;

 

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“Hart-Scott-Rodino Approval” means the expiration of all applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or earlier termination thereof, including any voluntarily agreed
extensions with respect to the transactions contemplated by this Agreement;

 

“Initial Closing Date” means the third Business Day following the satisfaction
or waiver of the condition set out in Section 7.1(a), provided that all of the
conditions set out in Article 7 shall also have been satisfied or waived, or
such other date as may be mutually agreed upon by the Vendor and the Purchaser;

 

“Investment Canada Act Approval” means the approval of the Minister of Industry
under the Investment Canada Act concerning the completion of the transactions
contemplated by this Agreement shall have been obtained or deemed to have been
obtained on terms that are acceptable to the Purchaser, in its reasonable
judgment;

 

“Outside Date” means April 30, 2011;

 

“Purchase Price” has the meaning set out in section 2.2;

 

“Purchased Shares” has the meaning set out in section 2.1;

 

“Regulatory Approvals” means those sanctions, rulings, consents, orders,
exemptions, permits and other approvals (including the waiver or lapse, without
objection, of a prescribed time under a statute or regulation that states that a
transaction may be implemented if a prescribed time lapses following the giving
of notice without an objection being made) of Governmental Entities, including
the Hart-Scott-Rodino Approval, Competition Act Approval, Investment Canada Act
Approval and any Foreign Antitrust Clearance;

 

“Subsequent Event” means the occurrence of the earlier of: (a) the completion of
an Acquisition Proposal between the Purchaser and the Corporation; and (b) the
Outside Date, provided however, that if there shall have occurred any competing
Acquisition Proposal by a third party, the Purchaser shall be permitted to
purchase the Remaining Shares at any time preceding the Outside Date on two
Business Days’ notice to the Vendor to enable the Purchaser to accept, tender
to, or otherwise participate in, such competing, third party Acquisition
Proposal;

 

“Time of Closing” means 10:00 a.m. (Toronto time) on the Initial Closing Date;
and

 

“Walter Common Shares” means the shares of common stock in the capital of the
Purchaser.

 

1.2          Knowledge.

 

References in this Agreement to the “knowledge” of the Vendor means the actual
knowledge of Julian A. Treger and Michael Treichl, in each case without further
inquiry.

 

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1.3          Currency.

 

Unless otherwise indicated, all dollar amounts referred to in this Agreement are
expressed in Canadian dollars.

 

1.4          Sections and Headings.

 

The division of this Agreement into sections and the insertion of headings are
for convenience of reference only and shall not affect the interpretation of
this Agreement. Unless otherwise indicated, any reference in this Agreement to
an Article, section, subsection, clause or a Schedule refers to the specified
Article, section, subsection or clause of or Schedule to this Agreement.

 

1.5          Entire Agreement.

 

This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.

 

1.6          Time of Essence.

 

Time shall be of the essence of this Agreement.

 

1.7          Applicable Law.

 

This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the parties shall be governed by,
the laws of the Province of Ontario and the federal laws of Canada applicable
therein, and each party hereby irrevocably and unconditionally submits to the
exclusive jurisdiction of the courts of such province and all courts competent
to hear appeals therefrom.

 

1.8          Severability.

 

If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.

 

1.9          Successors and Assigns.

 

This Agreement shall enure to the benefit of and shall be binding on and
enforceable by the parties and, where the context so permits, their respective
successors and permitted assigns. No party may assign any of its rights or
obligations hereunder without the prior written consent of the other party.

 

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1.10        Amendment and Waivers.

 

No amendment or waiver of any provision of this Agreement shall be binding on
any party unless consented to in writing by such party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.

 

ARTICLE 2
PURCHASE AND SALE OF PURCHASED SHARES

 

2.1          Purchase and Sale of Purchased Shares.

 

Subject to the terms and conditions hereof, the Vendor covenants and agrees to
sell, assign and transfer to the Purchaser and the Purchaser covenants and
agrees to purchase from the Vendor:

 

(a)           at the Time of Closing, 25,274,745 issued and outstanding Common
Shares (the “Initial Shares”); and

 

(b)           upon the occurrence of a Subsequent Event, 29,273,113 issued and
outstanding Common Shares (the “Remaining Shares”, and together with the Initial
Shares, the “Purchased Shares”).

