-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DVdOSzpRp7vh2+Nthbm/jL6jLJiAG0CH4m7tHo+JPze5PsF0aJeV947g80maYOcR GtLFEOPN+8Uwm1ko7iLY5A== 0000916641-02-001317.txt : 20020814 0000916641-02-001317.hdr.sgml : 20020814 20020814152524 ACCESSION NUMBER: 0000916641-02-001317 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASSEY ENERGY CO CENTRAL INDEX KEY: 0000037748 STANDARD INDUSTRIAL CLASSIFICATION: BITUMINOUS COAL & LIGNITE MINING [1220] IRS NUMBER: 950740960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07775 FILM NUMBER: 02735744 BUSINESS ADDRESS: STREET 1: 4 NORTH 4TH STREET CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 9493492000 MAIL ADDRESS: STREET 1: 4 NORTH 4TH STREET CITY: RICHMOND STATE: VA ZIP: 23219 FORMER COMPANY: FORMER CONFORMED NAME: FLUOR CORP LTD DATE OF NAME CHANGE: 19710624 FORMER COMPANY: FORMER CONFORMED NAME: FLUOR CORP/DE/ DATE OF NAME CHANGE: 19920703 10-Q 1 d10q.txt FORM 10-Q DATED JUNE 30, 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-7775 MASSEY ENERGY COMPANY - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) Delaware 95-0740960 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 4 North 4th Street, Richmond, Virginia 23219 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (804) 788-1800 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ] As of July 31, 2002 there were 74,867,805 shares of common stock, $0.625 par value, outstanding. 1 MASSEY ENERGY COMPANY FORM 10-Q For the Quarterly Period Ended June 30, 2002
TABLE OF CONTENTS PAGE - ----------------------------------------------------------------------------------------------------------- Part I: Financial Information 3 Item 1. Condensed Consolidated Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Discussions About Market Risk 15 Part II: Other Information 15 Item 1. Legal Proceedings 15 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 17 Signatures 18
2 PART I: FINANCIAL INFORMATION ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MASSEY ENERGY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------- ----------------------- $ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS 2002 2001 2002 2001 - ---------------------------------------------------------------------------------------------------------------- Net sales $ 330,903 $ 305,026 $ 654,406 $ 617,716 Other revenue 16,829 9,969 35,159 21,273 ----------- ---------- ---------- ---------- Total revenue 347,732 314,995 689,565 638,989 Costs and expenses Cost of sales 304,764 259,293 594,599 516,886 Depreciation, depletion and amortization 50,054 45,046 96,880 90,195 Selling, general and administrative 9,961 9,391 15,362 18,582 ----------- ---------- ---------- ---------- Total costs and expenses 364,779 313,730 706,841 625,663 (Loss) Earnings before interest and taxes (17,047) 1,265 (17,276) 13,326 Interest income 676 4,150 1,664 4,946 Interest expense 8,619 9,011 16,425 19,575 ----------- ---------- ---------- ---------- Loss before taxes (24,990) (3,596) (32,037) (1,303) Income tax benefit (8,748) (1,259) (13,652) (456) ----------- ---------- ---------- ---------- Net loss $ (16,242) $ (2,337) $ (18,385) $ (847) =========== ========== ========== ========== Loss per share (Note 6) Basic $ (0.22) $ (0.03) $ (0.25) $ (0.01) =========== ========== ========== ========== Diluted $ (0.22) $ (0.03) $ (0.25) $ (0.01) =========== ========== ========== ========== Shares used to calculate loss per share (Note 6) Basic 74,445 73,927 74,397 73,680 =========== ========== ========== ========== Diluted 74,445 73,927 74,397 73,680 =========== ========== ========== ========== Dividends declared per share $ 0.04 $ 0.04 $ 0.08 $ 0.08 =========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements. 3 MASSEY ENERGY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2002 and December 31, 2001 UNAUDITED JUNE 30, DECEMBER 31, $ IN THOUSANDS 2002 2001 - ------------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $ 2,344 $ 5,544 Trade and other accounts receivable 202,232 184,347 Inventories 180,894 155,793 Deferred taxes 13,889 13,572 Income taxes receivable - 1,880 Prepaid expenses and other 88,612 97,199 ------------ ------------ Total current assets 487,971 458,335 Net Property, Plant and Equipment 1,616,622 1,619,698 Other Noncurrent Assets Pension assets 78,024 79,747 Other 116,767 108,744 ------------ ------------ Total other noncurrent assets 194,791 188,491 ------------ ------------ Total assets $ 2,299,384 $ 2,266,524 ============ ============ (Continued On Next Page) 4 MASSEY ENERGY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2002 and December 31, 2001 UNAUDITED
JUNE 30, DECEMBER 31, $ IN THOUSANDS 2002 2001 - --------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable, principally trade and bank overdrafts $ 148,131 $ 186,810 Short-term debt 330,450 263,101 Payroll and employee benefits 20,817 29,605 Income tax payable 2,381 - Other current liabilities 102,238 77,590 ------------- ------------- Total current liabilities 604,017 557,106 Long-term debt 300,000 300,000 Noncurrent liabilities Deferred taxes 230,081 239,874 Other noncurrent liabilities 339,613 321,850 ------------- ------------- Total noncurrent liabilities 569,694 561,724 Shareholders' Equity Capital Stock Preferred - authorized 20,000,000 shares without par value; none issued - - Common - authorized 150,000,000 shares of $0.625 par value; issued and outstanding - 74,866,282 and 74,773,920 shares at June 30, 2002 and December 31, 2001, respectively 46,791 46,734 Additional capital 19,668 18,559 Retained earnings 764,193 788,534 Unamortized executive stock plan expense (4,979) (6,133) ------------- ------------- Total shareholders' equity 825,673 847,694 ------------- ------------- Total liabilities and shareholders' equity $ 2,299,384 $ 2,266,524 ============= =============
See Notes to Condensed Consolidated Financial Statements. 5 MASSEY ENERGY COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended June 30, 2002 and 2001 UNAUDITED
$ IN THOUSANDS 2002 2001 - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (18,385) $ (847) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation, depletion and amortization 96,880 90,195 Deferred taxes (9,902) (3,722) Loss on disposal of assets 124 97 Changes in operating assets and liabilities (45,400) 50,081 ------------ ------------ Cash provided by operating activities 23,317 135,804 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (93,569) (114,251) Proceeds from sale of assets 4,267 4,573 ------------ ------------ Cash utilized by investing activities (89,302) (109,678) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Increase (Decrease) in short-term debt, net 67,349 (24,547) Dividends paid (5,956) (5,827) Stock options exercised 1,392 9,013 Other, net - 1,000 ------------ ------------ Cash provided (utilized) by financing activities 62,785 (20,361) ------------ ------------ (Decrease) Increase in cash and cash equivalents (3,200) 5,765 Cash and cash equivalents at beginning of period 5,544 4,381 ------------ ------------ Cash and cash equivalents at end of period $ 2,344 $ 10,146 ============ ============
See Notes to Condensed Consolidated Financial Statements. 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) General Effective January 1, 2002, Massey Energy Company ("Massey" or "the Company") changed its fiscal year-end from October 31 to December 31 to enhance the financial community's ability to analyze and compare Massey to others within the coal industry. The condensed consolidated financial statements do not include footnotes and certain financial information normally presented annually under accounting principles generally accepted in the United States and, therefore, should be read in conjunction with Massey's Annual Report on Form 10-K for the fiscal year ended October 31, 2001. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three months and six months ended June 30, 2002 are not necessarily indicative of results that can be expected for the full year. The condensed consolidated financial statements included herein are unaudited; however, they contain all adjustments (consisting of normal recurring accruals) which, in the opinion of the Company, are necessary to present fairly its consolidated financial position at June 30, 2002 and December 31, 2001, its consolidated results of operations for the three months and six months ended June 30, 2002 and 2001, and its consolidated cash flows for the six months ended June 30, 2002 and 2001, in conformity with accounting principles generally accepted in the United States. The condensed consolidated financial statements include the accounts of Massey, its wholly owned subsidiary A. T. Massey Coal Company, Inc. ("A. T. Massey") and its subsidiaries. The Company has no independent assets or operations. A. T. Massey, which fully and unconditionally guarantees the Company's obligations under the 6.95% Senior Notes due 2007, is the Company's sole direct operating subsidiary. Certain 2001 amounts have been reclassified to conform with the 2002 presentation. (2) New Accounting Standards In August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). The standard requires that retirement obligations be recorded as a liability based on the present value of the estimated cash flows. SFAS 143 is effective for fiscal years beginning after June 15, 2002, and transition is by cumulative catch-up adjustment. The Company will adopt SFAS 143 during its fiscal year 2003. The Company is currently evaluating the impact that the standard will have on its financial statements. (3) Inventories Inventories are comprised of: June 30, December 31, $ in thousands 2002 2001 ------------------------------------------------------- Coal $ 157,423 $ 132,267 Other 23,471 23,526 ------------- ------------- $ 180,894 $ 155,793 ============= ============= (4) Property, Plant and Equipment Net Property, Plant and Equipment is comprised of:
June 30, December 31, $ in thousands 2002 2001 ------------------------------------------------------------------------------------ Property, Plant and Equipment, at cost $ 2,827,763 $ 2,751,026 Accumulated depreciation, depletion and amortization (1,211,141) (1,131,328) ------------ ------------ $ 1,616,622 $ 1,619,698 ============ ============
7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (5) Short Term Debt The Company had $330.5 million of short-term debt as of June 30, 2002, of which, $330.0 million consisted of borrowings under the revolving credit facilities. At June 30, 2002 the weighted average interest rate under the credit facilities was approximately 2.91 percent. The Company has $150 million 364-day and $250 million 3-year revolving credit facilities. The $150 million 364-day facility has been renewed through November 26, 2002, however, the facility allows for the conversion of outstanding obligations at the termination date to a term loan for a one-year period. Borrowings under these facilities bear interest based on (i) the London Interbank Offer Rate (LIBOR) plus a margin, which is based on our credit rating as determined by Moody's Investors Service ("Moody's") and Standard & Poor's Ratings Service ("S&P")(ii) the Base Rate (as defined in the facility agreements), and (iii) the Competitive Bid rate (as defined in the facility agreements). The revolving credit facilities contain financial covenants requiring us to maintain various financial ratios. Failure by us to comply with these covenants could result in an event of default, which if not cured or waived could have a material adverse effect on us. The financial covenants consist of a maximum leverage ratio, a minimum interest coverage ratio, and a minimum net worth test. The leverage ratio requires that we not permit the ratio of total indebtedness at the end of any quarter to adjusted EBITDA for the four quarters then ended to exceed a specific amount. The interest coverage ratio requires that we not permit the ratio of our adjusted EBITDA to interest expense for the four quarters then ended to be less than a specified amount. The net worth test requires that we not permit our net worth to be less than a specified amount. We were in compliance with these covenants at June 30, 2002. In determining EBITDA as defined in the debt agreements for use in computing the leverage ratio, the Company has excluded certain items, including the $25.6 million reserve relative to the Harman litigation described in Note 8. The Company believes that the exclusion of such items is appropriate and has notified the lenders' Administrative Agent of this exclusion. If the accrual for the Harman litigation were to be included in the EBITDA calculation and no further adjustments were made, the Company would still be in compliance with the covenant at June 30, 2002. However, depending on future operating results, it would be possible that the Company would not be in compliance with such covenant at September 30, 2002. Excluding this matter, the Company expects to remain in compliance with these covenants in the foreseeable future. In early May 2002, Moody's and S&P downgraded our credit ratings. These ratings actions effectively prevented us from accessing the commercial paper market due to the restrictive investment policy credit guidelines of potential commercial paper investors and caused us to draw on the credit facilities for short-term financing needs. (6) Earnings Per Share The number of shares used to calculate basic loss per share for the three months and six months ended June 30, 2002 and 2001 is based on the weighted average outstanding shares of Massey Energy during the respective periods. The number of shares used to calculate diluted earnings (loss) per share is based on the number of shares used to calculate basic earnings (loss) per share plus the dilutive effect of stock options and other stock-based instruments held by Massey employees each period. In accordance with accounting principles generally accepted in the United States, the effect of dilutive securities was excluded from the calculation of the diluted loss per common share in the three months and six months ended June 30, 2002 and 2001, as such inclusion would result in antidilution. The computations for basic and diluted loss per share are based on the following per share information:
