Exhibit 10.1


 


EXECUTION VERSION


 


	
  MORGAN STANLEY

  SENIOR FUNDING, INC.

  1585 Broadway

  New York, New York 10036

  	
   

  	
  CREDIT AGRICOLE CIB

  1301 Avenue of the Americas

  New York, New York 10019

  	
   

  	
  THE BANK OF NOVA SCOTIA

  Scotia Plaza

  40 King Street West

  62nd floor

  Toronto, Ontario

  Canada, M5W 2X6

  



 


December 2, 2010


 


Walter
Energy, Inc.

4211 W. Boy Scout Boulevard


Tampa,
Florida 33607

Attention: Miles Dearden


 


Project X-Men

Commitment Letter

$2,725,000,000 Senior Secured Bank Facilities


 


Ladies
and Gentlemen:


 


Walter
Energy, Inc. (“you” or the “Borrower”) has advised Morgan Stanley Senior Funding, Inc.
(“MSSF”), Credit Agricole Corporate and
Investment Bank (“CA-CIB”) and
The Bank of Nova Scotia (“BNS” and,
together with MSSF and CA-CIB, “we”, “us” or the “Commitment Parties”
and each individually a “Commitment Party”)
that you will acquire (the “Acquisition”),
directly or indirectly through a newly formed wholly-owned subsidiary,  100% of the outstanding capital stock of Western Coal
Corp., a corporation existing under the laws of the Province of British
Columbia (the “Target”), pursuant to a one step
merger (the “Merger”) to be effected pursuant
to an arrangement agreement (in the form provided to the Lead Arrangers prior
to the execution of this Commitment Letter, the “Acquisition
Agreement”) between you and Target for your stock and an aggregate
cash purchase price of approximately $2.453 billion. It is understood that
prior to the consummation of the Merger you or one of your subsidiaries may
acquire a portion of the Target’s outstanding capital stock from certain
existing stockholders. After giving effect to the Acquisition, Target will
become a wholly-owned subsidiary of the Borrower.  All references to “dollars”
or “$” in this Commitment Letter (as
defined below) are references to United States dollars.


 


We
understand that the total funding required to effect the Acquisition, to
refinance all existing indebtedness of the Borrower and Target and their
respective subsidiaries (the “Refinancing”),
to pay the fees and expenses incurred in connection therewith and to provide
for the ongoing working capital and general corporate needs of the Borrower and
its subsidiaries shall be $2.735  billion and
shall be provided in part from the incurrence by the Borrower of senior secured
credit facilities consisting of (i) a term A loan facility in the
aggregate principal amount of $600.0  million (the “Tranche A Facility”), (ii) a term B loan facility in
the aggregate 


 

















 


principal
amount of $1.750 billion (the “Tranche B Facility”, together with the Tranche A Facility,
the “Term Loan Facilities”) and (iii) a
revolving credit facility in the amount of $375.0 million (the “Revolving Facility”,
together with the Tranche A Facility and Tranche B Facility, the “Bank Facilities”),
of which Revolving Facility not more than an amount to be agreed by the
Commitment Parties may be drawn immediately after giving effect to the
Transactions, in each case, as described in the summary of terms and conditions
attached hereto as Exhibit A (the “Bank Term Sheet”);


 


The
Acquisition, the Refinancing, the entering into of this Commitment Letter (as
defined below), the entering into of the Bank Facilities and the initial
borrowings thereunder and the related transactions contemplated by the
foregoing as well as the payment of fees, commissions an expenses in connection
with each of the foregoing, are collectively referred to as the “Transactions.”  No other financing will be required for the
Transactions.


 


1.                                      Commitments.  Each Commitment Party is pleased to severally
(and not jointly) commit to provide (a) in the case of MSSF, 60%, in the
case of CA-CIB, 22% and in the case of BNS, 18%, of the Bank Facilities subject
to and on the terms and conditions set forth herein and in the Bank Term
Sheet and the additional conditions attached as Exhibit B (the “Conditions Term Sheet”, together with the Bank Term Sheet,
the “Term Sheets”
and together with this agreement and the Fee Letter (as defined below), the “Commitment Letter”). 
It is agreed that (i) MSSF, CA-CIB and BNS shall act as joint lead
arrangers for the Bank Facilities (in such capacity, the “Lead Arrangers”),
(ii) MSSF shall act as administrative agent for the Bank Facilities (in
such capacity, the “Administrative Agent”),
(iii) MSSF, CA-CIB and BNS shall act as joint book-runners for the Bank
Facilities, (iv) MSSF, CA-CIB and BNS shall act as co-syndication agents
for the Bank Facilities and (v) MSSF shall act as documentation agent for
the Bank Facilities (in such capacity, the “Documentation Agent”).
It is also agreed that MSSF shall have “left” placement in any and all
marketing materials or other documentation used in connection with any of the
Bank Facilities and shall hold the leading role and responsibilities
customarily associated with such “left” placement, including maintaining sole “physical
books” in respect of each of the Bank Facilities.  It is further agreed that no additional
advisors, agents, co-agents, arrangers or bookmanagers will be appointed and no
Lender (as defined below) will receive compensation with respect to any of the
Bank Facilities outside the terms contained in this Commitment Letter and the
fee letter (the “Fee Letter”) executed
simultaneously herewith in order to obtain its commitment to participate in the
Facilities, in each case unless you and we so agree. Notwithstanding the above,
you shall have the right to appoint one additional financial institution that
is reasonably satisfactory to us to act as a agent or co-agent (the “Additional Agent”); provided that (i) such
Additional Agent shall deliver by December 14, 2010 a joinder to this
Commitment Letter in form and substance reasonably satisfactory to the Lead
Arrangers by which such Additional Agent shall become a Commitment Party
hereunder, (ii) the percentage of the total compensation and economics
paid in connection with the Bank Facilities received by the Additional Agent
shall not exceed such appointed entity’s percentage of commitments of the Bank
Facilities set forth in the joinder delivered by such appointed entity pursuant
to clause (i) immediately above, (iii) the aggregate compensation and
economics payable by you and your affiliates in connection with the Bank
Facilities to such Additional Agent shall not exceed 10% of the total
compensation and economics paid in connection with the Bank Facilities and (iv) the
commitments of such Additional Agent shall reduce the commitments of the
Commitment Parties set forth above in a manner to be determined by the Lead
Arrangers.


 


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Without
limiting the conditions precedent provided herein to funding the consummation
of the Acquisition with the proceeds of the Bank Facilities, the Lead Arrangers
will cooperate with you as reasonably requested in coordinating the timing and
procedures for the funding of the Bank Facilities (the “Closing Date”)
in a manner consistent with the Acquisition Agreement. Those matters that are
not covered or made clear in this Commitment Letter are subject to mutual
agreement of the parties.  The commitment
and other obligations of the Commitment Parties hereunder are subject solely to
the satisfaction of the following conditions:


 


(a)                                  the
negotiation, execution and delivery of definitive loan documentation for the
Bank Facilities (including related collateral agreements) (the “Bank Documentation”), consistent with the Commitment Letter
and the Fee Letter and otherwise mutually agreed to be customary and
appropriate for transactions of this type;


 


(b)                                 since March 31,
2010, there shall not have occurred a Company Material Adverse Effect (as
defined in Exhibit C attached hereto) or any event or occurrence that
would reasonably be expected to have a Company Material Adverse Effect (as
defined in Exhibit C attached hereto); and


 


(c)                                  satisfaction of
the other conditions set forth in the Conditions Term Sheet.


 


Notwithstanding anything in this Commitment Letter,
the Fee Letter, the Bank Documentation or any other letter agreement or other
undertaking concerning the financing of the Transactions to the contrary, (i) the
only representations which shall be a condition to availability of the Bank
Facilities on the Closing Date shall be (A) such of the representations
made by (or relating to) the Target in the Acquisition Agreement that are
material to the interests of the Lenders, but only to the extent that you have
the right (determined without regard to any notice requirement) to terminate
your obligations (or to decline to consummate the Merger) under the Acquisition
Agreement as a result of a breach of such representations in the Acquisition
Agreement (the “Acquisition  Agreement
Representations”) and (B) the Specified Representations (as
defined below) and (ii) the terms of the Bank Documentation shall be in a
form such that they do not impair availability of the Bank Facilities on the
Closing Date if the conditions set forth in this Commitment Letter are
satisfied (it being understood that (I) to the extent any Collateral
referred to in the Bank Term Sheet may not be perfected by the filing of a UCC
financing statement, PPSA financing statement, or taking possession of a stock
certificate, if the perfection of the Administrative Agent’s security interest
in such Collateral is not accomplished prior to the Closing Date after your use
of commercially reasonable efforts to do so, then the perfection of the
security interest in such Collateral shall not constitute a condition precedent
to the availability of the Bank Facilities on the Closing Date but, instead,
may be accomplished within a period after the Closing Date reasonably
acceptable to the Administrative Agent and (II) nothing in preceding
clause (ii) shall be construed to limit the applicability of the
individual conditions expressly set forth herein or in the Term Sheets except
to the extent stated therein).  For
purposes hereof, “Specified Representations”
means the representations and warranties referred to in the Bank Term Sheet
relating to, corporate existence (subject to customary materiality thresholds),
corporate power and authority, the due authorization, execution, delivery,
validity and enforceability of the Bank Documentation, the Bank Documentation
not conflicting with charter documents, solvency of the Borrower and its
subsidiaries on a consolidated basis on the Closing Date, Federal Reserve
margin regulations, 


 


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Investment
Company Act of 1940, Patriot Act, and validity, priority and perfection of
security interests (subject to subclause (I) of the last parenthetical
appearing in the preceding sentence).