 

2.2          Purchase Price.

 

The purchase price payable by the Purchaser to the Vendor for the Purchased
Shares (the “Purchase Price”) shall be $11.50 per Purchased Share. The Purchase
Price shall be payable as follows:

 

(a)           in respect of the Initial Shares, at the Time of Closing, $11.50
in cash for each Initial Share;

 

(b)           in respect of the Remaining Shares, in circumstances where the
Remaining Shares are acquired pursuant to the completion of an Acquisition
Proposal between the Purchaser and the Corporation, contemporaneously with or as
promptly as practicable following the occurrence of the completion of such
Acquisition Proposal, the equivalent of $11.50 for each Remaining Share in such
combination of cash and/or Walter Common Shares based on the same methods for
determining the exchange ratio and on the basis of providing the same elections
in respect of the consideration (the “Form of Consideration”) as is agreed upon
in the definitive agreement between the Purchaser and the Corporation providing
for such Acquisition Proposal in respect of the consideration for the other
shareholders of the Corporation, provided however, that if the Form of
Consideration is not acceptable to the Vendor, each Remaining Share shall be
purchased for $11.50 in cash;

 

(c)           in respect of the Remaining Shares, in circumstances where the
Remaining Shares are acquired at the Outside Date, contemporaneously

 

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with or as promptly as practicable following the Outside Date, $11.50 in cash
for each Remaining Share; and

 

(d)           in respect of the Remaining Shares, in circumstances where the
Remaining Shares are acquired to enable the Purchaser to accept, tender to, or
otherwise participate in, a competing, third party Acquisition Proposal, $11.50
in cash for each Remaining Share.

 

2.3          Price Protection for Remaining Shares.

 

(a)           If at any time following the date of this Agreement and prior to
the Outside Date (the “Price Protection Period”):

 

(i)            the Purchaser or any of its Affiliates makes an offer or proposal
to the Corporation respecting, or publicly announces an intention to undertake,
an amalgamation or merger with, or an arrangement involving, the Corporation (or
other similar transaction) pursuant to which the Purchaser will directly, or
indirectly through an Affiliate, acquire all or a majority portion of the
outstanding Common Shares or the business of the Corporation; or

 

(ii)           the Purchaser or any of its Affiliates makes an offer or proposal
to the Corporation respecting, or publicly announces an intention to undertake,
a take-over bid by take-over bid circular in compliance with applicable Canadian
securities laws, after giving effect to which the Purchaser, if successful,
would beneficially own directly or indirectly through an Affiliate, a majority
of the Common Shares;

 

(any such transaction being a “Price Protection Transaction”) then within five
business days following the completion by the Purchaser or its Affiliate of the
Price Protection Transaction, the Purchaser will pay, or cause an Affiliate to
pay, to the Vendor the Adjustment Payment (as defined below), if applicable.

 

(b)           The Vendor will be entitled to receive an additional amount on
account of each of the Remaining Shares (the “Adjustment Payment”) in cash
and/or Walter Common Shares, on the same basis as received by the other holders
of the Corporation’s Common Shares pursuant to the Price Protection Transaction,
equal to the amount by which the consideration per Common Share received by the
holders of the Corporation’s Common Shares pursuant to the Price Protection
Transaction (the “Greater Price”) exceeds the Purchase Price.

 

(c)           If all or any portion of the consideration forming the Greater
Price has a value expressed in a currency other than Canadian dollars, then the
value of that consideration will be expressed in Canadian dollars based upon a
conversion rate of exchange equal to the noon spot rate quoted by the Bank of
Canada on the date of the completion of the Price Protection

 

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Transaction for the purchase of Canadian dollars using the currency in which the
consideration (or portion thereof) was originally denominated.

 

(d)           In the event of any disagreement between the Parties with respect
to the calculation of the value of the Greater Price, the matter will be
submitted to an internationally recognized firm of chartered accountants to be
agreed upon by the parties, provided that such firm may not be the auditors of
either the Vendor or the Purchaser. The decision of such firm of chartered
accountants as to the value of the Adjustment Payment will be final and binding
on the parties.

