AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION VERSION

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

BETWEEN

ALPHA NATURAL RESOURCES, INC.

AND

FOUNDATION COAL HOLDINGS, INC.

Dated as of May 11, 2009

TABLE OF CONTENTS

 

 

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Glossary of Defined Terms

 

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of May 11, 2009, by and between Alpha Natural Resources, Inc., a Delaware corporation (“ Alpha ”) and Foundation Coal Holdings, Inc., a Delaware corporation (“ Foundation ”).

RECITALS

WHEREAS, the board of directors of Foundation (the “ Foundation Board ”) has unanimously (i) determined that it is in the best interests of Foundation and the stockholders of Foundation, and declared it advisable, to enter into this Agreement with Alpha providing for the merger of Alpha with and into Foundation, with Foundation continuing as the surviving corporation, under the name Alpha Natural Resources, Inc. (the “ Merger ”) in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), upon the terms and subject to the conditions set forth herein, (ii) approved this Agreement in accordance with the DGCL, upon the terms and subject to the conditions set forth herein, and (iii) resolved to recommend adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the stockholders of Foundation;

WHEREAS, the board of directors of Alpha (the “ Alpha Board ”) has by the unanimous approval of those directors in attendance (i) determined that it is in the best interests of Alpha and the stockholders of Alpha, and declared it advisable, to enter into this Agreement with Foundation providing for the Merger in accordance with the DGCL, upon the terms and subject to the conditions set forth herein, (ii) approved this Agreement in accordance with the DGCL, upon the terms and subject to the conditions set forth herein, and (iii) resolved to recommend adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the stockholders of Alpha;

WHEREAS, for United States federal income tax purposes, it is intended that the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), and any comparable provisions of state or local law, and this Agreement is intended to be and is adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code; and

WHEREAS, Alpha and Foundation desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

THE MERGER

Section 1.1     The Merger; Effects of the Merger .  Upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL, at the Effective Time (as defined below), Alpha shall be merged with and into Foundation. As a result of the Merger, the separate corporate existence of Alpha shall cease and Foundation shall continue as the surviving corporation of the Merger (the “ Surviving Corporation ”). The Merger shall have the effects set forth herein and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of Foundation and Alpha shall vest in the Surviving Corporation and all debts, liabilities and duties of Foundation and Alpha shall become the debts, liabilities and duties of the Surviving Corporation.

Section 1.2     Consummation of the Merger .

(a)      Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated hereby (the “ Closing ,” and the date on which the Closing occurs, the “ Closing Date ”) will take place at 10:00 a.m., New York time, as promptly as practicable, but in no event later than the third Business Day, after the satisfaction or waiver (by the party entitled to grant such waiver) of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at the Closing), at the offices of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006 or at such other place or on such other date or time as Alpha and Foundation may mutually agree.

(b)      On the Closing Date and subject to the terms and conditions hereof, Alpha and Foundation shall cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware (the “ Secretary of State ”) a duly executed certificate of merger (the “ Certificate of Merger ”), as required by the DGCL, and shall take all such further actions as may be required by Law to make the Merger effective. The date and time of the filing of the Certificate of Merger with the Secretary of State (or such later date and time as shall be agreed to by the parties hereto and is specified in the Certificate of Merger) is referred to as the “ Effective Time .”

Section 1.3     Certificate of Incorporation; Bylaws .

(a)      At the Effective Time, the certificate of incorporation of Foundation shall, by virtue of the Merger, be amended and restated in its entirety to read as set forth on Annex A hereto and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with its terms and as provided by Law (subject to Section 5.9(a)). The name of the Surviving Corporation shall be amended in the Merger to be Alpha Natural Resources, Inc.

 

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(b)      At the Effective Time, the bylaws of Foundation shall, by virtue of the Merger, be amended and restated in their entirety as set forth on Annex B hereto and, as so amended, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with their terms and the certificate of incorporation of the Surviving Corporation and as provided by Law (subject to Section 5.9(a)).

Section 1.4     Directors and Officers .

(a)      Alpha and Foundation shall use their respective commercially reasonable efforts, in accordance with their respective certificates of incorporation and bylaws, effective as of immediately prior to the Effective Time, but subject to the occurrence of the Effective Time, to (i) cause the size of their respective boards of directors to be expanded to 10 directors, (ii) cause to be removed from their respective boards of directors (A) in the case of Alpha, the three individuals from the Alpha Board as constituted on the date hereof that are selected by a joint committee comprised of those individuals set forth on Section 1.4(a) of the Alpha Disclosure Schedule and those individuals set forth on Section 1.4(a) of the Foundation Disclosure Schedule (the “ Joint Committee ”) prior to the initial filing of the Form S-4 and Joint Proxy Statement with the SEC and (B) in the case of Foundation, the five individuals from the Foundation Board as constituted on the date hereof that are selected by the Joint Committee prior to the initial filing of the Form S-4 and Joint Proxy Statement with the SEC, and (iii) cause to be appointed to their respective boards of directors in such a manner as shall (A) cause the persons so appointed to constitute “Continuing Directors” under the terms of the indenture governing Alpha’s 2.375% Convertible Senior Notes due 2015 (as such indenture has been amended or supplemented from time to time) and (B) cause, at the Effective Time, a majority of the seats (other than vacant seats) on the Foundation Board to, as of such time, be occupied by persons who were nominated by the Foundation Board and/or appointed by directors so nominated under the terms of the Foundation Loan Agreement (1) in the case of Alpha, the four individuals (the “ Foundation Director Designees ”) from the Foundation Board as constituted on the date hereof that are selected by the Joint Committee (at least three of whom shall be independent under the applicable rules of the NYSE) prior to the initial filing of the Form S-4 and Joint Proxy Statement with the SEC (or if such individuals shall have declined to serve, such other individuals from the Foundation Board as constituted on the date hereof as designated by the Joint Committee) and (2) in the case of Foundation, the six individuals (the “ Alpha Director Designees ”) from the Alpha Board as constituted on the date hereof that are selected by the Joint Committee prior to the initial filing of the Form S-4 and Joint Proxy Statement with the SEC (or if such individuals shall have declined to serve, such other individuals from the Alpha Board as constituted on the date hereof as designated by the Joint Committee). The result of the foregoing shall be that, as of immediately prior to the Effective Time and subject to the occurrence of the Effective Time, the Alpha Board and the Foundation Board will each be comprised of ten members, six of which members shall be Alpha Director Designees and four of which members shall be Foundation Director Designees. If there are changes to the composition of the Alpha Board or the Foundation Board after the

 

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date hereof and before the Effective Time such that the foregoing provisions of this Section 1.4(a) are incapable of being fulfilled at the Effective Time, then the Joint Committee shall agree upon the composition of an Alpha Board and a Foundation Board, as of immediately prior to the Effective Time, that shall consist of six individuals from the Alpha Board, as constituted prior to the Effective Time, and four individuals from the Foundation Board, as constituted prior to the Effective Time, and shall cause such individuals to be appointed to their respective boards of directors in such a manner as shall have the consequences set forth in subclauses (A) and (B) of clause (iii) above in this Section 1.4(a).

(b)      (i) The Alpha Director Designees and the Foundation Director Designees or such other individuals from the Alpha Board and the Foundation Board selected pursuant to and in accordance with Section 1.4(a) shall comprise the board of directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation, (ii) subject to Section 1.4(c), the officers of Alpha immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be, and (iii) following the Effective Time, the Surviving Corporation shall take all actions necessary to ensure that the Foundation Director Designees are included in the slate of candidates recommended by the board of directors of the Surviving Corporation for election to the board of directors of the Surviving Corporation at the 2010 annual stockholders meeting of the Surviving Corporation (or, if such Foundation Director Designees decline to consent to such nominations, such other individuals designated by the Foundation Director Designees). It is understood that each such director on the board of directors of the Surviving Corporation, as of the Effective Time, shall serve until the earlier of his or her resignation or removal or until his or her successor is duly elected or qualified.

(c)      At the Effective Time, the board of directors of the Surviving Corporation shall use its commercially reasonable efforts to elect Michael J. Quillen as Chairman of the board of directors of the Surviving Corporation, to hold such office until the earlier of his resignation or removal or until his successor is duly elected and qualified. At the Effective Time, the board of directors of the Surviving Corporation shall use its commercially reasonable efforts to elect Kevin S. Crutchfield as Chief Executive Officer of the Surviving Corporation, to hold such office until the earlier of his resignation or removal or until his successor is duly elected and qualified. At the Effective Time, the board of directors of the Surviving Corporation shall use its commercially reasonable efforts to elect Kurt D. Kost as President of the Surviving Corporation, to hold such office until the earlier of his resignation or removal or until his successor is duly elected and qualified. At the Effective Time, the board of directors of the Surviving Corporation shall use its commercially reasonable efforts to elect the individual specified in Section 1.4(c) of the Foundation Disclosure Schedule as Chairman of the Nominating and Corporate Governance Committee of the Surviving Corporation, to hold such office until the earlier of his resignation or removal or until his successor is duly elected and qualified.

 

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Section 1.5     Conversion of Shares .

(a)      Each share (each, a “ Share ” and collectively the “ Shares ”) of common stock, par value $0.01, of Foundation (the “ Foundation Common Stock ”) issued and outstanding immediately prior to the Effective Time (other than Shares owned by Alpha or any Subsidiary of Alpha, all of which shall be cancelled without any consideration being exchanged therefor) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted at the Effective Time into the right to receive 1.0840 (the “ Exchange Ratio ”) fully paid and nonassessable shares of common stock, par value $0.01, of the Surviving Corporation (“ Surviving Corporation Common Stock ”) (the “ Foundation Merger Consideration ”), upon the surrender of the certificate or book-entry representing such Shares as provided in Section 2.1. At the Effective Time all such Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of any such Shares shall cease to have any rights with respect thereto, except the right to receive the Foundation Merger Consideration as provided herein, any dividends or other distributions payable pursuant to Section 2.1(c) and cash in lieu of fractional shares payable pursuant to Section 1.6.

(b)      Each share of common stock, par value $0.01, of Alpha (“ Alpha Common Stock ”) issued and outstanding immediately prior to the Effective Time (other than Shares owned by Foundation or any Subsidiary of Foundation, all of which shall be cancelled without any consideration being exchanged therefor) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted at the Effective Time into and become one share of Surviving Corporation Common Stock (the “ Alpha Merger Consideration ”). Without any action on the part of holders of Alpha Common Stock, all outstanding certificates and book-entries representing Alpha Common Stock shall, from and after the Effective Time, represent a number of shares of Surviving Corporation Common Stock equal to the number of shares of Alpha Common Stock represented thereby immediately prior to the Effective Time.

Section 1.6     Fractional Shares .  No fraction of a share of Surviving Corporation Common Stock will be issued by virtue of the Merger, but in lieu thereof each holder of Shares who would otherwise be entitled to a fraction of a share of Surviving Corporation Common Stock (after aggregating all shares of Surviving Corporation Common Stock that otherwise would be received by such holder) shall, upon surrender of such holder’s Certificates or Book-Entry Shares, receive from the Surviving Corporation an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of: (i) the fractional share interest (after aggregating all shares of Surviving Corporation Common Stock that would otherwise be received by such holder) which such holder would otherwise receive, multiplied by (ii) the average closing price of one share of Alpha Common Stock on the New York Stock Exchange (“ NYSE ” for the five trading days ending on the last trading day immediately prior to the Closing Date, as such price is reported on the NYSE Composite Transaction Tape (as reported by Bloomberg Financial Markets or such other source as the parties shall agree in writing prior to the Effective Time).

Section 1.7     Subsequent Actions .  If at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to continue, vest, perfect or confirm of record or otherwise the Surviving Corporation’s right, title or interest in, to or under any of the rights, properties, privileges, franchises or assets of Foundation or Alpha as a result of,

 

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or in connection with, the Merger, or otherwise to carry out the intent of this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of Foundation or Alpha, as applicable, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of Foundation or Alpha, as applicable, or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties, privileges, franchises or assets in the Surviving Corporation or otherwise to carry out the intent of this Agreement.

ARTICLE II

EXCHANGE OF SHARES AND CERTIFICATES; EQUITY AWARDS

Section 2.1     Exchange of Shares and Certificates; Procedures .

(a)      Prior to the Effective Time, Alpha shall engage, or shall cause to be engaged, an institution selected by Alpha and reasonably acceptable to Foundation ( provided that Alpha’s transfer agent shall be deemed reasonably satisfactory to Foundation) to act as exchange agent in connection with the Merger (the “ Exchange Agent ”). Immediately prior to the Effective Time, Foundation will deposit with the Exchange Agent, in trust for the benefit of the holders of Shares immediately prior to the Effective Time, certificates representing the shares of Surviving Corporation Common Stock issuable to holders of Shares pursuant to Section 1.5. The Surviving Corporation will also make available to the Exchange Agent, as needed from time to time after the Effective Time, cash in amounts sufficient to make the payments in lieu of fractional shares pursuant to Section 1.6 and any dividends or distributions to which holders of Shares may be entitled pursuant to Section 2.1(c). All cash and certificates representing shares of Surviving Corporation Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the “ Exchange Fund .” The cash included in the Exchange Fund shall be invested by the Exchange Agent in such manner as the Surviving Corporation shall direct; provided that (i) no such investment or losses thereon shall affect the amounts payable to former stockholders of Foundation after the Effective Time pursuant to this Article II, and (ii) such investments shall be in short-term obligations of the United States of America with maturities of no more than 30 days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively. Any interest or income produced by such investments will be payable to the Surviving Corporation. The Exchange Fund shall not be used for any purpose other than to fund payments due pursuant to Sections 1.5 and 1.6 and this Section 2.1.

