Document:

Exhibit 4.1

 

EXECUTION
COPY

 

 

RIGHTS AGREEMENT

 

WALTER ENERGY, INC.

 

and

 

MELLON INVESTOR SERVICES LLC

 

as Rights Agent

 

Dated as of April 24, 2009

 

 

 

TABLE OF
CONTENTS

	
   

  	
   

  
	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 1. Certain Definitions

  	
  1

  
	
   

  	
   

  
	
  Section 2. Appointment of Rights Agent

  	
  9

  
	
   

  	
   

  
	
  Section 3. Issuance of Right Certificates

  	
  9

  
	
   

  	
   

  
	
  Section 4. Form of Right Certificates

  	
  11

  
	
   

  	
   

  
	
  Section 5. Countersignature and Registration

  	
  12

  
	
   

  	
   

  
	
  Section 6. Transfer, Split Up, Combination and
  Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
  Certificates

  	
  12

  
	
   

  	
   

  
	
  Section 7. Exercise of Rights, Purchase Price;
  Expiration Date of Rights

  	
  13

  
	
   

  	
   

  
	
  Section 8. Cancellation and Destruction of
  Right Certificates

  	
  15

  
	
   

  	
   

  
	
  Section 9. Reservation and Availability of
  Shares of Junior Preferred Stock

  	
  15

  
	
   

  	
   

  
	
  Section 10. Junior Preferred Stock Record Date

  	
  16

  
	
   

  	
   

  
	
  Section 11. Adjustment of Purchase Price,
  Number and Kind of Shares and Number of Rights

  	
  16

  
	
   

  	
   

  
	
  Section 12. Certificate of Adjusted Purchase
  Price or Number of Shares

  	
  24

  
	
   

  	
   

  
	
  Section 13. Consolidation, Merger or Sale or
  Transfer of Assets or Earnings Power

  	
  25

  
	
   

  	
   

  
	
  Section 14. Fractional Rights and Fractional
  Shares

  	
  28

  
	
   

  	
   

  
	
  Section 15. Rights of Action

  	
  29

  
	
   

  	
   

  
	
  Section 16. Agreement of Right Holders

  	
  30

  
	
   

  	
   

  
	
  Section 17. Right Certificate Holder Not Deemed
  a Stockholder

  	
  30

  
	
   

  	
   

  
	
  Section 18. Concerning the Rights Agent

  	
  31

  
	
   

  	
   

  
	
  Section 19. Merger or Consolidation or Change
  of Rights Agent

  	
  31

  
	
   

  	
   

  
	
  Section 20. Duties of Rights Agent

  	
  32

  
	
   

  	
   

  
	
  Section 21. Change of Rights Agent

  	
  34

  
	
   

  	
   

  
	
  Section 22. Issuance of New Right Certificates

  	
  35

  

 

i

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 23. Redemption

  	
  35

  
	
   

  	
   

  
	
  Section 24. Exchange

  	
  37

  
	
   

  	
   

  
	
  Section 25. Notice of Certain Events

  	
  38

  
	
   

  	
   

  
	
  Section 26. Notices

  	
  39

  
	
   

  	
   

  
	
  Section 27. Supplements and Amendments

  	
  40

  
	
   

  	
   

  
	
  Section 28. Successors

  	
  40

  
	
   

  	
   

  
	
  Section 29. Benefits of this Rights Agreement

  	
  40

  
	
   

  	
   

  
	
  Section 30. Determinations and Actions by the
  Board of Directors

  	
  41

  
	
   

  	
   

  
	
  Section 31. Severability

  	
  41

  
	
   

  	
   

  
	
  Section 32. Governing Law

  	
  41

  
	
   

  	
   

  
	
  Section 33. Counterparts

  	
  42

  
	
   

  	
   

  
	
  Section 34. Descriptive Headings

  	
  42

  

 

EXHIBITS

 

Exhibit A — Form of Certificate of
Designations

 

Exhibit B — Form of Right Certificate

 

Exhibit C — Form of Summary of Rights

 

ii

 

INDEX OF DEFINED TERMS

 

	
  

  	
  Page

  
	
  Acquiring Person

  	
  1

  
	
  Affiliate

  	
  2

  
	
  Associate

  	
  2

  
	
  Authorized Officer

  	
  33

  
	
  Beneficial Owner

  	
  2

  
	
  Beneficial Ownership

  	
  2

  
	
  beneficially own

  	
  2

  
	
  Book-Entry

  	
  4

  
	
  Business Day

  	
  4

  
	
  close of business

  	
  4

  
	
  Common Stock

  	
  4

  
	
  Common Stock equivalents

  	
  19

  
	
  Company

  	
  1

  
	
  Current Value

  	
  19

  
	
  Definitive Acquisition
  Agreement

  	
  4

  
	
  Derivative Common Shares

  	
  4

  
	
  Distribution Date

  	
  9

  
	
  Equivalent Preferred
  Shares

  	
  20

  
	
  Exchange Act

  	
  2

  
	
  Exchange Ratio

  	
  38

  
	
  Exempted Entity

  	
  5

  
	
  Expiration Date

  	
  14

  
	
  Final Expiration Date

  	
  5

  
	
  fully financed

  	
  8

  
	
  invalidation time

  	
  18

  
	
  Junior Preferred Stock

  	
  5

  
	
  Nasdaq

  	
  5

  
	
  NYSE

  	
  5

  
	
  Original Rights

  	
  3

  
	
  Outside Meeting Date

  	
  37

  
	
  Person

  	
  5

  
	
  Principal Party

  	
  26

  
	
  Purchase Price

  	
  14

  
	
  Qualified Offer

  	
  5

  
	
  Record Date

  	
  1

  
	
  Redemption Date

  	
  14

  
	
  Redemption Price

  	
  36

  
	
  Redemption Resolution

  	
  36

  
	
  Right

  	
  1

  
	
  Right Certificate

  	
  10

  
	
  Rights Agent

  	
  1

  
	
  Rights Agreement

  	
  1

  
	
  Section 11(a)(ii) Trigger
  Date

  	
  19

  
	
  Securities Act

  	
  9

  
	
  Security

  	
  21

  
	
  Special Meeting

  	
  36

  
	
  Special Meeting Notice

  	
  36

  
	
  Special Meeting Period

  	
  36

  
	
  Spread

  	
  19

  
	
  Stock Acquisition Date

  	
  9

  
	
  Subsidiary

  	
  9

  
	
  Substitution Period

  	
  19

  
	
  Summary of Rights

  	
  10

  
	
  then outstanding

  	
  2

  
	
  Trading Day

  	
  21

  

 

iii

 

RIGHTS AGREEMENT

 

Rights
Agreement, dated as of April 24, 2009 (as amended, supplemented or
otherwise modified from time to time, the “Rights Agreement”) between
Walter Energy, Inc., a Delaware corporation (the “Company”), and
Mellon Investor Services LLC, a New Jersey limited liability company, as Rights
Agent (the “Rights Agent”).

 

W I T N E S S E T H

 

WHEREAS,
the Board of Directors of the Company has on February 27, 2009 authorized
and declared a dividend of one preferred share purchase right (a “Right”)
for each share of Common Stock (as defined below) of the Company outstanding as
of the close of business (as defined below) on April 23, 2009 (the “Record
Date”), each Right representing the right to purchase one one-thousandth
(subject to adjustment as provided herein) of a share of Junior Preferred
Stock, upon the terms and subject to the conditions herein set forth, and the
Board of Directors has further authorized and directed the issuance of one
Right (subject to adjustment as provided herein) with respect to each share of
Common Stock that shall become outstanding between the Record Date and the
earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined); provided, however, that Rights may be
issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the Expiration Date in accordance with
Section 22.

 

NOW
THEREFORE, in consideration of the premises and the mutual agreements herein
set forth, the parties hereby agree as follows:

 

Section 1         Certain
Definitions.  For purposes of this
Rights Agreement, the following terms have the meaning indicated:

 

(a)   “Acquiring Person” shall mean any Person (as defined below)
who or which shall be the Beneficial Owner (as defined below) of shares of
Common Stock having 20% or more of the total voting power of all shares of
Common Stock then outstanding, but shall not include an Exempted Entity (as
defined below); provided, however, that if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
“Acquiring Person” has become such inadvertently (including, without
limitation, because (A) such Person was unaware that it beneficially owned
Common Stock having a percentage of the total voting power of all shares of
Common Stock then outstanding that would otherwise cause such Person to be an “Acquiring
Person” or (B) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Rights Agreement) and without any
intention of changing or influencing control of the Company, then such Person
shall not be deemed to be or to have become an “Acquiring Person” for any
purposes of this Rights Agreement unless and until such Person shall have
failed to divest itself, as soon as practicable, if the Company so requests, of
Beneficial Ownership of a sufficient number of shares of Common Stock (or, in
the case solely of Derivative Common Shares (as such term is hereinafter
defined), such Person terminates the subject derivative transaction or transactions
or disposes of the subject derivative security or securities, or establishes to
the satisfaction of

 

 

the Board of Director that such
Derivative Common Shares are not held with any intention of changing or
influencing control of the Company) so that such Person would no longer
otherwise qualify as an “Acquiring Person”. 
Notwithstanding the foregoing, (x) if a Person would be deemed an
Acquiring Person upon the adoption of this Rights Agreement because of
Beneficial Ownership of shares of Common Stock having 20% or more of the total
voting power of all shares of Common Stock then outstanding, such Person will
not be deemed an Acquiring Person for any purposes of this Rights Agreement
unless and until such Person acquires Beneficial Ownership of additional shares
of Common Stock after the date hereof (other than pursuant to a dividend or
distribution paid in shares of Common Stock or pursuant to a split or
subdivision of the outstanding Common Stock), unless upon becoming the
Beneficial Owner of such additional shares of Common Stock, such person is not
then the Beneficial Owner of shares of Common Stock having 20% or more of the
total voting power of all shares of Common Stock then outstanding, and (y) no
Person shall be deemed an “Acquiring Person” as the result of an acquisition of
shares of Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person such that such Person beneficially owns shares of Common Stock
having 20% or more of the total voting power of all shares of Common Stock then
outstanding; provided, however, that if a Person shall become the
Beneficial Owner of shares of Common Stock having 20% or more of the total
voting power of all shares of Common Stock then outstanding by reason of such
share acquisitions by the Company and thereafter becomes the Beneficial Owner
of any additional shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Stock or
pursuant to a split or subdivision of the outstanding Common Stock), then such
Person shall be deemed to be an “Acquiring Person,” subject to the proviso set
forth in the first sentence of this Section 1(a), unless upon the consummation
of the acquisition of such additional shares of Common Stock such Person does
not beneficially own shares of Common Stock having 20% or more of the total
voting power of all shares of Common Stock then outstanding.  The phrase “then outstanding”, when
used with reference to a Person’s Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially hereunder.

 

(b)   “Affiliate” and “Associate” shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and in effect
on the date of the Agreement (the “Exchange Act”).

 

(c)   A Person shall be deemed the “Beneficial Owner” of, shall
be deemed to have “Beneficial Ownership” of and shall be deemed to “beneficially
own” any securities:

 

(i)            which such Person or any of such Person’s Affiliates or
Associates is deemed to beneficially own, directly or indirectly, within the
meaning of Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Rights Agreement;

 

(ii)           which such Person or any of such Person’s Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the

 

2

 

passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), written or otherwise, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, (x) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such Person
or any of such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, (y) securities which such Person
has a right to acquire on the exercise of Rights at any time prior to the time
a Person becomes an Acquiring Person or (z) securities issuable upon
exercise of Rights from and after the time a Person becomes an Acquiring Person
if such Rights were acquired by such Person or any of such Person’s Affiliates
or Associates prior to the Distribution Date or pursuant to Section 3 or Section 22
hereof (the “Original Rights”) or pursuant to Section 11(i) or
Section 11(n) with respect to an adjustment to the Original Rights;
or (B) the right to vote pursuant to any agreement, arrangement or
understanding, written or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, any
security by reason of such agreement, arrangement or understanding if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report);

 

(iii)          which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person’s Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to
this Section 1(c)(ii)(B)) or disposing of such securities of the Company;
or

 

(iv)          which are the subject of a derivative transaction entered
into by such Person, or derivative security acquired by such Person, which
gives such Person the economic equivalent of ownership of an amount of such securities
due to the fact that the value of the derivative is explicitly determined by
reference to the price or value of such securities, without regard to whether (a) such
derivative conveys any voting rights in such securities to such Person, (b) the
derivative is required to be, or capable of being, settled through delivery of
such securities, or (c) such Person may have entered into other
transactions that hedge the economic effect of such derivative. In determining
the number of shares of Common Stock deemed Beneficially Owned by virtue of the
operation of this Section 1(c)(iv), the subject Person shall be deemed to
Beneficially Own (without duplication) the number of shares of Common Stock
that are synthetically owned pursuant to such derivative transactions or such
derivative securities. Such shares of Common Stock that are deemed so
Beneficially Owned pursuant to the operation of this Section 1(c)(iv) shall
be referred to herein as “Derivative Common Shares.”

 

3

 

provided, however,
that (x) that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the “Beneficial Owner”
of, or to “beneficially own,” any securities acquired through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition, and then only if
such securities continue to be owned by such Person at such expiration of forty
days; (y) no Person who is an officer, director, or employee of an
Exempted Entity shall be deemed, solely by reason of such Person’s status or
authority as such, to be the “Beneficial Owner” of, to have “Beneficial
Ownership” of or to “beneficially own” any securities that are “beneficially
owned” (as defined in this Section 1(c)), including, without limitation,
in a fiduciary capacity, by an Exempted Entity or by any other such officer,
director or employee of an Exempted Entity; and (z) a Person shall not be
deemed the Beneficial Owner of, to have “Beneficial Ownership” of or to
beneficially own, shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) held by such Person in trust
accounts, managed accounts and the like, or otherwise held in a fiduciary
capacity, that are beneficially owned by third Persons who are not Affiliates
or Associates of such Person.

 

(d)   “Book-Entry” shall mean an uncertificated book-entry for
the Company’s Common Stock.

 

(e)   “Business Day” shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York or the
State of New Jersey are authorized or obligated by law or executive order to
close.