 


2.                                      Syndication.  The Lead Arrangers reserve the right, prior
to or after execution of the definitive credit documentation for the Bank
Facilities, to syndicate, in consultation with you, all or part of the
Commitment Parties’ commitment for such Facility to one or more financial
institutions or institutional lenders. Without limiting your obligations to
assist with syndication efforts as set forth herein, each of the Commitment
Parties agree that commencement or completion of such syndications is not a
condition to its commitments hereunder. Notwithstanding the foregoing, except
as provided in the last sentence of the first paragraph of Section 1 of
the Commitment Letter, it is agreed that any syndication of all or any portion
of any of the commitments hereunder prior to the initial funding of the Bank
Facilities shall not reduce any Commitment Party’s commitments hereunder with
respect to any of the Bank Facilities (provided, however, that,
notwithstanding the foregoing, assignments of an Commitment Party’s
commitments, which are effective simultaneously with the funding of such
commitments by the assignee, shall be permitted), and, unless the Borrower
consents in writing, which consent shall not be unreasonably withheld or
delayed, each Commitment Party shall retain exclusive control over all rights
and obligations with respect to its commitments, including all rights with
respect to consents, modifications and amendments, until the Closing Date has
occurred.


 


The
Lead Arrangers intend to commence syndication efforts promptly after the
execution of this Commitment Letter by you and you agree to actively assist the
Lead Arrangers in achieving a syndication in respect of each Bank Facility that
is satisfactory to the Lead Arrangers. 
Such syndication will be accomplished by a variety of means, including
direct contact during the syndication for a Bank Facility between senior
management and advisors of the Target
and the proposed syndicate members for such Bank Facility (such members in
respect of the Bank Facilities being referred to as the “Lenders”).  The Lead Arrangers will manage all aspects of
the syndication in consultation with you, including the timing, scope and
identity of potential lenders, any agency or other title designations or roles
awarded to any potential lender, any compensation provided to each potential
lender from the amount paid to the Lead Arrangers pursuant to this Commitment
Letter and the Fee Letter and the final allocation of the commitments in
respect of the Facilities among the Lenders.


 


To
assist the Commitment Parties in their syndication efforts, you hereby covenant
and agree (but shall not constitute a condition to funding on the Closing
Date):


 


(a)                                  to provide and
cause your advisors to provide, and use your commercially reasonable efforts to
cause the Target, its subsidiaries and its advisors to provide, the Lead
Arrangers with all information customarily required for such syndications as
reasonably requested by the Lead Arrangers, including but not limited to the
Projections (as defined below);


 


(b)                                 to use
commercially reasonable efforts to assist the Lead Arrangers in preparing
customary confidential information memoranda (including public and private
versions thereof) and customary lender presentations to be used in connection
with the syndication of each Bank Facility;


 


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(c)                                  to use your
commercially best efforts to ensure that the syndication efforts of the Lead
Arrangers benefit materially from your existing lending and banking
relationships and the existing lending and banking relationships of the Target
and its subsidiaries;


 


(d)                                 prior to and
until the completion of the syndication of the Bank Facilities (as determined
by the Lead Arrangers and notified in writing to you), there shall be no
competing issues of debt securities or commercial bank or other debt facilities
or securitizations (including any renewals or refinancing thereof) by the
Borrower, the Target or any of their respective subsidiaries or affiliates
being attempted, offered, placed or arranged, including renewals or refinancing
of any existing debt (it being understood that this condition shall survive the
Closing Date as a covenant until the completion of the syndication of the Bank
Facilities (as determined by the Lead Arrangers and notified in writing to
you));


 


(e)                                  to obtain
corporate credit or family ratings of the Borrower after giving effect to the
Transactions and ratings for each of the Bank Facilities from Moody’s Investors
Service, Inc. (“Moody’s”) and
Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc. (“S&P”)
(collectively, the “Ratings”); and


 


(f)                                    to otherwise
provide customary assistance to the Lead Arrangers in its syndication efforts,
including by making available your and, using commercially reasonable efforts,
the Target’s officers, representatives and advisors, in each case at times to
be mutually agreed from time to time and to attend and make customary
presentations regarding the business and prospects of the Borrower at one or
more meetings of Lenders.


 


3.                                      Information.  Subject to the last paragraph of Section 1
of this Commitment Letter, you represent and warrant that (a) all
information (other than the Projections referred to below and information of a
general economic or industry nature) that has been or will hereafter be made
available by or on behalf of you, the Borrower, to your knowledge, the Target
or by any of your or their respective agents or representatives in connection
with the Transactions (the “Information”), taken as a whole to the Commitment Parties is
and will be complete and correct in all material respects and does not and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein, taken as a
whole, not misleading in the light of the circumstances under which such
statements were or are made and (b) all financial projections (the “Projections”),
if any, that have been or will be prepared by you or on your behalf or by any
of your representatives and made available to the Commitment Parties have been
or will be prepared in good faith based upon assumptions believed by you to be
reasonable at the time made available (it being understood that such
projections are subject to significant uncertainties and contingencies and that
no assurance can be given that any particular projections will be
realized).  You agree that, if at any
time prior to the Closing Date and for such period as is necessary to complete
the syndication of the Bank Facilities any of the representations or warranties
in the preceding sentence would be incorrect if the Information or Projections
were being furnished, and such representations and warranties were being made,
at such time, then you will promptly supplement, or cause to be supplemented,
the Information and Projections so that such representations and warranties
will be correct at such time. You agree that, in issuing the commitments
hereunder and in arranging and syndicating the Bank Facilities, we will be
entitled to use and rely on the Information and the 


 


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Projections furnished by you or on your behalf or on
behalf of the Target without independent verification thereof.


 


You
agree that the Lead Arrangers may make available any Information and
Projections (collectively, the “Company
Materials”) to potential Lenders by posting the Company Materials on
IntraLinks, the Internet or another similar electronic system (the “Platform”). 
You further agree to assist, at the request of the Lead Arrangers, in
the preparation of a version of a confidential information memorandum and other
marketing materials and presentations to be used in connection with the
syndication of each Bank Facility, consisting exclusively of information or
documentation that is either (i) publicly available or (ii) not
material with respect to the Borrower, the Target or their respective
subsidiaries or any of their respective securities for purposes of foreign,
United States federal and state securities laws (all such information and
documentation being “Public Lender Information”).  Any information and documentation that is not
Public Lender Information is referred to herein as “Private
Lender Information.”  It is
understood that in connection with your assistance described above,
authorization letters will be included in any Confidential Information
Memorandum that authorize the distribution of the Confidential Information
Memorandum to prospective Lenders, containing a representation to the Lead
Arrangers that the public-side version does not include material non-public
information about the Borrower, its subsidiaries or its securities and
exculpating (i) us with respect to any liability related to the use of the
contents of the Confidential Information Memorandum or any related marketing
material by the recipients thereof and (ii) the Borrower and its
subsidiaries with respect to any liability related to the misuse of the
contents of the Confidential Information Memorandum or any related marketing
material by the recipients thereof.  You
agree to use commercially reasonable efforts to identify that portion of the
Information that may be distributed to the Public Lenders as “PUBLIC”.  You acknowledge and agree that the following
documents may be distributed to Public Lenders (unless you promptly notify us
otherwise): (a) the Term Sheets, (b) drafts and final definitive
documentation with respect to the Bank Facilities; (c) administrative
materials prepared by the Administrative Agent or the Commitment Parties for
prospective Lenders (such as a lender meeting invitation, allocations and
funding and closing memoranda); and (d) notification of changes in the
terms of the Bank Facilities.


 


4.                                      Costs,
Expenses and Fees.  You
agree to pay or reimburse the Lead Arrangers, the Administrative Agent and the
Commitment Parties for all reasonable and documented costs and expenses
incurred by the Lead Arrangers, the Administrative Agent and the Commitment
Parties and their respective affiliates (whether incurred before or after the
date hereof) in connection with the Bank Facilities and the preparation,
negotiation, execution and delivery of this Commitment Letter and Fee Letter,
the Bank Documentation and any security arrangements in connection therewith,
including without limitation, the fees and disbursements of counsel, regardless
of whether any of the Transactions is consummated.  You further agree to pay all costs and
expenses of the Lead Arrangers, the Administrative Agent and the Commitment
Parties and their respective affiliates (including, without limitation,
reasonable and documented fees and disbursements of counsel) incurred in
connection with the enforcement of any of its rights and remedies hereunder.  In addition, you
hereby agree to pay when and as due the fees described in the Fee Letter.  Once paid, such fees shall not be refundable
under any circumstances.  The terms of
the Fee Letter are an integral part of each Commitment Party’s commitment
hereunder and constitute part of this Commitment Letter for all purposes
hereof.