 

2.4          Competing Transaction

 

(a)           In the event the Remaining Shares are purchased pursuant to a
Subsequent Event and within 120 days following the Outside Date the Purchaser
subsequently sells the Remaining Shares pursuant to a competing, third party
Acquisition Proposal commenced prior to the Outside Date, on the third business
day following the completion of, and delivery of, payment to the Purchaser under
such third party Acquisition Proposal, the Purchaser shall pay the Vendor a cash
amount per Common Share equal to 50% of the amount by which the per share
consideration payable to the Purchaser under such competing, third party
Acquisition Proposal exceeds $11.50 (the “Shared Amount”).

 

(b)           If all or any portion of the Shared Amount is in the form of:

 

(i)            cash, the consideration shall be valued based on the face value
of the cash,

 

(ii)           publicly traded securities, the consideration shall be valued
based on the simple average of the closing prices of such securities over the
twenty trading days preceding the date of the completion of the third party
Acquisition Proposal on the published market on which the greatest volume of
trading in such securities, or

 

(iii)          any other consideration, the consideration shall be valued at its
fair market value as the Vendor and the Purchaser shall mutually agree, acting
reasonably; any disagreement between the Parties with respect to such value
shall be resolved in the manner provided in Section 2.3(e).

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE VENDOR

 

The Vendor represents and warrants to the Purchaser as follows and acknowledges
that the Purchaser is relying on such representations and warranties in
connection with its purchase of the Purchased Shares:

 

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3.1          Organization.

 

The Vendor is a company validly existing under the laws of the jurisdiction in
which it was incorporated or organized and has all necessary corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.

 

3.2          Authorization and Enforceability.

 

This Agreement has been duly authorized, executed and delivered by the Vendor
and is a legal, valid and binding obligation of the Vendor enforceable against
the Vendor by the Purchaser in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency and other laws affecting the rights of
creditors generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction.

 

3.3          No Other Agreements to Purchase.

 

No person other than the Purchaser has any written or oral agreement or option
or any right or privilege (whether by law, pre-emptive or contractual) capable
of becoming an agreement or option for the purchase or acquisition from the
Vendor of any of the Purchased Shares.

 

3.4          Ownership of Purchased Shares.

 

(a)           Schedule “A” hereto sets forth the Common Shares, stock options
(“Options”) and common share purchase warrants (“Warrants” and together with the
Common Shares and the Options, the “Owned Securities”) of the Corporation held
of record or beneficially owned by the Vendor on the date hereof.

 

(b)           The Owned Securities constitute all of the Common Shares, Warrants
and Options that are held of record or beneficially owned by the Vendor on the
date hereof.

 

(c)           Subject to any proxies or powers of attorney granted hereunder,
the Vendor has the sole voting and the sole dispositive power, and the sole
power to agree to the matters set forth herein with respect to the Owned
Securities.

 

(d)           Other than the Owned Securities set forth on Schedule “A” hereto,
no Common Shares, Options, Warrants or other securities of the Corporation which
by their terms are exercisable for or convertible into or exchangeable for
Common Shares, are beneficially owned or controlled, directly or indirectly, by
the Vendor.

 

(e)           The Purchaser is the beneficial owner of the Purchased Shares,
with good and marketable title thereto, free and clear of all Encumbrances and,
without limiting the generality of the foregoing, none of the Purchased

 

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Shares is subject to any voting trust, shareholder agreement or voting
agreement.

 

(f)            The Purchaser will have good title to the Purchased Shares free
and clear of any and all Encumbrances at the time that the Purchaser acquires
the Common Shares pursuant to this Agreement.

 

3.5          No Violation.

 

The execution and delivery of this Agreement by the Vendor and the consummation
of the transactions herein provided for will not result in either:

 

(a)           the breach or violation of any of the provisions of, or constitute
a default under, or conflict with or cause the acceleration of any obligation of
the Vendor under:

 

(i)            any provisions of the constating documents, by-laws or
resolutions of the board of directors (or any committee thereof) or shareholders
of the Vendor;

 

(ii)           any judgment, decree, order or award of any court, Governmental
Entity or arbitrator having jurisdiction over the Vendor;

 

(iii)          any licence, permit, approval, consent or authorization held by
the Vendor that is necessary for the ownership of the Purchased Shares; or

 

(iv)          any applicable law, statute, ordinance, regulation or rule; or

 

(b)           the creation or imposition of any Encumbrance on any of the
Purchased Shares.