Three Months Ended Six Months Ended June 30, June 30, ------------------ ----------------- In thousands 2002 2001 2002 2001 ---------------------------------------------------------------------------------------- Average shares of common stock outstanding: Basic 74,445 73,927 74,397 73,860 Effect of stock options/restricted stock - - - - ------ ------ ------ ------ Diluted 74,445 73,927 74,397 73,860 ====== ====== ====== ======
8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (7) Appalachian Synfuel, LLC On March 15, 2001, the Company sold a substantial interest in its synfuel producing subsidiary, Appalachian Synfuel, LLC, contingent upon a favorable Internal Revenue Service ruling, which was received in September 2001. The Company received cash of $3.6 million, a recourse promissory note for $15.2 million that will be paid in quarterly installments of $765,000 plus interest, and a contingent promissory note that is paid on a cents per Section 29 credit dollar earned based on synfuel tonnage shipped. On May 9, 2002, the Company sold substantially all of its remaining interest in Appalachian Synfuel, LLC, contingent upon a favorable Internal Revenue Service ruling, which was received in June 2002. The Company received cash of $3.6 million, a recourse promissory note for $19.4 million that will be paid in quarterly installments of $1.1 million plus interest, and a contingent promissory note that is paid on a cents per section 29 credit dollar earned based on synfuel tonnage shipped. Deferred gains of $26.7 million and $11.4 million as of June 30, 2002 and December 31, 2001, respectively, are included in other noncurrent liabilities to be recognized ratably through 2007. Marfork Coal Company, Inc., a subsidiary of the Company, will continue to manage the facility under an operating agreement. (8) Other Items Affecting Net Income During the second quarter of 2002, the Company recorded a charge in the amount of $25.6 million (pre-tax) related to an adverse jury verdict in the West Virginia Harman Mining Corporation action, which was rendered on August 1, 2002 (see Note 9 for further discussion). This charge is included in cost of sales for the three month and six month periods ended June 30, 2002. During the first quarter of 2002, the Company reduced its bad debt reserves for receivables from two large bankrupt customers, Enron Corp., based on a reassessment of our total exposure, and Wheeling Pittsburgh Steel, due to a long-term repayment agreement. This positive adjustment of $5.5 million (pre-tax) is reflected in selling, general and administrative expense for the first six months of 2002. Additionally, income from a contract buyout payment from a large customer in the amount of $5.1 million (pre-tax) is included in Other Revenue for the first six months of 2002. A refund for the settlement of a state tax dispute in the amount of $2.4 million, net of federal tax, is included in income tax benefit for the first six months of 2002. (9) Contingencies and Commitments Harman Mining Corporation and certain of its affiliates (collectively "Harman") instituted two civil actions against Massey or its present or former subsidiaries. In June 1998, Harman filed a breach of contract action against Wellmore Coal Corporation ("Wellmore"), a former Massey subsidiary, in Buchanan County, Virginia Circuit Court. Harman claimed that Wellmore breached a coal supply agreement, pursuant to which Harman sold coal to Wellmore, by declaring a force majeure event and reducing the amount of coal to be purchased from Harman as a result thereof. Wellmore claimed force majeure when its major customer was forced to close its Pittsburgh coke plant due to regulatory action. At trial, a jury found that Wellmore had breached its contract and Wellmore was assessed $6 million in damages. Massey's subsidiary, Knox Creek Coal Corporation, assumed the defense of this action under the terms of the stock purchase agreement by which it sold the stock of Wellmore and, on August 6, 2001, filed a petition for appeal of the adverse determination on liability and damages to the Supreme Court of Virginia. The Supreme Court of Virginia heard the case and a decision is expected in September 2002. 9 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Additionally, Harman and its sole shareholder, Hugh Caperton, filed a separate action against Massey and certain subsidiaries in Boone County, West Virginia Circuit Court, alleging that Massey and its subsidiaries tortiously interfered with Harman's contract with Wellmore and, as a result, caused Harman to go out of business. On August 1, 2002, the jury in the case awarded the plaintiffs $50 million in compensatory and punitive damages. Massey intends to vigorously pursue post-judgment remedies, including appeal to the West Virginia Supreme Court of Appeals if necessary. An appeal to the West Virginia Supreme Court of Appeals must be filed no later than four months after a final judgment is entered by the trial court. As a result of the impoundment failure at Martin County Coal on October 11, 2000, and certain other events, the Company was unable to deliver a portion of the coal under our contracts with Duke Energy Corporation. Among other defenses, we have asserted that our inability to perform our obligations under the contracts should be excused by reason of force majeure. On December 14, 2001, Duke Energy made a demand for arbitration, disputing our claim that an event of force majeure had occurred and claiming $20.5 million in damages. The Company intends to defend this claim vigorously. On January 14, 2002, the West Virgina Division of Environmental Protection ("WVDEP") entered an order finding a pattern of violations relating to water quality and suspending operations on Marfork Coal Company, Inc.'s refuse impoundment permit for 14 days. Marfork obtained a stay of enforcement of the order pending appeal to the Surface Mine Board, which heard the appeal, and on June 27, 2002, reduced the suspension to nine days. Marfork appealed the Surface Mine Board decision to the circuit court and the suspension has been temporarily stayed pending the circuit court's decision. On April 22, 2002, WVDEP entered an order finding a pattern of violations relating to water quality and suspending Independence Coal Company's (1) preparation plant permit for 16 days, (2) Jake Gore coal refuse impoundment permit for 12 days and (3) Justice longwall permit for seven days. Independence appealed the order to the Surface Mine Board and a hearing is scheduled for August 14, 2002. The suspensions have been temporarily stayed pending the decision of the Surface Mine Board. On April 16, 2002, Appalachian Power Company, a subsidiary of American Electric Power, filed suit against us in the Franklin County, Ohio Court of Common Pleas. The suit alleges that we improperly claimed force majeure with respect to a tonnage shortfall under our agreements with Appalachian Power in 2000 and 2001. The complaint also alleged that our claim of force majeure constituted fraud, and sought to recover profits made by us on sales to other customers of the coal Appalachian Power claims should have been delivered to it. However, by order entered July 25, 2002, the Court dismissed this fraud claim. We intend to defend the remaining claims vigorously. (10) Subsequent Events On August 1, 2002, the Company received an adverse jury verdict in connection with the West Virginia Harman Mining Corporation action mentioned above in the amount of $50 million. As a result, the Company recorded a charge in the amount of $25.6 million (pre-tax) in the second quarter of 2002, which is included in cost of sales. On August 2, 2002, S&P downgraded Massey's long-term debt rating from BBB to BBB-, with a stable outlook. On August 5, 2002, a shareholder derivative complaint was filed in the Boone County, West Virginia, Circuit Court naming as defendants the Company, each of the Company's directors (including Don L. Blankenship, Chairman, President and Chief Executive Officer), James L. Gardner, Executive Vice President and Chief Administrative Officer, Jeffrey M. Jarosinski, Vice President - Finance and Chief Financial Officer, Madeleine M. Curle, Vice President - Human Relations, and Bennett K. Hatfield, former Executive Vice President and Chief Operating Officer. The complaint alleges (i) breach of fiduciary duties against all of the defendants for refusing to cause the Company to comply with environmental, labor and securities laws, and (ii) improper insider trading by Don L. Blankenship, Jeffrey M. Jarosinski, Madeleine M. Curle, and Bennett K. Hatfield. The Company intends to vigorously pursue defense of this case. 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is provided to increase understanding of, and should be read in conjunction with, the Condensed Consolidated Financial Statements and accompanying notes and the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2001 and Quarterly Reports on Form 10-Q for the periods ending December 31, 2001 (transitional report) and March 31, 2002. Unless otherwise noted herein, all references to second quarter of 2001 in the following discussion shall refer to the three months ended June 30, 2001. FORWARD-LOOKING INFORMATION - --------------------------- From time to time, we make certain comments and disclosures in reports and statements, including this report or statements made by our officers or directors which may be forward-looking in nature. Examples include statements related to our growth, the adequacy of funds to service debt and our opinions about trends and factors that may impact future operating results. These forward-looking statements could also involve, among other things, statements regarding our intent, belief or expectation with respect to (i) our results of operations and financial condition, (ii) the consummation of acquisition, disposition or financing transactions and the effect thereof on our business, and (iii) our plans and objectives for future operations and expansion or consolidation. Any forward-looking statements are subject to the risks and uncertainties that could cause actual results of operations, financial condition, cost reductions, acquisitions, dispositions, financing transactions, operations, expansion, consolidation and other events to differ materially from those expressed or implied in such forward-looking statements. Any forward-looking statements are also subject to a number of assumptions regarding, among other things, future economic, competitive and market conditions generally. These assumptions would be based on facts and conditions as they exist at the time such statements are made as well as predictions as to future facts and conditions, the accurate prediction of which may be difficult and involve the assessment of events beyond the our control. As a result, the reader is cautioned not to rely on these forward-looking statements. We wish to caution readers that forward-looking statements, including disclosures, which use words such as we "believe," "anticipate," "expect," "estimate" and similar statements, are subject to certain risks and uncertainties, which could cause actual results of operations to differ materially from expectations. Any forward-looking statements should be considered in context with the various disclosures made by us about our businesses, including without limitation the risk factors more specifically described in Item 1. Business, under the heading "Business Risks", in our Annual Report on Form 10-K for its fiscal year ended October 31, 2001. Such filings are available publicly and upon request from Massey's Investor Relations Department: (866) 814-6512. We disclaim any intent or obligation to update our forward-looking statements. RESULTS OF OPERATIONS - --------------------- Three months ended June 30, 2002 compared with the three months ended June 30, - ------------------------------------------------------------------------------ 2001. - ----- For the three months ended June 30, 2002, net sales increased 8 percent to $330.9 million in 2002 compared with $305.0 million for the three months ended June 30, 2001. Two factors that impacted net sales for the second quarter of 2002 compared to the second quarter of 2001 were: . The volume of tons sold decreased 7 percent from 11.1 million tons to 10.3 million tons, attributable to a reduction in metallurgical and industrial tons sold of 12 and 19 percent, respectively; and . The average per ton sales price for coal increased 16 percent from $27.53 per ton to $32.06 per ton consisting of increases of 19, 14, and 18 percent of the prices for utility, metallurgical and industrial coal, respectively. Realized prices for our tonnage sold in the second quarter of 2002 reflect some of the improvement seen in the market during 2001, as spot market prices of Central Appalachian coal increased to 20-year highs, and we were able to obtain sales commitments at relatively higher prices. However, demand for coal remained weak during the second quarter of 2002, due to the lack of growth in the economy, soft steel demand and the unusually mild weather that prevailed in the Eastern United States during the winter. 