(b)      As soon as reasonably practicable after the Effective Time and in no event later than five Business Days following the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each record holder, as of the Effective Time, of (i) a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (the “ Certificates ”) or (ii) Shares represented by book-entry (“ Book-Entry Shares ”), a

 

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form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter of transmittal) and instructions for use in effecting the surrender of the Certificates or, in the case of Book-Entry Shares, the surrender of such Shares, in exchange for (x) certificates (or uncertificated shares in book-entry form) representing whole shares of Surviving Corporation Common Stock, (y) cash in lieu of any fractional shares pursuant to Section 1.6 and (z) any dividends or other distributions payable pursuant to Section 2.1(c). Following surrender to the Exchange Agent of a Certificate or Book-Entry Share, together with such letter of transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Share will be entitled to receive in exchange therefor (1) a certificate representing that number of whole shares of Surviving Corporation Common Stock (after taking into account all Certificates or Book-Entry Shares surrendered by such holder) to which such holder is entitled pursuant to Sections 1.5 and 1.6 (or uncertificated shares in book entry form), (2) payment by cash or check in lieu of fractional shares which such holder is entitled to receive pursuant to Section 1.6, and (3) any dividends or distributions payable pursuant to Section 2.1(c), and the Certificates or book entries evidencing the Book-Entry Shares so surrendered shall forthwith be canceled. No interest will be paid or accrued on any amount payable pursuant to Section 1.6 or Section 2.1(c) upon the surrender of the Certificates or Book-Entry Shares. If payment is to be made to a Person other than the Person in whose name the Certificate or Book-Entry Share surrendered is registered, it will be a condition of payment that the Certificate or Book-Entry Share so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the Person requesting such payment pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of the Certificate or Book-Entry Share surrendered or established to the satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable. From and after the Effective Time and until surrendered in accordance with the provisions of this Section 2.1, each Certificate or Book-Entry Share shall represent for all purposes solely the right to receive, in accordance with the terms hereof, the Foundation Merger Consideration (and any amounts to be paid pursuant to Section 1.6 or Section 2.1(c)) upon such surrender, without any interest thereon and subject to any applicable withholding Tax pursuant to Section 2.5.

(c)      No dividends or other distributions with respect to shares of Surviving Corporation Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate or Book-Entry Share with respect to the shares of Surviving Corporation Common Stock represented thereby, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 1.6, until such Certificate or Book-Entry Share has been surrendered in accordance with this Section 2.1. Subject to applicable Law, following surrender of any such Certificate or Book-Entry Share, there shall be paid to the record holder thereof, without interest, (i) promptly after such surrender, the number of whole shares of Surviving Corporation Common Stock issuable in exchange therefor pursuant to Sections 1.5 and 1.6, together with any cash payable in lieu of a fractional share of Surviving Corporation Common Stock to which such holder is entitled pursuant to Section 1.6 and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Surviving Corporation Common Stock and (ii) at the

 

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appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to such surrender payable with respect to such whole shares of Surviving Corporation Common Stock.

(d)      If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate such shares of Surviving Corporation Common Stock as may be required pursuant to Section 2.1(b), cash for fractional shares pursuant to Section 1.6 and any dividends or distributions payable pursuant to Section 2.1(c) with respect to the Shares formerly represented thereby.

(e)      Any portion of the Exchange Fund that remains unclaimed by the former stockholders of Foundation for nine months after the Effective Time shall be paid to the Surviving Corporation. Any former stockholder of Foundation that has not complied with this Section 2.1 prior to the end of such nine-month period shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) but only as a general creditor thereof for payment of its claim for the Foundation Merger Consideration, any cash in lieu of fractional shares pursuant to Section 1.6 and any dividends or distributions payable pursuant to Section 2.1(c), without any interest thereon. The Surviving Corporation shall pay all charges and expenses, including those of the Exchange Agent, in connection with the exchange of Shares for the Foundation Merger Consideration. The Surviving Corporation shall not be liable to any holder or former holder of Shares for any monies delivered from the Exchange Fund or otherwise to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificates or Book-Entry Shares shall not have been surrendered immediately prior to the date that such unclaimed funds would otherwise become subject to any abandoned property, escheat or similar Law, any unclaimed funds payable with respect to such Certificates or Book-Entry Shares shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

(f)      All shares of Surviving Corporation Common Stock issued upon the surrender for exchange of Certificates or Book-Entry Shares in accordance with the terms of this Article II and any cash paid pursuant to Section 1.6 or Section 2.1(c) shall be deemed to have been issued (or paid) in full satisfaction of all rights pertaining to the Shares previously represented by such Certificates or Book-Entry Shares.

Section 2.2     Closing of Transfer Books .

(a)      At the close of business on the day on which the Effective Time occurs, the stock transfer books of Foundation shall be closed, and no transfer of Shares that were

 

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outstanding prior to the Effective Time shall thereafter be made. If, after the Effective Time, Certificates that were outstanding prior to the Effective Time are presented to the Surviving Corporation for transfer, they shall be cancelled and exchanged as provided in this Article II.

(b)      At the close of business on the day on which the Effective Time occurs, the stock transfer books of Alpha shall be closed, and no transfer of shares of Alpha Common Stock that were outstanding prior to the Effective Time shall thereafter be made.

Section 2.3     Treatment of Equity-Based Awards .

(a)      At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each compensatory option to purchase Shares (a “ Foundation Stock Option ”) outstanding under any Foundation Plan immediately prior to the Effective Time and set forth on Section 2.3(a) of the Foundation Disclosure Schedule, whether or not then vested or exercisable, shall become fully vested and shall be assumed by the Surviving Corporation and converted automatically at the Effective Time into a fully vested option to purchase shares of Surviving Corporation Common Stock (a “ New Option ”) having terms and conditions substantially similar to those set forth on Exhibit A , except that (A) the number of shares of Surviving Corporation Common Stock subject to each such Foundation Stock Option shall be equal to the product of (1) the number of Shares purchasable upon exercise of such Foundation Stock Option and (2) the Exchange Ratio, the product being rounded down to the next whole share, and (B) the exercise price per share of Surviving Corporation Common Stock purchasable upon exercise of such New Option shall equal (1) the per share exercise price for the Shares otherwise purchasable pursuant to such Foundation Stock Option immediately prior to the Effective Time divided by (2) the Exchange Ratio (rounded up to the next whole cent) (such conversion being made in accordance with Treasury Regulation Section 1.409A-1(b)(5)(v)). The parties acknowledge that, with respect to any option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the foregoing provisions are intended to comply with the requirements of Section 424(a) of the Code. The parties agree and acknowledge that the conversion described in this Section 2.3(a) is not intended to result in a disqualification of any Foundation Stock Options as “qualified performance-based compensation” for purposes of Section 162(m) of the Code, and agree not to take any position inconsistent therewith.

(b)      At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each restricted Share outstanding under any Foundation Plan immediately prior to the Effective Time and set forth on Section 2.3(b) of the Foundation Disclosure Schedule shall become fully vested as of the Effective Time and, in full settlement thereof, shall be converted into the right to receive the per share Foundation Merger Consideration contemplated by Section 1.5(a).

(c)      At the Effective Time, each restricted stock unit issued under any Foundation Plan (a “ Foundation Restricted Stock Unit ”) that is subject to time-based vesting, outstanding immediately prior to the Effective Time and is set forth on Section 2.3(c) of the

 

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Foundation Disclosure Schedule shall become fully vested as of the Effective Time and shall, by virtue of the Merger and, except as provided in the next sentence, without any action on the part of the holder thereof, be converted into the right to receive the Foundation Merger Consideration. Notwithstanding anything herein to the contrary, any holder of a Foundation Restricted Stock Unit set forth on Section 2.3(c) of the Foundation Disclosure Schedule that also holds a Foundation Cash Unit set forth on Section 2.3(e) of the Foundation Disclosure Schedule shall be required to consent to the treatment of such Foundation Cash Unit described in Section 2.3(e) hereof as a condition precedent to the treatment of Foundation Restricted Stock Units described in this Section 2.3(c).

(d)      At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each (A) Foundation Restricted Stock Unit that is outstanding immediately prior to the Effective Time and is set forth on Section 2.3(d) of the Foundation Disclosure Schedule shall become fully vested and shall be assumed by the Surviving Corporation and converted automatically at the Effective Time into a vested Surviving Corporation restricted stock unit having the terms and conditions (including time of payment) set forth on Exhibit B , except that the number of shares of Surviving Corporation Common Stock subject to each such Foundation Restricted Stock Unit shall be equal to the number of Shares subject to such Foundation Restricted Stock Unit immediately prior to the Effective Time multiplied by the Exchange Ratio (rounded down to the nearest whole share), and (B) cash unit issued under any Foundation Plan (a “ Foundation Cash Unit ”) that is outstanding immediately prior to the Effective Time and is set forth on Section 2.3(d) of the Foundation Disclosure Schedule shall become fully vested and shall be assumed by the Surviving Corporation and converted automatically at the Effective Time into one vested Surviving Corporation cash unit having the terms and conditions (including time of payment) set forth on Exhibit B ; each such vested Surviving Corporation cash unit shall represent the right of the holder thereof to receive an amount in cash equal to $14.02.

(e)      At the Effective Time, by virtue of the Merger and subject to the consent of the holder thereof, each (A) Foundation Restricted Stock Unit that is outstanding immediately prior to the Effective Time and is set forth on Section 2.3(e) of the Foundation Disclosure Schedule shall be assumed by the Surviving Corporation and converted automatically at the Effective Time into a Surviving Corporation restricted stock unit having the terms and conditions (including vesting and time of payment) set forth on Exhibit C , except that the number of shares of Surviving Corporation Common Stock subject to each such Foundation Restricted Stock Unit shall be equal to the number of Shares subject to such Foundation Restricted Stock Unit immediately prior to the Effective Time multiplied by the Exchange Ratio (rounded down to the nearest whole share), and (B) Foundation Cash Unit that is outstanding immediately prior to the Effective Time and is set forth on Section 2.3(e) of the Foundation Disclosure Schedule shall be assumed by the Surviving Corporation and converted automatically at the Effective Time into one Surviving Corporation cash unit having the terms and conditions (including vesting and time of payment) set forth on Exhibit C ; each such Surviving Corporation cash unit shall represent the right of the holder thereof to receive an amount in cash equal to $7.01.

 

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(f)      At the Effective Time, the Surviving Corporation shall assume the obligations and succeed to the rights of Alpha under the Alpha Plans with respect to each compensatory option to purchase shares of Alpha Common Stock and each unvested performance share, restricted share, or restricted stock unit (each such restricted stock unit, an “ Alpha Restricted Stock Unit ”) or other equity-based compensation award issued under any Alpha Plan (together, the “ Alpha Equity Awards ”) (the assumption and conversion of each compensatory option to purchase shares of Alpha Common Stock being made in accordance with Treasury Regulation Section 1.424-1 and Treasury Regulation Section 1.409A-1(b)(5)(v)). Each Alpha Equity Award shall, immediately following the Effective Time, relate to the number of shares of Surviving Corporation Common Stock subject to such Alpha Equity Award prior to the Effective Time, on the same terms and conditions as were applicable to such Alpha Equity Award immediately prior to the Effective Time. The parties agree and acknowledge that the assumption and conversion of compensatory options to purchase shares of Alpha Common Stock described in this Section 2.3(f) is not intended to result in a disqualification of any such compensatory options as “qualified performance-based compensation” for purposes of Section 162(m) of the Code, and agree not to take any position inconsistent therewith. Prior to the Effective Time, Alpha and Foundation shall take all action required to reflect the transactions contemplated by this Section 2.3(f), including the conversion of the Alpha Equity Awards that are outstanding immediately prior to the Effective Time and the substitution of the Surviving Corporation for Alpha thereunder to the extent appropriate to effectuate the assumption of such Alpha Plans by the Surviving Corporation. From and after the Effective Time, all references to Alpha in each Alpha Plan pursuant to which any Alpha Equity Award has been granted and in each agreement evidencing any award of Alpha Equity Awards shall be deemed to refer to the Surviving Corporation.

Section 2.4     Adjustments .  If at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock, or securities convertible or exchangeable into or exercisable for shares of capital stock, of Foundation or Alpha shall occur as a result of any reclassification, recapitalization, stock split (including a reverse stock split) or subdivision or combination, exchange or readjustment of shares, or any stock dividend or stock distribution with a record date during such period, the Exchange Ratio shall be equitably adjusted, without duplication, to reflect such change; provided that nothing in this Section 2.4 shall be construed to permit either Foundation or Alpha to take any action with respect to its respective securities that is prohibited or not expressly permitted by the terms of this Agreement.

Section 2.5     Withholding Taxes .  The Surviving Corporation shall be entitled to deduct and withhold from the consideration or other amounts otherwise payable pursuant to the Merger or this Agreement, including, without limitation, consideration or other amounts otherwise payable pursuant to Sections 1.6, 2.1(c) and Section 2.3 of this Agreement, any such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or any applicable provision of state, local or foreign Tax Law. To the extent that amounts are so deducted and withheld and paid over to the applicable Governmental Entity, such deducted or withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made. The Surviving Corporation shall pay, or shall cause to be paid, all amounts so withheld to the appropriate Governmental Entity within the period required under applicable Law.