 

(f)    “close of business” on any given date shall mean 5:00 P.M.,
New York, New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York, New
York time, on the next succeeding Business Day.

 

(g)   “Common Stock” when used with reference to the Company
shall mean, the common stock, par value $0.01 of the Company.  “Common Stock” when used with reference to
any Person other than the Company shall mean the capital stock (or, in the case
of an unincorporated entity, the equivalent equity interest) with the greatest
voting power of such other Person or, if such other Person is a subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.

 

(h)   “Definitive Acquisition Agreement” shall mean any agreement
entered into by the Company that is conditioned on the approval by the holders
of not less than a majority of the voting power of the outstanding shares of
Common Shock, at a meeting of stockholders with respect to (i) a merger,
consolidation, recapitalization, reorganization, share exchange, business
combination or similar transaction involving the Company or (ii) the
acquisition in any manner, directly or indirectly, of more than 50% of the
consolidated total assets (including, without limitation, equity securities of
its subsidiaries) of the Company.

 

(i)    “Exempted Entity” shall mean (1) the Company, (2) any
Subsidiary (as defined below) of the Company (in the case of subclauses (1) and
(2) including, without limitation, in its fiduciary capacity), (3) any
employee benefit plan of the Company or of any Subsidiary of the Company, or (4) any
entity or trustee holding Common Stock for or pursuant

 

4

 

to the terms of any such plan or for
the purpose of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.

 

(j)    “Final Expiration Date” shall mean April 23, 2012.

 

(k)   “Junior Preferred Stock” shall mean the Junior
Participating Preferred Stock, par value $0.01 per share, of the Company having
the rights and preferences set forth in the Certificate of Designations
attached to this Rights Agreement as Exhibit A and, to the extent that
there are not a sufficient number of shares of Junior Preferred Stock
authorized to permit the full exercise of the Rights, any other series of
preferred stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Junior Preferred Stock.

 

(l)    “Nasdaq” shall mean The Nasdaq Stock Market’s National
Market.

 

(m)  “NYSE” shall mean the New York Stock Exchange, Inc.

 

(n)   “Person” shall mean any individual, firm, corporation,
partnership, limited liability company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.

 

(o)   “Qualified Offer” shall mean an offer determined by a
majority of the Independent Directors to have each of following
characteristics:

 

(i)            a fully-financed, all-cash tender offer, or an exchange
offer offering shares of common stock of the offeror, or a combination thereof,
in each such case for all of the outstanding shares of Common Stock at the same
per-share consideration;

 

(ii)           an offer that has commenced within the meaning of Rule 14d-2(a) under
the Exchange Act;

 

(iii)          an offer whose per-share offer price exceeds the greatest
of (x) the highest reported market price per share of the Common Stock, in
the immediately preceding 24 months (provided that this clause (x) shall
only be applicable to offers made on or prior to July 31, 2010), (y) the
highest price per share of the Common Stock paid by the Person making the
tender offer or any of its Affiliates during the 24 months immediately
preceding the commencement of the tender offer or prior to the expiration of
the tender offer and (z) the greater of (A) an amount that is 25%
higher than the 12-month moving average share price (determined as of the
Trading Day immediately preceding the commencement of such offer within the
meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act as set forth below in this Section 1(o)) of the
Common Stock and (B) an amount that is 25% higher than the closing price
(as “closing price” is determined pursuant to Section 11(d)(i) below)
per share of the Common Stock on the Trading Day immediately preceding the
commencement of such offer within the meaning of Rule 14(d)(2)(a) of
the General Rules and Regulations under the Exchange Act (provided that
this clause (z) shall only be applicable to offers made after July 31,
2010); provided, however, that, if, at the time that any offer is commenced
within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act,

 

5

 

any other offer that is a Qualified
Offer has been commenced and remains open, the per share offer price with
respect to such subsequent offer must equal or exceed the per share price with
respect to such earlier Qualified Offer (in lieu of exceeding the thresholds
set forth in clauses (A) and (B) above); provided, further, that, to
the extent that an offer that includes common stock of the offeror, such
per-share offer price with respect to such common stock of the offeror will be
determined for purposes of the foregoing provision to be the average of the daily
closing prices (as “closing price” is determined pursuant to Section 11(d)(i) below)
per share for such common stock of the offeror for the 30 Trading Days
immediately preceding the commencement of such offer within the meaning of Rule 14d-2(a) under
the Exchange Act;

 

(iv)          an offer that, within twenty Business Days after the
commencement date of the offer (or within ten Business Days after any increase
in the offer consideration), does not result in a nationally recognized
investment banking firm retained by the Board of Directors of the Company
rendering an opinion to the Board of Directors of the Company that the
consideration being offered to the stockholders of the Company is either unfair
or inadequate;

 

(v)           if the offer includes shares of common stock of the
offeror, an offer pursuant to which (A) the offeror shall permit
representatives of the Company (including a nationally-recognized investment
banking firm retained by the Board of Directors of the Company and legal
counsel and an accounting firm designated by the Company) to have access to
such offeror’s books, records, management, accountants, financial advisors,
counsel and any other appropriate outside advisors for the purposes of
permitting such representatives to conduct a due diligence review of the
offeror in order to permit the Board of Directors of the Company to evaluate
the offer and make an informed decision and, if requested by the Board of
Directors of the Company, to permit such investment banking firm (relying as
appropriate on the advice of such legal counsel) to be able to render an
opinion to the Board of Directors of the Company with respect to whether the
consideration being offered to the stockholders of the Company is fair from a
financial point of view and (B) within ten Business Days after such
representatives of the Company (including a nationally-recognized investment
banking firm retained by the Board of Directors of the Company and legal
counsel and an accounting firm designated by the Company) shall have notified
the Company and the offeror that it had completed such due diligence review to
its satisfaction (or, following completion of such due diligence review, within
ten Business Days after any increase in the consideration being offered), such
investment banking firm does not render an opinion to the Board of Directors of
the Company that the consideration being offered to the stockholders of the
Company is either unfair or inadequate and such investment banking firm does
not, after the expiration of such ten Business Day period, render an opinion to
the Board of Directors of the Company that the consideration being offered to
the stockholders of the Company has become either unfair or inadequate based on
a subsequent disclosure or discovery of a development or developments that have
had or are reasonably likely to have an adverse effect on the value of the
common stock of the offeror;

 

(vi)          an offer that is subject to only the minimum tender
condition described below in Section 1(o)(ix) and other customary
terms and conditions, which conditions

 

6

 

shall not include any financing,
funding or similar conditions or any requirements with respect to the offeror
or its agents being permitted any due diligence with respect to the books,
records, management, accountants or other outside advisors of the Company;

 

(vii)         an offer pursuant to which the Company has received an
irrevocable written commitment of the offeror that the offer will remain open
for at least 120 Business Days and, if a Special Meeting is duly requested in
accordance with Section 23(b), for at least ten Business Days after the
date of the Special Meeting or, if no Special Meeting is held within ninety
Business Days following receipt of the Special Meeting Notice in accordance
with Section 23(b), for at least ten Business Days following such ninety
Business Day period;

 

(viii)        an offer pursuant to which the Company has received an
irrevocable written commitment of the offeror that, in addition to the minimum
time periods specified above in Section 1(o)(vii), the offer, if it is
otherwise to expire prior thereto, will be extended for at least twenty
Business Days after any increase in the consideration being offered or after
any bona fide alternative offer is commenced within the meaning of Rule 14d-2(a) under
the Exchange Act; provided, however, that such offer need not
remain open, as a result of Section 1(o)(vii) and this Section 1(o)(viii),
beyond (A) the time that any other offer satisfying the criteria for a
Qualified Offer is then required to be kept open under such Section 1(o)(vii) and
this Section 1(o)(viii) or (B) the expiration date, as such date
may be extended by public announcement (with prompt written notice to the
Rights Agent) in compliance with Rule 14e—1 under the Exchange Act, of any
other tender offer for the Common Stock with respect to which the Board of
Directors of the Company has agreed to redeem the Rights immediately prior to
acceptance for payment of Common Stock thereunder (unless such other offer is
terminated prior to its expiration without any Common Stock having been
purchased thereunder) or (C) one Business Day after the stockholder vote
with respect to approval of any Definitive Acquisition Agreement has been
officially determined and certified by the inspectors of elections;

 

(ix)           an offer that is conditioned on a minimum of at least
two-thirds of the outstanding shares of the Common Stock not held by the Person
making such offer (and such Person’s Affiliates and Associates) being tendered
and not withdrawn as of the offer’s expiration date, which condition shall not
be waivable;

 

(x)            an offer pursuant to which the Company has received an
irrevocable written commitment of the offeror to consummate, as promptly as
practicable upon successful completion of the offer, a second step transaction
whereby all shares of the Common Stock not tendered into the offer will be
acquired at the same consideration per share actually paid pursuant to the
offer, subject to stockholders’ statutory appraisal rights, if any;

 

(xi)           an offer pursuant to which the Company and its
stockholders have received an irrevocable, legally binding written commitment
of the offeror that no amendments will be made to the offer to reduce the
consideration being offered or to otherwise change the terms of the offer in a
way that is adverse to a tendering stockholder;

 

7

 

(xii)          an offer (other than an offer consisting solely of cash
consideration) pursuant to which the Company has received the written
representation and certification of the offeror and the written representations
and certifications of the offeror’s Chief Executive Officer and Chief Financial
Officer, acting in such capacities, that (A) all facts about the offeror
that would be material to making an investor’s decision to accept the offer
have been fully and accurately disclosed as of the date of the commencement of
the offer within the meaning of Rule 14d-2(a) under the Exchange Act,
(B) all such new facts will be fully and accurately disclosed on a prompt
basis during the entire period during which the offer remains open, and (C) all
required Exchange Act reports will be filed by the offeror in a timely manner
during such period; and

 

(xiii)         if the offer includes non-cash consideration, (A) the
non-cash portion of the consideration offered must consist solely of common
stock of a Person that is a publicly-owned United States corporation, (B) such
common stock must be freely tradable and listed or admitted to trading on
either the NYSE or Nasdaq, (C) no stockholder approval of the issuer of
such common stock is required to issue such common stock, or, if such approval
is required, such approval has already been obtained, (D) no Person
(including such Person’s Affiliates and Associates) beneficially owns 20% or
more of the shares of common stock of the issuer then outstanding at the time
of commencement of the offer or at any time during the term of the offer, (E) such
issuer of such common stock has no other class of voting stock or other voting
securities and (F) the issuer of such common stock meets the registrant
eligibility requirements for use of Form S-3 for registering securities
under the Securities Act, including the filing of all required Exchange Act
reports in a timely manner during the twelve calendar months prior to the date
of commencement of such offer.

 

For the purposes
of this definition of “Qualified Offer,” “fully financed” shall
mean that the offeror has sufficient funds for the offer and related expenses
which shall be evidenced by (1) firm, unqualified, legally binding,
written commitments from responsible financial institutions having the necessary
financial capacity, accepted by the offeror, to provide funds for such offer
subject only to customary terms and conditions (for the avoidance of doubt it
being understood that a provision relating to the sharing with a financing
source of any break-up or termination fee shall be considered customary), (2) cash
or cash equivalents then available to the offeror, set apart and maintained
solely for the purpose of funding the offer with an irrevocable, legally
binding, written commitment being provided by the offeror to the Board of
Directors of the Company to maintain such availability until the offer is
consummated or withdrawn or (3) a combination of the foregoing; which
evidence has been provided to the Company prior to, or upon, commencement of the
offer.  If an offer becomes a Qualified
Offer in accordance with this definition, but subsequently ceases to be a
Qualified Offer as a result of the failure at a later date to continue to
satisfy any of the requirements of this definition, such offer shall cease to
be a Qualified Offer and the provisions of Section 23(b) shall no
longer be applicable to such offer, provided that the actual redemption of the
Rights pursuant to Section 23(b) shall not have already occurred.

 

(p)   “Securities Act” shall mean the Securities Act of 1933, as
amended.

 

8

 

(q)   “Stock Acquisition Date” shall mean the first date of
public announcement (which for purposes of this definition shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such or such earlier date as a majority of the Board of Directors
shall become aware of the existence of an Acquiring Person.

 

(r)    “Subsidiary” of any Person shall mean any corporation or
other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned, directly or
indirectly, by such Person, and any corporation or other entity that is
otherwise controlled by such Person.

 

Section 2.        Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as rights agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable
upon ten days’ prior notice to the Rights Agent.  The Rights Agent shall have no duty to
supervise, and shall in no event be liable for the acts or omissions of any
such co-Rights Agent.

 

Section 3.      Issuance of Right Certificates.  (a)  Until the close of business on the
earlier of (i) the tenth day after the Stock Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the
Company’s Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Exempted Entity) of, or of the first public announcement of the intention of
such Person (other than an Exempted Entity) to commence, a tender or exchange
offer the consummation of which would result in any Person (other than an
Exempted Entity) becoming the Beneficial Owner of shares of Common Stock having
20% or more of the total voting power of all shares of Common Stock then
outstanding (including, in the case of both clause (i) and (ii), any such
date which is after the date of this Rights Agreement and prior to the issuance
of the Rights) (the earlier of such dates being herein referred to as the “Distribution
Date”), (x) the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the balances indicated in the Book-Entries registered in the names of the
holders of Common Stock (which Book-Entries shall be deemed also to be
Book-Entries for Rights) and not by separate Book-Entries or Right Certificates
(as defined below) and the record holders of Common Stock represented by such
Book-Entries shall be the record holders of Rights represented thereby, and (y) the
Rights will be transferable only in connection with the transfer of Common
Stock.  Until the earlier of the
Distribution Date or the Expiration Date, the transfer on the registry books of
the Rights Agent of any Common Stock represented by a Book-Entry shall also
constitute the transfer of Rights associated with such shares of Common
Stock.  As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested and provided with all necessary information, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Stock as of the close of business on the Distribution Date (other than any
Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the
address of such holder shown on the records of the Company or the transfer
agent or registrar for the Common Stock, a Right Certificate, in substantially
the form of Exhibit B hereto (a “Right Certificate”), evidencing one Right
(subject to adjustment as provided herein) for each share of

 

9

 

Common
Stock so held.  As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates, and the Rights will be transferable only separately from the
transfer of Common Stock.  The Company
shall promptly notify the Rights Agent in writing upon the occurrence of the
Distribution Date and, if such notification is given orally, the Company shall
confirm same in writing on or prior to the third Business Day next
following.  Until such notice is received
by the Rights Agent, the Rights Agent may presume conclusively for all purposes
that the Distribution Date has not occurred.