11 Other revenue, which consists of royalties, rentals, miscellaneous income and gains on the sale of non-strategic assets, increased to $16.8 million for the second quarter of 2002 from $10.0 million for the second quarter of 2001. The increase was primarily due to increased earnings related to the operations of Appalachian Synfuel, LLC. Cost of sales increased approximately 18 percent to $304.8 million for the second quarter of 2002 from $259.3 million for the second quarter of 2001. Cost of sales on a per ton of coal sold basis increased by 26 percent in the second quarter of 2002 compared with the second quarter of 2001. These increases were due to a charge taken in the second quarter of 2002 in the amount of $25.6 million (pre-tax) related to an adverse jury verdict in the West Virginia Harman Mining Corporation action, as well as the reduction in tons sold, lower productivity at several of our longwall and room and pillar mining operations, and higher wage levels. Costs of sales for the second quarter of 2001 was also partially offset by a $6.5 million (pre-tax) refund related to black lung excise taxes paid on coal export sales tonnage. Tons produced in the second quarter of 2002 were 11.0 million compared to 11.7 million in the second quarter of 2001. Depreciation, depletion and amortization increased by approximately 11 percent to $50.1 million in the second quarter of 2002 compared to $45.0 million for the second quarter of 2001. The increase of $5.1 million was primarily due to capital expenditures made in 2001 in an effort to increase production. Selling, general and administrative expenses were $10.0 million for the second quarter of 2002 compared to $9.4 million for the second quarter of 2001. The increase was primarily attributable to increases in accruals related to long-term executive compensation programs and costs of legal services. Earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA"), was $33.0 million for the second quarter of 2002 compared to $46.3 million for the second quarter of 2001. Interest income decreased to $0.7 million for the second quarter of 2002 compared to $4.2 million for the second quarter of 2001. This decrease is due to $3.2 million (pre-tax) of interest income in the second quarter of 2001 for interest due on the black lung excise tax refund. Interest expense decreased to $8.6 million for the second quarter of 2002 compared with $9.0 million for the second quarter of 2001. The lower interest expense was primarily due to the decrease in interest rates in the short-term debt markets, as seen in our weighted average rates for short-term debt of 2.91 percent at June 30, 2002 compared to 4.23 percent at June 30, 2001. Income tax benefit was $8.7 million for the second quarter of 2002 compared with income tax benefit of $1.3 million for the second quarter of 2001. This reflects the increase in the loss before taxes in the three months ended June 30, 2002 compared to the loss before taxes for the same three-month period ended June 30, 2001. Six months ended June 30, 2002 compared with the six months ended June 30, 2001. - -------------------------------------------------------------------------------- For the six months ended June 30, 2002, net sales increased 6 percent to $654.4 million in 2002 compared with $617.7 million for the six months ended June 30, 2001. Two factors that impacted net sales for the first six months of 2002 compared to the first six months of 2001 were: . The volume of tons sold decreased 9 percent from 22.8 million tons to 20.8 million tons, attributable to a reduction in metallurgical and industrial tons sold of 22 and 16 percent, respectively; and . The average per ton sales price for coal increased 16 percent from $27.11 per ton to $31.42 per ton consisting of increases of 16, 18, and 22 percent of the prices for utility, metallurgical and industrial coal, respectively. Realized prices for our tonnage sold in the first six months of 2002 reflected the improvement seen in the market during 2001, as spot market prices of Central Appalachian coal increased to 20-year highs, and we were able to obtain sales commitments at relatively higher prices. However, during the first six months of 2002 the soft economic environment, weak steel demand and unusually mild weather during the winter significantly reduced demand for all grades of coal. Other revenue, which consists of royalties, rentals, miscellaneous income and gains on the sale of non-strategic assets, increased to $35.2 million for the first six months of 2002 from $21.3 million for the first six months of 2001. The increase was primarily due to a contract buyout payment from a large customer of approximately $5.1 million, as well as increased earnings related to the operations of Appalachian Synfuel, LLC. Cost of sales increased approximately 15 percent to $594.6 million for the first six months of 2002 from $516.9 million for the first six months of 2001. Cost of sales on a per ton of coal sold basis increased by 26 percent in the first six months of 2002 compared with the first six months of 2001. These increases were due to a charge taken in the second quarter of 2002 in the amount of $25.6 million (pre-tax) related to an adverse jury verdict in the West Virginia Harman Mining Corporation action, as well as the reduction in tons sold, lower 12 productivity at several of our longwall and room and pillar mining operations, and higher wage levels. During 2001, we increased staffing levels in order to increase production. However, due to the market weakness, we reduced total workforce during the first quarter of 2002 by approximately 7 percent and idled 15 continuous miner sections. Cost of sales for the first six months of 2001 was also partially offset by a $6.5 million (pre-tax) refund related to black lung excise taxes paid on coal export sales tonnage. Tons produced in the first six months of 2002 were 22.8 million compared to 23.3 million in the first six months of 2001. Depreciation, depletion and amortization increased by approximately 7 percent to $96.9 million in the first six months of 2002 compared to $90.2 million for the first six months of 2001. The increase of $6.7 million was primarily due to capital expenditures made in 2001 in an effort to increase production. Selling, general and administrative expenses were $15.4 million for the first six months of 2002 compared to $18.6 million for the first six months of 2001. The decrease was primarily attributable to reductions in bad debt reserves for receivables from two large bankrupt customers, Enron Corp. and Wheeling Pittsburgh Steel, totaling $5.5 million on a pre-tax basis. These reductions were offset by increases in accruals related to long-term executive compensation programs and costs of legal services. Earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA"), was $79.6 million for the first six months of 2002 compared to $103.5 million for the first six months of 2001. Interest income decreased to $1.7 million for the first six months of 2002 compared with $4.9 million for the first six months of 2001. This decrease is due to $3.2 million (pre-tax) of interest income in the first six months of 2001 for interest due on the black lung excise tax refund. Interest expense decreased to $16.4 million for the first six months of 2002 compared with $19.6 million for the first six months of 2001. The lower interest expense was primarily due to the decrease in interest rates in the short-term debt markets, as seen in our weighted average rates for short-term debt of 2.91 percent at June 30, 2002 compared to 4.23 percent at June 30, 2001. Income tax benefit was $13.7 million for the first six months of 2002 compared with income tax benefit of $0.5 million for the first six months of 2001. This reflects a refund in the first six months of 2002 for the settlement of a state tax dispute in the amount of $2.4 million, net of federal tax. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS - --------------------------------------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts. These estimates and assumptions are based on information available as of the date of the financial statements. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three months and six months ended June 30, 2002 are not necessarily indicative of results that can be expected for the full year. Please refer to the Critical Accounting Estimates and Assumptions of the Management's Discussion and Analysis of Financial Condition and Results of Operation section of the Quarterly Report on Form 10-Q for the period ended March 31, 2002, for a discussion of our critical accounting estimates and assumptions. Capitalized Development Costs Development costs applicable to the opening of new coal mines and certain mine expansion projects are capitalized and reported in property, plant and equipment. We periodically assess the continuing economic viability of capitalized development costs. We are currently assessing the future operating potential of several coal mines that were recently placed in idled status in light of the weak coal market. This assessment includes a consideration of the future operating cashflows from such idled mines as measured using various potential operating plans and market assumptions of future coal demand and prices. At the conclusion of this review, it may be necessary to write off all or a portion of the capitalized development costs associated with one or more of these mines. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At June 30, 2002 our available liquidity was $72.3 million, including cash and cash equivalents of $2.3 million and $70.0 million from our revolving credit facilities. We had $330.5 million of short-term debt as of June 30, 2002, of which, $330.0 million consisted of borrowings under the revolving credit facilities. On November 30, 2000, the date of the Spin-Off, we entered into $150 million 364-day and $250 million 3-year revolving credit facilities, which have been guaranteed by A. T. Massey. The $150 million 364-day facility has been renewed through November 26, 2002. Borrowings under these facilities bear interest based on (i) the London Interbank Offer Rate (LIBOR) plus a margin, which is based on our credit rating as determined by Moody's and S&P, national rating agencies, (ii) the Base Rate (as defined in the facility agreements), and (iii) the Competitive Bid rate (as defined in the facility agreements). The revolving credit facilities contain financial covenants requiring us to maintain various financial ratios. Failure by us to comply with these covenants could result in an event of default, which if not cured or waived could have a material adverse effect on us. The financial covenants consist of a maximum leverage ratio, a minimum interest coverage ratio, and a minimum net worth test. The leverage ratio requires that we not permit the ratio of total indebtedness at the end of any quarter to adjusted EBITDA for the four quarters then ended to exceed a specific amount. The interest coverage ratio requires that we not permit the ratio of our adjusted EBITDA to interest expense for the four quarters then ended to be less than a specified amount. The net worth test requires that we not permit our net worth to be less than a specified amount. We were in compliance with these covenants at June 30, 2002. The total debt-to-book capitalization ratio was 43.3 percent at June 30, 2002. 