 

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Section 2.6     Tax Consequences .  It is intended that the Merger shall constitute a “reorganization” within the meaning of Section 368(a) of the Code, and any comparable provisions of applicable state or local Law, and that this Agreement shall constitute a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a). Officers of Alpha and Foundation shall execute and deliver to Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Foundation, and Cleary Gottlieb Steen & Hamilton LLP, counsel to Alpha, certificates containing appropriate representations and covenants, reasonably satisfactory in form and substance to such counsels, at such time or times as may be reasonably requested by such counsels, including the effective date of the Form S-4, the date of the Joint Proxy Statement and the Closing Date, in connection with their respective deliveries of opinions, pursuant to Section 6.2(d) and Section 6.3(d), with respect to the Tax treatment of the Merger. Neither Alpha nor Foundation shall take or cause to be taken any action which would cause to be untrue (or fail to take or cause not to be taken any action which would cause to be untrue) any of such certificates and representations.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF FOUNDATION

Except (a) as disclosed in the correspondingly numbered section of the disclosure letter dated the date of this Agreement and delivered by Foundation to Alpha with respect to this Agreement immediately prior to the execution of this Agreement (the “ Foundation Disclosure Schedule ”) ( provided , however , that a matter disclosed in the Foundation Disclosure Schedule with respect to one representation or warranty shall also be deemed to be disclosed with respect to each other representation or warranty to the extent it is reasonably apparent from the text of such disclosure that such disclosure applies to or qualifies such other representation or warranty) or (b) as disclosed in Foundation’s Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission (the “ SEC ”) on March 2, 2009 and any Quarterly Report on Form 10-Q filed with the SEC thereafter, and in each case publicly available prior to the date of this Agreement (collectively, the “ Filed Foundation SEC Documents ”), excluding any forward looking disclosures set forth in any “risk factor” section or under the heading “Forward-Looking Statements” or any similar sections containing disclaimers or cautionary forward looking disclosure in any of such Filed Foundation SEC Documents, provided that in no event shall any disclosure in any Filed Foundation SEC Documents qualify or limit the representations and warranties of Foundation set forth in Sections 3.2, 3.3, 3.5(a), 3.5(c), 3.7, 3.22, 3.23, 3.24 or 3.25 of this Agreement, Foundation represents and warrants to Alpha as follows:

Section 3.1     Organization and Qualification .

(a)      Foundation is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to own its properties and conduct its business as currently conducted. Each Significant Subsidiary of Foundation is a duly organized and validly existing entity in good standing (where

 

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applicable) under the Laws of its jurisdiction of organization, with all requisite entity power and authority to own its properties and conduct its business as currently conducted. Foundation and each Subsidiary is duly qualified and in good standing as a foreign corporation or entity authorized to do business in each of the jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transacted by it makes such qualification necessary, except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

(b)      Foundation has heretofore made available to Alpha true, correct and complete copies of the restated certificate of incorporation and bylaws of Foundation as in effect on the date hereof, including all amendments thereto (respectively, the “ Foundation Certificate of Incorporation ” and “ Foundation Bylaws ”).

Section 3.2     Capitalization .

(a)      The authorized capital stock of Foundation consists of (i) 100,000,000 Shares and (ii) 10,000,000 shares of preferred stock, par value $0.01 per share, of Foundation (the “ Foundation Preferred Shares “), of which no Foundation Preferred Shares have been designated as to series. As of the close of business on May 8, 2009 (the “ Capitalization Date ”), (i) 44,688,759 Shares and no Foundation Preferred Shares were issued and outstanding, (ii) 2,536,842 Shares and no Foundation Preferred Shares were held in Foundation’s treasury, and (iii) 1,953,522 Shares and no Foundation Preferred Shares were issuable under Foundation Plans. All of the outstanding Shares have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.

(b)      Section 3.2(b) of the Foundation Disclosure Schedule contains a true, correct and complete list, as of the Capitalization Date, of each outstanding Foundation Stock Option, Foundation Restricted Stock Unit and other equity-based award (including under any deferred compensation plan or arrangement) outstanding, the number of Shares issuable thereunder or to which such award pertains, the expiration date, and the exercise or conversion price, if applicable, related thereto and, if applicable, the Foundation Plan pursuant to which each such Foundation Stock Option, Foundation Restricted Stock Unit or other equity-based award was granted (or, if not set forth on Section 3.2(b) of the Foundation Disclosure Schedule, such information has been provided to Alpha prior to the date hereof). Since the Capitalization Date, Foundation has not issued any Shares or Foundation Preferred Shares (other than the issuance of Shares permitted by Section 5.1 or upon the exercise of Foundation Stock Options outstanding on the Capitalization Date in accordance with their terms), has not granted any other Foundation Securities or entered into any other agreements or commitments to issue any Foundation Securities, and has not split, combined or reclassified any shares of its capital stock.

(c)      Except as set forth in Section 3.2(a) and except for Foundation Stock Options, Foundation Restricted Stock Units and other equity-based awards set forth in Section 3.2(b) of the Foundation Disclosure Schedule, there are no outstanding (i) securities of

 

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Foundation or any of its Subsidiaries convertible into or exchangeable for shares of capital stock, voting securities or other ownership interests in Foundation, (ii) options, restricted stock warrants, rights or other agreements or commitments to acquire from Foundation or any of its Subsidiaries, or obligations of Foundation or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities or other ownership interests in) Foundation, or bonds, debentures, notes or other evidences of Indebtedness having the right to vote on any matters on which stockholders of Foundation may vote, (iii) obligations (contingent or otherwise) of Foundation or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in Foundation (the items in clauses (i), (ii) and (iii), together with the capital stock of Foundation, being referred to collectively as “ Foundation Securities ”), or (iv) obligations (contingent or otherwise) of Foundation or any of its Subsidiaries to make any payments directly or indirectly based (in whole or in part) on the price or value of any Foundation Securities. There are no outstanding obligations, commitments or arrangements, contingent or otherwise, of Foundation or any of its Subsidiaries to purchase, redeem or otherwise acquire any Foundation Securities. There are no voting trusts or other agreements or understandings to which Foundation or any of its Subsidiaries is a party with respect to the voting of capital stock or other voting securities of Foundation.

(d)      Section 3.2(d) of the Foundation Disclosure Schedule sets forth a complete and accurate list of the Subsidiaries of Foundation. Foundation, alone or together with one or more of its Subsidiaries, is the record and beneficial owner of all the equity interests of each of its Subsidiaries, in each case free and clear of any Lien. With respect to each Subsidiary of Foundation, there are no outstanding (i) securities of Foundation or any of its Subsidiaries convertible into or exchangeable for shares of capital stock, voting securities or other ownership interests in any Subsidiary of Foundation, (ii) options, restricted stock, warrants, rights or other agreements or commitments to acquire from Foundation or any of its Subsidiaries, or obligations of Foundation or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities or other ownership interests in) any Subsidiary of Foundation, (iii) obligations of Foundation or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in any Subsidiary of Foundation (the items in clauses (i), (ii) and (iii), together with the capital stock or other equity interests of such Subsidiaries, being referred to collectively as “ Foundation Subsidiary Securities ”), or (iv) obligations of Foundation or any of its Subsidiaries to make any payment directly or indirectly based (in whole or in part) on the price or value of any Foundation Subsidiary Securities. There are no outstanding obligations, contingent or otherwise, of Foundation or any of its Subsidiaries to purchase, redeem or otherwise acquire any outstanding Foundation Subsidiary Securities. There are no voting trusts or other agreements or understandings to which Foundation or any of its Subsidiaries is a party with respect to the voting of capital stock or other voting securities of any Subsidiary of Foundation. Prior to the date hereof, Foundation has made available to Alpha complete and accurate copies of the charter and bylaws or other organizational documents of each Significant Subsidiary of Foundation.

 

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(e)      Foundation does not control, directly or indirectly, or have any direct or indirect equity participation or similar interest in any entity which is not a Subsidiary of Foundation, other than securities in a publicly traded company held for investment by Foundation or any of its Subsidiaries and consisting of less than 5% of the applicable class of the outstanding capital stock of such company.

Section 3.3     Authority for this Agreement; Foundation Board Action .

(a)      Foundation has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby to which Foundation is a party. The execution and delivery of this Agreement by Foundation and the consummation by Foundation of the transactions contemplated hereby have been duly and validly authorized by the Foundation Board, including the adoption by the Foundation Board of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement, and no other corporate proceedings on the part of Foundation are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, other than, with respect to completion of the Merger, the adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the Foundation Stockholder Approval prior to the consummation of the Merger and the filing of the Certificate of Merger with the Secretary of State as required by the DGCL. This Agreement has been duly and validly executed and delivered by Foundation and, assuming due authorization, execution and delivery by Alpha, constitutes a legal, valid and binding obligation of Foundation, enforceable against Foundation in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(b)      The Foundation Board (at a meeting or meetings duly called and held) has unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable and fair to, and in the best interests of, Foundation and its stockholders, (ii) adopted and approved this Agreement and the transactions contemplated hereby, including the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement, (iii) subject to the last sentence of Section 5.6(a), directed that the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement be submitted to the stockholders of Foundation for adoption, and (iv) subject to Sections 5.3(d) and (e), resolved to recommend the adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the stockholders of Foundation (the “ Foundation Board Recommendation ”), which actions and resolutions, subject to Sections 5.3(d) and (e), have not been subsequently rescinded, modified or withdrawn in any way. The making of any offer and proposal and the taking of any other action by Alpha and its Subsidiaries in accordance with this Agreement and the transactions contemplated hereby have been consented to by the Foundation Board under provisions of the Confidentiality Agreement.

 

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Section 3.4     Consents and Approvals; No Violation .

(a)      Neither the execution and delivery of this Agreement by Foundation nor the consummation of the transactions contemplated hereby will (i) violate or conflict with or result in any breach of any provision of the Foundation Certificate of Incorporation or the Foundation Bylaws, (ii) assuming all consents, approvals and authorizations contemplated by clauses (i) through (iv) of Section 3.4(b) have been obtained, and all filings described in such clauses have been made, conflict with or violate any order, writ, injunction, decree, judgment, determination, requirement, award, stipulation, statute, rule or regulation of any Governmental Entity (“ Law ”) applicable to Foundation or any of its Subsidiaries or by which any of their respective assets are bound, (iii) assuming the nominations or appointments of directors contemplated by Section 1.4(a)(iii)(B) are effective, violate, conflict with or result in a breach of, or (other than as contemplated under Section 5.13, Section 5.14 or Section 5.15) require any consent, waiver or approval under, or result in a default or give rise to any right of termination, cancellation, modification or acceleration (or an event that, with the giving of notice, the passage of time or otherwise, would constitute a default or give rise to any such right) under, any of the terms, conditions or provisions of any note, bond, mortgage, lease, license, agreement, contract, indenture or other instrument or obligation (“ Contract ”) to which Foundation or any of its Subsidiaries is a party or by which Foundation or any of its Subsidiaries or any of their respective assets are bound, or (iv) other than as contemplated under Section 5.13, Section 5.14 or Section 5.15, result (or, with the giving of notice, the passage of time or otherwise, would result) in the creation or imposition of any Lien on any asset of Foundation or any of its Subsidiaries, except in the case of clauses (ii), (iii) and (iv), as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

(b)      The execution, delivery and performance of this Agreement by Foundation and the consummation of the transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, or filing with or notification to, any foreign, federal, state or local government or subdivision thereof, or governmental, judicial, legislative, executive, administrative or regulatory authority, agency, commission, tribunal or body (a “ Governmental Entity ”), except (i) the pre-merger notification requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), (ii) the filing with the SEC of (x) a proxy statement/prospectus relating to the Foundation Special Meeting (such proxy statement/prospectus, together with the proxy statement relating to the Alpha Special Meeting, in each case as amended or supplemented from time to time, the “ Joint Proxy Statement ”), and (y) such other reports and filings as are required under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the rules and regulations promulgated thereunder, (iii) the filing of the Certificate of Merger with the Secretary of State required by the DGCL, (iv) such governmental consents, qualifications or filings as are customarily obtained or made in connection with the transfer of interests or the change of control of ownership in coal mining properties, including notices and consents relating to or in connection with mining, reclamation and environmental Permits, in each case under the applicable Laws of West Virginia, Pennsylvania, Virginia, Kentucky, Wyoming, Utah, Illinois or Indiana and (v) any such consent, approval, authorization, permit, filing, or notification the failure of which to make or obtain would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

 

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Section 3.5     Reports; Financial Statements .

(a)      Each of Foundation and its Subsidiaries has timely filed or transmitted (as applicable) all forms, reports, statements and certifications required to be filed or transmitted by it with or to the SEC since January 1, 2006 (such documents filed or otherwise transmitted since January 1, 2006, the “ Foundation SEC Reports ”). As of their respective dates, or, if amended, as of the date of the last amendment prior to the date hereof, the Foundation SEC Reports complied as to form in all material respects with all applicable requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) and, in each case, the rules and regulations of the SEC promulgated thereunder. None of the Foundation SEC Reports, including any financial statements or schedules included or incorporated by reference therein, at the time filed or transmitted (or, if amended or superseded by a subsequent filing, as of the date of the last such amendment or superseding filing prior to the date hereof), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No executive officer of Foundation or any of its Subsidiaries has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any Foundation SEC Report. True, correct and complete copies of all Foundation SEC Reports filed or furnished prior to the date of this Agreement, whether or not required under applicable Law, have been furnished to Alpha or are publicly available in the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC. Prior to the date hereof, Foundation has made available to Alpha true, correct and complete copies of all substantive written correspondence between the SEC, on the one hand, and Foundation and its Subsidiaries, on the other hand, since January 1, 2006. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC staff. To the knowledge of Foundation, as of the date of this Agreement, none of the Foundation SEC Reports is the subject of ongoing SEC review or outstanding SEC comment.

(b)      Except for Foundation Holdings Subsidiary, none of Foundation’s Subsidiaries is, or since January 1, 2006 has been, required to file periodic reports with the SEC pursuant to the Exchange Act.