 


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5.                                      Indemnity.  You agree to indemnify and hold harmless the
Lead Arrangers, the Administrative Agent and Lenders and their respective
affiliates (including, without limitation, controlling persons) and each
director, officer, employee, advisor, agent, affiliate, successor, partner,
representative and assign of each of the forgoing (each an “Indemnified Person”)
from and against any and all actions, suits, investigation, inquiry, claims,
losses, damages, liabilities, expenses or proceedings of any kind or nature
whatsoever which may be incurred by or asserted against or involve any such
Indemnified Person as a result of or arising out of or in any way related to or
resulting from this Commitment Letter, the Fee Letter, the Bank Facilities, the
use of proceeds thereof, the Transactions or the other transactions
contemplated thereby (regardless of whether any such Indemnified Person is a
party thereto and regardless of whether such matter is initiated by a third
party or otherwise) (any of the foregoing, a “Proceeding”),
and you agree to reimburse each Indemnified Person upon demand for any legal or
other out-of-pocket expenses incurred in connection with investigating,
defending, preparing to defend or participating in any such Proceeding; provided, however,
that no Indemnified Person will be indemnified for any such cost, expense or
liability to the extent determined by a final, nonappealable judgment of a
court of competent jurisdiction to have resulted from (i) the gross
negligence or willful misconduct of such Indemnified Person or (ii) arising
from a breach of the obligations of such Indemnified Person under this
Commitment Letter or the Bank Documentation. 
In the case of any Proceeding to which the indemnity in this paragraph
applies, such indemnity and reimbursement obligations shall be effective,
whether or not such Proceeding is brought by you, the Borrower, the Target, any
of your or their respective securityholders or creditors, an Indemnified Person
or any other person, or an Indemnified Person is otherwise a party thereto and
whether or not any aspect of the Commitment Letter, the Fee Letter, the Bank
Facilities or any of the Transactions is consummated.  Notwithstanding any other provision of this
Commitment Letter, (i) no Indemnified Person shall be responsible or
liable for damages arising from the unauthorized use by others of information
or other materials obtained through internet, electronic, telecommunications or
other information transmission and (ii) no Indemnified Person shall be
liable for any indirect, special, punitive or consequential damages in
connection with your or its activities related to the Bank Facilities, the
Commitment Letter or the Fee Letter, and it is further agreed that each
Commitment Party shall have liability only to you (as opposed to any other
person) and that each Commitment Party shall be liable solely in respect of its
own commitment hereunder on a several, and not joint, basis with any other
Commitment Party.


 


You
will not, without the prior written consent of the Indemnified Person, settle,
compromise, consent to the entry of any judgment in or otherwise seek to
terminate any Proceeding in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is a party thereto) unless
such settlement, compromise, consent or termination (i) includes an
unconditional release of each Indemnified Person from all liability arising out
of such Proceeding and (ii) does not include a statement as to, or an
admission of, fault, culpability, or a failure to act by or on behalf of such
Indemnified Person.


 


6.                                      Confidentiality.  This Commitment Letter is furnished solely
for your benefit, and may not be relied upon or enforced by any other person or
entity other than the parties hereto, the Lenders and the Indemnified
Persons.  This Commitment Letter is
delivered to you on the understanding that none of the Fee Letter and its terms
or substance, or, prior to your acceptance hereof, this Commitment Letter and
its terms or substance, or the activities of the Commitment Parties pursuant
hereto or to the Fee Letter shall be disclosed, directly or indirectly, 


 


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to any other person or entity (including other
lenders, underwriters, placement agents, advisors or any similar persons)
except (a) if the Commitment Parties consent to such proposed disclosure
or (b) pursuant to the order of any court or administrative agency in any
pending legal or administrative proceeding, or otherwise as required by
applicable law or compulsory legal process or, to the extent requested or
required by governmental and/or regulatory authorities, in each case based on
the reasonable advice of your legal counsel (in which case, to the extent
permitted by law, you agree to inform us promptly thereof (other than in the
case of requests by regulatory authorities or authorities purporting to have
regulatory jurisdiction over the Commitment Parties)); provided that (i) you
may disclose this Commitment Letter and the contents hereof to your officers,
directors, employees, attorneys, accountants and advisors, on a confidential
and need-to-know basis, (ii) you may disclose the Commitment Letter and its
contents in any proxy or other public filing relating to the Transactions, (iii) you
may disclose this Commitment Letter, and the contents hereof, to a potential
Additional Agent and to rating agencies in connection with obtaining ratings
for the Borrower and the Bank Facilities, (iv) you may disclose the fees
contained in the Fee Letter as part of a generic disclosure of aggregate
sources and uses related to fee amounts to the extent customary or required in
marketing materials, any proxy or other public filing or any prospectus or
other offering memorandum and (v) to the extent portions thereof have been
redacted in a manner to be mutually agreed upon, you may disclose the Fee
Letter and the contents thereof to your officers, directors, employees, attorneys,
accountants and advisors, and to Target on a confidential and need-to-know
basis.  You agree that you will permit us
to review and approve (such approval not to be unreasonably withheld or
delayed) any reference to us or any of our affiliates in connection with the
Bank Facilities or the transactions contemplated hereby contained in any press
release or similar written public disclosure prior to public release.


 


The Commitment Parties and their affiliates will use
all confidential information provided to them or such affiliates by or on
behalf of you hereunder solely for the purpose of providing the services which
are the subject of this Commitment Letter and shall treat confidentially all
such information; provided that nothing herein shall prevent the
Commitment Parties from disclosing any such information (a) pursuant to
the order of any court or administrative agency or in any pending legal or
administrative proceeding, or otherwise as required by applicable law or
compulsory legal process (in which case the Commitment Parties, to the extent
permitted by applicable law, agree to inform you promptly thereof), (b) upon
the request or demand of any regulatory authority having jurisdiction over the
Commitment Parties or any of their affiliates (in which case the Commitment
Parties, to the extent permitted by law, agree to inform you promptly thereof),
(c) to the extent that such information becomes publicly available other
than by reason of improper disclosure by the Commitment Parties or any of their
affiliates or any related parties thereto in violation of any confidentiality
obligations owing to you or any of your subsidiaries (including those set forth
in this paragraph), (d) to the extent that such information is received by
the Commitment Parties from a third party that is not to the Commitment Parties’
knowledge subject to confidentiality obligations owing to you or any of your
subsidiaries, (e) to the extent that such information was already in the
Commitment Party’s possession or is independently developed by the Commitment
Parties, (f) to the Commitment Parties’ affiliates and the Commitment
Parties’ and such affiliates’ officers, directors, partners, employees, legal
counsel, independent auditors and other experts or agents who need to know such
information in connection with the Transactions and are informed of the
confidential nature of such information and who agree (which agreement may be
oral or pursuant to company policy) to be bound by the terms of this paragraph
(or language substantially similar to this paragraph), (g) to potential or



 


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prospective
Lenders, participants or assignees and any direct or indirect contractual
counterparties to any swap or derivative transaction relating to the Borrower
and its obligations under the Bank Facilities, in each case who agree (which
agreement may be oral or pursuant to customary syndication practice) to be
bound by the terms of this paragraph (or language substantially similar to this
paragraph) or (h) for purposes of establishing a “due diligence defense”.  The Commitment Parties’ obligations under
this paragraph shall automatically terminate and be superseded by the
confidentiality provisions in the definitive documentation relating to the Bank
Facilities upon the initial funding thereunder and shall in any event terminate
upon the first anniversary of the date hereof.


 


7.                                      Patriot
Act.  We hereby notify you that
pursuant to the requirements of the USA Patriot Act, Title III of Pub. L.
107-56 (October 26, 2001) (as amended, the “Patriot Act”),
we and the other Lenders are required to obtain, verify and record information
that identifies the Borrower and the Target and its subsidiaries, which
information includes the name, address, tax identification number and other
information regarding them that will allow any of us or such Lender to identify
the Borrower and the Target in accordance with the Patriot Act.  This notice is given in accordance with the
requirements of the Patriot Act and is effective on behalf of the Commitment
Parties and each other Lender.


 


8.                                      Governing
Law etc.  This Commitment Letter and the Fee Letter shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of law to the extent that the application of the
laws of another jurisdiction will be required thereby.  Any right to trial by jury with respect to
any claim, action, suit or proceeding arising out of or contemplated by this
Commitment Letter and/or the related Fee Letter is hereby waived.  You hereby irrevocably and unconditionally
submit to the exclusive jurisdiction of the federal and New York State courts
located in the City of New York, Borough of Manhattan (and appellate courts
thereof) in connection with any dispute related to this Commitment Letter or
the Fee Letter or any matters contemplated hereby or thereby and agree that any
service of process, summons, notice or document by registered mail addressed to
you shall be effective service of process for any suit, action or proceeding
relating to any such dispute.  You
irrevocably and unconditionally waive any objection to the laying of venue of
any such suit, action or proceeding brought in any such court and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum.  A final judgment in any such
suit, action or proceeding may be enforced in any jurisdiction by suit on the
judgment or in any other manner provided by law. You agree, on behalf of your
affiliates, that the foregoing provisions of this paragraph shall also apply to
your affiliates to the same extent as to you, and the extension of our
commitments hereunder is being made in reliance on the foregoing.  Nothing herein will affect the right of the
Lead Arrangers or Administrative Agent or the Commitment Parties to serve legal
process in any other manner permitted by law or affect each Lead Arranger’s or
Administrative Agent’s or a Commitment Party’s right to bring any suit, action
or proceeding against the Borrower or its subsidiaries or its or their property
in the courts of other jurisdictions.