 

3.6          Consents and Approvals.

 

Except for the Regulatory Approvals, there is no requirement for the Vendor to
make any filing with, give any notice to or to obtain any licence, permit,
certificate, registration, authorization, consent or approval of, any
Governmental Entity as a condition to the lawful sale of the Purchased Shares as
contemplated by this Agreement. There is no requirement under any Contract to
which the Vendor is a party or by which the Vendor is bound to give any notice
to, or to obtain the consent or approval of, any party to such agreement,
instrument or commitment relating to the sale of the Purchased Shares as
contemplated by this Agreement.

 

3.7          No Actions, Proceedings.

 

There is no action, proceeding or investigation (whether or not purportedly on
behalf of the Vendor) pending or, to the knowledge of the Vendor, threatened
against or affecting the Vendor, at law or in equity, before or by any
Governmental Entity, which questions the validity of the purchase and sale of
the Purchased Shares or any action taken or to be taken by the Vendor pursuant
to this Agreement.

 

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser represents and warrants to the Vendor as follows and acknowledges
that the Vendor is relying on such representations and warranties in connection
with its sale of the Purchased Shares:

 

4.1          Organization.

 

The Purchaser is a corporation validly existing under the laws of the State of
Delaware and has all necessary corporate power and authority to enter into this
Agreement and to perform its obligations hereunder.

 

4.2          Authorization.

 

The transaction contemplated by this Agreement has been duly authorized, and
this Agreement has been duly executed and delivered by the Purchaser and is a
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser by the Vendor in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency and other laws affecting the rights of
creditors generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction.

 

4.3          No Violation.

 

The execution and delivery of this Agreement by the Purchaser and the
consummation of the transactions herein provided for will not result in either:

 

(a)           the breach or violation of any of the provisions of, or constitute
a default under, or conflict with or cause the acceleration of any obligation of
the Purchaser under:

 

(i)            any provision of the constating documents, by-laws or resolutions
of the board of directors (or any committee thereof) of the Purchaser;

 

(ii)           any judgment, decree, order or award of any court, Governmental
Entity or arbitrator having jurisdiction over the Purchaser;

 

(iii)          any license, permit, approval, consent or authorization held by
the Purchaser and necessary for the completion of the transaction contemplated
by this Agreement or the operation of the Purchaser’s business; or

 

(iv)          any applicable law, statute, ordinance, regulation or rule; or

 

(b)           the creation or imposition of any Encumbrance on any of the
material properties or assets of the Purchaser.

 

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4.4                               Consents and Approvals.

 

Except for the Regulatory Approvals, there is no requirement for the Purchaser
to make any filing with, give any notice to or to obtain any licence, permit,
certificate, registration, authorization, consent or approval of, any
Governmental Entity as a condition to the purchase of the Purchased Shares, or
the fulfillment by the Purchaser of the terms of this Agreement, except reports
of private placement and the payment of the corresponding fees to any required
securities regulatory authorities.

 

4.5                               Ownership of Common Shares.

 

The Purchaser does not beneficially own, directly or indirectly, and is not the
registered holder of any Common Shares.

 

4.6                               No Actions, Proceedings.

 

There is no action, proceeding or investigation (whether or not purportedly on
the Purchaser’s behalf) pending or, to the knowledge of the Purchaser,
threatened against or affecting the Purchaser, at law or in equity, before or by
any Governmental Entity which questions the validity of any action taken or to
be taken by the Purchaser pursuant to this Agreement.

 

4.7                               No Material Change.

 

The Purchaser has no knowledge of any fact relating to the Purchaser that has
not been publicly disclosed and that would be material to an investor in the
shares of common stock of the Purchaser, other than any of the matters
contemplated by this Agreement.

 

ARTICLE 5
SURVIVAL OF REPRESENTATIONS AND WARRANTIES

 

5.1                               Survival of Representations and Warranties.

 

To the extent that they have not been fully performed at or prior to the Time of
Closing, the covenants, representations and warranties of the parties contained
in this Agreement and any agreement, instrument, certificate or other document
executed or delivered pursuant hereto, except as otherwise expressly provided in
any agreement, instrument, certificate or other document executed or delivered
pursuant to this Agreement, shall survive the closing of the transactions
contemplated hereby for a period of one year and, notwithstanding such closing
nor any investigation made by or on behalf of the Purchaser, shall continue in
full force and effect for the benefit of the Purchaser, in respect of the
Vendor, and for the Vendor in respect of the Purchaser during such period,
except that the representations and warranties set out in section 3.2, 3.3 and
section 3.4 shall survive and continue in full force and effect without
limitation of time.