(c)      All of Foundation’s Subsidiaries are consolidated for accounting purposes. The audited and unaudited consolidated financial statements (including the related notes thereto) of Foundation included (or incorporated by reference) (i) in Foundation’s Annual Report on Form 10-K for its fiscal year ended December 31, 2008 (the “ Balance Sheet Date ”) filed with the SEC prior to the date of this Agreement, as amended or supplemented by filings with the SEC made prior to the date of this Agreement (the “ Foundation 2008 10-K ”) and in Foundation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 filed with the SEC prior to the date of this Agreement, as amended or supplemented by filings with the SEC made prior to the date of this Agreement and (ii) in the Foundation SEC Reports filed or otherwise transmitted with or to the SEC related to periods ending after March 31, 2009, have been prepared in accordance with United States generally accepted accounting principles "

 

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(“ GAAP ”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of Foundation and its Subsidiaries as of their respective dates, and the consolidated income, shareholders equity, results of operations and changes in consolidated financial position or cash flows for the periods presented therein; provided that unaudited interim financial statements may not contain footnotes required by GAAP and are subject to normal, recurring year-end adjustments that are not material in nature or amount.

(d)      The records, systems, controls, data and information of Foundation and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Foundation or its accountants (including all means of access thereto and therefrom), except for any nonexclusive ownership and nondirect control that has not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the system of internal accounting controls described below in this Section 3.5(d). Foundation has implemented and maintains a system of internal control over financial reporting (as required by Rule 13a-15(a) under the Exchange Act) that is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of its consolidated financial statements for external purposes in accordance with GAAP, and such system of internal control over financial reporting is effective. Foundation (i) has implemented and maintains disclosure controls and procedures (as required by Rule 13a-15(a) of the Exchange Act) that are designed to ensure that information required to be disclosed by Foundation in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time frames specified by the SEC’s rules and forms (and such disclosure controls and procedures are effective) and (ii) has disclosed, based on its most recent evaluation of its system of internal control over financial reporting prior to the date of this Agreement, to Foundation’s outside auditors and the audit committee of the Foundation Board (A) any significant deficiencies and material weaknesses in the design or operation of its internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that would reasonably be expected to adversely affect Foundation’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Foundation’s internal controls over financial reporting. Prior to the date hereof, a true, correct and complete summary of any such disclosures made to Foundation’s auditors and the audit committee of the Foundation Board has been provided to Alpha and is set forth as Section 3.5(d) of the Foundation Disclosure Schedule.

(e)      Since January 1, 2006, (i) neither Foundation nor any of its Subsidiaries nor, to the knowledge of Foundation, any director, officer, employee, auditor, accountant or representative of Foundation or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Foundation or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Foundation or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing

 

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Foundation or any of its Subsidiaries, whether or not employed by Foundation or any of its Subsidiaries, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by Foundation or any of its Subsidiaries or any of their respective officers, directors, employees or agents to the Foundation Board or any committee thereof or to any director or officer of Foundation or any of its Subsidiaries.

(f)      To the knowledge of Foundation, no employee of Foundation nor any of its Subsidiaries has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable Law of the type described in Section 806 of the Sarbanes-Oxley Act by Foundation or any of its Subsidiaries. Neither Foundation or any of its Subsidiaries nor, to the knowledge of Foundation, any director, officer, employee, contractor, subcontractor or agent of Foundation or any of its Subsidiaries has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of Foundation or any of its Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.

(g)      Neither Foundation nor any of its Subsidiaries has any liabilities of any nature, whether accrued, absolute, fixed, contingent or otherwise, known or unknown, whether due or to become due and whether or not required to be recorded or reflected on a balance sheet under GAAP, other than liabilities (i) as and to the extent reflected or reserved against on the consolidated balance sheet of Foundation dated as of the Balance Sheet Date included in Foundation 2008 10-K or in the notes thereto, (ii) incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date, or (iii) that would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

Section 3.6     Absence of Certain Changes .

(a)      Since the Balance Sheet Date, Foundation and its Subsidiaries have conducted their business only in the ordinary course consistent with past practice, and neither Foundation nor any of its Subsidiaries has taken any action since the Balance Sheet Date that, if taken after the date of this Agreement without the prior written consent of Alpha, would constitute a breach of Section 5.1(other than Sections 5.1(b), 5.1(d) and 5.1(r)).

(b)      Since the Balance Sheet Date, there has not been any change, effect, event or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

 

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Section 3.7     Information Supplied; Joint Proxy Statement; Other Filings .

(a)      None of the information supplied or to be supplied by or on behalf of Foundation for inclusion or incorporation by reference in (i) the registration statement on Form S-4 to be filed with the SEC by Foundation in connection with the issuance of Surviving Corporation Common Stock for the Merger (including any amendments or supplements, the “ Form S-4 ”) will, at the time the Form S-4 becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Joint Proxy Statement will, at the date it is first mailed to Foundation’s stockholders or at the time of the Foundation Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing provisions of this Section 3.7(a), no representation or warranty is made by Foundation with respect to information or statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement that were not supplied by or on behalf of Foundation.

(b)      Any other report required to be filed by Foundation or any of its Subsidiaries with the SEC in connection with the Merger (the “ Foundation Other Filings ”), at the time of its filing with the SEC, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by Foundation with respect to information supplied or to be supplied in writing by Alpha or any Affiliate of Alpha expressly for inclusion therein. At the time of its respective filing with the SEC and at the time any amendment or supplement thereto is filed with the SEC, the Joint Proxy Statement, the letter to stockholders and notice of meeting that will be provided to stockholders of Foundation in connection with the Merger and the Foundation Special Meeting (including any amendments or supplements) and the Foundation Other Filings will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations of the SEC promulgated thereunder.

Section 3.8     Employee Benefits Matters .

(a)      Section 3.8(a) of the Foundation Disclosure Schedule contains a true, correct and complete list of all material Foundation Plans in effect on the date hereof. Prior to the date of this Agreement, Foundation has provided or made available to Alpha true, correct and complete copies as in effect on the date hereof of each of the following, to the extent requested by Alpha prior to the date hereof, as applicable, with respect to each such Foundation Plan: (i) the plan document or agreement or, with respect to any Foundation Plan that is not in writing, a description of the material terms thereof; (ii) any summary plan description required to be furnished to participants pursuant to ERISA; (iii) the most recent annual report, actuarial report and/or financial report, if any; (iv) all amendments or modifications to any such documents; (v) the most recent determination letter received from the Internal Revenue Service with respect to each Foundation Plan that is intended to be a “qualified plan” under Section 401 of the Code; and (vi) the most recent required Internal Revenue Service Form 5500, including all schedules thereto.

 

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(b)      Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, with respect to each Foundation Plan, (i) all expenses, contributions, premiums or payments required to be made to, under or with respect to such Foundation Plan have been timely made and all amounts properly accrued to date or as of the Effective Time as liabilities of Foundation or any of its Subsidiaries which are not yet due have been properly recorded on the books of Foundation and, to the extent required by GAAP, adequate reserves are reflected on the financial statements of Foundation, (ii) each such Foundation Plan which is an “employee pension benefit plan” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)) and intended to qualify under Section 401 of the Code has received a favorable determination letter from the Internal Revenue Service with respect to such qualification, and, to the knowledge of Foundation, nothing has occurred since the date of such letter that has affected, or would reasonably be expected to adversely affect, such qualification, (iii) with respect to any Foundation Plan maintained outside the United States, all applicable foreign qualifications or registration requirements have been satisfied in all material respects, except where any failure to comply would not result in any material liability to Foundation or its Subsidiaries, (iv) there are no Proceedings pending (other than routine claims for benefits) or, to the knowledge of Foundation, threatened or anticipated with respect to such Foundation Plan, any fiduciaries of such Foundation Plan with respect to their duties to any Foundation Plan, or against the assets of such Foundation Plan or any trust maintained in connection with such Foundation Plan, (v) such Foundation Plan has been operated and administered in compliance in all material respects with its terms and all applicable Laws and regulations, including ERISA and the Code, and (vi) there is not now, and to the knowledge of Foundation there are no existing circumstances that would reasonably be expected to give rise to, any requirement for the posting of security with respect to a Foundation Plan or the imposition of any pledge, lien, security interest or encumbrance on the assets of Foundation or any of its Subsidiaries or any of their respective ERISA Affiliates under ERISA or the Code, or similar Laws of foreign jurisdictions.

(c)      Neither Foundation nor any of its Subsidiaries nor any trade or business, whether or not incorporated (an “ ERISA Affiliate ”), that, together with Foundation or any of its Subsidiaries would be deemed to be a “single employer” within the meaning of Section 4001(b) of ERISA, (i) maintains or contributes to (A) any “employee benefit plan” within the meaning of Section 3(3) of ERISA that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code or (B) a “multiemployer plan” within the meaning of Section 3(37) and 4001(a)(3) of ERISA or a “multiple employer plan” within the meaning of Sections 4063/4064 of ERISA or Section 413(c) of the Code, or (ii) has incurred or reasonably expects to incur any material liability pursuant to Title IV of ERISA (including any Controlled Group Liability), other than for premium payments to the Pension Benefit Guaranty Corporation. No Foundation Plan of Foundation, any of its Subsidiaries or any of their respective ERISA Affiliates has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. With respect to each Foundation Plan that is a “multiemployer plan,” no complete or partial withdrawal from such plan has been made by Foundation or any of its Subsidiaries that would reasonably be expected to result in a material liability to Foundation or any of its Subsidiaries.

 

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(d)      No deduction for federal income Tax purposes has been or is expected by Foundation to be disallowed for compensation paid by Foundation or any of its Subsidiaries by reason of Section 162(m) of the Code, including by reason of the transactions contemplated hereby.

(e)      To the knowledge of Foundation, no Foundation Plan is under audit or is the subject of an investigation, in each case by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation, the SEC or any other Governmental Entity, nor is any such audit or investigation pending or threatened.

(f)      Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will, either alone or in conjunction with any other event (whether contingent or otherwise), (i) result in any payment or benefit becoming due or payable, or required to be provided, to any director, employee or independent contractor of Foundation or any of its Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or independent contractor, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation, or (iv) result in any amount failing to be deductible by reason of Section 280G of the Code.

(g)      To the knowledge of Foundation, all options have been granted in compliance with the terms of the applicable Foundation Plans, with applicable Law, and with the applicable provisions of the Foundation Certificate of Incorporation or the Foundation Bylaws as in effect at the applicable time, and all such options are accurately disclosed as required under applicable Law in the Foundation SEC Reports, including the financial statements contained therein or attached thereto (if amended or superseded by a filing with the SEC made prior to the date of this Agreement, as so amended or superseded). To the knowledge of Foundation, Foundation has not issued any options or any other similar equity awards pertaining to Shares under any Foundation Plan with an exercise price that is less than the “fair market value” of the underlying Shares on the date of grant, as determined for financial accounting purposes under GAAP.

(h)      Each Foundation Plan that is a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the Code and any award thereunder, in each case that is subject to Section 409A of the Code, has been operated in compliance in all material respects with Section 409A of the Code since January 1, 2006, based upon a good faith, reasonable interpretation of (A) Section 409A of the Code and (B)(1) the regulations issued thereunder or (2) Internal Revenue Service Notice 2005-1.

 

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Section 3.9     Employees .

(a)      Neither Foundation nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or any labor union contract with respect to employees in the United States. There are no pending or, to the knowledge of Foundation, threatened, labor strikes, disputes, walkouts, work stoppages, slowdowns, or lockouts with respect to employees of Foundation or any of its Subsidiaries. No material labor grievance or arbitration demand or proceeding, or unfair labor practice charge or proceeding, whether or not filed pursuant to a collective bargaining agreement, has been filed, is pending or, to the knowledge of Foundation, is threatened against Foundation or its Subsidiaries.

(b)      Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, to the knowledge of Foundation, Foundation and each of its Subsidiaries are in compliance with all applicable local, state, federal and foreign Laws relating to labor and employment, including but not limited to Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations. Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, there are no complaints, lawsuits, arbitrations, administrative proceedings, or other Proceedings pending or, to the knowledge of Foundation, threatened against Foundation or any of its Subsidiaries brought by or on behalf of any applicant for employment, any current or former employee, any person alleging to be a current or former employee, any class of the foregoing, or any Governmental Entity, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortuous conduct in connection with the employment relationship.

(c)      Since February 1, 2009, neither Foundation nor any of its current Subsidiaries has incurred any liability or obligation which remains unsatisfied under the Worker Adjustment and Retraining Notification Act (“ WARN ”) or any state or local Laws regarding the termination or layoff of employees.

Section 3.10     Litigation .

(a)      There is no claim, action, suit, proceeding, arbitration or mediation by or before any Governmental Entity (each, a “ Proceeding ”) pending (or, to the knowledge of Foundation, threatened), nor, to the knowledge of Foundation, is any investigation by any Governmental Entity pending or threatened (other than any such Proceeding or governmental investigation that challenges or seeks to prohibit the execution, delivery or performance of this Agreement or any of the transactions contemplated hereby), to which Foundation or any of its Subsidiaries is a party or against Foundation or any of its Subsidiaries or any of its or their properties or assets that (i) involves an amount in controversy in excess of $2,000,000, (ii) seeks

 

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injunctive or other non-monetary relief, or (iii) would have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect. As of the date hereof, there are no Proceedings pending or, to the knowledge of Foundation, threatened, nor, to the knowledge of Foundation, are there any investigations by any Governmental Entity pending or threatened, against Foundation or any Subsidiary of Foundation challenging or seeking to prohibit the execution, delivery or performance of this Agreement or any of the transactions contemplated hereby. Neither Foundation nor any of its Subsidiaries nor any of their respective properties or assets is subject to any outstanding order, writ, injunction or decree of any Governmental Entity, except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

(b)      Section 3.10(b) of the Foundation Disclosure Schedule sets forth an accurate and complete list of each Proceeding or governmental investigation resolved or settled since January 1, 2008 and prior to the date of this Agreement and requiring payment by Foundation or any of its Subsidiaries in excess of $2,000,000 or involving the imposition on Foundation or any of its Subsidiaries of injunctive or other non-monetary relief.