 


9.                                      Other
Activities; No Fiduciary Relationship; Other Terms.


 


As
you know, Morgan Stanley, either directly or indirectly through its
subsidiaries or affiliates (collectively, “Morgan Stanley”),
Credit Agricole Securities (USA) Inc., either 


 


9

















 


directly
or indirectly through its subsidiaries or affiliates (collectively, “Credit Agricole”), and The Bank of Nova Scotia, either directly
or indirectly through its subsidiaries or affiliates (collectively, “Bank of Nova Scotia”), are full service securities firms
engaged in various activities, including securities trading, investment
management, financing and brokerage activities and financial planning and
benefits counseling for both companies and individuals.  In the ordinary course of these activities,
Morgan Stanley, Credit Agricole and Bank of Nova Scotia may actively trade the
debt and equity securities (or related derivative securities) of the Borrower
or other companies which may be the subject of the arrangements contemplated by
this Commitment Letter for their own account and for the accounts of their
customers and may at any time hold long and short positions in such securities.  Morgan Stanley, Credit Agricole and Bank of
Nova Scotia may also co-invest with, make direct investments in, and invest or
co-invest client monies in or with funds or other investment vehicles managed
by other parties, and such funds or other investment vehicles may trade or make
investments in securities or other debt obligations of the Borrower or other
companies which may be the subject of the arrangements contemplated by this
Commitment Letter.


 


The
Lead Arrangers, the Administrative Agent and the Commitment Parties and their
respective affiliates may have economic interests that conflict with those of
Target or the Borrower and may provide financing or other services to parties
whose interests conflict with yours. Notwithstanding the foregoing, the Lead
Arrangers, the Administrative Agent, and the Commitment Parties are not and
will not provide financial advisory or financial services to Target or any
other Party in connection with the Acquisition without your prior consent (such
consent not to be unreasonably withheld or delayed). You agree that the Lead
Arrangers, the Administrative Agent and the Commitment Parties will act under
this agreement as an independent contractor and that nothing in this Commitment
Letter or the Fee Letter or otherwise will be deemed to create an advisory,
fiduciary or agency relationship or fiduciary or other implied duty between the
Lead Arrangers, the Administrative Agent and the Commitment Parties, on the one
hand, and Target or the Borrower, or their respective management, stockholders
or affiliates, on the other hand.  You
acknowledge and agree that (i) the transactions contemplated by this
Commitment Letter and the Fee Letter are arm’s-length commercial transactions
between the Lead Arrangers, the Administrative Agent and the Commitment
Parties, on the one hand, and you, on the other, (ii) in connection
therewith and with the process leading to such transaction, each of the
Commitment Parties is acting solely as a principal and not as a fiduciary of
you, your management, stockholders, creditors or any other person,
(iii) the Lead Arrangers, the Administrative Agent and the Commitment
Parties have not assumed an advisory or fiduciary responsibility in favor of
you with respect to the Transactions or the process leading thereto
(irrespective of whether the Lead Arrangers, the Administrative Agent or the
Commitment Parties or any of their respective affiliates had advised or is
currently advising you on other matters) or any other obligation to you except
the obligations expressly set forth in this Commitment Letter and the Fee
Letter and (iv) you have consulted your own legal and financial advisors
to the extent you deemed appropriate.


 


You
further acknowledge and agree that you and your respective subsidiaries are
responsible for making your own independent judgment with respect to the
Transactions and the process leading thereto. 
In addition, please note that the Lead Arrangers, the Administrative
Agent and the Commitment Parties and their respective affiliates do not provide
accounting, tax or legal advice.  You and
your respective subsidiaries agree that you will not claim that the Lead


 


10
















 


Arrangers,
the Administrative Agent or the Commitment Parties or any of their respective
affiliates has rendered advisory services or any nature or respect, or owes a
fiduciary or similar duty to you or your or their respective subsidiaries, in
connection with the Transactions or the process leading thereto.


 


Each
Commitment Party reserves the right to employ the services of one or more of
its respective affiliates in providing services contemplated by this Commitment
Letter and to allocate, in whole or in part, to such affiliates certain fees
payable to such Commitment Party in such manner as the Commitment Party and its
affiliates may agree in its sole discretion. 
Subject to the last sentence of the first paragraph of Section 2 of
the Commitment Letter, you also agree that each Commitment Party may at any
time and from time to time assign all or any portion of its respective
commitments hereunder to one or more of its affiliates. You acknowledge that
each Commitment Party may share with any of its affiliates, and such affiliates
may share with such Commitment Party, any information related to the
Transactions, you, the Target, any of your or their subsidiaries or any of the
matters contemplated hereby in connection with the Transactions.  Each Commitment Party agree to treat, and
cause any of our affiliates to treat, all non-public information provided to us
by you as confidential information in accordance with customary banking
industry practices.


 


10.          Acceptance,
Termination, Amendment, etc.  Please indicate your acceptance of the terms
of this Commitment Letter and the Fee Letter by returning to each Commitment
Party executed counterparts hereof and thereof by no later than 5:00 p.m.,
New York time, on December 2, 2010. 
Thereafter, the commitments and other obligations of each Commitment
Party set forth in this Commitment Letter shall automatically terminate unless
each Commitment Party shall in its sole discretion agree to an extension, upon
the earliest to occur of (i) the termination of the Acquisition Agreement
and (ii) June 30, 2011.


 


This
Commitment Letter and the Fee Letter constitute the entire agreement and
understanding between you and your subsidiaries and affiliates and the
Commitment Parties with respect to the Bank Facilities and supersede all prior
written or oral agreements and understandings relating to the specific matters
hereof.  No individual has been
authorized by the Commitment Parties or the Lead Arrangers or any of their
respective affiliates to make any oral or written statements that are
inconsistent with this Commitment Letter or the Fee Letter.


 


Headings
are for convenience of reference only and shall not affect the construction of,
or be taken into consideration when interpreting, this Commitment Letter.  Delivery of an executed counterpart of a
signature page to this Commitment Letter and the Fee Letter by facsimile
or electronic .pdf shall be effective as delivery of a manually executed
counterpart of this Commitment Letter and the Fee Letter.  This Commitment Letter and the Fee Letter may
be executed in any number of counterparts, and by the different parties hereto
on separate counterparts, each of which counterpart shall be an original, but
all of which shall together constitute one and the same instrument.  The provisions of Sections 2, 3, 4, 5, 6, 8,
9 (other than the second sentence of the second paragraph of Section 9)
and this Section 10 shall survive termination of this Commitment Letter, provided
that your obligations under this Commitment Letter, other than those relating
to confidentiality and to the syndication of the Bank Facilities, shall
automatically terminate and be superseded by the Bank Documentation upon the
initial funding thereunder. This Commitment Letter may not be amended or any
provision hereof waived or modified 


 


11

















 


except
by an instrument in writing signed by the parties hereto.  This Commitment Letter shall not be
assignable by you without the prior written consent of each Commitment Party
and any purported assignment without such consent shall be null and void.  This Commitment Letter is intended to be
solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto (and any Indemnified Persons).


 


[Remainder of page intentionally left blank]


 


12

















 


We
are pleased to have given the opportunity to assist you in connection with the
financing for the Transactions.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  MORGAN
  STANLEY SENIOR FUNDING, INC.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Kevin D. Emerson

  
	
   

  	
   

  	
  Name:
  

  	
  Kevin
  D. Emerson

  
	
   

  	
   

  	
  Title:
  

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CREDIT
  AGRICOLE CORPORATE AND INVESTMENT BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/Gary
  Herzog

  
	
   

  	
   

  	
  Name:
  

  	
  Gary
  Herzog

  
	
   

  	
   

  	
  Title:
  

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  David P. Cagle

  
	
   

  	
   

  	
  Name:
  

  	
  David
  P. Cagle

  
	
   

  	
   

  	
  Title:
  

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  BANK OF NOVA SCOTIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  David Konarek

  
	
   

  	
   

  	
  Name:
  

  	
  David
  Konarek

  
	
   

  	
   

  	
  Title:
  

  	
  Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed
  to and accepted as of

  	
   

  
	
  the
  date first written above:

  	
   

  
	
   

  	
   

  
	
  WALTER
  ENERGY, INC.

  	
   

  
	
  By:
  

  	
  /s/
  Miles C. Dearden, III

  	
   

  	
   

  
	
   

  	
  Name:
  Miles C. Dearden, III

  	
   

  
	
   

  	
  Title:
  SVP and Treasurer

  	
   

  
						



 


13

















 


EXHIBIT A


 


$2.725 BILLION SENIOR SECURED BANK FACILITIES

SUMMARY OF CERTAIN TERMS AND CONDITIONS


 


All
capitalized terms used herein but not defined shall have the meanings provided
in the Commitment Letter.