 

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ARTICLE 6
COVENANTS

 

6.1                               Conduct Prior to Closing.

 

(a)                                  Without in any way limiting any other
obligations hereunder, during the period from the date hereof to the Subsequent
Event, each of the parties hereto shall use its commercially reasonable efforts
to take and cause to be taken all necessary actions, steps and proceedings to
consummate the completion of the transactions contemplated hereby, including:

 

(i)                                     to obtain all necessary approvals,
consents or waivers, including the Regulatory Approvals, and to effect all
necessary registrations and other filings and submissions of information to
Governmental Entities;

 

(ii)                                  to defend all lawsuits or other legal
proceedings challenging this agreement or the consummation of the transactions
contemplated hereby; and

 

(iii)                               to cause to be lifted or rescinded any
injunction or restraining order or other order adversely affecting the
consummation of the transactions contemplated hereby.

 

6.2                               Standstill.

 

(a)                                  Neither the Vendor nor any of its
Representatives will, directly or indirectly,

 

(i)                                     submit, solicit, initiate, discuss or
knowingly encourage or facilitate any proposal, offer or enquiry from a third
party relating to an Acquisition Proposal,

 

(ii)                                  enter into any agreement, arrangement,
commitment or understanding related to any Acquisition Proposal from a third
party;

 

(iii)                               engage in any negotiations concerning, or
provide any information or data to, or have any substantive discussions with,
any person other than the Purchaser relating to an Acquisition Proposal; or

 

(iv)                              otherwise cooperate in or knowingly facilitate
any effort or attempt to make, implement or accept any proposal or offer that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
from a third party.

 

(b)                                 The Vendor and its Representatives shall
suspend any and all discussions with any third party regarding any Acquisition
Proposal.

 

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(c)                                  For the purposes of this agreement,
“Representatives” means, with respect to any person, such person’s Affiliates,
shareholders, controllers, partners, directors, officers, employees and advisors
(including financial advisors and legal counsel, but excluding any persons at a
law firm acting behind a firewall established to segregate such persons from the
persons acting for such a person), and “person” includes, without limitation,
any corporation, partnership, individual or other entity.

 

6.3                               Negative Covenants.

 

(a)                                  Until the occurrence of a Subsequent Event,
neither the Vendor nor any of its Representatives will, directly or indirectly,

 

(i)                                     sell, transfer, gift, assign, pledge,
hypothecate, encumber, convert or otherwise dispose of any of the Purchased
Shares (or permit any of the foregoing with respect to any of the Purchased
Shares), other than transfers or assignments by and among each of the companies
comprising the Vendor, and other than the exercise of Warrants or Options in
accordance with their terms for Common Shares, or enter into any agreement,
arrangement or understanding in connection therewith; or

 

(ii)                                  except as contemplated by this Agreement,
grant (or permit to be granted) any proxies or powers of attorney or attorney in
fact, or deposit (or permit to be deposited) the Purchased Shares into a voting
trust or enter into a voting agreement, understanding or arrangement with
respect to the voting of such Purchased Shares.

 

(b)                                 Until the occurrence of the earlier of a
Subsequent Event and the termination of this Agreement, in respect of the
Purchased Shares, the Vendor hereby appoints the Purchaser as attorney in fact
(which appointment is unconditional, irrevocable and is coupled with an
interest) for and on its behalf to execute a proxy appointing such person
designated by the Purchaser to attend and act on behalf of the Vendor at any
meeting of shareholders of the Corporation in respect of any matter, including a
meeting requisitioned by a third party or a meeting in respect of an Acquisition
Proposal, and to act on behalf of the Vendor on every action or approval by
written consent of the Corporation’s shareholders. The Purchaser shall advise
the Vendor upon executing or revoking any proxies, as applicable, in respect of
the Vendor.

 

(c)                                  The Vendor hereby agrees not to do anything
to frustrate or hinder the purchase and sale of the Purchased Shares including
the consummation of an Acquisition Proposal between the Purchaser and the
Corporation.