(c)      To the knowledge of Foundation, (i) no officer or director of Foundation or any of its Subsidiaries is a defendant in any Proceeding or governmental investigation in connection with his or her status as an officer or director of Foundation or any of its Subsidiaries, and (ii) no such Proceeding or governmental investigation is threatened in writing.

Section 3.11     Tax Matters .

(a)      Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, (i) Foundation and each of its Subsidiaries has timely filed (taking into account extensions validly obtained) all returns and reports relating to Taxes required to be filed by applicable Law with respect to Foundation and each of its Subsidiaries, (ii) all such returns are true, correct and complete, (iii) Foundation and each of its Subsidiaries have timely paid all Taxes attributable to Foundation or any of its Subsidiaries that were due and payable, except, in the case of clauses (ii) and (iii) hereof, with respect to Taxes that are being contested in good faith by appropriate proceedings, (iv) Foundation has adequate reserves or has made adequate provision, in accordance with GAAP, in the consolidated financial statements included in the Foundation SEC Reports for the payment of all Taxes for which Foundation or any of its Subsidiaries may be liable for the periods covered thereby, (v) there is no audit, investigation, claim or assessment in respect of Taxes pending or, to the knowledge of Foundation, threatened in writing against Foundation or any of its Subsidiaries, (vi) there are no agreements or arrangements in effect to extend the period of limitations for the assessment or collection of any Tax for which Foundation or any of its Subsidiaries may be liable, and there is no currently effective “closing agreement” pursuant to Section 7121 of the Code (or any similar provision of foreign, state or local Law), (vii) there is no obligation of Foundation or any of its Subsidiaries to contribute to the payment of any Tax liability (or any amount calculated with reference thereto) of any Person (other than Foundation or its Subsidiaries), including under Treasury Regulations Section 1.1502-6 (or any similar

 

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provision of state, local or foreign law), as transferee or successor, by Contract or otherwise (other than pursuant to customary agreements to indemnify lenders or indemnity provisions in agreements relating to the acquisition or disposition of assets), (viii) no claim has been made since January 1, 2006 by any Governmental Entity in a jurisdiction where either Foundation or any of its Subsidiaries has not filed Tax returns that Foundation or any Subsidiary is or may be subject to taxation by that jurisdiction, (ix) neither Foundation nor any of its Subsidiaries has engaged in a “listed transaction” (as defined in Treasury Regulation Section 1.6011-4), and (x) Foundation and each of its Subsidiaries have withheld from payments to their employees, independent contractors, creditors, stockholders and any other applicable person (and timely paid to the appropriate Governmental Entity) proper and accurate amounts in compliance with all applicable Tax withholding provisions of any Governmental Entity for all periods through the date of this Agreement, except with respect to amounts that are being contested in good faith by appropriate proceedings, and have complied in all material respects with all applicable Laws relating to information reporting.

(b)      For purposes of this Agreement, “ Tax ” shall mean all taxes, charges, fees, levies, imposts, duties, and other like assessments, including any income, gross receipts, sales, use, service, service use, transfer, intangibles, value-added, franchise, title, license, capital, resource, withholding, employee withholding, payroll, worker’s compensation, unemployment insurance, social security, employment, estimated occupation, excise, severance, stamp, transfer, premium, recording, customs, import, export, real property, personal property, commercial rent, environmental or other tax imposed by a Governmental Entity, whether computed on a separate, consolidated, unitary, combined or any other basis, together with any interest, penalties, fines or additional amounts and any interest in respect of any additions, fines or penalties attributable or imposed or with respect to any such taxes, charges, fees, levies or other assessments.

Section 3.12     Compliance with Law .  Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, Foundation and each of its Subsidiaries is and has been since January 1, 2006 in compliance with all Laws applicable to the conduct of the business of Foundation or any of its Subsidiaries or by which any assets of Foundation or any of its Subsidiaries are bound or affected.

Section 3.13     Foundation Permits; Foundation Surety Bonds .

(a)        Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect:

    (i)        Foundation and its Subsidiaries have all Permits required under applicable Laws to own, lease, develop or operate their real properties and assets or to conduct their businesses as conducted on the date hereof (including Permits relating to underground mining, surface mining, highwall mining and auger mining, processing, sale or transporting of coal and coal byproducts, or activities defined under the Surface Mining Control and Reclamation Act of 1977, as amended, as “surface coal mining operations”) (collectively, the “ Foundation Permits ”) and each Foundation Permit is in full force and effect;

 

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  (ii)      each of Foundation and its Subsidiaries is and has been in compliance with the terms and conditions of the Foundation Permits; and

  (iii)      neither Foundation nor any of its Subsidiaries has received any written notice from any Governmental Entity threatening to suspend, revoke, withdraw, modify in any adverse respect or limit any of the Foundation Permits and, to the knowledge of Foundation, there are no circumstances or conditions providing grounds for any suspension, revocation, withdrawal, adverse modification or limitation on any of the Foundation Permits.

(b)      Neither Foundation nor any of its Subsidiaries has been notified by the Federal Office of Surface Mining or the agency of any state administering the Surface Mining Control and Reclamation Act of 1977, as amended (or any comparable state statute) that it is (A) ineligible to receive additional surface mining Permits or (B) under investigation to determine whether its eligibility to receive such Permits should be “permit blocked.”

(c)      Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect:

  (i)      there are no applications for new Permits (for the avoidance of doubt, not including amendments, renewals, extensions or other modifications of existing Foundation Permits) other than those set forth in Section 3.13(c) of the Foundation Disclosure Schedule (the “ Foundation Permit Applications ”);

  (ii)      each of the Foundation Permit Applications has been made in accordance with applicable Laws, subject to such changes as may be requested by a Governmental Entity as part of the permit review process; and

  (iii)      except for changes requested by a Governmental Entity as part of the permit review process, which changes can be readily implemented by Foundation or its Subsidiary, neither Foundation nor any of its Subsidiaries has received any written notice from any Governmental Entity indicating that any of the Foundation Permit Applications will not be granted.

(d)      Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, Foundation and its Subsidiaries have posted all deposits, letters of credit, trust funds, bid bonds, performance bonds, reclamation bonds and surety bonds (and all such similar undertakings) (collectively, the “ Surety Bonds ”)

 

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required to be posted in connection with their operations and pursuant to the Foundation Permits. All Surety Bonds posted by each of Foundation and its Subsidiaries in connection with its respective operations are defined as the “ Foundation Surety Bonds .” Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, each of Foundation and its Subsidiaries is in compliance with all Foundation Surety Bonds applicable to it.

(e)      Without limiting the generality of the foregoing, the operation of the coal mining and processing operations of Foundation and its Subsidiaries and the state of reclamation with respect to each of their Foundation Permits is “current” with respect to the reclamation obligations required by the Foundation Permits and otherwise are in compliance with the Foundation Permits and all applicable mining, reclamation and other similar Laws, except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

Section 3.14     Environmental Matters .

(a)      Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect:

  (i)      each of Foundation and its Subsidiaries (x) is and has been in compliance with applicable Environmental Laws and (y) holds and is and has been in compliance with all Permits required under Environmental Laws for the conduct of its business and activities as currently conducted (the “ Foundation Environmental Permits ”); and

  (ii)      all Foundation Environmental Permits were validly issued and are in full force and effect, and all applications, notices or other documents have been timely filed to effect timely renewal, issuance or reissuance of such Foundation Environmental Permits.

(b)      Neither Foundation nor any of its Subsidiaries has been or is presently the subject of any Environmental Claim, and no Environmental Claim is pending or, to the knowledge of Foundation, threatened against Foundation or any of its Subsidiaries or against any Person whose liability for the Environmental Claim was or may have been retained or assumed by Contract or by operation of Law or pursuant to any order by Foundation or any of its Subsidiaries, except for any such Environmental Claims that would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

(c)      No Hazardous Materials are present at, on, under or emanating from any properties or facilities currently leased, operated or used or, to the knowledge of Foundation,

 

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previously owned, leased, operated or used, in circumstances that would reasonably be expected to form the basis for a material Environmental Claim against, or a requirement for investigation pursuant to applicable Environmental Law by, Foundation or any of its Subsidiaries.

(d)      To the knowledge of Foundation, no property presently owned, leased or operated by Foundation or any of its Subsidiaries contains any landfills, surface impoundments, disposal areas, underground storage tanks, aboveground storage tanks, asbestos or asbestos-containing material, polychlorinated biphenyls or radioactive materials and no such property is listed or proposed for listing on the National Priorities List or any similar list issued by a Governmental Entity of sites where material remedial action is or may be necessary.

(e)      Neither Foundation nor its Subsidiaries has Released, disposed of, or arranged to dispose of, any Hazardous Materials in a manner, or to a location, that would reasonably be expected to result in a material Environmental Claim.

(f)      No material Lien imposed by any Governmental Entity having jurisdiction pursuant to any Environmental Law is currently outstanding as to any assets owned, leased or operated by Foundation or any of its Subsidiaries.

(g)      Except for Foundation Surety Bonds posted in the ordinary course of business and the surety agreements related thereto, no financial assurance obligation is in force as to any property or facility owned, leased or operated by Foundation or any of its Subsidiaries, except for such financial assurance obligations which would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

(h)      Foundation and its Subsidiaries have no obligation or liability by Contract relating to or arising under Environmental Law, except for such obligations or liabilities which would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

(i)       For purposes of the Agreement:

   (i)      “ Environment ” means any ambient, workplace or indoor air, surface water, drinking water, groundwater, land surface (whether below or above water), subsurface strata, sediment, plant or animal life, natural resources, and the sewer, septic and waste treatment, storage and disposal systems servicing real property or physical buildings or structures.

   (ii)      “ Environmental Claim ” means any claim, cause of action, investigation or notice by any Person, including any Governmental Entity having jurisdiction, alleging potential liability (including potential liability for investigatory costs,

 

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cleanup or remediation costs, governmental or third party response costs, natural resource damages, property damage, personal injuries, or fines or penalties) based on or resulting from (A) the presence or Release of, or exposure to, any Hazardous Materials at any location, whether or not owned or operated by Foundation or any of its Subsidiaries or Alpha or any of its Subsidiaries, as applicable, or (B) any Environmental Law, including the alleged or actual violation thereof.

  (iii)      “ Environmental Law ” means any Law (including common law) or any binding Contract, memorandum of understanding or commitment letter issued or entered by or with any Governmental Entity or Person relating to: (A) the Environment, including pollution, contamination, cleanup, preservation, protection and reclamation of the Environment, (B) the protection of human health or the exposure of employees or third parties to any Hazardous Materials, (C) any Release or threatened Release of any Hazardous Materials, including investigation, assessment, testing, monitoring, containment, removal, remediation and cleanup of any such Release or threatened Release, (D) the management of any Hazardous Materials, including the use, labeling, processing, disposal, storage, treatment, transport, or recycling of any Hazardous Materials, or (E) the presence of Hazardous Materials in any building, physical structure, product or fixture.

  (iv)      “ Hazardous Materials ” means all materials, chemicals, wastes, compounds and substances in any form defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, toxic mold, or otherwise regulated or giving rise to liability under any Environmental Law.

  (v)      “ Release ” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor Environment, or into or out of any property, including movement through air, soil, surface water, groundwater or property.

Section 3.15     Intellectual Property .

(a)       Foundation and its Subsidiaries own or possess, or are validly licensed or otherwise have the right to obtain ownership or possession and to currently use, all patents, patent rights, inventions and discoveries (whether or not patentable or reduced to practice), trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, Copyrights, trade secrets, licenses and all other confidential or proprietary information and know-how, whether or not reduced to writing or any other tangible form, and other proprietary intellectual property rights arising under the Laws of the United States (including any state or territory), any other country or group of countries or any political subdivision of any of the foregoing, whether registered or unregistered (collectively, “ Intellectual Property Rights ”) used in or reasonably necessary for the conduct of the business of Foundation or any of its Subsidiaries (the “ Foundation Intellectual Property ”).

 

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(b)      Except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect, (i) Foundation has received no third-party written claim of invalidity or conflicting ownership rights with respect to any Foundation Intellectual Property owned by Foundation or by a Subsidiary of Foundation (“ Foundation Owned Intellectual Property ”) and no such Foundation Owned Intellectual Property is the subject of any pending or, to the knowledge of Foundation, threatened interference, opposition or other Proceeding, (ii) no Person has given written notice to Foundation or any Subsidiary of Foundation that the use of any Foundation Intellectual Property by Foundation, any Subsidiary of Foundation or any licensee is infringing or has infringed any domestic or foreign registered patent, trademark, service mark, trade name, or Copyright or design right, or that Foundation, any Subsidiary of Foundation or any licensee has misappropriated or improperly used or disclosed any trade secret, confidential information or know-how, and (iii) the execution, delivery and performance of this Agreement by Foundation and the consummation of the transactions contemplated hereby will not cause the forfeiture or termination or give rise to a right of forfeiture or termination of any of the Foundation Intellectual Property, impair the right of Foundation to make, use, sell, license or dispose of, or to bring any action for the infringement of, any Foundation Owned Intellectual Property, or impair the right of Foundation or any of its Subsidiaries to use the Foundation Owned Intellectual Property in the conduct of their businesses as currently conducted.

(c)      Neither Foundation nor any of its Subsidiaries is experiencing any material defects in the Computer Software or hardware used in its business as it is currently conducted, including any material error or omission in the processing of any transactions.

(d)      For the purposes of this Agreement, “ Computer Software ” means all computer software (including programs and applications, object and source code, databases, algorithms, and documentation therefor, in each case including all Copyrights therefor), and “ Copyrights ” means all works of authorship, whether copyrightable or not, copyrights, and mask works.

Section 3.16     Real Property; Personal Property .