 


	
  Borrower:

  	
   

  	
  Walter
  Energy, Inc. (the “Borrower”).
  The Borrower will own all of the capital stock of the Target on the Closing
  Date.(1)

  
	
   

  	
   

  	
   

  
	
  Joint Lead Arrangers:

  	
   

  	
  Morgan
  Stanley Senior Funding, Inc. (“MSSF”),
  Credit Agricole Corporate and Investment Bank (“CA-CIB”)
  and The Bank of Nova Scotia (“BNS”)
  (collectively, in such capacity, the “Lead Arrangers”).

  
	
   

  	
   

  	
   

  
	
  Administrative
  Agent:

  	
   

  	
  MSSF.

  
	
   

  	
   

  	
   

  
	
  Collateral Agent:

  	
   

  	
  MSSF.

  
	
   

  	
   

  	
   

  
	
  Joint
  Book-runners:

  	
   

  	
  MSSF,
  CA-CIB and BNS.

  
	
   

  	
   

  	
   

  
	
  Co-Syndication
  Agents:

  	
   

  	
  MSSF,
  CA-CIB and BNS.

  
	
   

  	
   

  	
   

  
	
  Documentation
  Agent:

  	
   

  	
  MSSF.

  
	
   

  	
   

  	
   

  
	
  Lenders:

  	
   

  	
  MSSF,
  CA-CIB, BNS and a syndicate of financial institutions and institutional
  lenders arranged by the Lead Arrangers in consultation with the Borrower (the
  “Lenders”).

  
	
   

  	
   

  	
   

  
	
  Guarantors:

  	
   

  	
  All
  obligations under the Bank Facilities and under any interest rate protection
  or other hedging arrangements entered into with the Administrative Agent, any
  Lender, or any affiliates of the foregoing shall be fully and unconditionally
  guaranteed by each of the Borrower’s existing and subsequently acquired or
  organized direct and indirect material wholly-owned U.S. subsidiaries (each
  such subsidiary, a “Subsidiary Guarantor”
  and, collectively, the “Guarantors”), with exceptions to be mutually agreed.

  



 






(1) 
Potential inclusion of Canadian Borrower under the Revolving Facility if
mutually agreed.


 


1

















 


	
  Bank
  Facilities:

  	
   

  	
  (A) A tranche A term loan facility (the “Tranche A Facility”) in an aggregate
  principal amount of $600.0 million.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (B) A  tranche B
  term loan facility (the “Tranche B Facility”
  and, together with the Tranche A Facility, the “Term
  Facilities”) in an aggregate principal amount of $1.75 billion.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (C) A revolving credit facility
  (the “Revolving Facility” and together with
  the Term Facilities, the “Bank  Facilities”) in an aggregate principal amount of $375.0
  million, of which (i) an amount to be mutually agreed will be available
  for the issuance of letters of credit (“Letters of Credit”)
  and (ii) an amount to be mutually agreed will be available as a
  swingline subfacility (the “Swingline Facility”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Letters of Credit issued under the Revolving
  Facility will be issued by one or more Lenders acceptable to the Borrower and
  the Lead Arrangers (the “Issuing Bank”).
  Each Letter of Credit shall expire not later than the earlier of
  (i) twelve months after the original date of issuance and (ii) the
  fifth business day prior to the Revolving Maturity Date (as defined below).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Drawings
  in respect of any Letter of Credit shall be reimbursed by the Borrower on the
  same business day. To the extent the Borrower does not reimburse the Issuing
  Bank on the same business day, the Lenders under the Revolving Facility shall
  be irrevocably obligated to reimburse the Issuing Bank on a pro rata basis in
  accordance with their respective commitments under the Revolving Facility.
  The issuance of all Letters of Credit shall be subject to the customary
  procedures of the Issuing Bank.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Except
  for purposes of calculating the commitment fee described below, any swingline
  borrowings will reduce availability under the Revolving Facility on a
  dollar-for-dollar basis.

  
	
   

  	
   

  	
   

  
	
  Maturity and Amortization:

  	
   

  	
  Tranche A Facility: The Tranche A Facility shall mature on the fifth anniversary of the
  Closing Date (the “Tranche A Maturity Date”).
  The loans under the Tranche A Facility (the “Tranche A Loans”) will amortize
  in equal quarterly installments in annual amounts set forth below:

  



 


2

















 


	
   

  	
   

  	
  Tranche A Facility

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Year 1

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  Year 2

  	
   

  	
  $

  	
  60,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  Year 3

  	
   

  	
  $

  	
  90,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  Year 4

  	
   

  	
  $

  	
  120,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  Year 5

  	
   

  	
  $

  	
  300,000,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tranche B Facility: The Tranche B
  Facility shall mature on the seventh anniversary of the Closing Date (the “Tranche B Maturity Date”). The loans under the Tranche B Facility
  (the “Tranche B
  Loans” and together with the Tranche A Loans, the “Term Loans”) shall amortize in equal quarterly
  installments in annual amounts equal to 1.0% of the original principal amount
  of the Tranche B Facility, with the final installment payable on the Tranche
  B Maturity Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving
  Facility: The Revolving Facility
  shall mature on the fifth anniversary of the Closing Date (the “Revolving Maturity Date”). There shall be no amortization
  in respect of loans under the Revolving Facility (the “Revolving
  Loans”; each of the Terms Loans and the Revolving Loans, a “Bank Loan” and collectively, the “Bank Loans”).

  
	
   

  	
   

  	
   

  
	
  Purpose
  and Availability:

  	
   

  	
  Tranche
  A Facility: The full amount of the
  Tranche A Facility shall be available in a single borrowing on the Closing
  Date and shall be utilized (a) to finance the Acquisition and the
  Transactions and (b) to pay fees and expenses incurred in connection
  with the Transactions. Once repaid, no amount of Tranche A Loans may be
  reborrowed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tranche
  B Facility: The full amount of the
  Tranche B Facility shall be available in a single borrowing on the Closing
  Date and shall be utilized (a) to finance the Acquisition and the
  Transactions and (b) to pay fees and expenses incurred in connection
  with the Transactions. Once repaid, no amount of Tranche B Loans may be
  reborrowed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving
  Facility: The Revolving Loans shall
  be available on or after the Closing Date and shall be utilized solely for
  the Borrower’s and its subsidiaries’ working capital requirements and other
  general corporate purposes. Not more than an amount to be mutually agreed of
  the Revolving Facility may be drawn immediately after giving effect to the
  Transactions. Revolving Loans may be borrowed, repaid and reborrowed.

  



 


3

















 


	
  Collateral:

  	
   

  	
  Subject
  to the last paragraph of Section 1 of the Commitment Letter, the Bank
  Facilities, all interest rate protection and other hedging arrangements
  entered into with the Administrative Agent, any Lender, or any affiliates of
  the foregoing will be secured by a valid and perfected first priority lien
  and security interest in all of the following, whether owned on the Closing
  Date or thereafter acquired (collectively, the “Collateral”):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           All
  equity interests of (or other ownership interests in), and intercompany debt
  of, entities owned by the Borrower and the Guarantors, except, in the case of
  the pledge of any equity interests of any entity that is a controlled foreign
  corporation under Section 957 of the Internal Revenue Code (a “CFC”) of the Borrower and the Guarantors, such pledge
  shall be limited to 66% of the voting equity interests and 100% of the
  non-voting equity interests of such CFC, subject to certain other exceptions
  to be agreed;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           All
  present and future tangible and intangible assets of the Borrower and the
  Guarantors including but not limited to, machinery and equipment, inventory
  and other goods, accounts receivable, owned and leased real property, leases
  on mines, fixtures, deposit accounts, general intangibles, intercompany debt,
  license rights, intellectual property, chattel paper, insurance policies,
  contract rights, hedge agreements, documents, instruments, indemnification
  rights, mineral rights, tax refunds, investment property and cash, wherever
  located, subject to exceptions and thresholds to be agreed; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)           All
  proceeds and products of the property and assets described in clauses
  (a) and (b) above.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All
  the above-described pledges, security interests and mortgages shall be
  created on terms and pursuant to documentation satisfactory to the
  Administrative Agent, and none of the Collateral shall be subject to any
  other pledges, security interests or mortgages, subject to exceptions to be
  agreed upon. Assets may be excluded from the Collateral in circumstances to
  be agreed and in circumstances where the Administrative Agent determines in
  writing that the cost of obtaining a security interest in such assets is
  excessive in relation to the value afforded thereby.

  



 


4

















 


	
  Interest:

  	
   

  	
  At
  the Borrower’s option, the Bank Loans will bear interest based on the Base
  Rate or LIBOR (in each case, as defined below), except that all swingline
  borrowings will accrue interest based only at the Base Rate:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.
  Base Rate Option

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest
  will be at the Base Rate plus the applicable Interest Margin, calculated on
  the basis of the actual number of days elapsed in a year of 365 days and
  payable quarterly in arrears. “Base Rate”
  shall mean, for any day, a fluctuating rate per annum equal to the highest of
  (i) the Federal Funds Rate, as published by the Federal Reserve Bank of
  New York, plus 1/2 of 1%, (ii) the rate that the Administrative Agent
  announces from time to time as its prime or base commercial lending rate, as
  in effect from time to time and (iii) LIBOR for an interest period of
  one-month beginning on such day plus 1%; provided that
  when calculating interest on the Tranche B Loans, the Base Rate shall be
  deemed to be not less than 2.50% per annum.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Base
  Rate borrowings will be in minimum amounts to be agreed upon and (other than
  swingline borrowings) will require one business day’s prior notice.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B.
  LIBOR Option

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest
  will be determined for periods to be selected by the Borrower (“Interest Periods”) of one, two, three or six months and
  will be at an annual rate equal to the London Interbank Offered Rate (“LIBOR”) for the corresponding deposits of U.S. dollars,
  plus the applicable Interest Margin; provided that
  (i) prior to the completion of syndication of each of the Bank
  Facilities (as determined by the Administrative Agent and notified to the
  Borrower), the interest period shall be one month and (ii) when
  calculating interest on the Tranche B Loans, LIBOR shall be deemed to be not
  less than 1.50% per annum. LIBOR will be determined by the Administrative
  Agent at the start of each Interest Period and will be fixed through such
  period. Interest will be paid at the end of each Interest Period or, in the
  case of Interest Periods longer than three months, quarterly, and will be
  calculated on the basis of the actual number of days elapsed in a year of 360
  days. LIBOR will be adjusted for maximum statutory reserve requirements (if
  any).