 

6.4                               Other Agreements.

 

(a)                                  Each of the parties agrees:

 

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(i)                                     to the existence and factual details of
this Agreement being disclosed by the other party to the extent required by law,
which, for greater certainty, shall include the public announcement and filing
of reports under section 102 of the Securities Act (Ontario); and

 

(ii)                                  to this Agreement being filed or available
for inspection to the extent required by law.

 

(b)                                 The Vendor shall not, and hereby agrees not
to:

 

(i)                                     exercise any dissent rights and waives
any rights of appraisal, or rights to dissent from an Acquisition Proposal
between the Purchaser and the Corporation that the Vendor may have;

 

(ii)                                  commence or participate in, and shall, and
hereby agrees to, take all actions necessary to opt out of any class in any
class action with respect to, any claim, derivative or otherwise, against the
Purchaser or any of its subsidiaries (or any successor) relating to the
negotiation, execution and delivery of this Agreement or a definitive agreement
to be entered into among the Purchaser and the Corporation in respect of an
Acquisition Proposal between the Purchaser and the Corporation.

 

ARTICLE 7
CONDITIONS OF CLOSING

 

7.1                               Conditions of Closing in Favour of the
Purchaser.

 

The completion of the purchase and sale of the Purchased Shares is subject to
the satisfaction or waiver of the following conditions for the exclusive benefit
of the Purchaser, to be fulfilled or performed at or prior to the Time of
Closing, with regard to the Initial Shares, and at or prior to the closing
related to a Subsequent Event with regard to the Remaining Shares:

 

(a)                                  Regulatory Approvals. Hart-Scott-Rodino
Approval and any Foreign Antitrust Clearance shall have been obtained, in the
case of the purchase and sale of the Initial Shares and of the Remaining Shares,
as applicable, and, in addition thereto, Competition Act Approval, Investment
Canada Act Approval and any other required Regulatory Approval shall have been
obtained, in the case of the purchase and sale of the Remaining Shares pursuant
to a Subsequent Event that is an Acquisition Proposal between the Purchaser and
the Corporation;

 

(b)                                 Representations and Warranties. The
representations and warranties of the Vendor contained in this Agreement shall
be true and correct in all material respects at the Time of Closing or at the
time of the closing related to a Subsequent Event, as applicable, with the same
force and

 

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effect as if such representations and warranties were made at and as of such
time;

 

(c)                                  Covenants. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by the Vendor at
or before the Time of Closing or the closing related to a Subsequent Event, as
applicable, shall have been complied with or performed; and

 

(d)                                 No Action or Proceeding. No legal or
regulatory action or proceeding shall be pending or threatened by any
Governmental Entity to enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated hereby.

 

If any of the conditions contained in this section 7.1 shall not be performed or
fulfilled at or prior to the Outside Date to the satisfaction of the Purchaser,
acting reasonably, the Purchaser may, by notice to the Vendor, if the Purchaser
is not in breach of its obligations under this Agreement, terminate this
Agreement and the obligations of the Vendor and the Purchaser under this
Agreement other than the obligations contained in sections 9.2, 9.3 and 9.5
shall be terminated. Any such condition may be waived in whole or in part by the
Purchaser without prejudice to any claims it may have for breach of covenant,
representation or warranty.

 

7.2                               Conditions of Closing in Favour of the Vendor.

 

The completion of the purchase and sale of the Purchased Shares is subject to
the satisfaction or waiver of the following conditions for the exclusive benefit
of the Vendor, to be fulfilled or performed at or prior to the Time of Closing,
with regard to the Initial Shares, and at or prior to the closing related to a
Subsequent Event with regard to the Remaining Shares:

 

(a)                                  Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects at the Time of Closing or the
closing related to a Subsequent Event, as applicable, with the same force and
effect as if such representations and warranties were made at and as of such
time;

 

(b)                                 Covenants. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by the Purchaser
at or before the Time of Closing or the closing related to a Subsequent Event,
as applicable, shall have been complied with or performed; and

 

(c)                                  No Action or Proceeding. No legal or
regulatory action or proceeding shall be pending or threatened by any
Governmental Entity to enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated hereby.

 

If any of the conditions contained in this section 7.2 shall not be performed or
fulfilled at or prior to the Outside Date to the satisfaction of the Vendor,
acting reasonably, the Vendor may, by notice to the Purchaser, if the Vendor is
not in breach of its obligations

 

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under this Agreement, terminate this Agreement and the obligations of the Vendor
and the Purchaser under this Agreement other than the obligations contained in
sections 9.2, 9.3 and 9.5 shall be terminated. Any such condition may be waived
in whole or in part by the Vendor without prejudice to any claims it may have
for breach of covenant, representation or warranty.