 

(b)   As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Shares of Junior Preferred
Stock, in substantially the form of Exhibit C hereto (the “Summary of
Rights”), by electronic mail or such other means as the Company may
determine, to each record holder of Common Stock as of the close of business on
the Record Date (other than any Acquiring Person or any Associate or Affiliate
of any Acquiring Person), at the address (including any electronic mail
address) of such holder shown on the records of the Company; provided, however,
the Company will send a copy of the Summary of Rights by first-class,
postage-prepaid mail to each record holder who so requests upon receipt of the
electronic mail.  With respect to shares
of Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights associated with such shares will be evidenced by the balances
indicated in the Book-Entries registered in the names of the holders of the
Common Stock and not by separate Book-Entries or Rights Certificates, and
registered holders of Common Stock represented by such Book-Entries shall also
be registered holders of the associated Rights. 
Until the Distribution Date (or, if earlier, the Expiration Date), the
transfer of any shares of Common Stock outstanding on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the transfer of
the Rights associated with the Common Stock represented thereby.

 

(c)   Rights shall be issued in respect of all shares of Common Stock
issued or disposed of (including, without limitation, upon disposition of
Common Stock out of treasury stock or issuance or reissuance of Common Stock
out of authorized but unissued shares) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date, or in certain
circumstances provided in Section 22 hereof, after the Distribution
Date.  If confirmations or written
notices are sent to holders of shares of Common Stock in book-entry form, or if
the Company issues certificated shares of Common Stock (including, without limitation,
upon transfer of outstanding Common Stock, disposition of Common Stock out of
treasury stock or issuance or reissuance of Common Stock out of authorized but
unissued shares) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date, such confirmations, written notices
or certificates, as applicable, shall have impressed on, printed on, written on
or otherwise affixed to them a legend in substantially the following form:

 

“The shares to which this
certificate or written notice relates also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement between Walter
Energy, Inc. and Mellon Investor Services LLC, as Rights Agent, dated as
of April 24, 2009, as the same may be amended, supplemented or otherwise
modified from time to time (the “Rights Agreement”), the terms of which
are hereby incorporated herein by reference and a copy of which is on

 

10

 

file at the principal
executive offices of Walter Energy, Inc. 
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by the shares to which this statement relates.  Walter Energy, Inc. will mail to the
holder of shares to which this statement relates a copy of the Rights Agreement
without charge after receipt of a written request therefor.  Under certain circumstances, as set forth in
the Rights Agreement, Rights owned by or transferred to any Person who is or
becomes an Acquiring Person or any Affiliate or Associate thereof (as each such
term is defined in the Rights Agreement) and certain transferees thereof will
become null and void and will no longer be transferable.”

 

With respect to shares of Common Stock in Book-Entry form for which
there has been sent a confirmation or written notice containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with such shares of Common Stock shall
be evidenced by the balances indicated in the Book-Entries registered in the
names of the holders of the Common Stock and not by separate Book-Entries or
Rights Certificates, and registered holders of such shares of Common Stock
shall also be registered holders of the associated Rights, and the transfer of
any such shares of Common Stock shall also constitute the transfer of the
Rights associated with such shares of Common Stock. With respect to
certificated shares, if any, such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate, except as otherwise provided herein,
shall also constitute the transfer of the Rights associated with the Common
Stock represented thereby.  In the event
that the Company purchases or otherwise acquires any Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the shares of Common
Stock which are no longer outstanding.

 

Notwithstanding
this paragraph (c), the omission of a legend shall not affect the
enforceability of any part of this Rights Agreement or the rights of any holder
of the Rights.

 

Section 4.                         Form of Right Certificates. 
The Right Certificates (and the forms of election to purchase shares and
of assignment to be printed on the reverse thereof) shall be substantially in
the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect
the rights, duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Rights Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of NYSE or of any
other stock exchange or automated quotation system on which the Rights may from
time to time be listed, or to conform to usage. 
Subject to the provisions of Sections 11 and 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-thousandths of a share of Junior Preferred Stock as shall be set forth
therein at the Purchase Price (as determined pursuant to Section 7), but
the

 

11

 

amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.

 

Section 5.      Countersignature and Registration.  (a)  The Right Certificates shall be
executed on behalf of the Company by the Chief Executive Officer, the
President, any of the Vice Presidents or the Treasurer of the Company, either
manually or by facsimile signature, shall have affixed thereto the Company’s
seal or a facsimile thereof and shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature.  The Right Certificates shall
be countersigned by the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless countersigned.  In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same force
and effect as though the Person who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any Person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company
to sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such Person was not such an officer.

 

(b)   Following the Distribution Date, receipt by the Rights Agent of
notice to that effect and all other relevant information referred to in Section 3(a),
the Rights Agent will keep or cause to be kept, at an office or agency
designated for such purpose, books for registration and transfer of the Right
Certificates issued hereunder.  Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

 

Section 6.                         Transfer, Split
Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates.  (a)  Subject to the provisions of this
Rights Agreement, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become null and void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder thereof to purchase a like
number of one one-thousandths of a share of Junior Preferred Stock (or,
following such time, other securities, cash or assets as the case may be) as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase.  Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the office
or agency of the Rights Agent designated for such purpose.  The Right Certificates are transferable only
on the registry books of the Rights Agent. 
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate or Certificates until the registered holder thereof shall have (i) completed
and signed the certificate contained in the form of assignment set forth on the
reverse side of each such Right Certificate, (ii) provided such additional
evidence

 

12

 

of
the identity of the Beneficial Owner (or former Beneficial Owner) thereof and
of the Rights evidenced thereby and the Affiliates and Associates of such
Beneficial Owner (or former Beneficial Owner) as the Company or the Rights
Agent shall reasonably request, and (iii) paid a sum sufficient to cover
any tax or charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates as required by Section 9(e) hereof.  Thereupon the Rights Agent, subject to the
provisions of this Rights Agreement, shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested, registered in such name or names as may be designated
by the surrendering registered holder. 
The Rights Agent shall promptly forward any such sum collected by it to
the Company or to such Persons as the Company shall specify by written
notice.  The Rights Agent shall have no
duty or obligation under any Section of this Rights Agreement which requires
the payment of taxes or charges unless and until it is satisfied that all such
taxes and/or charges have been paid.

 

(b)   Subject to the provisions of this Rights Agreement, at any time
after the Distribution Date and prior to the Expiration Date, upon receipt by
the Company and the Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company’s request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered holder in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.

 

(c)   Notwithstanding any other provision of this Rights Agreement to
the contrary, the Company and the Rights Agent may amend this Rights Agreement
to provide for uncertificated Rights in addition to or in place of Rights
evidenced by Rights Certificates.

 

Section 7.                         Exercise of
Rights, Purchase Price; Expiration Date of Rights.  (a)  Except as otherwise provided
herein, the Rights shall become exercisable on the Distribution Date, and
thereafter the registered holder of any Right Certificate may, subject to Section 11(a)(ii) hereof
and except as otherwise provided herein, exercise the Rights evidenced thereby
in whole or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof properly completed and duly
executed, to the Rights Agent at the office or agency of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one one-thousandth of a share of Junior Preferred Stock (or other
securities, cash or assets, as the case may be) as to which the Rights are
exercised, and an amount equal to any tax or charge required to be paid under Section 9(e) hereof,
by certified check, cashier’s check, bank draft or money order payable to the
order of the Company, at any time which is both after the Distribution Date and
at or prior to the time (the “Expiration Date”) that is the earliest of (i) the
close of business on the Final Expiration Date, (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”)
or (iii) the time at which such Rights are exchanged as provided in Section 24
hereof.  Except for those provisions
herein which expressly survive the termination of this Rights Agreement, this
Rights Agreement shall terminate at such time as the Rights are no longer
exercisable hereunder.

 

13

 

(b)   The purchase price (the “Purchase Price”) shall be
initially $150 for each one one-thousandth of a share of Junior Preferred Stock
purchasable upon the exercise of a Right. 
The Purchase Price and the number of shares of Junior Preferred Stock or
other securities or property to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) of this Section 7.

 

(c)   Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase properly completed and duly executed, accompanied by payment of the
aggregate Purchase Price for the number of shares of Junior Preferred Stock to
be purchased and an amount equal to any applicable tax or charge required to be
paid under Section 9(e) hereof, in cash or by certified check,
cashier’s check, bank draft or money order payable to the order of the Company,
subject to Section 20(j) hereof, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Junior
Preferred Stock or make available if the Rights
Agent is the transfer agent for the Junior Preferred Stock certificates
(or make any entries in the book-entry account system of the transfer agent)
for the number of one one-thousandth of a share of Junior Preferred Stock to be
purchased (and the Company hereby irrevocably authorizes each such transfer
agent to comply with all such requests), or (B) requisition from the
depositary agent appointed by the Company depositary receipts representing
interests in such number of shares of Junior Preferred Stock as are to be
purchased, in which case certificates for the Junior Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent (and the Company hereby directs each such depositary agent to
comply with such request), (ii) when necessary to comply with this Rights
Agreement, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts (or confirmation or written
notice that an entry has been made in the book-entry account system of the
transfer agent), cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder and (iv) when necessary to comply with
this Rights Agreement, after receipt, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate.

 

(d)   Except as otherwise provided herein, in case the registered holder
of any Right Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the
exercisable Rights remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.

 

(e)   Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights or other securities upon
the occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i) properly
completed and signed the certificate contained in the form of assignment or
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such transfer or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof and the Rights

 

14

 

evidenced thereby and of the Affiliates
and Associates of such Beneficial Owner (or former Beneficial Owner) as the
Company or the Rights Agent shall reasonably request.

 

Section 8.                         Cancellation and Destruction of Right
Certificates.  All Right Certificates surrendered for the
purpose of exercise, transfer, split up, combination, redemption or exchange
shall, if surrendered to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled form, or, if surrendered to
the Rights Agent, shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions
of this Rights Agreement.  The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the
Company, destroy or cause to be destroyed such cancelled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Company.

 

Section 9.                         Reservation
and Availability of Shares of Junior Preferred Stock.  (a)  The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Junior Preferred Stock
or any shares of Junior Preferred Stock held in its treasury, the number of
shares of Junior Preferred Stock that will be sufficient to permit the exercise
in full of all outstanding Rights in accordance with this Rights Agreement.

 

(b)   So long as the shares of Junior Preferred Stock (and, following
the time that a Person becomes an Acquiring Person, shares of Common Stock and
other securities) issuable and deliverable upon the exercise of Rights may be
listed or admitted to trading on the NYSE or listed on any other national
securities exchange or quotation system, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed or admitted to trading on the NYSE or
listed on any other exchange or quotation system upon official notice of
issuance upon such exercise.

 

(c)   From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Junior Preferred Stock (and following the time that a Person first
becomes an Acquiring Person, shares of Common Stock and other securities) upon
the exercise of Rights, to register and qualify such shares of Junior Preferred
Stock (and following the time that a Person first becomes an Acquiring Person,
shares of Common Stock and other securities) under the Securities Act and any
applicable state securities or “Blue Sky” laws (to the extent exemptions
therefrom are not available), cause such registration statement and
qualifications to become effective as soon as possible after such filing and
keep such registration and qualifications effective until the earlier of (x) the
date as of which the Rights are no longer exercisable for such securities and (y) the
Expiration Date.  The Company may
temporarily suspend, for a period of time not to exceed ninety days, the
exercisability of the Rights in order to prepare and file a registration statement
under the Securities Act and permit it to become effective.  Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. 
The Company shall notify the Rights Agent whenever it

 

15

 

makes a public announcement pursuant to
this Section 9(c) and give the Rights Agent a copy of such
announcement.  Notwithstanding any
provision of this Rights Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification or exemption
in such jurisdiction shall have been obtained and until a registration
statement under the Securities Act (if required) shall have been declared
effective.

 

(d)   The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Junior Preferred Stock (and,
following the time that a Person becomes an Acquiring Person, shares of Common
Stock and other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates therefor (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

 

(e)   The Company further covenants and agrees that it will pay when due
and payable taxes and charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any shares of Junior Preferred
Stock (or shares of Common Stock or other securities) upon the exercise of
Rights.  The Company shall not, however,
be required to pay any transfer tax or charge which may be payable in respect
of any transfer or delivery of Right Certificates to a Person other than, or
the issuance or delivery of certificates or depositary receipts (or entry in
the book-entry account system of the transfer agent) for the Junior Preferred
Stock (or shares of Common Stock or other securities) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates or depositary
receipts (or enter in the book-entry account system of the transfer agent) for
the Junior Preferred Stock (or shares of Common Stock or other securities) upon
the exercise of any Rights until any such tax or charge shall have been paid
(any such tax or charge being payable by that holder of such Right Certificate
at the time of surrender) or until it has been established to the Company’s or
the Rights Agent’s satisfaction that no such tax or charge is due.

 

Section 10.                   Junior Preferred Stock Record Date. 
Each Person in whose name any certificate (or entry in the book-entry
account system) of Junior Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Junior Preferred Stock represented thereby on, and such certificate
or book-entry, shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable taxes or charges) was duly made; provided, however,
that if the date of such surrender and payment is a date upon which the Junior
Preferred Stock transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
or book-entry, shall be dated, the next succeeding Business Day on which such
transfer books are open.  Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Junior Preferred Stock for
which the Rights shall be exercisable, including, without limitation, the right
to vote or to receive dividends or other distributions, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.

 

Section 11.                   Adjustment of Purchase Price, Number and
Kind of Shares and Number of Rights.  The Purchase
Price, the number of shares of Junior Preferred Stock or other

 

16

 

securities or property purchasable upon exercise of
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.

 

(a)   (i)  In the event the Company shall at any time after the
date of this Rights Agreement (A) declare a dividend on the Junior
Preferred Stock payable in shares of Junior Preferred Stock, (B) subdivide
the outstanding shares of Junior Preferred Stock, (C) combine the
outstanding shares of Junior Preferred Stock into a smaller number of shares of
Junior Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the shares of Junior Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, as the case may be, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Junior Preferred Stock transfer books of the
Company were open, the holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.

