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);


 

















 


“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 


 


14

















 


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 


 


15

















 


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:


 


16

















 


	
  (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 


 


17

















 


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 


 


18

















 


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.]


 


19

















 


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

  



 


20

















 


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.