 

ARTICLE 8
CLOSING ARRANGEMENTS

 

8.1                               Place of Closing.

 

Each of the purchase and sale of the Initial Shares at the Time of Closing and
the purchase and sale of the Remaining Shares upon the occurrence of a
Subsequent Event, other than the completion of an Acquisition Proposal between
the Purchaser and the Corporation which shall take place pursuant to such
Acquisition Proposal, shall take place at the offices of Osler, Hoskin &
Harcourt LLP, 1 First Canadian Place Toronto, Ontario, Canada M5X 1B8.

 

8.2                               Transfer.

 

At the Time of Closing, upon fulfilment of all the conditions set out in
Article 7, the Vendor shall execute and deliver to the Purchaser all such
documents, certificates and instruments and do all such other acts and things as
the Purchaser may consider necessary or desirable, acting reasonably, to
effectively transfer and assign the Purchased Shares to the Purchaser, with a
good and marketable title, free and clear of all Encumbrances, except as
contemplated by this Agreement, and to deliver possession thereof to the
Purchaser.

 

8.3                               Further Assurances.

 

Each party to this Agreement covenants and agrees that, from time to time
subsequent to the Closing Date, it will, at the request and expense of the
requesting party, execute and deliver all such documents, including, without
limitation, all such additional conveyances, transfers, consents and other
assurances and do all such other acts and things as any other party hereto,
acting reasonably, may from time to time request be executed or done in order to
better evidence or perfect or effectuate any provision of this Agreement or of
any agreement or other document executed pursuant to this Agreement or any of
the respective obligations intended to be created hereby or thereby.

 

ARTICLE 9
MISCELLANEOUS

 

9.1                               Notices.

 

(a)                                  Any notice or other communication required
or permitted to be given hereunder shall be in writing and shall be delivered in
person, transmitted by telecopy or similar means of recorded electronic
communication or sent by registered mail, charges prepaid, addressed as follows:

 

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(i)

if to the Vendor:

 

 

 

Audley Capital

 

11 Grafton Street

 

London, W1S 4EW

 

United Kingdom

 

 

 

Attention:

Julian Treger

 

Fax:

44.20.7529.6901

 

 

 

with a copy to:

 

 

 

Davies Ward Phillips & Vineberg LLP

 

1 First Canadian Place

 

P.O. Box 63

 

Toronto, Ontario M5X 1B1

 

 

 

 

Attention:

Vincent Mercier and Peter Hong

 

Facsimile:

416.863.0871

 

 

 

(ii)

if to the Purchaser:

 

 

 

Walter Energy, Inc.

 

4211 W. Boy Scout Blvd.

 

Tampa, Florida

 

 

 

 

Attention:

General Counsel

 

Fax:

813.871.4399

 

 

 

 

With a required copy (which shall not be deemed notice) to:

 

 

 

Osler, Hoskin & Harcourt LLP

 

1 First Canadian Place

 

Box 50, Toronto, Ontario M5X 1B8

 

 

 

 

Attention:

Emmanuel Pressman

 

Facsimile:

416.862.6666

 

 

 

 

With a required copy (which shall not be deemed notice) to:

 

 

 

Simpson Thacher & Bartlett LLP

 

425 Lexington Avenue

 

New York, New York 10017 - 3954

 

 

 

 

Attention:

Peter Gordon

 

Facsimile:

212.455.2502

 

(b)                                 Any such notice or other communication shall
be deemed to have been given and received on the day on which it was delivered
or transmitted (or, if such day is not a Business Day, on the next following
Business

 

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Day) or, if mailed, on the third Business Day following the date of mailing;
provided, however, that if at the time of mailing or within three Business Days
thereafter there is or occurs a labour dispute or other event which might
reasonably be expected to disrupt the delivery of documents by mail, any notice
or other communication hereunder shall be delivered or transmitted by means of
recorded electronic communication as aforesaid.

 

(c)                                  Any party may at any time change its
address for service from time to time by giving notice to the other parties in
accordance with this section 9.1.