 

(ii)           Subject to Section 24 of this Rights Agreement and
except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii),
in the event that any Person becomes an Acquiring Person, each holder of a
Right shall thereafter have the right to receive, upon exercise thereof at a
price equal to the then-current Purchase Price, in accordance with the terms of
this Rights Agreement and in lieu of shares of Junior Preferred Stock, such
number of shares of Common Stock (or at the option of the Company, such number
of one one-thousandths of a share of Junior Preferred Stock) as shall equal the
result obtained by (x) multiplying the then-current Purchase Price by the
number of one one-thousandths of a share of Junior Preferred Stock for which a
Right is then exercisable and dividing that product by (y) 50% of the
then-current per share market price of the Common Stock (determined pursuant to
Section 11(d) hereof) on the date of the occurrence of such event; provided,
however, that the Purchase Price (as so adjusted) and the number of
shares of Common Stock so receivable upon exercise of a Right (or at the option
of the Company, such number of one one-thousandths of a share of Junior
Preferred Stock) shall thereafter be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof.  Notwithstanding anything in this Rights
Agreement to the contrary, however, from and after the time (the “invalidation
time”) when any Person first becomes an Acquiring Person, any Rights that
are beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee after the
invalidation time or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the invalidation time pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it has
any continuing agreement, arrangement or understanding, written or otherwise,
regarding the

 

17

 

transferred Rights or (II) a
transfer that the Board of Directors has determined is part of a plan,
arrangement or understanding, written or otherwise, which has the purpose or
effect of avoiding the provisions of this paragraph, and subsequent transferees
of such Persons, shall be null and void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with respect
to such Rights under any provision of this Rights Agreement.  The Company shall use all reasonable efforts
to ensure that the provisions of this Section 11(a)(ii) are complied
with, but shall have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.  From and after the invalidation time, no
Right Certificate shall be issued pursuant to Section 3 or Section 6
hereof that represents Rights that are or have become null and void pursuant to
the provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become null and void
pursuant to the provisions of this paragraph shall be cancelled.  From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have
not been exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only in accordance with Section 13 and not
pursuant to this Section 11(a)(ii). 
The Company shall give the Rights Agent written notice of the identity
of any such Acquiring Person, Associate or Affiliate, or the nominee of any of
the foregoing, and the Rights Agent may rely on such notice in carrying out its
duties under this Rights Agreement and shall be deemed not to have any
knowledge of the identity of any such Acquiring Person, Associate or Affiliate,
or the nominee of any of the foregoing unless and until it shall have received
such notice.

 

(iii)          The Company may at its option
substitute for a share of Common Stock issuable upon the exercise of Rights in
accordance with the foregoing subparagraph (ii) such number or fractions
of shares of Junior Preferred Stock having an aggregate current market value
equal to the current per share market price of a share of Common Stock.  In the event that there shall be an
insufficient number of shares of Common Stock authorized but unissued (and
unreserved) to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall, with respect to such
deficiency, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party (A) determine
the excess of (x) the value of the shares of
Common Stock issuable upon the exercise
of a Right in accordance with the foregoing subparagraph (ii) (the “Current
Value”) over (y) the then-current Purchase Price multiplied by the
number of one one-thousandths of shares of Junior Preferred Stock for which a
Right was exercisable immediately prior to the time that the Acquiring Person
became such (such excess, the “Spread”), and (B) with respect to
each Right (other than Rights which have become null and void pursuant to Section 11(a)(ii)),
make adequate provision to substitute for the shares of Common Stock issuable
in accordance with subparagraph (ii) upon exercise of the Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction
in such Purchase Price, (3) shares of Junior Preferred Stock or other
equity securities of the Company (including, without limitation, shares or
fractions of shares of preferred stock which, by virtue of having dividend,
voting and liquidation rights substantially comparable to those of the shares
of Common Stock, are deemed in good faith by the Board of Directors to have
substantially the same value as the shares of Common Stock (such shares or
fractions of shares of

 

18

 

preferred stock or other equity
securities are hereinafter referred to as “Common Stock equivalents”), (4) debt
securities of the Company, (5) other assets or (6) any combination of
the foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of any reduction in such
Purchase Price), where such aggregate value has been determined by the Board of
Directors upon the advice of a nationally recognized investment banking firm
selected in good faith by the Board of Directors; provided, however,
if the Company shall not make adequate provision to deliver value pursuant to
clause (B) above within thirty days following the date that the Acquiring
Person became such (the “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, to the extent permitted by
applicable law and any material agreements then in effect to which the Company
is a party, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions of shares of
Junior Preferred Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread.  If within the thirty day period referred to
above the Board of Directors shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board of Directors so elects,
such thirty day period may be extended to the extent necessary, but not more
than ninety days after the Section 11(a)(ii) Trigger Date, in order
that the Company may seek stockholder approval for the authorization of such
additional shares (such thirty day period, as it may be extended, is
hereinafter called the “Substitution Period”).  To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentence of
this Section 11(a)(iii), the Company (x) shall provide, subject to Section 11(a)(ii) hereof
and the last sentence of this Section 11(a)(iii) hereof, that such
action shall apply uniformly to all outstanding Rights and (y) may suspend
the exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to decide
the appropriate form of distribution to be made pursuant to such second
sentence and to determine the value thereof. 
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect.  For purposes of this
Section 11(a)(iii), the value of the shares of Common Stock shall be the
current per share market price (as determined pursuant to Section 11(d) on
the Section 11(a)(ii) Trigger Date and the per share or fractional
value of any Common Stock equivalent shall be deemed to equal the current per
share market price of the Common Stock (as determined pursuant to Section 11(d)).  The Board of Directors of the Company may,
but shall not be required to, establish procedures to allocate the right to
receive shares of Common Stock upon the exercise of the Rights among holders of
Rights pursuant to this Section 11(a)(iii).

 

(b)   In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Junior Preferred Stock entitling
them (for a period expiring within forty-five calendar days after such record
date) to subscribe for or purchase Junior Preferred Stock or shares having
similar rights privileges and preferences as the Junior Preferred Stock (“Equivalent
Preferred Shares”)) or securities convertible into Junior Preferred

 

19

 

Stock or Equivalent Preferred Shares at
a price per share of Junior Preferred Stock or Equivalent Preferred Shares (or
having a conversion price per share, if a security convertible into shares of
Junior Preferred Stock or Equivalent Preferred Shares) less than the
then-current per share market price of the Junior Preferred Stock (determined
pursuant to Section 11(d) hereof) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Junior
Preferred Stock and Equivalent Preferred Shares outstanding on such record date
plus the number of shares of Junior Preferred Stock and Equivalent Preferred
Shares which the aggregate offering price of the total number of such shares so
to be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of shares of Junior Preferred
Stock and Equivalent Preferred Shares outstanding on such record date plus the
number of additional shares of Junior Preferred Stock and/or Equivalent
Preferred Shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.  In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
written statement filed with the Rights Agent and which shall be binding on the
Rights Agent.  Shares of Junior Preferred
Stock and Equivalent Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation.  Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

 

(c)   In case the Company shall fix a record date for the making of a
distribution to all holders of the Junior Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Junior Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then-current per share market
price of the Junior Preferred Stock (determined pursuant to Section 11(d) hereof)
on such record date, less the fair market value (as determined in good faith by
the Board of Directors of the Company whose determination shall be described in
a written statement filed with the Rights Agent and shall be binding on the
Rights Agent) of the portion of such assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable to one
share of Junior Preferred Stock, and the denominator of which shall be such
current per share market price of the Junior Preferred Stock; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall

 

20

 

again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.

 

(d)   (i) Except as otherwise provided herein, for the purpose of
any computation hereunder, the “current per share market price” of any security
(a “Security” for the purpose of this Section 11(d)) on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the thirty consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that
in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security, and prior to the
expiration of thirty Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such security.  The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported by (w) the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, (x) if the Security is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to
trading or, if (y) the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use, or, (z) if
on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company.  The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day. 
For the purpose of any computation hereunder, if any Security of the Company
is not publicly traded, “current per share market price” shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a written statement filed
with the Rights Agent and shall be binding on the Rights Agent.

 

(ii)           For the purpose of any computation hereunder, if the
Junior Preferred Stock is publicly traded, the “current per share market price”
of the Junior Preferred Stock shall be determined in accordance with the method
set forth in Section 11(d)(i).  If
the Junior Preferred Stock is not publicly traded but the Common Stock is
publicly traded, the “current per share market price” of the Junior Preferred
Stock shall be conclusively deemed to be the current per share market price of
the Common Stock, as determined pursuant to Section 11(d)(i), multiplied
by one thousand (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof).  If neither the Common Stock nor the Junior
Preferred Stock is publicly traded, “current per share market price” shall mean
the fair value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be

 

21

 

described in a written statement filed
with the Rights Agent and shall be binding on the Rights Agent.

 

(e)   No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments not required to be
made by reason of this Section 11(e) shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share
or security, as the case may be. 
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the Expiration Date.

 

(f)    If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than the Junior Preferred
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Junior Preferred Stock contained in Section 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Junior Preferred Stock
shall apply on like terms to any such other shares.

 

(g)   All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of
a share of Junior Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.

 

(h)   Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result
of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Junior Preferred Stock (calculated to the
nearest one ten-thousandth of a share of Junior Preferred Stock) obtained by (i) multiplying
(x) the number of one one-thousandths of a share of Junior Preferred Stock
purchasable upon the exercise of a Right immediately prior to such adjustment
by (y) the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.

 

(i)    The Company may elect on or after the date of any adjustment of
the Purchase Price pursuant to Sections 11(b) or 11(c) hereof to
adjust the number of Rights, in substitution for any adjustment in the number
of one one-thousandths of a share of Junior Preferred Stock purchasable upon
the exercise of a Right.  Each of the
Rights outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-thousandths of a share of Junior Preferred Stock for
which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of

 

22

 

the number of Rights shall become that
number of Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price.  The Company shall
make a public announcement (with prompt written notice thereof to the Rights
Agent) of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the
adjustment to be made.  This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten days
later than the date of the public announcement. 
If Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled as a result
of such adjustment.  Right Certificates
so to be distributed shall be issued, executed and delivered by the Company,
and countersigned and delivered by the Rights Agent, in the manner provided for
herein and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.

 

(j)    Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Junior Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one one-thousandths of a share of Junior Preferred Stock which were expressed
in the initial Right Certificates issued hereunder.

 

(k)   Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Junior
Preferred Stock or other shares of capital stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Junior Preferred Stock or other
such shares at such adjusted Purchase Price.

 

(l)    In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (with prompt written notice
thereof to the Rights Agent) until the occurrence of such event the issuing to
the holder of any Right exercised after such record date the Junior Preferred
Stock, Common Stock or other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Junior Preferred Stock,
Common Stock or other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares upon the occurrence of
the event requiring such adjustment.

 

23

 

(m)  Notwithstanding anything in this Section 11 to the contrary,
the Company shall be entitled to make such adjustments in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Junior
Preferred Stock, issuance (wholly for cash) of any shares of Junior Preferred
Stock at less than the current market price, issuance (wholly for cash) of
Junior Preferred Stock or securities which by their terms are convertible into
or exchangeable for Junior Preferred Stock, dividends on Junior Preferred Stock
payable in shares of Junior Preferred Stock or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Junior Preferred Stock shall not be taxable to such
stockholders.

 

(n)   Notwithstanding anything in this Rights Agreement to the contrary,
in the event that at any time after the date of this Rights Agreement and prior
to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of a dividend payable in Common
Stock) into a greater or lesser number of shares of Common Stock, then in any
such case, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter, shall be proportionately
adjusted so that the number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately following the occurrence of
such event.

 

(o)   The Company agrees that, after the earlier of the Distribution
Date or the Stock Acquisition Date, it will not, except as permitted by
Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or eliminate the benefits intended to
be afforded by the Rights.

 

Section 12.     Certificate
of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made or any event
affecting the Rights or their exercisability (including without limitation an
event which causes Rights to become null and void) occurs as provided in Section 11
or 13 hereof, the Company shall promptly (a) prepare a certificate setting
forth such adjustment or describing such event, and a brief, reasonably
detailed statement of the facts, computations and methodology accounting for
such adjustment, (b) file with the Rights Agent and with each transfer
agent for the Common Stock or the Junior Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof (if so required under Section 25
hereof) and Section 26 hereof.  The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment or statement therein contained and shall have no duty or
liability with respect to, and shall not be deemed to have knowledge of, any
adjustment or any such event unless and until it shall have received such a
certificate.

 

24

 

Section 13.     Consolidation,
Merger or Sale or Transfer of Assets or Earnings Power.  (a)  In the event, directly or
indirectly, at any time after any Person has become an Acquiring Person, (i) the
Company shall merge with and into any other Person (other than one or more of
its wholly-owned Subsidiaries), (ii) any Person (other than one or more of
its wholly-owned Subsidiaries), shall consolidate with the Company, or any
Person (other than one or more of its wholly-owned Subsidiaries), shall merge
with and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or of the Company) or cash or any other
property, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating to 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly-owned
Subsidiaries), then, and in each such case, proper provision shall be made so
that:

 

(A) each holder of record of a Right
(other than Rights which have become null and void pursuant to Section 11(a)(ii))
shall thereafter have the right to receive, upon the exercise thereof at a
price equal to the then-current Purchase Price multiplied by the number of one
one-thousandths of a share of Junior Preferred Stock for which a Right was
exercisable (whether or not such Right was then exercisable) immediately prior
to the time that any Person first became an Acquiring Person (each as
subsequently adjusted thereafter pursuant to Section 11(a)(i), 11(b),
11(c), 11(f), 11(h), 11(i) and 11(m)), in accordance with the terms of
this Rights Agreement and in lieu of Junior Preferred Stock, such number of
validly issued, fully paid and non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as defined below) not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then-current
Purchase Price by the number of one one-thousandths of a share of Junior
Preferred Stock for which a Right was exercisable immediately prior to the time
that any Person first became an Acquiring Person (as subsequently adjusted
thereafter pursuant to Section 11(a)(i), 11(b), 11(c), 11(f), 11(h), 11(i) and
11(m)) and (2) dividing that product by 50% of the then-current per share
market price of the Common Stock of such Principal Party (determined pursuant
to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided that the Purchase
Price and the number of shares of Common Stock of such Principal Party issuable
upon exercise of each Right shall be further adjusted as provided in Section 11(f) of
this Rights Agreement to reflect any events occurring in respect of such
Principal Party after the date of such consolidation, merger, sale or transfer;

 

(B) such Principal Party shall thereafter
be liable for, and shall assume, by virtue of such consolidation, merger, sale
or transfer, all the obligations and duties of the Company pursuant to this
Rights Agreement;

 

(C) the term “Company” as used herein
shall thereafter be deemed to refer to such Principal Party; and

 

(D) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its shares of its Common Stock) in connection with such consummation of any
such transaction as may be necessary to assure that the provisions hereof

 

25

 

 

shall thereafter be applicable, as nearly as reasonably may be, in
relation to the shares of its Common Stock thereafter deliverable upon the
exercise of the Rights; provided that, upon the subsequent occurrence of
any consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Purchase Price as provided in this Section 13(a), such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had such holder, at the time of such transaction, owned the Common
Stock of the Principal Party receivable upon the exercise of a Right pursuant
to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with
the terms hereof for such cash, shares, rights, warrants and other property.