13 In determining EBITDA as defined in the debt agreements for use in computing the leverage ratio, the Company has excluded certain items, including the $25.6 million reserve relative to the Harman litigation described in Note 8. The Company believes that the exclusion of such items is appropriate and has notified the lenders' Administrative Agent of this exclusion. If the accrual for the Harman litigation were to be included in the EBITDA calculation and no further adjustments were made, the Company would still be in compliance with the covenant at June 30, 2002. However, depending on future operating results, it would be possible that the Company would not be in compliance with such covenant at September 30, 2002. Excluding this matter, the Company expects to remain in compliance with these covenants in the foreseeable future. Cash flow provided by operating activities was $23.3 million and $135.8 million for the first six months of 2002 and 2001, respectively. Cash provided by operating activities reflects net earnings adjusted for non-cash charges and changes in working capital requirements. Net cash utilized by investing activities was $89.3 million and $109.7 million for the first six months of 2002 and 2001, respectively. The cash used in investing activities reflects capital expenditures in the amount of $93.6 million and $114.2 million for the first six months of 2002 and 2001, respectively. These capital expenditures are for replacement of mining equipment, the expansion of mining and shipping capacity, and projects to improve the efficiency of mining operations. In addition to the cash spent on capital expenditures, during first six months of 2002, we leased, through operating leases, $10.6 million of primarily surface mining equipment compared to $39.8 million for the first six months of 2001. Additionally, the first six months of 2002 and 2001 included $4.3 million and $4.6 million, respectively, of proceeds provided by the sale of assets. Financing activities primarily reflect changes in short term financing for the first six months of 2002 and 2001, as well as the exercising of stock options. Net cash provided (utilized) by financing activities was $62.8 million and ($20.4) million for the first six months of 2002 and 2001, respectively. We have historically funded our operations, working capital requirements and capital expenditures through a combination of cash flow from operations and borrowings from the commercial paper market. In early May 2002, Moody's and S&P downgraded our credit ratings. These ratings actions have effectively prevented us from accessing the commercial paper market for our short-term funding needs due to the restrictive investment policy credit guidelines of potential commercial paper investors. As a result, we are relying on borrowings under our revolving credit facilities, which bear interest at higher rates than our commercial paper, for our short-term liquidity needs. We believe that cash generated from operations and borrowings, which we expect to be available from our credit facilities, will be sufficient to meet our debt service, capital expenditures and working capital requirements for the foreseeable future. Our $150 million 364-day facility expires on November 26, 2002, however, the facility allows for the conversion of outstanding obligations at the termination date to a term loan for a one-year period. We have begun efforts to put in place a replacement credit facility and anticipate closing that transaction within the next 60 days. In the event we are not able to complete the successful establishment of the replacement facility, we may need to seek alternative sources for capital. INFLATION - --------- Inflation in the United States has been relatively low in recent years and did not have a material impact on our results of operations for the periods presented. NEW ACCOUNTING STANDARDS - ------------------------- On August 15, 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations". The standard will require that retirement obligations be recorded as a liability based on the present value of the estimated cash flows. SFAS 143 is effective for fiscal years beginning after June 15, 2002 and transition is by cumulative catch-up adjustment. We are currently evaluating the impact that the standard will have on our financial statements. 14 OUTLOOK - ------- Given the weak market conditions that prevailed throughout the first half of 2002, we have revised our sales expectations for 2002 to 44 to 45 million tons, approximately the same as in fiscal 2001. Virtually all of this tonnage is committed for 2002, with contract prices at significantly higher rates than in fiscal 2001. A variety of initiatives have been put in place to address the higher costs per ton we have experienced during the first six months of the year. Item 3: QUANTITATIVE AND QUALITATIVE DISCUSSIONS ABOUT MARKET RISK Our interest expense is sensitive to changes in the general level of interest rates in the United States. At June 30, 2002, we had outstanding $300 million aggregate principal amount of long-term debt under fixed-rate instruments; however, our primary exposure to market risk for changes in interest rates relates to our short-term debt financing. At June 30, 2002, we had $330.0 million outstanding under the revolving credit facilities. At June 30, 2002 the weighted average interest rate under the credit facilities was approximately 2.91 percent. Based on the short-term debt balance outstanding at June 30, 2002, a 100 basis point increase in the average issuance rate for our borrowings would increase our annual interest expense by approximately $3.3 million. Almost all of our transactions are denominated in U.S. dollars, and, as a result, we do not have material exposure to currency exchange-rate risks. We have not engaged in any interest rate, foreign currency exchange rate or commodity price-hedging transactions. PART II: OTHER INFORMATION Item 1. Legal Proceedings The following describes material developments in legal proceedings affecting us, as previously described in Item 3, "Legal Proceedings," in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2001, and Quarterly Reports on Form 10-Q for the periods ending December 31, 2001 (transitional report) and March 31, 2002, as they relate to the fiscal quarter ended June 30, 2002. On August 5, 2002, a shareholder derivative complaint was filed in the Boone County, West Virginia, Circuit Court naming as defendants the Company, each of the Company's directors (including Don L. Blankenship, Chairman, President and Chief Executive Officer), James L. Gardner, Executive Vice President and Chief Administrative Officer, Jeffrey M. Jarosinski, Vice President - Finance and Chief Financial Officer, Madeleine M. Curle, Vice President - Human Relations, and Bennett K. Hatfield, former Executive Vice President and Chief Operating Officer. The complaint alleges (i) breach of fiduciary duties against all of the defendants for refusing to cause the Company to comply with environmental, labor and securities laws, and (ii) improper insider trading by Don L. Blankenship, Jeffrey M. Jarosinski, Madeleine M. Curle and Bennett K. Hatfield. The Company intends to vigorously pursue defense of this case. The Company previously reported certain litigation pending in Boone County, West Virginia, Circuit Court, in which Harman Mining Corporation and certain of its affiliates (collectively "Harman"), and Harman's sole shareholder, Hugh Caperton, alleged that Massey and certain of its subsidiaries tortiously interfered with Harman's coal supply contract with Wellmore Coal Corporation (a former Massey subsidiary) and caused Harman to go out of business. On August 1, 2002, the jury in the case awarded the plaintiffs $50 million in compensatory and punitive damages. Massey intends to vigorously pursue post-judgment remedies, including appeal to the West Virginia Supreme Court of Appeals if necessary. An appeal to the West Virginia Supreme Court must be filed no later than four months after a final judgment is entered by the trial court. The Company continued discussions with various Kentucky and West Virginia agencies in connection with notices of violation relating to the October 11, 2000, partial failure of Martin County Coal Corporation's coal refuse impoundment. On July 31, 2002, Martin County settled the claims set forth in Kentucky's notices of violation by agreeing to pay approximately $3.25 million in penalties, costs and damages. On July 18, 2002, a West Virginia circuit court ruled that West Virginia is preempted by the Federal Clean Water Act from assessing penalties against Martin County. 15 On January 2, 2002, the West Virginia Division of Environmental Protection ("WVDEP") entered an order finding a pattern of violations relating to water quality and suspending an idled Green Valley Coal Company refuse area permit for three days. Green Valley obtained a stay of the order and appealed to the West Virginia Surface Mine Board (the "Surface Mine Board"), where the order was overturned on June 7, 2002. On February 14, 2002, WVDEP entered an order finding a pattern of violations relating to water quality and suspending another idled Green Valley refuse area permit for 30 days. Green Valley obtained a stay of the order pending appeal to the Surface Mine Board. On April 9, 2002, the Board upheld the 30-day suspension, but modified parts of the order at Green Valley's request. Green Valley elected not to appeal the order as modified. On January 14, 2002, WVDEP entered an order finding a pattern of violations relating to water quality and suspending operations on Marfork Coal Company, Inc.'s refuse impoundment permit for 14 days. Marfork obtained a stay of enforcement of the order pending appeal to the Surface Mine Board, which heard the appeal, and on June 27, 2002, reduced the suspension to nine days. Marfork appealed the Surface Mine Board decision to the circuit court and the suspension has been temporarily stayed pending the circuit court's decision. On January 19, 2002, WVDEP issued an order to Peerless Eagle Coal Co. to show cause why its permit for a surface mine should not be suspended or revoked due to an alleged pattern of violations relating to water quality. The hearing to show cause that was originally scheduled for May 21, 2002 has been postponed and has not yet been rescheduled. On April 22, 2002, WVDEP entered an order finding a pattern of violations relating to water quality and suspending Independence Coal Company's (1) preparation plant permit for 16 days, (2) Jake Gore coal refuse impoundment permit for 12 days and (3) Justice longwall permit for seven days. Independence appealed the order to the Surface Mine Board and a hearing is scheduled for August 14, 2002. The suspensions have been temporarily stayed pending the decision of the Surface Mine Board. On April 29, 2002, WVDEP issued an order to Majestic Mining, Inc. to show cause why its permit for an underground mine, which has been inactive since 1988, should not be suspended or revoked due to an alleged pattern of violations relating to water quality. Majestic requested a hearing to show cause but the hearing has not yet been scheduled. Investigations into various water quality violations, including those described above, are continuing and may result in additional sanctions against us. In addition, the Company and its subsidiaries, incident to their normal business activities, are parties to a number of other legal and regulatory proceedings in various stages of development. While the Company cannot predict the outcome of these proceedings, based on reports of counsel, the facts now known to the Company, assuming the reasonableness of any ultimate outcome (which, in our opinion, was not reflected in the jury award in the Harman case), and also assuming reasonable coverage decisions by the Company's insurance carriers, the Company does not believe that any liability arising from these proceedings individually or in the aggregate should have a material adverse affect upon the consolidated financial position, cash flows or results of operations of the Company. Item 5. Other Information a) On August 21, 2001, the Kentuckians for the Commonwealth, an environmental group, sued the U.S. Army Corps of Engineers alleging that the Corps of Engineers lacks the authority under its regulations pursuant to the Clean Water Act to issue permits for valley fills in the waters of the United States. While neither the Company nor its subsidiaries is a party to this litigation, virtually all mining operations (including ours) utilize valley fills to dispose of excess materials mined during coal production. The EPA and the Corps of Engineers published a rule on May 9, 2002 designed to clarify that the Corps of Engineers has the authority to issue permits for valley fills in the waters of the United States. However, on May 8, 2002, prior to the rule being published, the United States District Court in this litigation entered an order holding that the Corps of Engineers is prohibited by the Clean Water Act from issuing permits for valley fills in waters of the United States and holding that the EPA and the Corps of Engineers are without authority under the Clean Water Act to issue any rule giving the Corps of Engineers such authority. The order enjoins the Corps of Engineers from issuing any permits for valley fills in waters of the United States. The Corps of Engineers and industry intervenors moved for a stay of the ruling pending an appeal; the District Court denied 16 the motion for stay on June 17, 2002. The Corps of Engineers and industry intervenors have appealed the order to the Fourth Circuit Federal Court of Appeals. b) On August 1, 2002, James L. Gardner resigned from the Board of Directors in connection with his acceptance on July 1, 2002, of the position of Massey's Executive Vice President and Chief Administrative Officer, and accordingly, the Bylaws of the Company were amended to reduce the required number of directors by one. c) The employment agreement between the Company and Don L. Blankenship was amended and restated on July 16, 2002 to provide that (i) the number of "shadow stock" units received annually by Mr. Blankenship as part of his compensation is subject to review and approval by the Board prior to the commencement of each annual vesting period and (ii) if Mr. Blankenship resigns from his employment at any time after October 31, 2002 and prior to October 31, 2004, he shall provide consulting services to the Company on an exclusive, full-time basis for six months after the date of such resignation and shall receive as compensation the compensation payable to him had he remained in the Company's employment through the next succeeding October 31. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 3.1 Restated Bylaws (as amended effective August 1, 2002) of Massey Energy Company 10.1 Amended and Restated Employment Agreement between Massey Energy Company, A. T. Massey Coal Company, Inc. and Don L. Blankenship dated as of November 1, 2001 [amending and restating on July 16, 2002, the Employment Agreement between Massey Energy Company, A. T. Massey Coal Company, Inc. and Don L. Blankenship dated as of November 1, 2001] 99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K. Form 8-K filed on August 2, 2002, reporting jury verdict in press release attached thereto Form 8-K filed on August 13, 2002, reporting an adjustment to second quarter earnings in press release attached thereto Form 8-K filed on August 14, 2002, containing Statements of Oath of Principal Executive and Principal Financial Officers Regarding Facts and Circumstances Relating to Exchange Act Filings 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MASSEY ENERGY COMPANY ------------------------------- (Registrant) Date: August 14, 2002 /s/ J. M. Jarosinski ------------------------------- J. M. Jarosinski, Vice President - Finance and Chief Financial Officer /s/ E. B. Tolbert ------------------------------- E. B. Tolbert, Controller 18 EX-3.1 3 dex31.txt EXHIBIT 3.1 Exhibit 3.1 RESTATED BYLAWS (as amended as of August 1, 2002) OF MASSEY ENERGY COMPANY (a Delaware corporation) ARTICLE I OFFICES Section 1.01 Registered Office. The registered office of MASSEY ENERGY COMPANY (hereinafter called the "Corporation") in the State of Delaware shall be at 9 East Loockerman Street, City of Dover, County of Kent, and the name of the registered agent at that address shall be National Registered Agents, Inc. Section 1.02 Principal Office. The principal office for the transaction of the business of the Corporation shall be at Four North Fourth Street, Richmond, Virginia 23219. The Board of Directors (hereinafter called the "Board") is hereby granted full power and authority to change said principal office from one location to another. Section 1.03 Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board may from time to time determine or as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 2.01 Annual Meetings. Annual meetings of the stockholders of the Corporation for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings may be held at such time, date and place as the Board shall determine by resolution. Section 2.02 Special Meetings. Special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time by the Board, or by a committee of the Board which has been duly designated by the Board and whose powers and authority, as provided in a resolution of the Board or in the Bylaws, include the power to call such meeting, but such special meetings may not be called by any other person or persons; provided, however, that if and to the extent that any special meetings of stockholders may be 1 called by any other person or persons specified in any provisions of the Certificate of Incorporation or any amendment thereto or any certificate filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time hereafter), then such special meeting may also be called by the person or persons, in the manner, at the times and for the purposes so specified. Section 2.03 Place of Meetings. All meetings of the stockholders shall be held at such places, within or without the State of Delaware, as may from time to time be designated by the person or persons calling the respective meeting and specified in the respective notices or waivers of notice thereof. Section 2.04 Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation who complies with the notice procedures set forth in this Section 2.04. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal office of the Corporation, not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the books of the Corporation, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2.04. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.04, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 2.05 Notice of Meetings. Except as otherwise required by law, notice of each meeting of the stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him or her personally, or by 2 depositing such notice in the United States mail, in a postage prepaid envelope, directed to him or her at his or her post office address furnished by him or her to the Secretary of the Corporation for such purpose or, if he or she shall not have furnished to the Secretary his or her address for such purposes, then at his or her post office address last known to the Secretary, or by transmitting a notice thereof to him or her at such address by telegraph, cable or wireless. Except as otherwise expressly required by law, no publication of any notice of a meeting of the stockholders shall be required. Every notice of a meeting of the stockholders shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the purpose or purposes for which the meeting is called. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall have waived such notice and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise expressly required by law, notice of any adjourned meeting of the stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken. Section 2.06 Quorum. Except in the case of any meeting for the election of directors summarily ordered as provided by law, the holders of record of a majority in voting interest of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the stockholders of the Corporation or any adjournment thereof. In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time. At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called. Section 2.07 Voting. (a) Each stockholder shall, at each meeting of the stockholders, be entitled to vote in person or by proxy each share or fractional share of the stock of the Corporation having voting rights on the matter in question and which shall have been held by him or her and registered in his or her name on the books of the Corporation: (i) on the date fixed pursuant to Section 6.05 of the Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting, or (ii) if no such record date shall have been so fixed, then (a) at the close of business on the day next preceding the day on which notice of the meeting shall be given or (b) if 3 notice of the meeting shall be waived, at the close of business on the day next preceding the day on which meeting shall be held. (b) Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he or she shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his or her proxy, may represent such stock and vote thereon. Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or with respect to which two or more persons have the same fiduciary relationship, shall be voted in accordance with the provisions of the General Corporation Law of the State of Delaware. (c) Any such voting rights may be exercised by the stockholder entitled thereto in person or by his or her proxy appointed by an instrument in writing, subscribed by such stockholder or by his or her attorney thereunto authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date unless said proxy shall provide for a longer period. The attendance at any meeting of a stockholder who may theretofore have given a proxy shall not have the effect of revoking the same unless he or she shall in writing so notify the secretary of the meeting prior to the voting of the proxy. At any meeting of the stockholders all matters, except as otherwise provided in the Certificate of Incorporation, in the Bylaws or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat and thereon, a quorum being present. The vote at any meeting of the stockholders on any question need not be by ballot, unless so directed by the chairman of the meeting. On a vote by ballot each ballot shall be signed by the stockholder voting, or by his or her proxy, if there be such proxy, and it shall state the number of shares voted. Section 2.08 List of Stockholders. The Secretary of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the entire duration thereof, and may be inspected by any stockholder who is present. 4 Section 2.09 Judges. If at any meeting of the stockholders a vote by written ballot shall be taken on any question, the chairman of such meeting may appoint a judge or judges to act with respect to such vote. Each judge so appointed shall first subscribe an oath faithfully to execute the duties of a judge at such meeting with strict impartiality and according to the best of his or her ability. Such judges shall decide upon the qualification of the voters and shall report the number of shares represented at the meeting and entitled to vote on such question, shall conduct and accept the votes, and, when the voting is completed shall ascertain and report the number of shares voted respectively for and against the question. Reports of the judges shall be in writing and subscribed and delivered by them to the Secretary of the Corporation. The judges need not be stockholders of the Corporation, and any officer of the Corporation may be a judge on any question other than a vote for or against a proposal in which he or she shall have a material interest. ARTICLE III BOARD OF DIRECTORS Section 3.01 General Powers. The property, business and affairs of the Corporation shall be managed by the Board. Section 3.02 Number. The authorized number of directors of the Corporation shall be seven and such authorized number shall not be changed except by a Bylaw or amendment thereof duly adopted by the stockholders in accordance with the Certificate of Incorporation or by the Board amending this Section 3.02. Section 3.03 Election of Directors. The directors shall be elected by the stockholders of the Corporation, and at each election the persons receiving the greatest number of votes, up to the number of directors then to be elected, shall be the persons then elected. The election of directors is subject to any provisions contained in the Certificate of Incorporation relating thereto, including any provisions for a classified board and for cumulative voting. Section 3.04 Notice of Stockholder Nominees. Only persons who are nominated in accordance with the procedures set forth in the Bylaws shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 3.04. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall 5 be delivered to or mailed and received at the principal office of the Corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to be named in the proxy statement as a nominee and to serve as a director if elected); and (b) as to the stockholder proposing such nomination (i) the name and address, as they appear on the books of the Corporation, of such stockholder, and (ii) the class and number of shares of the Corporation which are beneficially owned by such stockholder. At the request of the Board of Directors any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in the Bylaws. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the Bylaws, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded. Section 3.05 Mandatory Retirement. Each director of the Corporation serving at age 78 shall retire from the Board at the end of the calendar year in which his or her 78th birthday occurs unless such retirement age shall be waived by the unanimous vote of the directors. For purposes of this Section, "end of the calendar year" shall include the period ending with the seventh day of January next following. Section 3.06 Resignations. Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3.07 Vacancies. Except as otherwise provided in the Certificate of Incorporation, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, may be filled by vote of the majority of the remaining directors, although less than a quorum. Each director so chosen to fill a vacancy shall hold office until his or her successor shall have been elected and shall qualify or until he or she shall resign or shall have been removed. 