  



 


5

















 


	
   

  	
   

  	
  LIBOR
  borrowings will require three business days’ prior notice and will be in
  minimum amounts to be agreed upon.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C.
  Interest Margins

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  applicable Interest Margin with respect to the Tranche B Facility and the
  applicable initial Interest Margins with respect to the Tranche A Facility
  and the Revolving Facility will be the basis points set forth in the
  following tables, as applicable:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i) if
  the Borrower’s corporate family rating from Moody’s is at least Ba3 (with
  stable outlook) and the corporate credit rating from S&P is at least BB-
  (with stable outlook) on the Closing Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Base Rate

  Loans

  	
   

  	
  LIBOR

  Loans

  	
   

  	
   

  
	
   

  	
   

  	
  Tranche A Facility

  	
   

  	
  2.50

  	
   

  	
  3.50

  	
   

  	
   

  
	
   

  	
   

  	
  Tranche B Facility

  	
   

  	
  2.50

  	
   

  	
  3.50

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving Facility

  	
   

  	
  2.50

  	
   

  	
  3.50

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii) otherwise:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Base Rate

  	
   

  	
  LIBOR

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Loans

  	
   

  	
  Loans

  	
   

  	
   

  
	
   

  	
   

  	
  Tranche A Facility

  	
   

  	
  2.75

  	
   

  	
  3.75

  	
   

  	
   

  
	
   

  	
   

  	
  Tranche B Facility

  	
   

  	
  2.75

  	
   

  	
  3.75

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving Facility

  	
   

  	
  2.75

  	
   

  	
  3.75

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Interest Margins with respect to the Tranche A Facility and the Revolving
  Facility will be subject to a leverage based grid to be mutually agreed.

  
	
   

  	
   

  	
   

  
	
  Default
  Interest:

  	
   

  	
  Interest
  will accrue on past due amounts (a) in the case of principal or interest
  on any loan at a rate of 2.0% per annum plus the interest rate otherwise
  applicable to such loan and (b) in the case of any other outstanding
  amount, at a rate of 2.0% per annum plus the non-default interest rate then
  applicable to Base Rate Revolving Loans and, in each case, will be payable on
  demand.

  



 


6

















 


	
  Unused Commitment Fees:

  	
   

  	
  0.50% per
  annum on the unused amount of the commitments under the Revolving Facility
  (calculated on an actual/360-day basis), payable (i) quarterly in arrears
  and (ii) on the date of termination or expiration of the commitments.

  
	
   

  	
   

  	
   

  
	
  Letter of Credit Fees:

  	
   

  	
  The
  Borrower shall pay (calculated on an actual/360-day basis) (a) to the
  Issuing Bank for its own account a fronting fee equal to 0.125% per annum on the
  aggregate face amount of each Letter of Credit issued and (b) to the
  Lenders under the Revolving Facility a participation fee equal to the
  applicable Interest Margin for LIBOR Revolving Loans on the aggregate undrawn
  amount of each such Letter of Credit. Other customary administrative,
  issuance, amendment and other charges shall be payable to the Issuing Bank
  for its own account.

  
	
   

  	
   

  	
   

  
	
  Optional Prepayments and  Commitment Reductions:

  	
   

  	
  The
  Borrower may prepay, in whole or in part, the Bank Facilities, together with
  any accrued and unpaid interest, with prior notice but without premium or
  penalty (other than any breakage or redeployment costs) and in minimum
  amounts to be agreed. Voluntary reductions to the unutilized commitments of
  the Revolving Facility may be made from time to time by the Borrower without
  premium or penalty.

  
	
   

  	
   

  	
   

  
	
  Mandatory Prepayments:

  	
   

  	
  The
  Bank Facilities shall be prepaid in an amount equal to: (a) 100% of the
  net cash proceeds from the sale or other disposition of all or any part of
  the assets of the Borrower or any of its subsidiaries after the Closing Date
  other than sales of inventory in the ordinary course of business and other
  exceptions to be agreed and other than amounts reinvested in assets to be
  used in the Borrower’s business within 12 months of such disposition,
  (b) 100% of all casualty and condemnation proceeds received by the
  Borrower or any of its subsidiaries, subject to reinvestment rights to be
  agreed, (c) 100% of the net cash proceeds received by the Borrower or
  any of its subsidiaries from the issuance of certain debt or preferred stock
  after the Closing Date, 50% of excess
  cash flow (to be defined) of the Borrower and its subsidiaries (to be defined
  in a manner to be agreed), subject to stepdowns to 25% based on leverage
  ratios to be agreed. Mandatory prepayments shall be applied first to the Term
  Facilities and, after the Term Facilities have been prepaid in full, to the
  reduction of commitments under the Revolving Facility.

  



 


7
















 


	
  Application of Prepayments:

  	
   

  	
  Optional
  and mandatory prepayments of the Term Facilities will be applied to the
  Tranche A Facility and the Tranche B Facility on a pro rata basis, except as
  set forth below. Until the Tranche A Facility has been repaid in full,
  Lenders under the Tranche B Facility may decline any prepayment, whereupon
  such amount shall be applied to the Tranche A Facility; once the Term Loan A
  Facility has been repaid in full, Lenders under the Term Loan B Facility
  may not decline any prepayment.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Within
  each Term Facility, prepayments will be applied to scheduled amortization
  payments (i) in the case of optional prepayments, as directed by
  Borrower and (ii) in the case of mandatory prepayments, on a pro rata
  basis.

  
	
   

  	
   

  	
   

  
	
  Conditions Precedent to Initial Funding:

  	
   

  	
  Conditions
  precedent to initial borrowings under the Bank Facilities shall be limited to
  (x) those set forth in the second paragraph of Section 1 of the
  Commitment Letter and in the Conditions Term Sheet and the accuracy of the
  Acquisition Agreement Representations and the Specified Representations and
  (y) delivery to the Administrative Agent of a notice of borrowing and
  any letter of credit request.

  
	
   

  	
   

  	
   

  
	
  Conditions Precedent to All Other Extensions of Credit:

  	
   

  	
  Conditions
  precedent to each borrowing under the Bank Facilities after the initial
  funding described above shall be consistent with those customary for similar
  senior secured bank financings, including (a) delivery to the
  Administrative Agent of a notice of borrowing or letter of credit request;
  (b) the absence of any default or event of default at the time of, and
  after giving effect to, such borrowing; and (c) the accuracy in all
  material respects of the representations and warranties of the Borrower, each
  of the Guarantors and each of their respective subsidiaries at the time of,
  and after giving effect to, such borrowings.

  
	
   

  	
   

  	
   

  
	
  Representations and Warranties:

  	
   

  	
  Subject
  to the last paragraph of Section 1 of the Commitment Letter,
  representations and warranties applicable to the Borrower and its
  subsidiaries, consisting of: corporate existence; corporate power and
  authority; non-contravention and enforceability of the Bank Documentation; no
  conflicts with law or contractual obligations; accuracy and completeness of
  financial and other information (including pro forma financial information);
  no material adverse change; compliance with applicable laws and regu-

  



 


8

















 


	
   

  	
   

  	
  lations,
  including ERISA, environmental laws and Federal Reserve regulations; accuracy
  and completeness of disclosure, absence of undisclosed liabilities; no
  governmental or third party approvals or consents; ownership of property; no
  liens; absence of burdensome restrictions; intellectual property; Patriot Act
  and anti-terrorism law compliance; subsidiaries; equity interests;
  maintenance of appropriate and adequate insurance; no material litigation;
  inapplicability of the Investment Company Act of 1940; solvency; payment of
  taxes and other obligations; no default or event of default; and validity,
  priority and perfection of the liens on and security interest in the
  Collateral.