 

(b)   “Principal Party” shall mean:

 

(i)            in the case of any transaction described in clauses (i) or
(ii) of the first sentence of Section 13(a) hereof:  (A) the Person that is the issuer of the
securities into which the shares of Common Stock are converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer of the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (x) the
Person that is the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the shares of
Common Stock of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the
consolidation; and

 

(ii)           in the case of any transaction described in clause (iii) of
the first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of such
Persons is the issuer of Common Stock having the greatest aggregate market
value of shares outstanding;

 

provided, however, that in any such case described in
the foregoing clause (b)(i) or (b)(ii), if the Common Stock of such Person
is not at such time or has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, then (1) if
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, the term “Principal Party” shall
refer to such other Person, or (2) if such Person is a Subsidiary,
directly or indirectly, of more than one Person, and the Common Stock of all of
such persons have been so registered, the term “Principal Party” shall refer to
whichever of such Persons is the issuer of Common Stock having the greatest
aggregate market value of shares outstanding, or (3) if such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in clauses (1) and (2) above shall apply to each of the owners
having an interest in the

 

26

 

venture as if the Person owned by the joint venture was a Subsidiary of
both or all of such joint venturers, and the Principal Party in each such case
shall bear the obligations set forth in this Section 13 in the same ratio
as its interest in such Person bears to the total of such interests.

 

(c)   The Company shall not consummate any consolidation, merger, sale
or transfer referred to in Section 13(a) hereof unless prior thereto
the Company and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements of
Sections 13(a) and (b) hereof shall promptly be performed in
accordance with their terms and that such consolidation, merger, sale or
transfer of assets shall not result in a default by the Principal Party under
this Rights Agreement as the same shall have been assumed by the Principal
Party pursuant to Sections 13(a) and (b) hereof and providing that,
as soon as practicable after executing such agreement pursuant to this Section 13,
the Principal Party will:

 

(i)            prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date, and
similarly comply with applicable state securities laws;

 

(ii)           use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the NYSE or on another national
securities exchange, to list or admit to trading (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on the
NYSE or such securities exchange, or, if the Common Stock of the Principal
Party shall not be listed or admitted to trading on the NYSE or a national
securities exchange, to cause the Rights and the securities receivable upon exercise
of the Rights to be reported by such other system then in use;

 

(iii)          deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and

 

(iv)          obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to
purchase upon exercise of outstanding Rights.

 

(d)   In case the Principal Party has a provision in any of its
authorized securities or in its certificate of incorporation or by-laws or
other instrument governing its affairs, which provision would have the effect
of (i) causing such Principal Party to issue (other than to holders of Rights
pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares
of Common Stock or Common Stock equivalents of such Principal Party at less
than the then-current market price per share thereof (determined pursuant to Section 11(d) hereof)
or securities exercisable for, or convertible into, Common Stock or Common
Stock equivalents of such Principal Party at less than such then-current market
price, or (ii) providing for any special payment, tax or similar

 

27

 

provision in connection with the
issuance of the Common Stock of such Principal Party pursuant to the provisions
of Section 13, then, in such event, the Company hereby agrees with each
holder of Rights that it shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that
the authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.

 

(e)   The Company covenants and agrees that it shall not, at any time
after a Person first becomes an Acquiring Person enter into any transaction of
the type contemplated by Sections 13(a)(i)-(iii) hereof if (x) at the
time of or immediately after such consolidation, merger, sale, transfer or
other transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the stockholders of
the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13(b) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates or
Associates or (z) the form or nature of organization of the Principal
Party would preclude or limit the exercisability of the Rights.

 

Section 14.     Fractional
Rights and Fractional Shares.  (a) 
The Company shall not be required to issue fractions of Rights (except prior to
the Distribution Date in accordance with Section 11(n) hereof) or to
distribute Right Certificates which evidence fractional Rights.  In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right.  For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.  The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported by (w) the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the NYSE or, (x) if
the Rights are not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, (y) if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, (z) if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board of Directors of the Company. 
If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.

 

(b)   The Company shall not be required to issue fractions of shares of
Junior Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a

 

28

 

share of Junior Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Junior Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share of Junior Preferred Stock).  Interests in fractions of Junior Preferred
Stock in integral multiples of one one-thousandth of a share of Junior
Preferred Stock may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Junior Preferred Stock represented by such depositary receipts.  In lieu of fractional shares of Junior
Preferred Stock that are not integral multiples of one one-thousandth of a
share of Junior Preferred Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised for shares
of Junior Preferred Stock as herein provided an amount in cash equal to the
same fraction of the current market value of one share of Junior Preferred
Stock.  For the purposes of this Section 14(b),
the current market value of a share of Junior Preferred Stock shall be the
closing price of a share of Junior Preferred Stock (as determined pursuant to Section 11(d) hereof)
for the Trading Day immediately prior to the date of such exercise.

 

(c)   The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights.  In lieu of such fractional shares of Common
Stock, the Company shall pay to the registered holders of the Right
Certificates at the time such Rights are exercised or exchanged for shares of
Common Stock as herein provided an amount in cash equal to the same fraction of
the current market value of a whole share of Common Stock (as determined in
accordance with Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise or exchange.

 

(d)   The holder of a Right by the acceptance of the Right expressly
waives the right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right (except as provided above).

 

(e)   Whenever a payment for fractional Rights or fractional shares is
to be made by the Rights Agent, the Company shall (i) promptly prepare and
deliver to the Rights Agent a certificate setting forth in reasonable detail
the facts related to such payments and the prices and/or formulas utilized in
calculating such payments, and (ii) provide sufficient monies to the
Rights Agent in the form of fully collected funds to make such payments.  The Rights Agent shall be fully protected in
relying upon such a certificate and shall have no duty with respect to, and
shall not be deemed to have knowledge of any payment for fractional Rights or
fractional shares under any Section of this Rights Agreement relating to
the payment of fractional Rights or fractional shares unless and until the
Rights Agent shall have received such a certificate and sufficient monies.

 

Section 15.     Rights
of Action.  All rights of action in
respect of this Rights Agreement, excepting the rights of action given to the
Rights Agent under Section 18 and Section 20 hereof, are vested in
the respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock),

 

29

 

without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the Distribution Date, of
the Common Stock), on such holder’s own behalf and for such holder’s own
benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder’s right to exercise the Rights evidenced by such Right Certificate (or,
prior to the Distribution Date, such Common Stock) in the manner provided in
such Right Certificate and in this Rights Agreement.  Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach by the Company of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations by the Company of the obligations of any Person subject
to, this Rights Agreement.

 

Notwithstanding
anything in this Rights Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person
as a result of the Company’s or the Rights Agent’s inability to perform any of
their respective obligations under this Rights Agreement by reason of any
preliminary or permanent injunction or other order, judgment, decree or ruling
(whether interlocutory or final) issued by a court or by a governmental,
regulatory, self-regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of
such obligation.

 

Section 16.     Agreement
of Right Holders.  Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:

 

(i)            prior to the Distribution Date, the Rights shall be
evidenced by the Book-Entries representing shares of Common Stock registered in
the name of the holders of Common Stock, which Book-Entries representing shares
of Common Stock shall also constitute certificates for Rights, and not by
separate Rights Certificates, and each Right will be transferable only in
connection with the transfer of shares of the Common Stock;

 

(ii)           after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and

 

(iii)          the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or,
prior to the Distribution Date, the Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right Certificates or the Common
Stock certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent, subject
to Section 7(e) hereof, shall be affected by any notice to the
contrary.

 

Section 17.     Right
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Junior Preferred Stock or any other securities of the Company
which

 

30

 

may at any time be issuable on the exercise or
exchange of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in this Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights evidenced by
such Right Certificate shall have been exercised or exchanged in accordance
with the provisions hereof.

 

Section 18.     Concerning
the Rights Agent.  (a)  The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the preparation, delivery, amendment, administration and execution
of this Rights Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense (including, without limitation, the reasonable fees and expenses of
legal counsel), incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent (which gross negligence, bad faith
or willful misconduct must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction), for any
action taken, suffered or omitted by the Rights Agent in connection with the
acceptance, administration, exercise and performance of its duties under this
Rights Agreement.  The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company.  The provisions of this Section 18
and Section 20 below shall survive the termination of this Rights
Agreement, the exercise or expiration of the Rights and the resignation,
replacement or removal of the Rights Agent.

 

(b)   The Rights Agent shall be authorized and protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by it
in connection with its acceptance and administration of this Rights Agreement
and the exercise and performance of its duties hereunder, in reliance upon any
Right Certificate or certificate for the Junior Preferred Stock or Common Stock
or for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

 

Section 19.     Merger
or Consolidation or Change of Rights Agent. 
(a)  Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Rights Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof.  In case at the time such
successor Rights Agent shall succeed to the agency created by this Rights
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor

 

31

 

Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of such successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Rights Agreement.

 

(b)   In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Rights Agreement.

 

Section 20.     Duties
of Rights Agent.  The Rights Agent
undertakes to perform only the duties and obligations expressly imposed by this
Rights Agreement (and no implied duties) upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:

 

(a)   The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or an employee of the Rights Agent), and the advice or
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it and in accordance with
such advice or opinion.

 

(b)   Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including without limitation, the identity of an Acquiring Person
and the determination of the current per share market price of any security) be
proved or established by the Company prior to taking, suffering or omitting to
take any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chief
Executive Officer, President, any Vice President, the Treasurer or the
Secretary of the Company (each, an “Authorized Officer”) and delivered
to the Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or omitted
by it under the provisions of this Rights Agreement in reliance upon such
certificate.

 

(c)   The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct
(which gross negligence, bad faith or willful misconduct must be determined by
a final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction).  Anything to the
contrary notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage.  Any liability of the Rights Agent under this
Rights Agreement will be limited to the amount of annual fees paid by the
Company to the Rights Agent.

 

32

 

(d)   The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.

 

(e)   The Rights Agent shall not have any liability for or be under any
responsibility in respect of the validity of this Rights Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming null
and void pursuant to Section 11(a)(ii) hereof) or any change or
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 and 24, or the ascertaining of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after
receipt of the certificate described in Section 12 hereof, upon which the
Rights Agent may rely); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Junior Preferred Stock or other securities to be issued pursuant to this
Rights Agreement or any Right Certificate or as to whether any shares of Junior
Preferred Stock or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable.

 

(f)    The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.

 

(g)   The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Authorized
Officers, and to apply to such Authorized Officers for advice or instructions
in connection with its duties, such instructions shall be full authorization
and protection to the Rights Agent and the Rights Agent shall not be liable for
or in respect of any action taken, suffered or omitted by it in accordance with
instructions of any such Authorized Officer or for any delay in acting while
waiting for those instructions.  The
Rights Agent shall be fully authorized and protected in relying upon the most
recent instructions received by any such Authorized Officer.  Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken, suffered or omitted by
the Rights Agent under this Rights Agreement and the date on and/or after which
such action shall be taken or suffered or such omission shall be
effective.  The Rights Agent shall not be
liable for any action taken or suffered by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five
Business Days after the date any Authorized Officer of the Company actually
receives such application, unless any such Authorized Officer shall have
consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an

 

33

 

omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken, suffered or omitted.

 

(h)   The Rights Agent and any stockholder, affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though the Rights
Agent were not Rights Agent under this Rights Agreement.  Nothing herein shall preclude the Rights
Agent or any such stockholder, affiliate, director, officer or employee from
acting in any other capacity for the Company or for any other Person.

 

(i)    The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself (through
its directors, officers and employees) or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or agents or for any
loss to the Company or any other Person resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
in the selection and continued employment thereof (which gross negligence, bad
faith or willful misconduct must be determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent jurisdiction).

 

(j)    If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to certify the holder is
not an Acquiring Person (or an Affiliate or Associate thereof) or a transferee
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.

 

(k)   No provision of this Rights Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.

 

Section 21.     Change
of Rights Agent.  The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Rights Agreement upon thirty days’ notice in writing mailed to the Company
and to each transfer agent of the Common Stock or the Junior Preferred Stock
known to the Rights Agent by registered or certified mail, and, following the
Distribution Date, to the holders of the Right Certificates by first-class
mail.  The Company may remove the Rights
Agent or any successor Rights Agent upon thirty days’ notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock or the Junior Preferred Stock by registered
or certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. 
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent.  If the Company shall fail to make
such appointment within a period of thirty days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning

 

34

 

or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (A) a Person organized and doing business under the laws of the
United States or any State thereof, which is authorized under such laws to
exercise stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million or (B) an
affiliate of such Person described in clause (A) of this sentence.  After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock or the
Junior Preferred Stock, and, following the Distribution Date, mail a notice
thereof in writing to the registered holders of the Right Certificates.  Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

 

Section 22.     Issuance
of New Right Certificates. 
Notwithstanding any of the provisions of this Rights Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such forms as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Rights Agreement.  In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the Expiration Date, the Company may with respect to shares
of Common Stock so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii) the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company or (iv) a contractual obligation of the Company, in each case
existing prior to the Distribution Date, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale.