(a)      For the purpose of the Agreement:

  (i)      “ Foundation Owned Real Property ” means all real property and other right, title and other interests in land, including coal, mineral, mining, water and surface rights, easements, rights of way and options, owned by Foundation or any of its Subsidiaries, together with all improvements and fixtures located thereon or appurtenant thereto;

 

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  (ii)      “ Foundation Leased Real Property ” means all real property and other right, title and other interests in land, including coal, mineral, mining, water and surface rights, easements, rights of way and options, leased, subleased, licensed or otherwise used by Foundation or any of its Subsidiaries as lessee, licensee or grantee (each such lease, sublease, license or other use agreement, a “ Lease ”), together with all improvements and fixtures located thereon or appurtenant thereto; and

  (iii)      “ Foundation Real Property ” means the Foundation Owned Real Property and the Foundation Leased Real Property.

(b)      (i) The Foundation Real Property includes all of the land, buildings, structures and fixtures located thereon and all easements, rights of way, options, coal, mineral, mining, water, surface and other rights and interests appurtenant thereto necessary for the use by Foundation and its Subsidiaries in the conduct of their business as currently conducted; (ii) Foundation or one of its Subsidiaries has good and marketable title to, or has a valid leasehold interest in, all Foundation Real Property, except where the failure to have such title or interest could not reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect; (iii) all Foundation Owned Real Property is owned by Foundation or one of its Subsidiaries, free and clear of all Liens other than Permitted Liens or any other Liens that would not have, individually or in the aggregate, a Foundation Material Adverse Effect; (iv) Foundation or one of its Subsidiaries has a valid leasehold interest in or easement or other property interest in, and to, and enjoys peaceful and undisturbed possession of all Foundation Leased Real Property on which it is currently conducting operations and, except where the failure to have such possession would not have, individually or in the aggregate, a Foundation Material Adverse Effect, Foundation has complied with all of its obligations under such leases and all such Leases are in full force and effect and are free and clear of all Liens other than Permitted Liens; and (v) Foundation or one of its Subsidiaries has adequate rights of ingress and egress to all Foundation Real Property on which it is currently conducting operations, except where the failure to have such access would not have, individually or in the aggregate, a Foundation Material Adverse Effect, sufficient to access and exercise its rights with respect to such Foundation Real Property.

(c)      With respect to the Foundation Real Property:

  (i)      there are no pending or, to the knowledge of Foundation, threatened Proceedings to take all or any portion of the Foundation Real Property or any interest therein by eminent domain or any condemnation proceeding or any sale or disposition in lieu thereof;

  (ii)      there are no outstanding options, rights of reverter, rights of first offer, rights of first refusal or Contracts granted by Foundation or any of its Subsidiaries to purchase or lease any material portion of such Foundation Real Property (other than extension rights in the lease or sublease agreements to which Foundation or any of its Subsidiaries is a party and other than such options or rights granted in the ordinary course of business), or an interest therein other than those which would constitute Permitted Liens;

 

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    (iii)      there are no Leases or other Contracts granting to any Person (other than Foundation or any of its Subsidiaries) the right of use or occupancy of any material portion of any Foundation Real Property, other than those granted or incurred in the ordinary course of business, that do not, in the aggregate, interfere in any material respect with the ordinary conduct of the business of Foundation or its Subsidiaries at the Foundation Real Property affected thereby;

    (iv)      all buildings, structures, fixtures, building systems and equipment included in the Foundation Real Property (the “ Foundation Improvements ”) are in good condition and repair in all material respects, subject to reasonable wear and tear, and, to the knowledge of Foundation, there are no facts or conditions affecting any of the Foundation Improvements that would materially and adversely interfere with the use or occupancy of the Foundation Improvements or any portion thereof in the operation of the business of Foundation and its Subsidiaries as presently conducted thereon;

    (v)      to the knowledge of Foundation, the present use of the Foundation Real Property (including the Foundation Improvements) is, and the Foundation Improvements themselves are, in substantial conformity with all recorded deeds, restrictions of record and other agreements affecting such Foundation Real Property, and to the knowledge of Foundation there are no material violations thereof;

    (vi)      to the knowledge of Foundation, there are no currently proposed or pending assessments affecting the Foundation Real Property, whether for public improvements or otherwise;

    (vii)      there are no outstanding Contracts or other obligations (including options) entered into by Foundation or any of its Subsidiaries for the sale, exchange, encumbrance or transfer of any of the Foundation Real Property, or any portion of it, that are material to Foundation and its Subsidiaries taken as a whole; and

    (viii)    with respect to each Foundation Real Property on which significant surface Foundation Improvements are located, there are no rights or claims of parties in possession not shown by the public records, encroachments, overlaps, boundary line disputes or other matters which would be disclosed by an accurate survey or inspection of the premises except as could not reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

 

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(d)      The parcels constituting the Foundation Owned Real Property are assessed separately from all other adjacent property not constituting Foundation Owned Real Property for purposes of real property Taxes, and each of the parcels of Foundation Owned Real Property complies with all applicable assessment requirements, without reliance on property not constituting Foundation Owned Real Property.

(e)      To the knowledge of Foundation, the coal reserves currently mined by Foundation and its Subsidiaries that are owned or leased by any of them are not subject to the mining rights of any other Person with respect to such coal reserves and none of Foundation or its Subsidiaries has received a notice of claim to such effect, and Foundation has sufficient rights to access and mine such coal reserves.

(f)      Foundation and its Subsidiaries are in possession of and have good and marketable title to, or have valid leasehold interests in, all tangible personal property used in the business of Foundation and its Subsidiaries. All such tangible personal property is owned by Foundation or one of its Subsidiaries, free and clear of all Liens other than Permitted Liens, or, to the knowledge of Foundation, is leased under a valid and subsisting lease and, in each case, is in good working order and condition, ordinary wear and tear excepted.

Section 3.17     Material Contracts .

(a)      Section 3.17(a) of the Foundation Disclosure Schedule lists, and Foundation has made available to Alpha prior to the date of this Agreement, true, correct and complete copies of, any of the following Contracts to which Foundation or any of its Subsidiaries is a party or by which Foundation, any of its Subsidiaries or any of their respective assets is bound, as of the date hereof:

  (i)      that would be required to be filed by Foundation or Foundation Holdings Subsidiary as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed by Foundation or Foundation Holdings Subsidiary on a Current Report on Form 8-K;

  (ii)      that contains covenants that limit the ability of Foundation or any of its Subsidiaries (or which, following the consummation of the Merger, could restrict the ability of the Surviving Corporation or any of its Affiliates) to compete in any business or with any person or in any geographic area or distribution or sales channel, or to sell, supply or distribute any service or product, in each case, that could reasonably be expected to be material to the business of Foundation and its Subsidiaries, taken as a whole;

 

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    (iii)      that relates to a joint venture, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation or control of any partnership or joint venture or similar entity or arrangement (other than any partnership or limited liability company operating agreement of a direct or indirect wholly-owned Subsidiary of Foundation) or pursuant to which Foundation or any of its Subsidiaries has an obligation (contingent or otherwise) to make a material investment in or material extension of credit to any Person;

    (iv)      that involves any exchange traded, over-the-counter or other swap, cap, floor, collar, futures contract, forward contract, option or any other derivative financial instrument or contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including commodities, emissions allowances, renewable energy credits, currencies, interest rates, foreign currency and other indices, in each case, that is material to the business of Foundation and its Subsidiaries, taken as a whole;

    (v)      that relates to (A) Indebtedness under which Foundation and/or any of its Subsidiaries has outstanding obligations in excess of $10,000,000 or (B) conditional or similar sale arrangements in connection with which the aggregate actual or contingent obligations of Foundation and its Subsidiaries under such Contract are greater than $10,000,000;

    (vi)      under which (A) to the knowledge of Foundation, any Person has directly or indirectly guaranteed any liabilities or obligations of Foundation or its Subsidiaries (other than any such guarantees by Foundation or its Subsidiaries), in case of each such liability or obligation, in an amount in excess of $5,000,000, or (B) Foundation or any of its Subsidiaries has directly or indirectly guaranteed any liabilities or obligations of any other Person (other than Foundation or any of its Subsidiaries);

    (vii)      for the purchase and sale of coal under which (x) the aggregate amounts to be paid by Foundation and its Subsidiaries over the remaining term of such Contract would reasonably be expected to exceed $50,000,000 in any twelve-month period or (y) the aggregate amounts to be received by Foundation and its Subsidiaries over the remaining term of such Contract would reasonably be expected to exceed $50,000,000 in any twelve-month period;

    (viii)     under which (x) the aggregate amounts to be paid by Foundation and its Subsidiaries over the remaining term of such Contract would reasonably be expected to exceed $10,000,000 in any twelve-month period or (y) the aggregate amounts to be received by Foundation and its Subsidiaries over the remaining term of such Contract would reasonably be expected to exceed $10,000,000 in any twelve-month period, in each case, other than (1) the Foundation Material Contracts described in Section 3.17(a)(iv) or 3.17(a)(vii) and (2) purchase orders for the purchase of goods or services in the ordinary course of business;

 

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  (ix)      that relates to a Foundation Interested Party Transaction;

  (x)       that relates to the ownership, lease or use of space at Foundation’s headquarters in Linthicum Heights, Maryland; or

  (xi)      that would or would reasonably be expected to prevent or materially delay Foundation’s ability to consummate the Merger or the other transactions contemplated by this Agreement.

Each Contract of the type described in clauses (i) through (xi) is referred to herein as a “ Foundation Material Contract .”

(b)      Each Foundation Material Contract is valid and binding on Foundation and any Subsidiary of Foundation that is a party thereto and, to the knowledge of Foundation, each other party thereto and is in full force and effect. There is no default under any Foundation Material Contract by Foundation or any of its Subsidiaries or, to the knowledge of Foundation, by any other party, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by Foundation or any of its Subsidiaries or, to the knowledge of Foundation, by any other party, in each case except as would not have or reasonably be expected to have, individually or in the aggregate, a Foundation Material Adverse Effect.

(c)      Neither Foundation nor any of its Subsidiaries is party to any Contract that prohibits Foundation from providing to Alpha the information described in Section 5.3(c).

Section 3.18     Insurance .  Foundation and its Subsidiaries are covered by valid and currently effective insurance policies issued in favor of Foundation and its Subsidiaries that are customary and adequate for companies of similar size in the industries and locales in which Foundation and its Subsidiaries operate. Section 3.18 of the Foundation Disclosure Schedule sets forth, as of the date hereof, a true, correct and complete list of all material insurance policies issued in favor of Foundation, or pursuant to which Foundation or any of its Subsidiaries is a named insured or otherwise a beneficiary, as well as any historic incurrence-based policies still in force. With respect to each such insurance policy, (i) the policy is in full force and effect and all premiums due thereon have been paid, (ii) Foundation is not in breach or default, and neither Foundation nor any of its Subsidiaries has taken any action or failed to take any action which with notice or the lapse of time would constitute such a breach or default, or permit termination or modification of, any such policy, and (iii) to the knowledge of Foundation, no insurer on any such policy has been declared insolvent or placed in receivership, conservatorship or liquidation, and no notice of cancellation or termination has been received with respect to any such policy.

 

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Section 3.19     Suppliers and Customers .  Section 3.19 of the Foundation Disclosure Schedule sets forth the names of the 10 largest customers of Foundation and its Subsidiaries (as measured by revenue for the twelve-month period ended on the Balance Sheet Date) and the 10 largest suppliers of Foundation and its Subsidiaries (as measured by aggregate cost of items or services purchased for the twelve-month period ended on the Balance Sheet Date). To the knowledge of Foundation, neither Foundation nor any of its Subsidiaries (a) has been notified in writing of any dispute with any such customer or supplier or (b) has been notified in writing by any such customer or supplier that it intends or is threatening to terminate or otherwise adversely alter the terms of its business with Foundation or any of its Subsidiaries.

Section 3.20     Questionable Payments .  Neither Foundation nor any of its Subsidiaries (nor, to the knowledge of Foundation, any of their respective directors, executives, representatives, agents or employees) (a) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees, (c) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977, as amended, (d) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties, or (e) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

Section 3.21     Interested Party Transactions .  No event has occurred since December 31, 2008 that would be required to be reported by Foundation pursuant to Item 404(a) of Regulation S-K promulgated by the SEC under the Securities Act (a “ Foundation Interested Party Transaction ”).

Section 3.22     Required Vote of Foundation Stockholders .  The only vote of the holders of securities of Foundation required by the Foundation Certificate of Incorporation, the Foundation Bylaws, by Law or otherwise to complete the Merger is the adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the affirmative vote of the holders of not less than a majority of the outstanding Shares, voting together as a single class. The adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the vote described in the previous sentence is referred to as the “ Foundation Stockholder Approval .”

Section 3.23     Takeover Laws, Etc .

(a)      The Foundation Board has unanimously approved this Agreement and the transactions contemplated hereby as required to render inapplicable to this Agreement and such transactions the restrictions on “business combinations” set forth in Section 203 of the DGCL or any other “moratorium,” “control share,” “fair price,” “takeover” or “interested stockholder” Law (any such laws, “ Takeover Laws ”), which approval has not, except upon the termination of this Agreement, been subsequently rescinded, modified or withdrawn in any way.

 

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(b)      All waivers of standstills that Foundation has granted, on or before the date hereof, to any Person who signed such standstill in connection with its consideration of a possible Foundation Acquisition Proposal have expired or been revoked.

Section 3.24     Opinion of Financial Advisor .  Prior to the execution of this Agreement, Barclays Capital Inc. (the “ Foundation Financial Advisor ”) has delivered to the Foundation Board its written opinion, dated the date of this Agreement, to the effect that, as of such date and based upon and subject to the matters set forth therein, the Exchange Ratio to be received by holders of Shares in the Merger is fair, from a financial point of view, to such holders. Promptly following receipt of the opinion by the Foundation Board, a true, correct and complete copy of the opinion was delivered to Alpha for informational purposes only.