6 Section 3.08 Place of Meeting, etc. The Board may hold any of its meetings at such place or places within or without the State of Delaware as the Board may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting. Directors may participate in any regular or special meeting of the Board by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board can hear each other, and such participation shall constitute presence in person at such meeting. Section 3.09 First Meeting. The Board shall meet as soon as practicable after each annual election of directors and notice of such first meeting shall not be required. Section 3.10 Regular Meetings. Regular meetings of the Board may be held at such times as the Board shall from time to time by resolution determine. If any day fixed for a meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting shall be held at the same hour and place on the next succeeding business day not a legal holiday. Except as provided by law, notice of regular meetings need not be given. Section 3.11 Special Meetings. Special meetings of the Board may be called at any time by the Chairman of the Board or the President or by any two directors, to be held at the principal office of the Corporation, or at such other place or places, within or without the State of Delaware, as the person or persons calling the meeting may designate. Notice of all special meetings of the Board shall be given to each director by two days' service of the same by telegram, by letter, or personally. Such notice may be waived by any director and any meeting shall be a legal meeting without notice having been given if all the directors shall be present thereat or if those not present shall, either before or after the meeting, sign a written waiver of notice of, or a consent to, such meeting or shall after the meeting sign the approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or be made a part of the minutes of the meeting. Section 3.12 Quorum and Manner of Acting. Except as otherwise provided in the Bylaws or by law, the presence of a majority of the authorized number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such. 7 Section 3.13 Action by Consent. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or such committee. Section 3.14 Compensation. No stated salary need be paid directors, as such, for their services, but, by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board or an annual directors' fee may be paid; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefore. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 3.15 Committees. The Board may, by resolution passed by the Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Except as otherwise provided in the Board resolution designating a committee, the presence of a majority of the authorized number of members of such committee shall be required to constitute a quorum for the transaction of business at any meeting of such committee. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have any power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of the dissolution, or amending the Bylaws of the Corporation; and unless the resolution of the Board expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board. Section 3.16 Officers of the Board. The Board shall have a Chairman of the Board and may, at the discretion of the Board, have a Vice Chairman and other officers. The Chairman of the Board and the Vice Chairman shall be appointed from time to time by the Board, unless such positions are elected offices of the Corporation, currently filled, and shall have such powers and duties as shall be designated by the Board. 8 ARTICLE IV OFFICERS Section 4.01 Officers. The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a Secretary, a Treasurer and such other officers as may be appointed by the Board as the business of the Corporation may require. Officers shall have such powers and duties as are permitted or required by law or as may be specified by or in accordance with resolutions of the Board. Any number of offices may be held by the same person. Unless the Board shall otherwise determine, the Chairman of the Board shall be the Chief Executive Officer of the Corporation. In the absence of any contrary determination by the Board, the Chief Executive Officer shall, subject to the power and authority of the Board, have general supervision, direction and control of the officers, employees, business and affairs of the Corporation. Section 4.02 Election and Term. The officers of the Corporation shall be elected annually by the Board. The Board may at any time and from time to time elect such additional officers as the business of the Corporation may require. Each officer shall hold his or her office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Section 4.03 Removal and Resignation. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board. Any officer may resign at any time by giving notice to the Board. Such resignation shall take effect at the time specified in such notice or, in the absence of such specification, at the date of the receipt by the Board of such notice. Unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Section 4.04 Vacancies. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled in the manner prescribed in these Bylaws for the regular appointment to such office. ARTICLE V CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. Section 5.01 Execution of Contracts. The Board, except as in the Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by the Bylaws, no officer, agent or employee shall have any power or authority to bind the 9 Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount. Section 5.02 Checks, Drafts, etc. All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each such person shall give such bond, if any, as the Board may require. Section 5.03 Deposit. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the Chief Executive Officer, the President or the Treasurer (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation. Section 5.04 General and Special Bank Accounts. The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of the Bylaws, as it may deem expedient. ARTICLE VI SHARES AND THEIR TRANSFER Section 6.01 Certificates for Stock. Every owner of stock of the Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board shall prescribe, certifying the number and class of shares of the stock of the Corporation owned by him or her. The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the President and by the Secretary. Any or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall thereafter have ceased to be such officer, transfer agent or registrar 10 before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue. A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation the respective dates of cancellation. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.04 of the Bylaws. Section 6.02 Transfers of Stock. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his or her attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer clerk or a transfer agent appointed as provided in Section 6.03 of the Bylaws, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact shall be stated expressly in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. Section 6.03 Regulations. The Board may make such rules and regulations as it may deem expedient, not inconsistent with the Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them. Section 6.04 Lost, Stolen, Destroyed, And Mutilated Certificates. In any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. Section 6.05 Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in 11 respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If, in any case involving the determination of stockholders for any purpose other than notice of or voting at a meeting of stockholders, the Board shall not fix such a record date, the record date for determining stockholders for such purpose shall be the close of business on the day on which the Board shall adopt the resolution relating thereto. A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. ARTICLE VII MISCELLANEOUS Section 7.01 Seal. The Board shall provide a corporate seal, which shall be in the form of a circle and shall bear the name of the Corporation and words and figures showing that the Corporation was incorporated in the State of Delaware and the year of incorporation. Section 7.02 Waiver of Notices. Whenever notice is required to be given by the Bylaws or the Certificate of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice. Section 7.03 Fiscal Year. The fiscal year of the Corporation shall end on the 31st day of December of each year. Section 7.04 Amendments. The Bylaws, or any of them, may be rescinded, altered, amended or repealed, and new Bylaws may be made, (i) by the Board, by vote of a majority of the number of directors then in office as directors, acting at any meeting of the Board, or (ii) by the vote of the holders of not less than 80% of the total voting power of all outstanding shares of voting stock of the Corporation, at any annual meeting of stockholders, without previous notice, or at any special meeting of stockholders, provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of special meeting. Any Bylaws made or altered by the stockholders may be altered or repealed by the Board or may be altered or repealed by the stockholders. 12 EX-10.1 4 dex101.txt EXHIBIT 10.1 Exhibit 10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), entered into as of November 1, 2001, by and between MASSEY ENERGY COMPANY ("Parent"), A.T. MASSEY COAL COMPANY, INC., ("Massey"), and DON L. BLANKENSHIP (the "Executive"). WITNESSETH: WHEREAS, Parent and Massey desire to retain the experience, abilities and service of the Executive upon the terms and conditions specified herein; and WHEREAS, the Executive is willing to provide such services upon the terms and conditions specified herein; and WHEREAS, the parties previously entered into an Employment Agreement, as previously amended and restated (the "Prior Agreement"), effective as of November 1, 2001; and WHEREAS, the parties desire to amend and restate the Prior Agreement as set forth in this Agreement; NOW, THEREFORE, in consideration of the premises, the terms and provisions set forth herein, the mutual benefits to be gained by the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Employment. Parent and Massey hereby offer employment to the Executive and the Executive hereby accepts such offers, all upon the terms and conditions set forth herein. SECTION 2. Term. Subject to the terms and conditions of this Agreement, the Executive shall be employed by Parent and Massey commencing on November 1, 2001, (the "Effective Date") and terminating on April 30, 2005, (the "Primary Term") unless sooner terminated pursuant to Section 5 of this Agreement. SECTION 3. Duties and Responsibilities. A. Capacity. The Executive shall serve as Chairman and Chief Executive Officer of Parent and Massey. The Executive shall perform the duties ordinarily expected of a Chairman and Chief Executive Officer and shall also perform such other duties consistent therewith as the Organization and Compensation Committee of Parent's Board of Directors (the "Committee") from time to time, reasonably determines. B. Full-Time Duties. The Executive shall devote his full business time, attention and energies to the business of Parent and Massey. Notwithstanding anything herein to the contrary, the Executive shall be allowed to (a) manage the Executive's personal investments and affairs, and (b)(i) serve on boards or committees of civic or charitable organizations or trade associations, and (ii) with the permission of the Committee, serve on the board of directors of any corporation or as an advisory director of any corporation; provided that such activities do not interfere with the proper performance of his duties and responsibilities specified in Section 3(A). SECTION 4. Compensation. A. Base Salary. During the term of this Agreement, the Executive shall receive a salary (the "Base Salary") of $1,000,000 per annum. The Base Salary shall be payable by Massey in accordance with the general payroll practices of Massey in effect from time to time. B. Annual Incentive Bonus. The Executive shall be eligible for an annual bonus pursuant to the Massey Energy Company 1999 Executive Performance Incentive Plan ("PIP") with a target amount of at least $700,000, $800,000, $900,000 and $450,000, based upon company performance for fiscal years ending in 2002, 2003, 2004 and 2005, respectively. The bonus amounts will be paid in installments on August 15 and February 15 between Massey and the Executive. The following table shows the target payment amounts and payment dates for each fiscal year's performance: --------------------------------------------------------------------------- FYE August 15 February 15 TOTAL --------------------------------------------------------------------------- 2002 $350,000 $350,000 $700,000 --------------------------------------------------------------------------- 2003 $400,000 $400,000 $800,000 --------------------------------------------------------------------------- 2004 $450,000 $450,000 $900,000 --------------------------------------------------------------------------- 2005 $450,000 N/A $450,000 --------------------------------------------------------------------------- The bonus payments will be based on the financial performance of Parent, Massey or both for each of the stated fiscal years. There will be predetermined performance goals and objectives established and mutually agreed to by the Committee