 

9.2                               Commissions, etc.

 

The Vendor agrees to indemnify and save harmless the Purchaser from and against
all claims, damages and expenses suffered or incurred by the Purchaser in
respect of any commission or other remuneration payable or alleged to be payable
to any broker, agent or other intermediary who purports to act or have acted for
or on behalf of the Vendor.

 

The Purchaser agrees to indemnify and save harmless the Vendor from and against
all claims, damages and expenses suffered or incurred by the Vendor in respect
of any commission or other remuneration payable or alleged to be payable to any
broker, agent or other intermediary who purports to act or have acted for or on
behalf of the Purchaser.

 

Each party shall be responsible for any expenses incurred by it in connection
with this Agreement.

 

9.3                               Consultation.

 

The parties shall consult with each other before issuing any press release or
making any other public announcement with respect to this Agreement or the
transactions contemplated hereby. The parties will use their respective
reasonable efforts not to issue any press releases or other public statements
inconsistent with the results of such consultation.

 

9.4                               Best Efforts.

 

The parties acknowledge and agree that, for all purposes of this Agreement, an
obligation on the part of any party to use its best efforts to obtain any
waiver, consent, approval, permit, licence or other document shall not require
such party to make any payment to any person for the purpose of procuring the
same, other than payments for amounts due and payable to such person, payments
for incidental expenses incurred by such person and payments required by any
applicable law or regulation.

 

9.5                               Remedy.

 

Each party acknowledges that a breach by the other party of this Agreement will
cause the non-breaching party to sustain injury for which it would not have an
adequate remedy at law for monetary damages. Therefore, the parties agree that
in the event of

 

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such breach, the non-breaching party shall be entitled to the remedy of specific
performance of the covenants and commitments contained herein and permanent and
preliminary injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity, and the parties further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of such injunctive or other equitable relief.

 

9.6                               Assignment.

 

The provisions of this Agreement shall be binding upon and enure to the benefit
of the parties hereto and their respective successors and permitted assigns,
provided that no party may assign, delegate or otherwise transfer any of its
rights, interests or obligations under this Agreement without the prior written
consent of the other parties hereto, and except that the Purchaser may, assign,
delegate or otherwise transfer any of its rights, interests or obligations under
this Agreement to an Affiliate.

 

9.7                               Counterparts.

 

This Agreement may be executed in counterparts, each of which shall constitute
an original and all of which taken together shall constitute one and the same
instrument.

 

[Signature Page Follows.]

 

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IN WITNESS WHEREOF this Agreement has been executed by the parties.

 

 

AUDLEY CAPITAL MANAGEMENT LIMITED

 

 

 

By:

/s/ Simon Thornton

 

 

Name: Simon Thornton

 

 

Title: Director

 

 

 

 

 

 

 

AUDLEY EUROPEAN OPPORTUNITIES MASTER FUND LIMITED

 

 

 

By:

/s/ Simon Thornton

 

 

Name: Simon Thornton

 

 

Title: Director

 

 

 

 

 

 

 

AUDLEY INVESTMENT I

 

 

 

 

 

By:

/s/ Simon Thornton

 

 

Name: Simon Thornton

 

 

Title: Director

 

 

 

 

 

 

 

AUDLEY INVESTMENT II

 

 

 

 

 

By:

/s/ Simon Thornton

 

 

Name: Simon Thornton

 

 

Title: Director

 

 

 

 

 

 

 

WALTER ENERGY, INC.

 

 

 

 

 

By:

/s/ Michael T. Tokarz

 

 

Michael T. Tokarz

 

 

Chairman of the Board of Directors

 

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SCHEDULE “A”

 

SECURITIES

 

HOLDER

 

COMMON SHARES

(Specify whether
registered, beneficial
or controlled)

Audley Capital Management Limited — Audley Investment I

 

21,137,050

 

beneficial and registered

 

 

 

Audley Capital Management Limited — Audley Investment II

 

2,369,101

 

beneficial and registered

 

 

 

Audley European Opportunities Master Fund Limited

 

39,680,711

 

beneficial and registered

 

The number of Purchased Shares to be sold by any particular company comprising
the Vendor to the Purchaser and whether such Purchased Shares form part of the
Initial Shares or the Remaining Shares will be determined by the Vendor,
provided that the aggregate number of Initial Shares shall be 25,274,745 and the
aggregate number of Remaining Shares shall be 29,273,113.

 

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