Section 3.25     Brokers; Certain Fees .  No broker, finder or investment banker is or will be entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by and on behalf of Foundation or any of its Subsidiaries, except as provided in the letter agreement between Foundation and the Foundation Financial Advisor relating to the Merger, a complete and correct copy of which was delivered to Alpha prior to the date of this Agreement.

Section 3.26     Foundation Loan Agreement Amendment .  As of the date hereof, Foundation has delivered to Alpha a true and complete copy of the commitment letter, dated as of May 11, 2009, by and among Foundation, Foundation PA Subsidiary, Alpha and the lenders set forth on Section 3.26 of the Foundation Disclosure Schedule, pursuant to which such parties have agreed, subject to the terms and conditions set forth therein, to amend the Credit Agreement, dated as of July 30, 2004, as amended and restated as of July 7, 2006 (as amended prior to the date hereof), by and among Foundation Holdings Subsidiary, Foundation PA Subsidiary, the Administrative Agent and the other institutions from time to time party thereto (the “ Foundation Loan Agreement ”) in the form set forth as an attachment to such letter (such amendment, the “ Foundation Loan Agreement Amendment ”). As of the date of this Agreement, such commitment letter has not been amended or modified or, to the knowledge of Foundation, withdrawn or rescinded or, excepted as provided therein, qualified or conditioned in any respect.

Section 3.27     No Other Representations; Disclaimer .

(a)      Except for the representations and warranties made by Foundation in this Agreement, neither Foundation nor any other Person makes any express or implied representation or warranty with respect to Foundation or its Subsidiaries or their respective business, operations, assets, liabilities, condition (financial or otherwise) or prospects, and Foundation hereby disclaims any such other representations or warranties, including any representation or warranty regarding merchantability or fitness for a particular purpose. In particular, without limiting the foregoing disclaimer, except for the representations and warranties made by Foundation in this Agreement, neither Foundation nor any other Person makes or has made any representation or warranty to Alpha or any of its Affiliates or representatives with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to Foundation, any of its Subsidiaries or their respective businesses, or (ii) any oral or written information presented to Alpha or any of its Affiliates or representatives in the course of their due diligence investigation of Foundation, the negotiation of this Agreement or in the course of the transactions contemplated hereby.

 

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(b)      Notwithstanding anything contained in this Agreement to the contrary, Foundation acknowledges and agrees that neither Alpha nor any other Person has made or is making any representations or warranties whatsoever, express or implied, beyond those expressly given by Alpha in this Agreement, including any implied representation or warranty as to the accuracy or completeness of any information regarding Alpha furnished or made available to Foundation, or any of its representatives or any representation or warranty regarding merchantability or fitness for a particular purpose. Without limiting the generality of the foregoing, Foundation acknowledges that, except for the representations and warranties made by Alpha in this Agreement, no representations or warranties are made by Alpha or any other Person with respect to any projections, forecasts, estimates, budgets or prospect information that may have been made available to Foundation or any of its representatives.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF ALPHA

Except (a) as disclosed in the correspondingly numbered section of the disclosure letter dated the date of this Agreement and delivered by Alpha to Foundation with respect to this Agreement immediately prior to the execution of this Agreement (the “ Alpha Disclosure Schedule ”) ( provided , however , that a matter disclosed in the Alpha Disclosure Schedule with respect to one representation or warranty shall also be deemed to be disclosed with respect to each other representation or warranty to the extent it is reasonably apparent from the text of such disclosure that such disclosure applies to or qualifies such other representation or warranty) or (b) as disclosed in Alpha’s Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on February 27, 2009 and any Quarterly Report on Form 10-Q filed with the SEC thereafter, and in each case publicly available prior to the date of this Agreement (collectively, the “ Filed Alpha SEC Documents ”), excluding any forward looking disclosures set forth in any “risk factor” section or under the heading “Forward-Looking Statements” or any similar sections containing disclaimers or cautionary forward looking disclosure in any of such Filed Alpha SEC Documents, provided that in no event shall any disclosure in any Filed Alpha SEC Documents qualify or limit the representations and warranties of Alpha set forth in Sections 4.2, 4.3, 4.5(a), 4.5(c), 4.7, 4.22, 4.23, 4.24, 4.25 or 4.26 of this Agreement, Alpha represents and warrants to Foundation as follows:

Section 4.1     Organization and Qualification .

(a)      Alpha is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to own its properties and conduct its business as currently conducted. Each Significant Subsidiary of Alpha is a duly organized and validly existing entity in good standing (where applicable) under the Laws of its jurisdiction of organization, with all requisite entity power and

 

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authority to own its properties and conduct its business as currently conducted. Alpha and each Subsidiary is duly qualified and in good standing as a foreign corporation or entity authorized to do business in each of the jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transacted by it makes such qualification necessary, except as would not have or reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect.

(b)      Alpha has heretofore made available to Foundation true, correct and complete copies of the restated certificate of incorporation and bylaws of Alpha as in effect on the date hereof, including all amendments thereto (respectively, the “ Alpha Certificate of Incorporation ” and “ Alpha Bylaws ”).

Section 4.2     Capitalization .

(a)      The authorized capital stock of Alpha consists of (i) (A) as of the date hereof, 100,000,000 shares of Alpha Common Stock and (B) if Alpha’s stockholders approve an amendment to the Alpha Certificate of Incorporation to increase the number of shares of Alpha Common Stock from 100,000,000 to 200,000,000 (the “ Authorized Alpha Common Stock Increase ”), as of the Closing Date, 200,000,000 shares of Alpha Common Stock; and (ii) 10,000,000 shares of preferred stock, par value $0.01 per share, of Alpha (the “ Alpha Preferred Shares ”), of which no Alpha Preferred Shares have been designated as to series. As of the close of business on the Capitalization Date, (i) 71,356,867 shares of Alpha Common Stock and no Alpha Preferred Shares were issued and outstanding, (ii) 106,895 shares of Alpha Common Stock and no Alpha Preferred Shares were held in Alpha’s treasury, and (iii) 4,445,482 shares of Alpha Common Stock and no Alpha Preferred Shares were issuable under the Alpha Plans. All of the outstanding shares of Alpha Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.

(b)      Section 4.2(b) of the Alpha Disclosure Schedule contains a true, correct and complete list, as of the Capitalization Date, of each outstanding option to purchase shares of Alpha Common Stock granted pursuant to an Alpha Plan (an “ Alpha Stock Option ”), Alpha Restricted Stock Unit and other equity-based award (including under any deferred compensation plan or arrangement) outstanding, the number of shares of Alpha Common Stock issuable thereunder or to which such award pertains, the expiration date, and the exercise or conversion price, if applicable, related thereto and, if applicable, the Alpha Plan pursuant to which each such Alpha Stock Option, Alpha Restricted Stock Unit or other equity-based award was granted. Since the Capitalization Date, Alpha has not issued any shares of Alpha Common Stock (other than the issuance of Alpha Common Stock permitted by Section 5.2 or upon the exercise of Alpha Stock Options or Alpha Restricted Stock Units outstanding on the Capitalization Date in accordance with their terms), has not granted any other Alpha Securities or entered into any other agreements or commitments to issue any Alpha Securities, and has not split, combined or reclassified any shares of its capital stock.

 

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(c)      Except as set forth in Section 4.2(a) and except for the Alpha Stock Options and Alpha Restricted Stock Units set forth in Section 4.2(b) of the Alpha Disclosure Schedule, there are no outstanding (i) securities of Alpha or any of its Subsidiaries convertible into or exchangeable for shares of capital stock, voting securities or other ownership interests in Alpha, (ii) options, restricted stock warrants, rights or other agreements or commitments to acquire from Alpha or any of its Subsidiaries, or obligations of Alpha or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities or other ownership interests in) Alpha, or bonds, debentures, notes or other evidences of Indebtedness having the right to vote on any matters on which stockholders of Alpha may vote, (iii) obligations (contingent or otherwise) of Alpha or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in Alpha (the items in clauses (i), (ii) and (iii), together with the capital stock of Alpha, being referred to collectively as “ Alpha Securities ”), or (iv) obligations (contingent or otherwise) of Alpha or any of its Subsidiaries to make any payments directly or indirectly based (in whole or in part) on the price or value of any Alpha Securities. There are no outstanding obligations, commitments or arrangements, contingent or otherwise, of Alpha or any of its Subsidiaries to purchase, redeem or otherwise acquire any Alpha Securities. There are no voting trusts or other agreements or understandings to which Alpha or any of its Subsidiaries is a party with respect to the voting of capital stock or other voting securities of Alpha.

(d)      Section 4.2(d) of the Alpha Disclosure Schedule sets forth a complete and accurate list of the Subsidiaries of Alpha. Alpha, alone or together with one or more of its Subsidiaries, is the record and beneficial owner of all the equity interests of each of its Subsidiaries, in each case free and clear of any Lien. With respect to each Subsidiary of Alpha, there are no outstanding (i) securities of Alpha or any of its Subsidiaries convertible into or exchangeable for shares of capital stock, voting securities or other ownership interests in any Subsidiary of Alpha, (ii) options, restricted stock, warrants, rights or other agreements or commitments to acquire from Alpha or any of its Subsidiaries, or obligations of Alpha or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities or other ownership interests in) any Subsidiary of Alpha, (iii) obligations of Alpha or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in any Subsidiary of Alpha (the items in clauses (i), (ii) and (iii), together with the capital stock or other equity interests of such Subsidiaries, being referred to collectively as “ Alpha Subsidiary Securities ”), or (iv) obligations of Alpha or any of its Subsidiaries to make any payment directly or indirectly based (in whole or in part) on the price or value of any Alpha Subsidiary Securities. There are no outstanding obligations, contingent or otherwise, of Alpha or any of its Subsidiaries to purchase, redeem or otherwise acquire any outstanding Alpha Subsidiary Securities. There are no voting trusts or other agreements or understandings to which Alpha or any of its Subsidiaries is a party with respect to the voting of capital stock or other voting securities of any Subsidiary of Alpha. Prior to the date hereof, Alpha has made available to Foundation complete and accurate copies of the charter and bylaws or other organizational documents of each Significant Subsidiary of Alpha.

 

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(e)      Alpha does not control, directly or indirectly, or have any direct or indirect equity participation or similar interest in any entity which is not a Subsidiary of Alpha, other than securities in a publicly traded company held for investment by Alpha or any of its Subsidiaries and consisting of less than 5% of the applicable class of the outstanding capital stock of such company.

Section 4.3     Authority for this Agreement; Alpha Board Action .

(a)      Alpha has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby to which Alpha is a party. The execution and delivery of this Agreement by Alpha and the consummation by Alpha of the transactions contemplated hereby have been duly and validly authorized by the Alpha Board, including the adoption by the Alpha Board of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement, and no other corporate proceedings on the part of Alpha are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, other than, with respect to completion of the Merger, the adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the Alpha Stockholder Approval prior to the consummation of the Merger and the filing of the Certificate of Merger with the Secretary of State as required by the DGCL. This Agreement has been duly and validly executed and delivered by Alpha and, assuming due authorization, execution and delivery by Foundation, constitutes a legal, valid and binding obligation of Alpha, enforceable against Alpha in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(b)      The Alpha Board (at a meeting or meetings duly called and held) has by the unanimous approval of those directors in attendance (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable and fair to, and in the best interests of, Alpha and its stockholders, (ii) adopted and approved this Agreement and the transactions contemplated hereby, including the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement, (iii) subject to the last sentence of Section 5.6(b), directed that the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement be submitted to the stockholders of Alpha for adoption and (iv) subject to Sections 5.4(d) and (e), resolved to recommend the adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the stockholders of Alpha (the “ Alpha Board Recommendation ”), which actions and resolutions, subject to Sections 5.4(d) and (e), have not been subsequently rescinded, modified or withdrawn in any way.

Section 4.4     Consents and Approvals; No Violation .

(a)      Neither the execution and delivery of this Agreement by Alpha nor the consummation of the transactions contemplated hereby will (i) violate or conflict with or result in any breach of any provision of the Alpha Certificate of Incorporation or the Alpha Bylaws, (ii) assuming all consents, approvals and authorizations contemplated by clauses (i) through (iv) of Section 4.4(b) have been obtained, and all filings described in such clauses have been made,

 

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conflict with or violate any Law applicable to Alpha or any of its Subsidiaries or by which any of their respective assets are bound, (iii) violate, conflict with or result in a breach of, or require any consent, waiver or approval under, or result in a default or give rise to any right of termination, cancellation, modification or acceleration (or an event that, with the giving of notice, the passage of time or otherwise, would constitute a default or give rise to any such right) under, any of the terms, conditions or provisions of any Contract to which Alpha or any of its Subsidiaries is a party or by which Alpha or any of its Subsidiaries or any of their respective assets are bound, or (iv) result (or, with the giving of notice, the passage of time or otherwise, would result) in the creation or imposition of any Lien on any asset of Alpha or any of its Subsidiaries, except in the case of clauses (ii), (iii) and (iv), as would not have or reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect.

(b)      The execution, delivery and performance of this Agreement by Alpha and the consummation of the transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity, except (i) the pre-merger notification requirements under the HSR Act, (ii) the filing with the SEC of (x) the Joint Proxy Statement, and (y) such other reports and filings as are required under the Exchange Act and the rules and regulations promulgated thereunder, (iii) the filing of the Certificate of Merger with the Secretary of State required by the DGCL, (iv) such governmental consents, qualifications or filings as are customarily obtained or made in connection with the transfer of interests or the change of control of ownership in coal mining properties, including notices and consents relating to or in connection with mining, reclamation and environmental Permits, in each case under the applicable Laws of West Virginia, Pennsylvania, Virginia or Kentucky, and (v) any such consent, approval, authorization, permit, filing, or notification the failure of which to make or obtain would not have or reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect.