and the Executive. The award payments will be made in accordance with standard Massey practices. C. Long Term Incentive Award. The Executive shall participate in Parent's Long Term Incentive Program. The Executive will participate in the fiscal year 2002, 2003, 2004 and 2005 performance cycles. The Long Term Incentive Award for each cycle shall consist of a target cash award of $300,000 (except for the four month fiscal 2005 performance cycle for which the target cash award shall be $150,000). The amount payable under each Long Term Incentive Award may range up to 2 times the target level as determined by the Committee in a manner consistent with Massey's established Long Term Incentive Program based on predetermined performance of Parent, Massey or both over the performance cycle. Each of the cash awards will be evidenced by an Award Agreement between Parent and the Executive pursuant to the PIP. The Long Term Incentive Program will also consist of annual grants of 50,000 non-qualified stock options, 12,700 shares of restricted stock, and a cash bonus equal to the fair market value of 7,300 shares of Parent stock (except for the four month fiscal 2005 performance cycle the Long Term Incentive Program will consist of 25,000 non-qualified stock options, 6,350 2 shares of restricted stock and a cash bonus equal to the fair market value of 3,650 shares of Parent stock). Each of the stock options will be evidenced by an Award Agreement between Parent and the Executive pursuant to the Massey Energy Company 1996 Executive Stock Plan (the "ESP") or the PIP and each of the restricted stock grants and the cash bonuses will be evidenced by an Award Agreement between Parent and the Executive pursuant to the PIP. D. Shadow Stock. Subject to the following terms and conditions, the Executive shall be granted units of shadow stock ("Units") pursuant to the Massey Energy Company 1982 Shadow Stock Plan (the "Shadow Plan"), and such Units shall vest, at the time and in the amounts set forth in the following table: Date of Grant Vesting Date Number of Units November 1, 2001 October 31, 2002 300,000 Units November 1, 2002 October 31, 2003 300,000 Units November 1, 2003 October 31, 2004 300,000 Units November 1, 2004 April 30, 2005 150,000 Units Notwithstanding the foregoing, these grants will become effective only if the Committee affirmatively authorizes such grant at a meeting prior to November 1 of each year and the Committee may in its sole discretion, at any time prior to the granting of Units pursuant to this Section 4(D) alter the number of such Units to be granted and/or condition the vesting of such Units on the performance of such criteria as the Committee shall elect. In the event the Executive remains continuously employed by Parent or Massey until the applicable vesting date, then all restrictions on the Units shall expire and the Units shall vest. On each date that Units vest in accordance with the foregoing table, the then value of the Units will thereupon be credited to the Executive's account in the Massey Executive Deferred Compensation Program. In the event the Executive's employment with Parent and Massey terminates prior to the expiration of the Primary Term and following a "Change of Control" (as such term is hereinafter defined) or if the Executive's employment is terminated by Parent or Massey for reasons which do not constitute "Cause" as defined herein, then any Units which have not vested in accordance with the foregoing table shall be vested as of such termination date and all restrictions on the Units will expire and the then value of the Units will thereupon be credited to the Executive's account in the Massey Executive Deferred Compensation Program. Subject to the provisions of Section 7 below, in the event the Executive's employment with Parent and Massey terminates prior to the expiration of the Primary Term for any reason other than those set forth in the preceding sentence, then all of the Executive's rights in the Units which have not previously vested in accordance with the foregoing table shall terminate as of the date of termination, and all rights thereunder shall cease. The Units will be evidenced by a Shadow Stock Agreement between Parent and the Executive. E. Stock Appreciation Rights (SARs). As of the Effective Date, the Executive shall be granted units of Stock Appreciation Rights (SARs) pursuant to the Massey Energy Company 1997 Stock Appreciation Rights Plan (the "SAR Plan"). The number of shares awarded shall be 3 787,500. All restrictions on the SARs will expire and the then value of the SARs will thereupon be credited to Executive's account in the Massey Executive Deferred Compensation Program in the event that the Executive remains continuously employed by Parent or Massey from the Effective Date until the applicable vesting date in accordance with the following table: Vesting Date Number of SARs October 31, 2002 225,000 SARs October 31, 2003 225,000 SARs October 31, 2004 225,000 SARs April 30, 2005 112,500 SARs In addition, all restrictions on the SARs will expire and the then value of the SARs will thereupon be credited to the Executive's account in the Massey Executive Deferred Compensation Plan in the event that the Executive's employment with Parent and Massey terminates prior to the expiration of the Primary Term following a "Change of Control" (as such term is hereinafter defined) or the Executive's employment is terminated by Parent or Massey for reasons which do not constitute "Cause" as defined herein. Subject to the provisions of Section 7 below, in the event that the Executive's employment with Parent and Massey terminates prior to the expiration of the Primary Term for any reason other than those set forth in the preceding sentence, then all of the Executive's rights in the SARs which have not previously vested in accordance with the foregoing table shall terminate as of the date of termination, and all rights thereunder shall cease. The SARs shall have a ten-year term from the Effective Date, subject to earlier expiration in accordance with the plan documents. The SARs will be evidenced by an SAR Agreement between Parent and the Executive. F. Retention Stock Award. A subaccount, denominated as the "Retention Stock Account" will be established for the Executive under the Massey Executive Deferred Compensation Plan. As of the Effective Date, the Retention Stock Account will be credited with the then value of 350,000 shares of Parent stock. The Executive's interest in the Retention Stock Account will vest on April 30, 2005 if the Executive remains in the continuous employ of Parent or Massey from the Effective Date until April 30, 2005. In addition Executive's interest in the Retention Stock Account will vest on the date of the Executive's termination of employment if the Executive's employment with Parent and Massey terminates prior to April 30, 2005 and following a "Change in Control" (as such term is hereinafter defined) or if the Executive's employment is terminated by Parent or Massey for reasons which do not constitute "Cause" as defined herein. In the event that the Executive's employment with Parent and Massey terminates prior to April 30, 2005 due to death or permanent and total disability as defined by Massey personnel policy, then the Executive will vest in a pro rata interest in the Retention Stock Account in accordance with the following table and the portion of the Retention Stock Account which does not vest shall terminate and be forfeited: 4 ------------------------------------------------------------------------ Date of Death Pro rata Portion or Disability to be Vested ------------------------------------------------------------------------ November 1, 2001 through 2/7 October 31, 2002 ------------------------------------------------------------------------ November 1, 2002 through 4/7 October 31, 2003 ------------------------------------------------------------------------ November 1, 2003 through 6/7 October 31, 2004 ------------------------------------------------------------------------ On or after November 1, 2004 7/7 ------------------------------------------------------------------------ Except as provided in the three preceding sentences, the Executive's interest in the Retention Stock Account shall terminate and be forfeited if the Executive's employment with Parent and Massey terminates prior to April 30, 2005. The value of the Retention Stock Account shall be determined based on the value of the Parent stock as if the amount credited thereto was invested in Parent stock and received dividends and other distributions thereon to the same extent as if it was invested in Parent stock. G. Retention Cash Award. The Executive's account in the Massey Executive Deferred Compensation Plan will be credited with $400,000 on each of October 31, 2002, October 31, 2003 and October 31, 2004 and an additional $200,000 on April 30, 2005. All restrictions on such amounts and the bookkeeping earnings thereon shall lapse on April 30, 2005 if the Executive remains in the continuous employ of Parent or Massey from the Effective Date until April 30, 2005. In the event the Executive's employment with Parent and Massey terminates prior to April 30, 2005 and following a "Change in Control" (as such term is hereinafter defined) or if the Executive's employment is terminated by Parent or Massey for reasons which do not constitute "Cause" as defined herein, then the date for the addition any credits to the Massey Executive Deferred Compensation Plan referred to in the first sentence of this paragraph shall be accelerated to such termination date and all restrictions on all such amounts (including amounts credited before the termination date) and the bookkeeping earnings thereon shall lapse as of such termination date. In the event that the Executive's employment with Parent and Massey terminates prior to April 30, 2005 due to death or permanent and total disability as defined by Massey personnel policy, all restrictions shall lapse on amounts scheduled to be credited to the Executive's account in the Massey Executive Deferred Compensation Plan on or before the Executive's termination date and the bookkeeping earnings thereon. In the event that the Executive's employment with Parent and Massey terminates prior to April 30, 2005 for any reason other than those set forth in the two preceding sentences, then all of the Executive's rights with respect to amounts credited or to be credited to the Executive's account in the Massey Executive Deferred Compensation Plan pursuant to the first sentence of this paragraph shall terminate as of the date of such termination of employment. H. Life Insurance Policy. The Executive's rights under the $4,000,000 split dollar life insurance policies or program owned by Parent and in force on the Effective Date shall be vested if the Executive remains in the continuous employ of the Parent or Massey from the Effective 5 Date until April 30, 2005 or, if earlier, the termination of the Executive's employment (x) following a "Change in Control" (as such term is hereinafter defined), (y) by Parent or Massey for reasons which do not constitute "Cause" as defined herein or (z) due to death or permanent and total disability as defined by Massey's personnel policy. The Executive's rights under the $4,000,000 split dollar life insurance policies or program owned by Parent and in force on the Effective Date shall be determined without regard to this paragraph if the Executive's employment with Parent and Massey terminates before April 30, 2005 for a reason other than those set forth in items (z), (y) or (z) of the preceding sentence. SECTION 5. Termination of Employment. Notwithstanding the provisions of Section 2, the Executive's employment hereunder may terminate under any of the following conditions: A. Death. The Executive's employment under this Agreement shall terminate automatically upon his death. B. Disability. The Executive's employment under this Agreement may be terminated due to his Disability. "Disability" shall mean permanent and total disability as defined by Massey personnel policy. C. Termination by Company for Cause. The Executive's employment hereunder may be terminated for Cause by Parent or Massey. For purposes of this Agreement, "Cause" means: (1) willful and persistent failure by the Executive to reasonably perform his duties: (2) conviction of a misdemeanor involving moral turpitude which materially affects the Executive's ability to perform his duties hereunder or materially adversely affects the Executive's, the Parent's or Massey's reputation or conviction of a felony; (3) material dishonesty, defalcation, or embezzlement or misappropriation of corporate assets or opportunities; or (4) any material default by the Executive in the performance of any covenants or agreements of the Executive set forth in this Agreement. Any termination of the Executive's employment for Cause under this Section 5(C) shall be authorized by the Parent's Board of Directors (the "Board"). The Executive shall be given notice by the Board specifying in detail the particular act or failure to act on which the Board is relying in proposing to terminate him for Cause and offering the Executive an opportunity, on a date at least 1 day after the receipt of such notice, to have a hearing, with counsel, before the Board. 