  
	
   

  	
   

  	
   

  
	
  Affirmative Covenants:

  	
   

  	
  Affirmative
  covenants, applicable to the Borrower and its subsidiaries, consisting of
  (subject to thresholds and/or exceptions to be negotiated and reflected in
  the Bank Documentation): delivery of certified quarterly and audited annual
  financial statements, accountants’ letters, reports to shareholders, notices
  of defaults, litigation and other material events, budgets, compliance
  certificates and other information customarily supplied in a transaction of
  this type; compliance with applicable laws and regulations, including ERISA,
  environmental laws and Federal Reserve regulations; payment of taxes and
  other obligations; maintenance of appropriate and adequate insurance; use of
  proceeds; preservation of corporate existence, rights (charter and
  statutory), franchises, permits, licenses and approvals; visitation and
  inspection rights; keeping of proper books and records; maintenance of
  properties; further assurances (including, without limitation, with respect
  to new subsidiaries and pledgors and security interests in after-acquired
  property); commercially reasonable efforts to maintain public corporate
  credit/family ratings of the Borrower and ratings of the Bank Facilities from
  Moody’s and S&P (but not to maintain a specific rating); obtaining
  interest rate protection on a percentage to be agreed of the aggregate funded
  indebtedness of the Borrower and its subsidiaries and in form and with
  parties acceptable to the Lenders.

  
	
   

  	
   

  	
   

  
	
  Negative Covenants:

  	
   

  	
  Negative
  covenants, applicable to the Borrower and its subsidiaries, consisting of
  (subject to thresholds and/or exceptions to be negotiated and reflected in
  the Bank Documentation):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.
  Limitations on liens and further negative pledges.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.
  Limitations on sale-leaseback transactions.

  



 


9

















 


	
   

  	
   

  	
  3.
  Limitations on debt (including, without limitation, guaranties and other contingent
  obligations, and including the subordination of all intercompany indebtedness
  on terms reasonably satisfactory to the Lenders) and any prepayment,
  redemption or repurchase of such debt.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.
  Limitations on mergers, consolidations and acquisitions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.
  Limitations on sales, transfers and other dispositions of assets.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.
  Limitations on loans and other investments.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.
  Limitations on dividends and other distributions, stock repurchases and
  redemptions and other restricted payments.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.
  Limitations on creating new subsidiaries or becoming a general partner in any
  partnership.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.
  Limitations on restrictions affecting subsidiaries.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.
  Limitations on transactions with affiliates.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  11.
  Limitations on issuances of capital stock.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  12.
  No change in (i) the nature of their business or (ii) fiscal year.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  13.
  No modification or waiver of charter documents of the Borrower and its
  subsidiaries in a manner materially adverse to the Lenders.

  
	
   

  	
   

  	
   

  
	
  Financial Covenants:

  	
   

  	
  Financial
  covenants, applicable to the Borrower
  and its subsidiaries after the Closing Date, consisting of (in each case to
  be defined):(2)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·      maintenance
  of a minimum interest coverage ratio (EBITDA to interest expense); and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·      maintenance
  of a maximum leverage ratio (net debt to EBITDA, subject to a cap on cash and
  cash equivalents to be netted to be mutually agreed).

  



 






(2)  Covenants to be based on 25%
cushion to plan provided.


 


10

















 


	
  Events of Default:

  	
   

  	
  Events
  of default consisting of: failure to pay principal when due or interest or
  other amounts within a specified grace period (to be determined) after the
  same becomes due; breach of representations, warranties or covenants;
  cross-default and cross-acceleration; bankruptcy and insolvency events;
  judgment defaults; actual or asserted invalidity or impairment of Bank
  Documentation, Collateral or guarantees; change of control; and customary
  ERISA defaults.

  
	
   

  	
   

  	
   

  
	
  Expenses and Indemnity:

  	
   

  	
  The
  Borrower shall pay or reimburse all reasonable costs and expenses incurred in
  connection with the syndication of the Bank Facilities and with the
  preparation, negotiation, execution and delivery of the Bank Documentation
  and any security arrangements in connection therewith, including without
  limitation, the reasonable fees and disbursements of counsel. You further
  agree to pay all costs and expenses of the Administrative Agent, the
  Collateral Agent, the Issuing Bank, the Lenders and their respective affiliates
  (including, without limitation, reasonable fees and disbursements of counsel)
  incurred in connection with the administration, amendment, waiver or
  modification (including proposed amendments, waivers or modifications) of,
  and enforcement of any of its rights and remedies under, the Bank
  Documentation.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Borrower will indemnify the Lenders, the Commitment Parties, the Lead
  Arrangers, the Administrative Agent, the Collateral Agent and the Issuing
  Bank and their respective affiliates, and hold them harmless from and against
  all reasonable out-of-pocket costs, expenses (including but not limited to
  reasonable legal fees and expenses) and liabilities arising out of or
  relating to the Transactions and any actual or proposed use of the proceeds of
  any loans made under the Bank Facilities; provided, however, that no such person will be indemnified for
  costs, expenses or liabilities to the extent determined by a final,
  non-appealable judgment of a court of competent jurisdiction to have been
  incurred solely from the gross negligence or willful misconduct of such
  person.

  
	
   

  	
   

  	
   

  
	
  Waivers and Amendments:

  	
   

  	
  Amendments
  and waivers of the provisions of the Bank Documentation shall require the
  approval of Lenders holding not less than a majority of the aggregate principal
  amount of the loans and commitments under the Bank Facilities; provided that (a) the consent of each affected Lender
  shall be required with respect to (i) increases in the

  



 


11

















 


	
   

  	
   

  	
  commitment
  of such Lender; (ii) reductions of principal, interest or fees;
  (iii) extensions of scheduled amortization or the final maturity date
  and (iv) releases of all or substantially all of the Collateral or the
  guarantees; (b) the consent of all of the Lenders shall be required with
  respect to (i) modification of the voting percentages (or any of the
  applicable definitions related thereto) and (ii) modifications to the
  pro rata provisions and (c) consent of the Lenders holding not less than
  a majority of any class of loans under the Bank Facilities shall be required
  with respect to any amendment or waiver that by its terms adversely affects
  the rights of such class in respect of payments or Collateral in a manner
  different than such amendment or waiver affects another class.

  
	
   

  	
   

  	
   

  
	
  Assignments and Participations:

  	
   

  	
  Each
  Lender may assign all or, subject to minimum amounts to be agreed, a portion
  of its loans and commitments under one or more of the Bank Facilities subject
  to the following limitations. Assignments will require payment of an
  administrative fee to the Administrative Agent and the consents of the
  Administrative Agent and the Borrower; provided that
  no consent of the Borrower shall be required (i) for an assignment to an
  existing Lender or an affiliate of an existing Lender and (ii) during an
  event of default or prior to completion of the primary syndication of the
  Bank Facilities (as determined by the Lead Arrangers). In addition, each
  Lender may sell participations in all or a portion of its loans and commitments
  under one or more of the Bank Facilities; provided that
  no purchaser of a participation shall have the right to exercise or to cause
  the selling Lender to exercise voting rights in respect of the Bank
  Facilities (except as to certain basic issues). The Bank Documentation shall
  provide that Term Loans may be purchased by, and assigned to, the Borrower on
  a non-pro rata basis through Dutch auction or similar procedures to be agreed
  that are offered to all Lenders on a pro rata basis in accordance with customary
  procedures to be agreed and subject to customary restrictions to be agreed; provided
  that (i) any such Term Loans acquired by the Borrower shall be retired
  and cancelled promptly upon acquisition thereof, (ii) the aggregate
  principal amount of Term Loans acquired by the Borrower shall not exceed an
  amount to be mutually agreed in any fiscal year and (iii) the Borrower
  shall not be permitted to use proceeds from Revolving Loans to acquire such
  Term Loans.

  



 


12

















 


	
   

  	
   

  	
   

  
	
  Yield Protection, Taxes and Other Deductions:

  	
   

  	
  The
  Bank Documentation will contain customary provisions for facilities of this
  kind, and as otherwise deemed necessary or appropriate by the Commitment
  Parties, including, without limitation, in respect of breakage and
  redeployment costs, increased costs, funding losses, capital adequacy,
  illegality, requirements of law and defaulting lenders. All payments shall be
  free and clear of any present or future taxes, withholdings or other
  deductions whatsoever (other than income taxes in the jurisdiction of a
  Lender’s applicable lending office).

  
	
   

  	
   

  	
   

  
	
  Governing Law:

  	
   

  	
  The
  State of New York, except as to real estate and certain other collateral
  documents required to be governed by local law. Each party to the Bank
  Documentation will waive the right to trial by jury and will consent to the
  exclusive jurisdiction of the state and federal courts located in The Borough
  of Manhattan, The City of New York.

  
	
   

  	
   

  	
   

  
	
  Counsel
  to the Lead Arranger and the Administrative Agent:

  	
   

  	
  White &
  Case LLP.

  



 


13

















 


EXHIBIT B


 


CONDITIONS PRECEDENT

$2,725,000,000 SENIOR SECURED BANK FACILITIES


 


Capitalized
terms not otherwise defined herein have the same meanings as specified therefor
in the Commitment Letter to which this Exhibit B is attached.