 

Section 23.     Redemption.  (a)  The Board of Directors of the
Company may, at any time prior to such time as any Person first becomes an
Acquiring Person, redeem all but not less than all the then-outstanding Rights
at a redemption price of $0.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (the “Redemption Price”).  The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.  The Company may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based on the
current market price of the Common Stock at the time of redemption as
determined pursuant to Section 11(d) hereof) or any other form of
consideration deemed appropriate by the Board of Directors.

 

35

 

(b)   If the Company receives a Qualified Offer and the Board of
Directors of the Company has not redeemed the outstanding Rights or exempted
such offer from the terms of this Rights Agreement or called a special meeting
of stockholders for the purpose of voting on whether or not to exempt such
Qualified Offer from the terms of this Rights Agreement, in each case by the
end of the ninety Business Days following the commencement of such Qualified
Offer, and if the Company receives, not earlier than ninety Business Days nor
later than 120 Business Days following the commencement of such Qualified
Offer, a written notice complying with the terms of this Section 23(b) (the
“Special Meeting Notice”), properly executed by the holders of record
outstanding shares of Common Stock having 10% or more of the total voting power
of all shares of Common Stock then outstanding (or their duly authorized proxy)
(excluding shares of Common Stock beneficially owned by the Person making the
Qualified Offer and such Person’s Affiliates and Associates), directing the
Board of Directors of the Company to submit to a vote of stockholders at a
special meeting of the stockholders of the Company (a “Special Meeting”)
a resolution authorizing the redemption of all, but not less than all, of the
then outstanding Rights at the Redemption Price (the “Redemption Resolution”),
then the Board of Directors of the Company shall take such actions as are
necessary or desirable to cause the Redemption Resolution to be submitted to a
vote of stockholders within ninety Business Days following receipt by the
Company of the Special Meeting Notice (the “Special Meeting Period”),
including by including a proposal relating to adoption of the Redemption
Resolution in the proxy materials of the Company for the Special Meeting;
provided, however, that if the Company, at any time during the Special Meeting
Period and prior to a vote on the Redemption Resolution, enters into a
Definitive Acquisition Agreement, the Special Meeting Period may be extended
(and any Special Meeting called in connection therewith may be cancelled) if
the Redemption Resolution will be separately submitted to a vote at the same
meeting as the Definitive Acquisition Agreement.  For purposes of a Special Meeting Notice, to
the full extent permitted by applicable law, the record date for determining
eligible holders of record of the Common Stock shall be the ninetieth Business
Day following the commencement of a Qualified Offer.  Any Special Meeting Notice must be delivered
to the Secretary of the Company at the principal executive offices of the
Company and must set forth, as to the stockholders of record executing such
Special Meeting Notice, (i) the name and address of such stockholders, as
they appear on the Company’s books and records, (ii) the number of shares
of Common Stock that are owned of record by each of such stockholders and (iii) in
the case of Common Stock that is owned beneficially by another Person, an
executed certification by the holder of record that such holder has executed
such Special Meeting Notice only after obtaining instructions to do so from
such beneficial owner.  Subject to the
requirements of applicable law, the Board of Directors of the Company may take
a position in favor of or opposed to the adoption of the Redemption Resolution,
or no position with respect to the Redemption Resolution, as it determines to
be appropriate in the exercise of its fiduciary duties.  In the event that (A) no Person has
become an Acquiring Person prior to the effective date of redemption referred
to below in this sentence, (B) the Qualified Offer continues to be a
Qualified Offer prior to the last day of the Special Meeting Period (the “Outside
Meeting Date”) and (C) either (1) the Special Meeting is not held
on or prior to the ninetieth Business Day following receipt of the Special
Meeting Notice or (2) at the Special Meeting at which a quorum is present,
the holders of shares of Common Stock outstanding as of the record date for the
Special Meeting selected by the Board of Directors of the Company (excluding
shares of Common Stock beneficially

 

36

 

owned by the Person making the
Qualified Offer and such Person’s Affiliates and Associates) having a majority
of the total voting power of all such shares of Common Stock, shall vote in
favor of the Redemption Resolution, then all of the Rights shall be deemed
redeemed at the Redemption Price by such failure to hold the Special Meeting or
as a result of the adoption of the Redemption Resolution by the stockholders of
the Company (or the Board of Directors of the Company shall take such other
action as may be necessary to prevent the existence of the Rights from
interfering with the consummation of the Qualified Offer), such redemption to
be effective, as the case may be, (x) as of the close of business on the
Outside Meeting Date if a Special Meeting is not held on or prior to such date
or (y) if a Special Meeting is held on or prior to the Outside Meeting
Date, as of the date on which the results of the vote adopting the Redemption
Resolution at the Special Meeting are certified as official by the appointed
inspectors of election for the Special Meeting.

 

(c)   Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(a) or the
effectiveness of a redemption of the Rights pursuant to Section 23(b), in
either case, without any further action and without any notice, the right to
exercise the Rights will terminate and each Right will thereafter represent
only the right to receive the Redemption Price. 
The Company shall promptly give public notice of any such redemption
(with prompt written notice to the Rights Agent); provided, however,
that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption.  Within
ten days after such action of the Board of Directors ordering the redemption of
the Rights pursuant to Section 23(a) or Section 23(b), the
Company shall mail a notice of redemption to all the holders of the
then-outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock.  Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption
shall state the method by which the payment of the Redemption Price will be
made. The failure to give notice required by this Section 23(c) or
any defect therein shall not affect the validity of the action taken by the
Company.

 

(d)   In the case of a redemption under Section 23(a) hereof,
the Company may, at its option, discharge all of its obligations with respect
to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights and (ii) mailing payment of the Redemption Price
to the registered holders of the Rights at their last addresses as they appear
on the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent of the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company.

 

Section 24.     Exchange.  (a)  The Board of Directors of the
Company may, at its option, at any time after any Person first becomes an
Acquiring Person, exchange all or part of the then-outstanding and exercisable
Rights (which shall not include Rights that have not become effective or that
have become null and void pursuant to the provisions of Section 11(a)(ii) hereof)
for shares of Common Stock (or one one-thousandth of a share of Junior
Preferred Stock, at an exchange ratio of one share of Common Stock (or one
one-thousandth of a share of Junior Preferred Stock) per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such amount per Right being hereinafter
referred to as the “Exchange Ratio”). 
Notwithstanding the foregoing, the Board of

 

37

 

Directors shall not be
empowered to effect such exchange at any time after an Acquiring Person becomes
the Beneficial Owner of shares of Common Stock having 50% or more of the total
voting power of all shares of Common Stock then outstanding.  From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have
not been exchanged pursuant to this Section 24(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged
pursuant to this Section 24(a).  The
exchange of the Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish.

 

(b)   Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. 
The Company shall promptly give public notice of any such exchange (with
prompt written notice thereof to the Rights Agent); provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange.  The Company
shall promptly mail a notice of any such exchange to all of the holders of the
Rights so exchanged at their last addresses as they appear upon the registry
books of the Rights Agent.  Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice.  Each
such notice of exchange will state the method by which the exchange of the
shares of Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become null
and void pursuant to the provisions of Section 11(a)(ii) hereof) held
by each holder of Rights.

 

(c)   The Company may at its option substitute and, in the event that
there shall not be sufficient shares of Common Stock issued but not outstanding
or authorized but unissued (and unreserved) to permit an exchange of Rights as
contemplated in accordance with this Section 24, the Company shall
substitute, to the extent of such insufficiency, for each share of Common Stock
that would otherwise be issuable upon exchange of a Right, a number of shares
of Junior Preferred Stock or fraction thereof (or Equivalent Preferred Shares
as such term is defined in Section 11(b)) such that the current per share
market price (determined pursuant to Section 11(d) hereof) of one
share of Junior Preferred Stock (or Equivalent Preferred Share) multiplied by
such number or fraction is equal to the current per share market price of one
share of Common Stock (determined pursuant to Section 11(d) hereof)
as of the date of such exchange.

 

Section 25.     Notice
of Certain Events.  (a)  In case
the Company shall at any time after the earlier of the Distribution Date or the
Stock Acquisition Date propose (i) to pay any dividend payable in stock of
any class to the holders of its Junior Preferred Stock or to make any other
distribution to the holders of its Junior Preferred Stock (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Junior
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Junior Preferred Stock or shares of stock of any class or
any other securities, rights or options, (iii) to effect any
reclassification of its Junior Preferred Stock (other than a reclassification
involving only the subdivision or combination of

 

38

 

outstanding Junior Preferred
Stock), (iv) to effect the liquidation, dissolution or winding up of the
Company, or (v) to declare or pay any dividend on the Common Stock payable
in Common Stock or to effect a subdivision, combination or consolidation of the
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each holder
of a Right Certificate, in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend, or distribution or offering of rights or warrants, or the
date on which such liquidation, dissolution, reclassification, subdivision,
combination, consolidation or winding up is to take place and the date of
participation therein by the holders of the Common Stock and/or Junior
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above
at least ten days prior to the record date for determining holders of the
Common Stock and/or Junior Preferred Stock for purposes of such action, and in
the case of any such other action, at least ten days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Stock and/or Junior Preferred Stock, whichever shall be
the earlier.

 

(b)   In case any event described in Section 11(a)(ii) or Section 13
shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under Section 11(a)(ii) and
Section 13 hereof.

 

Section 26.     Notices.  Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
next-day courier or first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:

 

Walter Energy, Inc.

4211 W. Boy Scout Boulevard

Tampa, Florida 33607 

Attention:  General Counsel

 

Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Rights Agreement to be given or made by the Company
or by the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by next-day courier or first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:

 

Mellon Investor Services LLC

480 Washington Boulevard, 29th Floor

Jersey City, NJ 07310 

Attention:  Kayur D. Patel

 

39

 

with a copy to:

 

Mellon Investor Services LLC

480 Washington Boulevard

Jersey City, NJ 07310

Attention: 
General Counsel

Facsimile: 
(201) 680-4610

 

Notices or demands authorized by this Rights Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by next-day courier or first-class
mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.

 

Section 27.     Supplements
and Amendments.  Except as otherwise
provided in this Section 27, for so long as the Rights are then
redeemable, the Company (by action of its Board of Directors) may in its sole
and absolute discretion, and the Rights Agent shall if the Company so directs,
supplement or amend any provision of this Rights Agreement in any respect
without the approval of any holders of the Rights.  At any time when the Rights are no longer redeemable,
except as otherwise provided in this Section 27, the Company (by action of
its Board or Directors) may, and the Rights Agent shall, if the Company so
directs, supplement or amend this Rights Agreement without the approval of any
holders of Rights in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen
any time period hereunder, or (iv) change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable; provided,
however, that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person an
Affiliate or Associate of an Acquiring Person, or any person whose Rights have
become null and void pursuant to Section 11(a)(ii)), and no such amendment
may cause the Rights again to become redeemable or cause this Rights Agreement
again to become amendable other than in accordance with this sentence.  Notwithstanding anything contained in this
Rights Agreement to the contrary, no supplement or amendment shall be made
which decreases the Redemption Price. 
Upon the delivery of a certificate from an appropriate officer of the
Company and, if requested by the Rights Agent, an opinion of counsel, that
states that the proposed supplement or amendment complies with the terms of
this Section 27, the Rights Agent shall execute such supplement or
amendment.  Notwithstanding anything
contained in this Rights Agreement to the contrary, the Rights Agent may, but
shall not be obligated to, enter into any supplement or amendment that affects
the Rights Agent’s own rights, duties, obligations or immunities under this
Rights Agreement.  Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.

 

Section 28.     Successors.  All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.

 

Section 29.     Benefits
of this Rights Agreement.  Nothing in
this Rights Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement shall
be for the sole and exclusive benefit of the Company, the Rights

 

40

 

Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).

 

Section 30.     Determinations
and Actions by the Board of Directors. 
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Rights Agreement and to exercise the rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Rights Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Rights Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights, to exchange or not exchange the Rights, or to amend this Rights
Agreement).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) that are
done or made by the Board of Directors of the Company in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights, as such, and all other parties, and (y) not subject the Board
of Directors to any liability to the holders of the Rights.  The Rights Agent is entitled always to assume
the Company’s Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.

 

Section 31.     Severability.  If any term, provision, covenant or
restriction of this Rights Agreement or applicable to this Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; provided, however,
that notwithstanding anything in this Rights Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board determines in its
good faith judgment that severing the invalid language from this Rights
Agreement would adversely affect the purpose or effect of this Rights
Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated (with prompt notice to the Rights Agent) and shall not expire until
the close of business on the tenth Business Day following the date of such
determination by the Board.  Without
limiting the foregoing, if any provision requiring a specific group of
Directors of the Company to act is held to by any court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board in accordance with applicable law
and the Company’s Second Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws.

 

Section 32.     Governing
Law.  This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State, provided, however, that all provisions regarding the rights,
duties and obligations of the Rights Agent shall be governed by and construed
in accordance with the laws of the state of New York applicable to contracts
made and to be performed entirely within such state, without regard to the
principles or rules concerning conflicts of laws which might otherwise
require application of the substantive laws of another jurisdiction.

 

41

 

Section 33.     Counterparts.  This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

 

Section 34.     Descriptive
Headings.  Descriptive headings of
the several Sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.

 

42

 

IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly executed and attested, all as of the day and year first above written.

 

 

	
   

  	
   

  	
   

  	
  WALTER
  ENERGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
  /s/ Catherine C. Bona

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Victor P. Patrick

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice Chairman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MELLON INVESTOR SERVICES LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
  /s/Lee Kowalsky

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Margaret B. Loyd

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Relationship Manager

  

 

 

EXHIBIT A

 

FORM

 

OF

 

CERTIFICATE OF DESIGNATIONS

 

OF

 

JUNIOR PARTICIPATING PREFERRED STOCK

 

OF

 

WALTER ENERGY, INC.

