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EX-2PARTNERSHIP INTEREST AND STOCK PURCHASE AGREEMENT

Purchase and Sale Agreement

EX-2PARTNERSHIP INTEREST AND STOCK PURCHASE

AGREEMENT | Document Parties: ADVANCED BIOENERGY, LLC | HGF ACQUISITION, LLC | HEARTLAND GRAIN FUELS, L.P., | HEARTLAND PRODUCERS, LLC | SOUTH DAKOTA WHEAT GROWERS ASSOCIATION | DAKOTA FUELS, INC You are currently viewing:
This Purchase and Sale Agreement involves

ADVANCED BIOENERGY, LLC | HGF ACQUISITION, LLC | HEARTLAND GRAIN FUELS, L.P., | HEARTLAND PRODUCERS, LLC | SOUTH DAKOTA WHEAT GROWERS ASSOCIATION | DAKOTA FUELS, INC

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Title: EX-2PARTNERSHIP INTEREST AND STOCK PURCHASE AGREEMENT
Governing Law: Minnesota     Date: 11/8/2006
Law Firm: Faegre & Benson LLP; Blackwell Sanders Peper Martin LLP;Gellhaus & Gellhaus, P.C.    

EX-2PARTNERSHIP INTEREST AND STOCK PURCHASE

AGREEMENT, Parties: advanced bioenergy  llc , hgf acquisition  llc , heartland grain fuels  l.p.  , heartland producers  llc , south dakota wheat growers association , dakota fuels  inc
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EXHIBIT 2.2

PARTNERSHIP INTEREST AND STOCK PURCHASE

AGREEMENT

BY AND AMONG

ADVANCED BIOENERGY, LLC,

HGF ACQUISITION, LLC,

HEARTLAND GRAIN FUELS, L.P.,

HEARTLAND PRODUCERS, LLC,

SOUTH DAKOTA WHEAT GROWERS ASSOCIATION,

AND

DAKOTA FUELS, INC.

November 7, 2006

 



TABLE OF CONTENTS

ARTICLE I PURCHASE AND SALE OF HGF LIMITED PARTNERSHIP INTERESTS AND DF

 

1

 

 

 

COMMON SHARES

 

 

 

Section 1.1

 

Purchase and Sale of HGF Limited Partnership Interests and DF Common Shares

 

1

 

 

 

 

 

 

 

ARTICLE II CLOSINGS; PURCHASE PRICE

 

1

 

Section 2.1

 

First Closing

 

1

 

Section 2.2

 

Second Closing

 

2

 

Section 2.3

 

Escrow Agreement

 

2

 

Section 2.4

 

Purchase Price

 

2

 

 

 

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF HGF

 

2

 

Section 3.1

 

Organization of HGF

 

3

 

Section 3.2

 

HGF Partnership Interests

 

3

 

Section 3.3

 

Authority; No Conflict; Required Filings and Consents

 

3

 

Section 3.4

 

Financial Statements; Absence of Undisclosed Liabilities

 

4

 

Section 3.5

 

Tax Matters

 

4

 

Section 3.6

 

Absence of Certain Changes or Events

 

5

 

Section 3.7

 

Title and Related Matters

 

7

 

Section 3.8

 

Proprietary Rights

 

8

 

Section 3.9

 

Employee Benefit Plans

 

9

 

Section 3.10

 

Bank Accounts

 

11

 

Section 3.11

 

Contracts

 

11

 

Section 3.12

 

Orders, Commitments and Returns

 

11

 

Section 3.13

 

Compliance With Law

 

12

 

Section 3.14

 

Labor Matters; No Discrimination

 

12

 

Section 3.15

 

Trade Regulation

 

12

 

Section 3.16

 

Insider Transactions

 

12

 

Section 3.17

 

Employees, Independent Contractors and Consultants

 

13

 

Section 3.18

 

Insurance

 

13

 

Section 3.19

 

Accounts Receivable

 

13

 

Section 3.20

 

Litigation

 

13

 

Section 3.21

 

Governmental Authorizations and Regulations

 

13

 

Section 3.22

 

Subsidiaries

 

13

 

Section 3.23

 

Compliance with Environmental Requirements

 

14

 

Section 3.24

 

Partnership Documents

 

14

 

Section 3.25

 

No Brokers

 