Section 4.5     Reports; Financial Statements .

(a)      Each of Alpha and its Subsidiaries has timely filed or transmitted (as applicable) all forms, reports, statements and certifications required to be filed or transmitted by it with or to the SEC since January 1, 2006 (such documents filed or otherwise transmitted since January 1, 2006, the “ Alpha SEC Reports ”). As of their respective dates, or, if amended, as of the date of the last amendment prior to the date hereof, the Alpha SEC Reports complied as to form in all material respects with all applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act and, in each case, the rules and regulations of the SEC promulgated thereunder. None of the Alpha SEC Reports, including any financial statements or schedules included or incorporated by reference therein, at the time filed or transmitted (or, if amended or superseded by a subsequent filing, as of the date of the last such amendment or superseding filing prior to the date hereof), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No executive officer of Alpha or any of its Subsidiaries has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any Alpha SEC Report. True, correct and complete copies of all Alpha SEC Reports

 

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filed or furnished prior to the date of this Agreement, whether or not required under applicable Law, have been furnished to Alpha or are publicly available in the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC. Prior to the date hereof, Alpha has made available to Foundation true, correct and complete copies of all substantive written correspondence between the SEC, on the one hand, and Alpha and its Subsidiaries, on the other hand, since January 1, 2006. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC staff. To the knowledge of Alpha, as of the date of this Agreement, none of the Alpha SEC Reports is the subject of ongoing SEC review or outstanding SEC comment.

(b)      Except for Alpha Natural Resources, LLC, none of Alpha’s Subsidiaries is, or since January 1, 2006 has been, required to file periodic reports with the SEC pursuant to the Exchange Act.

(c)      All of Alpha’s Subsidiaries are consolidated for accounting purposes. The audited and unaudited consolidated financial statements (including the related notes thereto) of Alpha included (or incorporated by reference) (i) in Alpha’s Annual Report on Form 10-K for its fiscal year ended December 31, 2008 filed with the SEC prior to the date of this Agreement, as amended or supplemented by filings with the SEC made prior to the date of this Agreement (the “ Alpha 2008 10-K ”) and in Alpha’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 filed with the SEC prior to the date of this Agreement, as amended or supplemented by filings with the SEC made prior to the date of this Agreement and (ii) in Alpha SEC Reports filed or otherwise transmitted with or to the SEC related to periods ending after March 31, 2009, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of Alpha and its Subsidiaries as of their respective dates, and the consolidated income, shareholders equity, results of operations and changes in consolidated financial position or cash flows for the periods presented therein; provided that unaudited interim financial statements may not contain footnotes required by GAAP and are subject to normal, recurring year-end adjustments that are not material in nature or amount.

(d)      The records, systems, controls, data and information of Alpha and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Alpha or its accountants (including all means of access thereto and therefrom), except for any nonexclusive ownership and nondirect control that has not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the system of internal accounting controls described below in this Section 4.5(d). Alpha has implemented and maintains a system of internal control over financial reporting (as required by Rule 13a-15(a) under the Exchange Act) that is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of its consolidated financial statements for external purposes in accordance with GAAP, and such system of internal control over financial reporting is effective. Alpha (i) has implemented and

 

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maintains disclosure controls and procedures (as required by Rule 13a-15(a) of the Exchange Act) that are designed to ensure that information required to be disclosed by Alpha in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time frames specified by the SEC’s rules and forms (and such disclosure controls and procedures are effective) and (ii) has disclosed, based on its most recent evaluation of its system of internal control over financial reporting prior to the date of this Agreement, to Alpha’s outside auditors and the audit committee of the Alpha Board (A) any significant deficiencies and material weaknesses in the design or operation of its internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that would reasonably be expected to adversely affect Alpha’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Alpha’s internal controls over financial reporting. Prior to the date hereof, a true, correct and complete summary of any such disclosures made to Alpha’s auditors and the audit committee of the Alpha Board has been provided to Foundation and is set forth as Section 4.5(d) of the Alpha Disclosure Schedule.

(e)      Since January 1, 2006, (i) neither Alpha nor any of its Subsidiaries nor, to the knowledge of Alpha, any director, officer, employee, auditor, accountant or representative of Alpha or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Alpha or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Alpha or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing Alpha or any of its Subsidiaries, whether or not employed by Alpha or any of its Subsidiaries, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by Alpha or any of its Subsidiaries or any of their respective officers, directors, employees or agents to the Alpha Board or any committee thereof or to any director or officer of Alpha or any of its Subsidiaries.

(f)      To the knowledge of Alpha, no employee of Alpha nor any of its Subsidiaries has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable Law of the type described in Section 806 of the Sarbanes-Oxley Act by Alpha or any of its Subsidiaries. Neither Alpha or any of its Subsidiaries nor, to the knowledge of Alpha, any director, officer, employee, contractor, subcontractor or agent of Alpha or any of its Subsidiaries has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of Alpha or any of its Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.

(g)      Neither Alpha nor any of its Subsidiaries has any liabilities of any nature, whether accrued, absolute, fixed, contingent or otherwise, known or unknown, whether due or to become due and whether or not required to be recorded or reflected on a balance sheet under

 

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GAAP, other than liabilities (i) as and to the extent reflected or reserved against on the consolidated balance sheet of Alpha dated as of the Balance Sheet Date included in the Alpha 2008 10-K or in the notes thereto, (ii) incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date, or (iii) that would not have or reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect.

Section 4.6     Absence of Certain Changes .

(a)      Since the Balance Sheet Date, Alpha and its Subsidiaries have conducted their business only in the ordinary course consistent with past practice, and neither Alpha nor any of its Subsidiaries has taken any action since the Balance Sheet Date that, if taken after the date of this Agreement without the prior written consent of Foundation, would constitute a breach of Section 5.2 (other than Sections 5.2(a), 5.2(b), 5.2(d) and 5.2(r)).

(b)      Since the Balance Sheet Date, there has not been any change, effect, event or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect.

Section 4.7     Information Supplied; Joint Proxy Statement; Alpha Other Filings .

(a)      None of the information supplied or to be supplied by or on behalf of Alpha for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Joint Proxy Statement will, at the date it is first mailed to Alpha’s stockholders or at the time of the Alpha Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing provisions of this Section 4.7(a), no representation or warranty is made by Alpha with respect to information or statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement that were not supplied by or on behalf of Alpha.

(b)      Any other report required to be filed by Alpha or any of its Subsidiaries with the SEC in connection with the Merger (the “ Alpha Other Filings ”), at the time of its filing with the SEC, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by Alpha with respect to information supplied or to be supplied in writing by Foundation or any Affiliate of Foundation expressly for inclusion therein. At the time of its respective filing with the SEC and at the time any amendment or supplement thereto is filed with the SEC, the Joint Proxy Statement, the letter to stockholders and notice of meeting that will be provided to stockholders of Alpha in connection with the Merger and the Alpha Special Meeting

 

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(including any amendments or supplements) and the Alpha Other Filings will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations of the SEC promulgated thereunder.

Section 4.8     Employee Benefits Matters .

(a)      Section 4.8(a) of the Alpha Disclosure Schedule contains a true, correct and complete list of all material Alpha Plans in effect on the date hereof. Prior to the date of this Agreement, Alpha has provided or made available to Foundation true, correct and complete copies as in effect on the date hereof of each of the following, to the extent requested by Foundation prior to the date hereof, as applicable, with respect to each such Alpha Plan: (i) the plan document or agreement or, with respect to any Alpha Plan that is not in writing, a description of the material terms thereof; (ii) any summary plan description required to be furnished to participants pursuant to ERISA; (iii) the most recent annual report, actuarial report and/or financial report, if any; (iv) all amendments or modifications to any such documents; (v) the most recent determination letter received from the Internal Revenue Service with respect to each Alpha Plan that is intended to be a “qualified plan” under Section 401 of the Code; and (vi) the most recent required Internal Revenue Service Form 5500, including all schedules thereto.

(b)      Except as would not have or reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect, with respect to each Alpha Plan, (i) all expenses, contributions, premiums or payments required to be made to, under or with respect to such Alpha Plan have been timely made and all amounts properly accrued to date or as of the Effective Time as liabilities of Alpha or any of its Subsidiaries which are not yet due have been properly recorded on the books of Alpha and, to the extent required by GAAP, adequate reserves are reflected on the financial statements of Alpha, (ii) each such Alpha Plan which is an “employee pension benefit plan” (as defined in Section 3(2) of ERISA) and intended to qualify under Section 401 of the Code has received a favorable determination letter from the Internal Revenue Service with respect to such qualification, and, to the knowledge of Alpha, nothing has occurred since the date of such letter that has affected, or would reasonably be expected to adversely affect, such qualification, (iii) with respect to any Alpha Plan maintained outside the United States, all applicable foreign qualifications or registration requirements have been satisfied in all material respects, except where any failure to comply would not result in any material liability to Alpha or its Subsidiaries, (iv) there are no Proceedings pending (other than routine claims for benefits) or, to the knowledge of Alpha, threatened or anticipated with respect to such Alpha Plan, any fiduciaries of such Alpha Plan with respect to their duties to any Alpha Plan, or against the assets of such Alpha Plan or any trust maintained in connection with such Alpha Plan, (v) such Alpha Plan has been operated and administered in compliance in all material respects with its terms and all applicable Laws and regulations, including ERISA and the Code, and (vi) there is not now, and to the knowledge of Alpha there are no existing circumstances that would reasonably be expected to give rise to, any requirement for the posting of security with respect to an Alpha Plan or the imposition of any pledge, lien, security interest or encumbrance on the assets of Alpha or any of its Subsidiaries or any of their respective ERISA Affiliates under ERISA or the Code, or similar Laws of foreign jurisdictions.

 

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(c)      Neither Alpha nor any of its Subsidiaries nor any ERISA Affiliate, that, together with Alpha or any of its Subsidiaries would be deemed to be a “single employer” within the meaning of Section 4001(b) of ERISA, (i) maintains or contributes to (A) any “employee benefit plan” within the meaning of Section 3(3) of ERISA that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code or (B) a “multiemployer plan” within the meaning of Section 3(37) and 4001(a)(3) of ERISA or a “multiple employer plan” within the meaning of Sections 4063/4064 of ERISA or Section 413(c) of the Code, or (ii) has incurred or reasonably expects to incur any material liability pursuant to Title IV of ERISA (including any Controlled Group Liability), other than for premium payments to the Pension Benefit Guaranty Corporation. No Alpha Plan of Alpha, any of its Subsidiaries or any of their respective ERISA Affiliates has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. With respect to each Alpha Plan that is a “multiemployer plan,” no complete or partial withdrawal from such plan has been made by Alpha or any of its Subsidiaries that would reasonably be expected to result in a material liability to Alpha or any of its Subsidiaries.

(d)      No deduction for federal income Tax purposes has been or is expected by Alpha to be disallowed for compensation paid by Alpha or any of its Subsidiaries by reason of Section 162(m) of the Code, including by reason of the transactions contemplated hereby.

(e)      To the knowledge of Alpha, no Alpha Plan is under audit or is the subject of an investigation, in each case by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation, the SEC or any other Governmental Entity, nor is any such audit or investigation pending or threatened.

(f)      Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will, either alone or in conjunction with any other event (whether contingent or otherwise), (i) result in any payment or benefit becoming due or payable, or required to be provided, to any director, employee or independent contractor of Alpha or any of its Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or independent contractor, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation, or (iv) result in any amount failing to be deductible by reason of Section 280G of the Code.

(g)      To the knowledge of Alpha, all options have been granted in compliance with the terms of the applicable Alpha Plans, with applicable Law, and with the applicable provisions of the Alpha Certificate of Incorporation or Alpha Bylaws as in effect at the applicable time, and all such options are accurately disclosed as required under applicable Law in the Alpha SEC Reports, including the financial statements contained therein or attached thereto (if amended or superseded by a filing with the SEC made prior to the date of this Agreement, as so amended or superseded). To the knowledge of Alpha, Alpha has not issued any options or any other similar equity awards pertaining to shares of Alpha Common Stock under any Alpha Plan with an exercise price that is less than the “fair market value” of the underlying shares of Alpha Common Stock on the date of grant, as determined for financial accounting purposes under GAAP.

 

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(h)      Each Alpha Plan that is a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the Code and any award thereunder, in each case that is subject to Section 409A of the Code, has been operated in compliance in all material respects with Section 409A of the Code since January 1, 2006, based upon a good faith, reasonable interpretation of (A) Section 409A of the Code and (B)(1) the regulations issued thereunder or (2) Internal Revenue Service Notice 2005-1.

Section 4.9     Employees .

(a)      Neither Alpha nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or any labor union contract with respect to employees in the United States. There are no pending or, to the knowledge of Alpha, threatened, labor strikes, disputes, walkouts, work stoppages, slowdowns, or lockouts with respect to employees of Alpha or any of its Subsidiaries. No material labor grievance or arbitration demand or proceeding, or unfair labor practice charge or proceeding, whether or not filed pursuant to a collective bargaining agreement, has been filed, is pending or, to the knowledge of Alpha, is threatened against Alpha or its Subsidiaries.

(b)      Except as would not have or reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect, to the knowledge of Alpha, Alpha and each of its Subsidiaries are in compliance with all applicable local, state, federal and foreign Laws relating to labor and employment, including but not limited to Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations. Except as would not have or reasonably be expected to have, individually or in the aggregate, an Alpha Material Adverse Effect, there are no complaints, lawsuits, arbitrations, administrative proceedings, or other Proceedings pending or, to the knowledge of Alpha, threatened against Alpha or any of its Subsidiaries brought by or on behalf of any applicant for employment, any current or former employee, any person alleging to be a current or former employee, any class of the foregoing, or any Governmental Entity, relat