 

(Pursuant to Section 151 of the

General Corporation Law of the State of
Delaware)

 

 

Walter
Energy, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the “Company”), hereby
certifies that the following resolution was duly adopted by the Board of
Directors of the Company as required by Section 151 of the General
Corporation Law of the State of Delaware (the “General Corporation Law”)
on February 27, 2009, which resolution remains in full force and effect on
the date hereof:

 

RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Company (hereinafter being referred to as the “Board
of Directors” or the “Board”) in accordance with the provisions of
the Company’s Second Amended Restated Certificate of Incorporation (as amended,
hereinafter being referred to as the “Certificate of Incorporation”),
and Section 151(g) of the General Corporation Law, the Board of
Directors hereby creates, authorizes and provides for the issuance of a series
of preferred stock, par value $0.01 per share, of the Company, to be designated
the “Junior Participating Preferred Stock” and hereby adopts the resolution
establishing the number of shares, voting powers and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of the shares of such
series as set forth below:

 

Section 1.     Designation and Amount.  The shares of Junior Participating Preferred
Stock shall be designated as “Junior Participating Preferred Stock” (the “Junior
Preferred Stock”) and the number of shares constituting the Junior Preferred
Stock shall be 2,000,000.  Such numbers
of shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the numbers of shares
of Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Junior Preferred
Stock.

 

A-1

 

Section 2.     Dividends and Distributions

 

(A)          Subject to the rights
of the holders of any shares of any series of preferred stock of the Company
(the “Preferred Stock”) (or any similar stock) ranking prior and
superior to the Junior Preferred Stock with respect to dividends, the holders
of shares of Junior Preferred Stock, in preference to the holders of common
stock, par value $0.01 per share, of the Company (the “Common Stock”)
and of any other stock of the Company ranking junior to the Junior Preferred
Stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the last day of January, April, July, and October in
each year (each such date being referred to herein as a “Dividend Payment
Date”), commencing on the first Dividend Payment Date after the first
issuance of a share or fraction of a share of Junior Preferred Stock (the “Issue
Date”), in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock, declared on the Common Stock since the immediately
preceding Dividend Payment Date or, with respect to the first Dividend Payment
Date, since the first issuance of any share or fraction of a share of Junior
Preferred Stock.  In the event the
Company shall at any time after the Issue Date declare any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Junior Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

 

(B)           The Company shall
declare a dividend or distribution on the Junior Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Dividend Payment Date and the next subsequent Dividend Payment
Date, a dividend of $1 per share on the Junior Preferred Stock shall
nevertheless be payable, when, as and if declared, on such subsequent Dividend
Payment Date.

 

(C)           Dividends shall
begin to accrue and be cumulative, whether or not earned or declared, on
outstanding shares of Junior Preferred Stock from the Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Dividend Payment 

 

A-2

 

Date
or is a date after the record date for the determination of holders of shares
of Junior Preferred Stock entitled to receive a quarterly dividend and before
such Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Junior Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix a record date for the determination of holders of shares of Junior
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than sixty days prior to
the date fixed for the payment thereof.

 

Section 3.     Voting Rights.  The holders of shares of Junior Preferred
Stock shall have the following voting rights:

 

(A)          Subject to the
provision for adjustment hereinafter set forth and except as otherwise provided
in the Certificate of Incorporation or required by law, each share of Junior
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters
upon which the holders of the Common Stock of the Company are entitled to
vote.  In the event the Company shall at
any time after the Issue Date declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Junior Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

 

(B)           Except as otherwise
provided herein, in the Certificate of Incorporation or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock, and except as otherwise required by law, the holders of shares of Junior
Preferred Stock and the holders of shares of Common Stock and any other capital
stock of the Company having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the Company.

 

(C)           Except as set forth
herein, or as otherwise provided by law, holders of Junior Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.

 

A-3

 

(D)          If, at the time of
any annual meeting of stockholders for the election of directors, the
equivalent of six quarterly dividends (whether or not consecutive) payable on
any share or shares of Junior Preferred Stock are in default, the number of
directors constituting the Board of Directors of the Company shall be increased
by two. In addition to voting together with the holders of Common Stock for the
election of other directors of the Company, the holders of record of the Junior
Preferred Stock, voting separately as a class to the exclusion of the holders
of Common Stock shall be entitled at said meeting of stockholders (and at each
subsequent annual meeting of stockholders), unless all dividends in arrears on
the Junior Preferred Stock have been paid or declared and set apart for payment
prior thereto, to vote for the election of two directors of the Company, the
holders of any Junior Preferred Stock being entitled to cast a number of votes
per share of Junior Preferred Stock as is specified in paragraph (A) of
this Section 3.  Each such
additional director shall serve until the next annual meeting of stockholders
for the election of directors, or until his successor shall be elected and
shall qualify, or until his right to hold such office terminates pursuant to
the provisions of this Section 3(D). 
Until the default in payments of all dividends which permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the provisions of this Section 3(D) may
be removed at any time, without cause, only by the affirmative vote of the
holders of the shares of Junior Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such director
at a special meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Junior Preferred Stock shall
be divested of the foregoing special voting rights, subject to revesting in the
event of each and every subsequent like default in payments of dividends. Upon
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this Section 3(D) shall
be in addition to any other voting rights granted to the holders of the Junior
Preferred Stock in this Section 3.

 

Section 4.     Certain Restrictions.

 

(A)          Whenever quarterly
dividends or other dividends or distributions payable on the Junior Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not earned or
declared, on shares of Junior Preferred Stock outstanding shall have been paid
in full, the Company shall not:

 

i.                  declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock;

 

A-4

 

ii.               declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
dividends paid ratably on the Junior Preferred Stock and all such parity stock
on which dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;

 

iii.            redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock, provided that the
Company may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Company ranking
junior (as to dividends and upon dissolution, liquidation or winding up) to the
Junior Preferred Stock or rights, warrants or options to acquire such junior
stock; or

 

iv.           redeem or purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Junior Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series
or classes.

 

(B)           The Company shall
not permit any subsidiary of the Company to purchase or otherwise acquire for
consideration any shares of stock of the Company unless the Company could,
under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.

 

Section 5.     Reacquired Shares.  Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their retirement
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to any conditions and
restrictions on issuance set forth herein, in the Certificate of Incorporation,
or in any other certificate of designation creating series of Preferred Stock,
or as otherwise restricted by law.

 

Section 6.     Liquidation, Dissolution or Winding Up.  Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other
stock of the Company ranking junior, upon liquidation, dissolution or winding
up, to the Junior Preferred Stock unless, prior thereto, the holders of shares
of Junior Preferred Stock shall have received $1,000 per share, plus an amount
equal to accrued and unpaid dividends 

 

A-5

 

and distributions thereon,
whether or not earned or declared, to the date of such payment, provided that
the holders of shares of Junior Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 times the aggregate amount to be distributed per
share to holders of shares of Common Stock, or (B) to the holders of
shares of stock ranking on a parity upon liquidation, dissolution or winding up
with the Junior Preferred Stock, except distributions made ratably on the
Junior Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. 
In the event, however, that there are not sufficient assets available to
permit payment in full of the Junior Preferred Stock liquidation preference and
the liquidation preferences of all other classes and series of stock of the
Company, if any, that rank on a parity with the Junior Preferred Stock in
respect thereof, then the assets available for such distribution shall be
distributed ratably to the holders of the Junior Preferred Stock and the
holders of such parity shares in the proportion to their respective liquidation
preferences.  In the event the Company
shall at any time after the Issue Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Junior Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(A) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.

 

Neither the merger or
consolidation of the Company into or with another entity nor the merger or
consolidation of any other entity into or with the Company (nor the sale of all
or substantially all of the assets of the Company) shall be deemed to be a
liquidation, dissolution or winding up of the Company within the meaning of
this Section 6.

 

Section 7.     Consolidation, Merger, etc.  In case the Company shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are converted into, exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly converted into,
exchanged for or changed into an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is converted,
exchanged or converted.  In the event the
Company shall at any time after the Issue Date declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
conversion, exchange or change of shares of Junior Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the 

 

A-6

 

numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

Section 8.     No Redemption.  The shares of Junior Preferred Stock shall
not be redeemable from any holder.

 

Section 9.     Rank.  The Junior Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, junior to all other
series of Preferred Stock and senior to the Common Stock.

 

Section 10.     Amendment.  If any proposed amendment (either directly or
indirectly, or through merger, consolidation or otherwise) to the Certificate
of Incorporation (including this Certificate of Designations) would alter,
change or repeal any of the preferences, powers or special rights given to the
Junior Preferred Stock so as to affect the Junior Preferred Stock adversely,
then the holders of the Junior Preferred Stock shall be entitled to vote
separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Junior Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.

 

Section 11.     Fractional Shares.  Junior Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder’s fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Junior Preferred Stock.

 

A-7

 

IN WITNESS WHEREOF, this Certificate of Designations
is executed on behalf of the Company by
                            
, [Title of Signatory] of the Company on                   
    , 2009.

 

 

	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-8

 

EXHIBIT B

 

FORM OF RIGHT CERTIFICATE

 

	
  Certificate
  No. R-         

  	
   

  	
          Rights

  

 

NOT EXERCISABLE AFTER APRIL 23, 2012 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. 
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

Right Certificate

 

WALTER ENERGY, INC.

 

This certifies that
                      
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of April 24,
2009 as the same may be amended from time to time (the “Rights Agreement”),
between Walter Energy, Inc., a Delaware corporation (the “Company”),
and Mellon Investor Services LLC, a New Jersey limited liability company, as
Rights Agent (the “Rights Agent”), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York City time, on April 23,
2012 at the office or agency of the Rights Agent designated for such purpose,
or of its successor as Rights Agent, one one-thousandth of a fully paid
non-assessable share of Junior Participating Preferred Stock, par value $0.01
per share (the “Junior Preferred Stock”), at a purchase price of $150
per one one-thousandths of a share of Junior Preferred Stock (the “Purchase
Price”), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed.  The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a share of Junior
Preferred Stock which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
February 27, 2009, based on the Junior Preferred Stock as constituted at
such date.

 

As provided in the Rights Agreement, the Purchase
Price and the number of one one-thousandths of a share of Junior Preferred
Stock (or other securities or property) which may be purchased upon the
exercise of the Rights and the number of Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.

 

B-1

 

This Right Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference and made
a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates.  Copies of the Rights
Agreement are on file at the principal executive offices of the Company.  The Company will mail to the holder of this
Right Certificate a copy of the Rights Agreement without charge after receipt
of a written request therefor.

 

This Right Certificate, with or without other Right
Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of shares of Junior Preferred Stock
as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase.  If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.

 

Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $0.01 per Right or (ii) may be exchanged
in whole or in part for shares of Junior Preferred Stock or shares of the
Company’s Common Stock.

 

No fractional shares of Junior Preferred Stock or
Common Stock will be issued upon the exercise or exchange of any Right or
Rights evidenced hereby (other than fractions of Junior Preferred Stock which
are integral multiples of one one-thousandths of a share of Junior Preferred
Stock, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.

 

No holder of this Right Certificate, as such, shall
be entitled to vote or receive dividends or be deemed for any purpose the
holder of the Junior Preferred Stock or of any other securities of the Company
which may at any time be issuable on the exercise or exchange hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement) or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised or exchanged
as provided in the Rights Agreement.

 

This Right Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned by the Rights
Agent.

 

B-2

 

WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal. 
Dated as of
                          
    , 2009.

 

	
  ATTEST:

  	
   

  	
  WALTER
  ENERGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ,

  	
   

  	
   

  
	
  MELLON
  INVESTOR SERVICES LLC,

  	
   

  	
   

  
	
  as
  Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  	
   

  

 

B-3

 

Form of Reverse Side of Right
Certificate

 

FORM OF ASSIGNMENT

 

(To be
executed by the registered holder if such

holder
desires to transfer the Right Certificate)

 

FOR VALUE RECEIVED ____________________________
hereby sells, assigns and transfer unto ______________________________

 

______________________________________________________________________________________

(Please
print name and address of transferee)

 

______________________________________________________________________________________

 

Rights represented by this Right Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint _____________________________ Attorney, to
transfer said Rights on the books of the within-named Company, with full power
of substitution.

 

Dated: ___________________________,_____

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature Guaranteed:

 

Signatures must be guaranteed by a bank, trust
company, broker, dealer or other eligible institution participating in a
recognized signature guarantee medallion program.

 

The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by, were not acquired
by the undersigned from, and are not being sold, assigned or transferred to, an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

B-4

 

Form of Reverse Side of Right
Certificate — continued

 

FORM OF ELECTION TO PURCHASE

 

(To be
executed if holder desires to exercise

Rights
represented by the Rights Certificate)

 

To the Rights Agent:

 

The undersigned hereby irrevocably elects to
exercise ________________________Rights represented by this Right Certificate
to purchase the shares of Junior Preferred Stock (or other securities or
property) issuable upon the exercise of such Rights and requests that
certificates for such shares of Junior Preferred Stock (or other securities or
property) be issued in the name of:

 

____________________________________________________________________________

(Please print name and address)

 

____________________________________________________________________________

 

If such number of Rights shall not be all the
Rights evidenced by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the name of and
delivered to:

 

Please insert social security

or other identifying number:
_____________________________________________________

 

____________________________________________________________________________

(Please print name and address)

 

____________________________________________________________________________

 

Dated:  ___________________________,_____,

 

	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
  (Signature must conform to holder specified
  on Right Certificate)

  
	
   

  	
   

  

Signature Guaranteed:

 

Signatures must be guaranteed by a bank, trust
company, broker, dealer or other eligible institution participating in a
recognized signature guarantee medallion program.

 

The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by, were not
acquired by the undersigned from, and are not being sold, assigned or transferred
to, an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

B-5

 

Form of Reverse Side of Right
Certificate — continued

 

NOTICE

 

The signature in the Form of Assignment or Form of
Election to Purchase, as the case may be, must conform to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.

 

In the event the certification set forth above in
the Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored.

 

B-6

 

EXHIBIT C

 

UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.

 

SUMMARY OF RIGHTS TO PURCHASE

JUNIOR PARTICIPATING PREFERRED STOCK

 

On February 27, 2009 the Board of Directors of
Walter Energy, Inc., a Delaware corporation (the “Company”),
declared a dividend of one preferred stock purchase right (a “Right”)
for each outstanding share of common stock, par value $0.01 per share, of the
Company (the “Common Stock”).  The
dividend is payable on April 23, 2009 to the stockholders of record as of
the close of business on April 23, 2009 (the “Record Date”).  Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a fully paid non-assessable
share of Junior Participating Preferred Stock, par value $0.01 per share (the “Junior
Preferred Stock”), of the Company at a price of $150 per share (as the same
may be adjusted, the “Purchase Price”). 
The description and terms of the Rights are set forth in a Rights
Agreement, dated as of April 24, 2009 (as the same may be amended from
time to time, the “Rights Agreement”), between the Company and Mellon
Investor Services LLC, a New Jersey limited liability company, as Rights Agent
(the “Rights Agent”). Capitalized terms used herein and not otherwise
defined herein shall have the meanings given to them in the Rights Agreement.