6 SECTION 6. Change of Control. A. Upon the Executive's termination of employment for any reason (including, by way of example and not of limitation, the Executive's death or permanent and total disability as defined by Massey personnel policy),within two years following a Change of Control, as defined below, any restrictions on any stock option, restricted stock, stock appreciation right, Unit or other equity-based incentive provided under the PIP, ESP, the SAR Plan, the Shadow Plan or any other plan of Parent (a "Stock Plan") shall lapse immediately. B. Upon the Executive's termination of employment for any reason (including, by way of example and not of limitation, the Executive's death or disability as defined by Massey personnel policy), within two years following a Change of Control, as defined below, the Executive's account in the Massey Executive Deferred Compensation Plan shall be credited with any credits accelerated in accordance with Section 4(G) and the Executive shall be vested in his rights under the split dollar life insurance policies or program in accordance with Section 4(H). C. A Change of Control shall have the meaning set forth in the PIP as of the Effective Date, or any definition that is more favorable to the Executive that is set forth in any subsequent Stock Plan or that is approved by the Board for the benefit of Massey's senior executives. SECTION 7. Voluntary Termination A. Notwithstanding any other provisions of this Agreement, if Executive voluntarily terminates his employment with Massey at any time after October 31, 2002 and prior to October 31, 2004, Executive's rights with respect to the compensation described in paragraphs A, B, C, D, E and H of Section 4 of this Agreement shall be determined, and Executive shall receive such compensation, as if Executive terminated his employment as of the next succeeding October 31 after the actual date of his termination of employment (the "Deemed Termination Date"). B. In consideration of the foregoing and without any further compensation, Executive shall, for a period of six months after the actual date of his termination of employment, provide to Parent and Massey such advice and other consulting services as Parent or Massey shall request. During such six month period, Executive shall make himself available to Parent and Massey on a full-time basis and shall not enter into any employment, consulting or other business arrangement with any competitor or potential competitor of Parent or Massey. SECTION 8. Payments Upon Termination. A. Upon termination of the Executive's employment for any reason prior to the expiration of the Primary Term, Parent and/or Massey shall be obligated to pay, and the Executive shall be entitled to receive: (1) all accrued and unpaid Base Salary under Section 4(A) to the date of termination; (2) any unpaid bonus under Section 4(B) or long-term incentive award under Section 4(C) for the fiscal year or performance cycle ending prior to the date of termination; 7 provided that if such termination occurs after October 31 of a calendar year, such unpaid bonus or long-term incentive award shall accrue as of October 31; (3) any benefits to which he is entitled under the terms of the Massey Executive Deferred Compensation Program, the Long Term Incentive Program, and any other applicable employee pension or benefit plan or program, or applicable law. B. Upon termination of the Executive's employment by Parent or Massey without Cause pursuant to Section 5(C), Parent and/or Massey shall be obligated to pay and the Executive shall be entitled to receive: (1) all of the amounts and benefits described in Section 8(A); (2) Base Salary under Section 4(A) for the remainder of the Primary Term, as if there had been no termination; (3) annual bonuses under Section 4(B)for the remainder of the Primary Term equal to the target bonus for each such fiscal year, such bonuses to be paid at the same time annual bonuses are regularly paid by Massey to him; (4) accelerated vesting of Units of shadow stock and corresponding credits to the Executive's account under the Massey Executive Deferred Compensation Plan in accordance with Section 4(D); (5) accelerated vesting of SARs and corresponding credits to the Executive's account under the Massey Executive Deferred Compensation Plan in accordance with Section 4(E); (6) accelerated vesting of the Executive's interest in the Retention Stock Account in accordance with Section 4(F); (7) accelerated credits to the Executive's account under the Massey Executive Deferred Compensation Plan in accordance with Section 4(G) and accelerated vesting of such amounts; (8) accelerated vesting of the Executive's rights under the split dollar life insurance policy in accordance with Section 4(H). C. Upon termination of the Executive's employment on account of the Executive's death or permanent and total disability as defined by Massey personnel policy, Parent and/or Massey shall be obligated to pay, and the Executive shall be entitled to receive: (1) all of the amounts and benefits described in Section 8(A); (2) accelerated vesting of a pro rata interest in the Retention Stock Account in accordance with Section 4(F); 8 (3) accelerated credits to the Executive's account in the Massey Executive Deferred Compensation Plan in accordance with Section 4(G) and accelerated vesting of such amounts; (4) accelerated vesting of the Executive's rights under the split dollar life insurance policy in accordance with Section 4(H). D. Upon voluntary termination of employment by Executive as set forth in Section 7, Parent and/or Massey shall be obligated to pay and the Executive shall be entitled to receive: (1) all of the amounts and benefits described in Section 8(A); (2) base salary under Section 4(A) for the remaining period through the Deemed Termination Date; (3) annual bonuses under Section 4(B), if any, for the remaining period through the Deemed Termination Date; (4) vesting of any long-term incentive awards under Section 4(C) that would have vested had Executive's employment with Parent or Massey continued through the Deemed Termination Date; (5) vesting of any Units of shadow stock and corresponding credits to the Executive's account under the Massey Executive Deferred Compensation Plan in accordance with Section 4(D) that would have vested had Executive's employment with Parent or Massey continued through the Deemed Termination Date, except that, in lieu of credits to the Massey Executive Deferred Compensation Plan, the value of such Units will be paid within 15 days of such vesting; (6) vesting of SARs and corresponding credits to the Executive's account under the Massey Executive Deferred Compensation Plan in accordance with Section 4(E) that would have vested had Executive's employment with Parent or Massey continued though the Deemed Termination Date, except that, in lieu of credits to the Massey Executive Deferred Compensation Plan, the value of such SARs will be paid within 15 days of such vesting; and (7) a determination of the Executive's rights under the split dollar life insurance policy as described in Section 4(H) as though Executive's employment with Parent or Massey had terminated on the Deemed Termination Date. E. In the event of any termination of employment under this Section 8, the Executive shall be under no obligation to seek other employment, and there shall be no offset against amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. SECTION 9. Amendment; Waiver. The terms and provisions of this Agreement may be modified or amended only by a written instrument executed by . each of the parties hereto, and compliance with the terms and provisions hereof may be waived only by a written instrument executed by each Party entitled to the benefits thereof. No failure or delay on the part of any 9 party in exercising any right, power or privilege granted hereunder shall constitute a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege granted hereunder. SECTION 10. Entire Agreement. Except as contemplated herein, this Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior written or oral agreements, arrangements of understandings between Parent, Massey and the Executive with respect thereto; provided, however, that this Agreement shall not affect or impair in any way the rights and obligations of Parent and Executive under the Special Successor Development and Retention Program established in August, 1998. SECTION 11. Notices. All notices or communications hereunder shall be in writing, addressed as follows or to any ddress subsequently provided to the other party: To Parent: Massey Energy Company Attention: Chief Legal Officer 4 North 4/th/ Street Richmond, VA 23219 To Massey: A. T. Massey Coal Company, Inc. Attention: Chief Legal Officer 4 North 4/th/ Street Richmond, VA 23219 To the Executive: Don Blankenship P.O. Box 895 Matewan, WV 25678 All such notices shall be conclusively deemed to be received and shall be effective, (i) if sent by hand delivery or overnight courier, upon receipt, (ii) if sent by telecopy or facsimile transmission, upon confirmation of receipt by the sender of such transmission or (iii) if sent by registered or certified mail, on the fifth day after the day on which such notice is mailed. SECTION 12. Severability. In the event that any term or provision of this Agreement is found to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining terms and provisions hereof shall not be in any way affected or impaired thereby, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained therein. SECTION 13. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns (it being understood and agreed that, except as expressly provided herein, nothing contained in this Agreement is 10 intended to confer upon any other person or entity any rights, benefits or remedies of any kind or character whatsoever). No rights or obligations of Parent or Massey under this Agreement may be assigned or transferred by Parent or Massey except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which Parent or Massey is not the continuing entity, or the sale or liquidation as described of all or substantially all of the assets of Parent or Massey, provided that the assignee or transferee is the successor to all or substantially all of the assets of Parent or Massey and such assignee or transferee assumes the liabilities, obligations and duties of Parent or Massey, as contained in this Agreement, either contractually or as a matter of law. Parent and Massey further agree that, in the event of a sale of assets or liquidation as described in the preceding sentence, each shall take whatever action it legally can in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of Parent or Massey hereunder. In the event of the sale, liquidation, consolidation, or merger of Massey or substantially all the assets of Massey in which Parent does not retain an ownership interest of more than 50%, Parent agrees to guarantee payment to Executive of all amounts due under this or related agreements referenced herein. SECTION 14. Governing Law; Dispute Resolution. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia (except that no effect shall be given to any conflicts of law principles thereof that would require the application of the laws of another jurisdiction). Any dispute or misunderstanding arising out of or in connection with this Agreement shall first be settled, if possible, by the parties themselves through negotiation and, failing success at negotiation through mediation, and failing success at mediation, shall be arbitrated at Richmond, Virginia. Unless otherwise agreed upon by Massey and the Executive, the arbitration shall be had before three arbitrators, each party designating an arbitrator and the two designees naming a third arbitrator experienced in employment related controversies. The procedure shall be in accordance with the rules and regulations of the American Arbitration Association. SECTION 15. Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement. SECTION 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11 IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date set forth above. MASSEY ENERGY COMPANY By: __________________________________ A.T. MASSEY COAL COMPANY, INC. By: ___________________________________ Executive: _______________________________________ Donald L. Blankenship 12 EX-99.1 5 dex991.txt EXHIBIT 99.1 Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Massey Energy Company (the "Company") for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Don L. Blankenship, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Don L. Blankenship - ---------------------- Don L. Blankenship August 14, 2002 EX-99.2 6 dex992.txt EXHIBIT 99.2 Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Massey Energy Company (the "Company") for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey M. Jarosinski, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Jeffrey M. Jarosinski - ------------------------- Jeffrey M. Jarosinski August 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----