 


1.             Conditions
Applicable to the Bank Facilities.  The commitments of the Lenders in respect of
the Bank Facilities and the closing and the initial extension of credit
thereunder will be subject to the satisfaction of the conditions precedent set
forth in the second paragraph of Section 1 of the Commitment Letter, the
conditions precedent set forth in the Bank Term Sheet under the Heading “Conditions
Precedent to Initial Funding” and each of the following additional conditions
precedent:


 


(a)           Consummation of the
Acquisition. The Acquisition and the other Transactions shall be
consummated concurrently with the initial funding of the Bank Facilities in
compliance with applicable law and in accordance with the Acquisition Agreement
(which shall be in the form provided to the Lead Arrangers prior to the
execution of this Commitment Letter), without waiver or amendment thereof or
any consent thereunder that are materially adverse to the Lenders (it being
understood that any (i) material increase of the purchase price or (ii) change
in the definition of “Company Material Adverse Effect” as set forth in the
Acquisition Agreement on the date hereof shall be considered materially adverse
to the Lenders and shall require the consent of the Lead Arrangers) unless
consented to by the Lead Arrangers. 
Immediately following the Transactions, neither Borrower nor any of its
subsidiaries shall have any indebtedness or preferred equity other than as
permitted pursuant to the terms of the Bank Documentation.  The Administrative Agent shall have received
reasonably satisfactory evidence of repayment of all indebtedness to be repaid
in connection with the Refinancing and the discharge (or the making of
arrangements for discharge) of all liens other than liens permitted to remain
outstanding under the Bank Documentation.


 


(b)           Fees and Expenses.  The Borrower shall have complied with all of
their obligations to pay fees and expenses under the Fee Letter and the
Commitment Letter. All accrued costs, fees and expenses (including reasonable
legal fees and expenses and the fees and expenses of any other advisors) and
other compensation payable to the Administrative Agent, the Lead Arrangers and
the Lenders shall have been paid to the extent reasonable documentation has
been provided reasonably prior thereto.


 


(c)           Financial Statements; Pro
Formas.  The Lead Arrangers
shall have received (i) as soon as available and in any event not later
than March 1, 2011, U.S. GAAP audited consolidated balance sheets and
related statements of income, stockholders’ equity and cash flows of each of
Borrower and the Target for each of the last three fiscal years ended more than
90 days prior to the Closing Date (the “Audited Financial
Statements”), (ii) as soon as available and in any event not
later than the Closing Date, unaudited consolidated balance sheets and related
statements of income and cash flows of 


 


1

















 


each of Borrower and the
Target for each fiscal quarter ended in 2010 and 2011 and at least 45 days
prior to the Closing Date, for the period elapsed from the beginning of the
2010 fiscal year or the 2011 fiscal year, as applicable, to the end of such
fiscal quarter and for the comparable periods of the preceding fiscal year (the
“Unaudited Financial Statements”), (iii) a pro
forma consolidated and consolidating balance sheet and related statements of
income and cash flows for the Borrower (the “Pro Forma
Financial Statements”), as well as pro forma levels of EBITDA (“Pro Forma EBITDA”), for the last fiscal year covered by the
Audited Financial Statements and for the latest twelve-month period ended with
the latest period covered by the Unaudited Financial Statements required by
clause (ii), promptly after the historical financial statements for such
periods are available, in each case after giving effect to the Transactions and
(v) forecasts of the financial performance of the Borrower and its
subsidiaries (x) on an annual basis, through December 31, 2017 and
(y) on a quarterly basis, through June 30, 2013.  The financial statements referred to in
clauses (i) and (ii) shall be prepared in accordance with accounting
principles generally accepted in the United States. The Pro Forma Financial
Statements shall be prepared on a basis consistent with pro forma financial
statements set forth in a registration statement filed with the Securities and
Exchange Commission.


 


(d)           Patriot Act.  The Borrower and each of the
Guarantors shall have provided the documentation and other information to the
Lenders that are required by regulatory authorities under the applicable “know-your-customer”
rules and regulations, including the Patriot Act.


 


(e)           Collateral.  Subject to the last paragraph of Section 1
of this Commitment Letter, (i) the Collateral Agent shall have a
perfected, first priority security interest in and lien on all assets as set
forth in the Bank Term Sheet under the heading “Collateral”,
(ii) all filings or recordations necessary to perfect such liens and security
interests shall be in proper form for filing, and (iii) all filings and
recording fees and taxes shall have been duly paid.


 


(f)            Miscellaneous Closing
Conditions.  Subject to the
last paragraph of Section 1 of this Commitment Letter, the Lenders under
each Bank Facility shall have received closing certificates (including a
solvency certificate from an authorized senior financial officer of the
Borrower attesting to the solvency on the Closing Date of such Borrower and its
subsidiaries, taken as a whole on a consolidated basis, evidences of authority,
charter documents, and officers’ incumbency certificates) and customary legal
opinions with respect to the Bank Facilities, in each case consistent with the
Commitment Letter and Fee Letter and otherwise mutually agreed to be customary
and appropriate for transactions of this type. 
Subject to the last paragraph of Section 1 of this Commitment
Letter, (a) the guarantees made by the Guarantors shall have been executed
and be in full force and effect or substantially simultaneously with the
initial borrowing under the Bank Facilities, shall be executed and become in
full force and effect and (b) all documents and instruments required to
perfect the Collateral Agent’s security interest in the Collateral shall have
been executed and delivered and, if applicable, be in proper form for filing,
and none of the Collateral shall be subject to any other pledges, security
interest or mortgages, except for the liens permitted under the Bank
Documentation.


 


2

















 


EXHIBIT C


 


For
purposes of this Commitment Letter:


 


“Company Material Adverse Effect” means any
one or more changes, effects, events, occurrences or states of fact, either
individually or in the aggregate: (a) that is, or would reasonably be
expected to be material and adverse to the assets, liabilities (whether
absolute, accrued, conditional or otherwise and including any contingent
liabilities that may arise through outstanding or pending litigation),
business, operations, results of operations or financial condition of the
Target and its Subsidiaries taken as a whole, provided that, except as
hereinafter set forth in this definition, no change, effect, event, occurrence
or state of facts, relating to any of the following, individually or in the
aggregate, shall be considered a Company Material Adverse Effect, solely as
contemplated above (or be taken into account in determining whether a change,
effect, event, occurrence or state of facts, is a Company Material Adverse
Effect, solely as contemplated above): (i)  the announcement of the
execution of the Acquisition Agreement or the transactions contemplated hereby,
(ii) a change in the market price or trading volume of the Company Shares,
(iii) any changes affecting the coal mining industry generally; (iv) any
change in the market price of coal; (v) general political, economic,
financial, currency exchange, securities, capital, credit or commodity market
conditions in Canada, the United States or the United Kingdom (including the
failure of any financial institution, whether or not either Party or its
Subsidiaries as the case may be, has credit arrangements or other business
dealings with such financial institution, or the imposition of any limitation
(whether or not mandatory) by any Governmental Entity on the extension of
credit generally by financial institutions); (vi) any change in Law or in
the interpretation, application or non-application of Law by any Governmental
Entity; (vii) any national or international, political or social
conditions (including, the engagement by any country in hostilities, whether
commenced before or after the date hereof, and whether or not pursuant to the
declaration of a national emergency or war), or the occurrence of any military,
militant or terrorist attack (or any escalation or worsening thereof); (viii) any
failure by Target to meet any public estimates or expectations regarding its
revenues, earnings or other financial performance or results of operations (it
being understood that the causes underlying such change or failure referred to
in clauses (ii) and (viii), respectively, may be taken into account when
determining whether a Company Material Adverse Effect has occurred); (ix) any
matters disclosed in the Acquisition Agreement or in the Company Disclosure
Letter; or (x) any action or inaction taken by the Target or any of its
Subsidiaries which has expressly consented in writing or as expressly permitted
by the Acquisition Agreement, except, in the cases of clauses (iii), (iv), (v),
(vi) and (vii), to the extent that Target and its Subsidiaries, taken as a
whole, are materially disproportionately affected thereby as compared to other
companies of similar size operating in the coal mining industry (in which case
the incremental disproportionate impact or impacts may be deemed either alone
or in combination to constitute, or be taken into account in determining
whether there has been, or is reasonably expected to be, a Company Material
Adverse Effect); or (b) that is, or would reasonably be expected to be,
material and adverse to the ability of Target to consummate the transactions
contemplated by the Acquisition Agreement.


 


3

















 


As used in this Exhibit C:


 


“Company  Disclosure
Letter” means the disclosure
letter executed by Target and delivered to the Borrower prior to the execution
of the Acquisition Agreement;


 


“Company Shares” means the common shares in the authorized share capital of Target.


 


“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, ministry bureau, agency or entity, domestic or
foreign; (b) any stock exchange, including the TSX, the NYSE or the AIM; (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.


 


“Law” or “Laws” means all laws (including common law), by-laws,
statutes, rules, regulations, principles of law and equity, orders, rulings,
ordinances, judgements, injunctions, determinations, awards, decrees or other
requirements, whether domestic or foreign, and the terms and conditions of any
Permit of or from any Governmental Entity or self-regulatory authority
(including the TSX, the NYSE and the AIM), and the term “applicable” with respect to such Laws and
in a context that refers to a Party, means such Laws as are applicable to such
Party and/or its Subsidiaries or their business, undertaking, property or
securities and emanate from a Person having jurisdiction over the Party and/or
its Subsidiaries or its or their business, undertaking, property or securities;


 


“Parties” means the Target and the Borrower, and “Party” means either of them as the context requires.


 


“Subsidiary” has the meaning ascribed thereto in the National Instrument 45-106 — Prospectus and Registration Exemptions of the Canadian Securities Administrators,
and, in respect of Target includes the Belcourt Saxon Coal Limited Partnership
and the Willow Creek Coal Partnership.


 


4