 

Until the close of business on the earlier of (i) the
tenth day after the first date of a public announcement that a person (other
than an Exempted Entity (as defined below)) or group of affiliated or
associated persons (an “Acquiring Person”) has acquired beneficial
ownership of shares of Common Stock (which includes for this purpose stock
referenced in derivative transactions and securities) having 20% or more of the
total voting power of all shares of Common Stock then outstanding or (ii) the
tenth business day (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) after the date of commencement of, or the
first public announcement of an intention to commence, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person (other than an Exempted Entity) or group of shares of
Common Stock having 20% or more of the total voting power of all shares of
Common Stock then outstanding (the earlier of such dates being herein referred
to as the “Distribution Date”), the Rights will be evidenced by the balances indicated in the book-entry account
system of the transfer agent for the Common Stock registered in the names of
the holders of the Common Stock.  A
Person who beneficially owns shares of Common Stock having 20% or more
of the total voting power of all shares of Common Stock then outstanding upon the adoption of the Rights Agreement will not
be considered an Acquiring Person unless and until such Person acquires
beneficial ownership of additional shares of Common Stock after the date of
adoption of the Rights Agreement (other than pursuant to a dividend or
distribution paid in shares of Common Stock or pursuant to a split or
subdivision of the outstanding Common Stock), unless upon becoming beneficial
owner of such additional shares of Common Stock, such person is not then
beneficial owner of shares of Common Stock having 20% or more of the total
voting power of all shares of Common Stock then outstanding.

 

C-1

 

“Exempted Entity” shall mean (1) the
Company, (2) any Subsidiary (as defined below) of the Company (in the case
of subclauses (1) and (2) including, without limitation, in its
fiduciary capacity), (3) any employee benefit plan of the Company or of
any Subsidiary of the Company, or (4) any entity or trustee holding Common
Stock for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company.

 

The
Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferable only
in connection with the transfer of Common Stock.  Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
shares of Common Stock outstanding as of the Record Date, even without a
notation incorporating the Rights Agreement by reference or a copy of this
Summary of Rights, will also constitute the transfer of the Rights associated
with the shares of Common Stock as evidenced by the balances indicated in the
book-entry account system of the transfer agent for Common Stock registered in
the names of holders of Common Stock.  As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Right Certificates”) will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.

 

The Rights are not exercisable until the
Distribution Date.  The Rights will
expire on April 23, 2012 (the “Final Expiration Date”), unless the
Rights are earlier redeemed or exchanged by the Company, in each case as
described below.

 

The Purchase Price payable, and the number of shares
of Junior Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Junior Preferred Stock, (ii) upon
the grant to holders of the Junior Preferred Stock of certain rights or
warrants to subscribe for or purchase Junior Preferred Stock at a price, or
securities convertible into Junior Preferred Stock with a conversion price,
less than the then-current market price of the Junior Preferred Stock or (iii) upon
the distribution to holders of the Junior Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends or dividends
payable in Junior Preferred Stock) or of subscription rights or warrants (other
than those referred to above).

 

The Rights are also subject to adjustment in the
event of a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.

 

Shares of Junior Preferred Stock purchasable upon
exercise of the Rights will not be redeemable. 
Each share of Junior Preferred Stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of the greater
of (a) $1 per share and (b) an amount equal to 1,000 times the
dividend declared per share of Common Stock. 
In the event of liquidation, dissolution or winding up of the Company,
the holders of the Junior Preferred Stock will be entitled to a minimum
preferential liquidation payment of $1,000 per share (plus any accrued but
unpaid dividends) but will be entitled to an aggregate 1,000 times the payment
made per share of Common Stock.  In
general, each share of Junior Preferred Stock will vote together 

 

C-2

 

with the Common Stock and
any other class or series of capital stock of the Company entitled to vote, on
all matters submitted to a vote of the stockholders of the Company.  Each share of Junior Participating Preferred
Stock will have 1,000 votes on all matters upon which the holders of Common
Stock of the Company are entitled to vote. 
The holders of the Junior Preferred Stock, voting as a separate class,
shall be entitled to elect two directors if dividends on the Junior Preferred
Stock are in arrears in an amount equal to six quarterly dividends
thereon.  Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Junior Preferred Stock will be entitled
to receive 1,000 times the amount received per share of Common Stock.  These rights are protected by customary
antidilution provisions.

 

Because of the nature of the Junior Preferred Stock’s
dividend, liquidation and voting rights, the value of the one one-thousandth
interest in a share of Junior Preferred Stock purchasable upon exercise of each
Right should approximate the value of one share of Common Stock.

 

In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, each holder of a Right,
other than Rights that have become void (as described below), will thereafter
have the right to receive upon exercise of a Right and payment of the Purchase
Price, that number of shares of Common Stock having a market value of two times
the Purchase Price.  Notwithstanding the
foregoing, following the time any person or group of affiliated or associated
persons becomes an Acquiring Person, all Rights that are, or under certain
circumstances specified in the Rights Agreement were, beneficially owned by any
Acquiring Person or its affiliates or associates will be null and void.

 

In the event that, after a person or group has
become an Acquiring Person, the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold, proper provision will be made so that each holder of a
Right (other than Rights that have become void) will thereafter have the right
to receive, upon the exercise thereof at the then-current exercise price of the
Right, that number of shares of common stock of the person with whom the
Company has engaged in the foregoing transaction (or its parent), which number
of shares at the time of such transaction will have a market value of two times
the Purchase Price.

 

At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person or group of
beneficial ownership of shares of Common Stock having 50% or more of the total
voting power of all shares of Common Stock then outstanding or the occurrence
of an event described in the prior paragraph, the Board of Directors of the
Company may exchange the Rights (other than Rights that have become void), in whole
or in part, at an exchange ratio of one share of Common Stock, or a fractional
share of Junior Preferred Stock (or of a share of a similar class or series of
the Company’s preferred stock having similar rights, preferences and
privileges) of equivalent value, per Right (subject to adjustment).

 

With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.  No fractional shares of Junior Preferred Stock
will be issued (other than fractions which are integral 

 

C-3

 

multiples of one
one-thousandth of a share of Junior Preferred Stock, which may, at the election
of the Company, be evidenced by depositary receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of the Junior
Preferred Stock on the last trading day prior to the date of exercise.

 

At
any time prior to the time an Acquiring Person becomes such, the Board of Directors
of the Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right (the “Redemption Price”).  The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. In addition, if a Qualified
Offer (as described below) is made, the holders of record of outstanding shares
of Common Stock having 10% or more of the total voting power of all shares of
Common Stock then outstanding (or their duly authorized proxy) may direct the
Board of Directors of the Company to call a special meeting of stockholders to
consider a resolution authorizing a redemption of all Rights.  If the special meeting is not held within
ninety Business Days of being called or if, at the special meeting, the holders
of outstanding shares of Common Stock having a majority of the total voting
power of all shares of Common Stock outstanding as of the record date of the
special meeting (other than shares held by the offeror and its affiliated and
associated persons) vote in favor of the redemption of the Rights, then the
Rights shall be redeemed at the Redemption Price (or the Board will take such
other action as may be necessary to prevent the Rights from interfering with
the consummation of the Qualified Offer).

 

A
Qualified Offer, among other things, is an offer determined by the Board of
Directors of the Company to be a fully-financed offer for all outstanding
shares of Common Stock whose per share offer price exceeds the greatest of (x) the
highest reported market price per share of the Common Stock, in the immediately
preceding 24 months (provided that this clause (x) shall only be
applicable to offers made on or prior to July 31, 2010), (y) the
highest price per share of the Common Stock paid by the Person making the
tender offer or any of its Affiliates during the 24 months immediately
preceding the commencement of the tender offer or prior to the expiration of
the tender offer, and (z) the greater of (A) an amount that is 25%
higher than the 12-month moving average share price (determined as of the
trading day immediately preceding the commencement of such offer) of the Common
Stock and (B) an amount that is 25% higher than the closing price per
share of the Common Stock on the trading day immediately preceding the
commencement of such offer (provided that this clause (z) shall only be
applicable to offers made after July 31, 2010).  A Qualified Offer is, among other things,
conditioned upon a minimum of at least two-thirds of the outstanding shares of
Common Stock not held by the offeror (and its affiliated and associated
persons) being tendered and not withdrawn, with a commitment to acquire all
shares of Common Stock not tendered for the same consideration.  If the Qualified Offer includes non-cash
consideration, such consideration must consist solely of freely-tradeable
common stock of a publicly traded company, and the board and its
representatives must be given access to conduct a due diligence review of the offeror
to determine whether the consideration is fair and adequate.  A Qualified Offer must also remain open for
at least 120 Business Days following commencement.

 

Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.

 

C-4

 

For so long as the Rights are then redeemable, the
Company may, except with respect to a decrease in the Redemption Price, amend
the Rights Agreement in any manner. 
After the Rights are no longer redeemable, the Company may, except with
respect to a decrease in the Redemption Price, amend the Rights Agreement in
any manner that does not adversely affect the interests of holders of the
Rights (other than an Acquiring Person, the affiliates or associates of an
Acquiring Person, or a holder whose Rights have become void).

 

Until a Right is exercised or exchanged, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.

 

A copy of the Rights Agreement and the Certificate
of Designation for the Junior Preferred Stock has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated April 23, 2009.  A copy of the Rights Agreement and the
Certificate of Designation are available free of charge from the Company.  This summary description of the Rights and
Junior Preferred Stock does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement and Certificate of Designation,
as the same may be amended from time to time, which are hereby incorporated
herein by reference.

 

C-5Exhibit 4.2

 

AMENDMENT NO. 1

TO

RIGHTS AGREEMENT

 

This
amendment number one (this “Amendment”) to the Rights Agreement between
Walter Energy, Inc., a Delaware corporation (the “Company”), and
Mellon Investor Services LLC (the “Rights Agent”), dated as of November 21,
2008, is made and entered into as of April 24, 2009, and shall become
effective on April 24, 2009.

 

BACKGROUND

 

WHEREAS,
the Company and the Rights Agent entered into a Rights Agreement dated as of November 21,
2008 (the “Existing Rights Agreement”);

 

WHEREAS,
the Company, on April 23, 2009, changed its name from Walter Industries, Inc.
to Walter Energy, Inc.;

 

WHEREAS,
Section 27 of the Existing Rights Agreement provides that, in certain
circumstances, the Company may supplement or amend the Existing Rights
Agreement without the approval of any holders of Rights;

 

WHEREAS,
the Board of Directors deems it advisable and in the best interests of the
Company to, subject to and contingent upon stockholder approval of the new
rights agreement and the Second Amended and Restated Certificate of
Incorporation of the Company that authorizes preferred stock, enter into a new
rights agreement (the “Rights Agreement”) and amend the terms of the
Existing Rights Agreement so that it expires simultaneously with the
implementation of the new Rights Agreement;

 

WHEREAS,
on February 27, 2009, the Board of Directors of the Company resolved to
make implementation of the new Rights Agreement and the amendment of the
Existing Rights Agreement described above contingent upon approval by
stockholders of the Company at the annual meeting of stockholders to be held on
April 23, 2009 of the new Rights Agreement and the Second Amended and
Restated Certificate of Incorporation of the Company;

 

WHEREAS,
at the annual meeting of stockholders of the Company held on April 23,
2009, the stockholders of the Company approved the new Rights Agreement and the
Second Amended and Restated Certificate of Incorporation of the Company;

 

WHEREAS,
the Company desires to modify the terms of the Existing Rights Agreement in
certain respects as set forth herein, and in connection therewith, is entering
into this Amendment and directing the Rights Agent to enter into this
Amendment;

 

NOW,
THEREFORE, the parties hereto agree as follows:

 

1

 

1.
Effect of Amendment. Except as expressly provided herein, the Existing
Rights Agreement shall be and remain in full force and effect.

 

2.
Capitalized Terms. All capitalized, undefined terms used in this
Amendment shall have the meanings assigned thereto in the Existing Rights
Agreement.

 

3.
Amendment to Section 1(j). Section 1(j) of the Existing
Rights Agreement is hereby amended and restated in its entirety as follows:

 

(j) 
“‘Final Expiration Date’ shall mean April 24, 2009.”

 

4.
Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with the laws of the State of Delaware without reference
to the conflicts or choice of law principles thereof, provided, however, that all provisions regarding
the rights, duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the state of New York applicable to
contracts made and to be performed entirely within such state, without regard
to the principles or rules concerning conflicts of laws which might
otherwise require application of the substantive laws of another jurisdiction.

 

5.
Counterparts. This Amendment may be executed in separate counterparts,
each of which when executed and delivered is an original but all of which taken
together constitute one and the same instrument.

 

6.
Fax Transmission. A facsimile, telecopy or other reproduction of this
Amendment may be executed by one or more parties hereto, and an executed copy
of this Amendment may be delivered by one or more parties hereto by facsimile
or similar instantaneous electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen, and such execution and
delivery shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties hereto hereby agree to execute an
original of the Amendment as well as any facsimile, telecopy or other
reproduction thereof.

 

2

 

IN
WITNESS WHEREOF, the Company and the Rights Agent have caused this Amendment to
be duly executed as of the day first above written.

 

 

	
  WALTER ENERGY, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  
	
  Name: 

  	
  Victor
  P. Patrick

  	
   

  
	
  Title:
  

  	
  Vice
  Chairman

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MELLON INVESTOR SERVICES LLC

  	
   

  
	
  as
  Rights Agent

  	
   

  
	
   

  	
   

  
	
  By:
  

  	
  /s/

  	
   

  
	
  Name: 

  	
  Margaret
  B. Lloyd

  	
   

  
	
  Title:
  

  	
  Relationship
  Manager

  	
   

  

 

(Signature Page to Amendment No. 1 to Rights
Agreement)

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