14

 

Section 3.26

 

Offers

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DF, SDWG AND HP

 

15

 

Section 4.1

 

Organization

 

15

 

Section 4.2

 

Authority; No Conflict; Required Filings and Consents

 

15

 

Section 4.3

 

Litigation

 

16

 

Section 4.4

 

Offers

 

16

 

Section 4.5

 

Purchase for Investment

 

16

 

Section 4.6

 

Ownership of HGF Limited Partnership Interests and DF Common Shares

 

16

 

 

 

 

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF ABE AND ACQUISITION SUB

 

16

 

Section 5.1

 

Organization of ABE and Acquisition Sub

 

17

 

Section 5.2

 

ABE Capital Structure

 

17

 

Section 5.3

 

Authority; No Conflict; Required Filings and Consents

 

18

 

Section 5.4

 

SEC Filings

 

19

 

Section 5.5

 

Tax Matters

 

19

 

Section 5.6

 

Absence of Certain Changes or Events

 

20

 

Section 5.7

 

Title and Related Matters

 

22

 

Section 5.8

 

Proprietary Rights

 

23

 

Section 5.9

 

Employee Benefit Plans

 

24

 

Section 5.10

 

Contracts

 

25

 

Section 5.11

 

Compliance With Law

 

26

 

Section 5.12

 

Labor Matters; No Discrimination

 

26

 

Section 5.13

 

Insider Transactions

 

27

 

Section 5.14

 

Employees, Independent Contractors and Consultants

 

27

 

Section 5.15

 

Insurance

 

27

 

Section 5.16

 

Litigation

 

27

 

Section 5.17

 

Governmental Authorizations and Regulations

 

27

 

Section 5.18

 

Subsidiaries

 

27

 

Section 5.19

 

Compliance with Environmental Requirements

 

28

 

Section 5.20

 

ABE Documents

 

28

 

Section 5.21

 

No Brokers

 

28

 

Section 5.22

 

Interim Operations of Acquisition Sub

 

28

 

Section 5.23

 

Valid Issuance of ABE Units

 

28

 

Section 5.24

 

Financing

 

29

 

Section 5.25

 

Solvency

 

29

 

 

 

 

 

 

 

ARTICLE VI PRECLOSING COVENANTS OF HGF, SDWG AND HP

 

29

 

Section 6.1

 

Advice of Changes

 

29

 

Section 6.2

 

Operation of Business

 

29

 

Section 6.3

 

Access to HGF Information

 

32

 

Section 6.4

 

Satisfaction of Conditions Precedent

 

32

 

Section 6.5

 

Novations, Terminations, Amendments, Consents, Authorizations and Notices

 

32

 

 

 

 

 

 

 

 

 



 

Section 6.6

 

Litigation

 

32

 

Section 6.7

 

Other Negotiations

 

32

 

 

 

 

 

 

 

ARTICLE VII PRECLOSING AND OTHER COVENANTS OF ABE AND ACQUISITION SUB

 

33

 

Section 7.1

 

Advice of Changes

 

33

 

Section 7.2

 

Operation of Business

 

33

 

Section 7.3

 

Access to ABE Information

 

33

 

Section 7.4

 

Novations, Terminations, Amendments, Consents, Authorizations and Notices

 

34

 

Section 7.5

 

Satisfaction of Conditions Precedent

 

34

 

Section 7.6

 

Litigation

 

34

 

 

 

 

 

 

 

ARTICLE VIII OTHER AGREEMENTS

 

34

 

Section 8.1

 

Preparation of the Form S-4; Information Statement; HP Member Meeting

 

34

 

Section 8.2

 

Confidentiality

 

36

 

Section 8.3

 

No Public Announcement

 

36

 

Section 8.4

 

Further Assurances

 

36

 

Section 8.5

 

FIRPTA

 

36

 

Section 8.6

 

Certain Employment Agreements

 

36

 

Section 8.7

 

Expansion of Aberdeen Facility

 

36

 

Section 8.8

 

Employee Related Matters

 

36

 

Section 8.9

 

Distribution

 

37

 

Section 8.10

 

Tax Allocation

 

37

 

Section 8.11

 

Federal Income Tax Matters

 

37

 

Section 8.12

 

Licenses

 

37

 

 

 

 

 

 

 

ARTICLE IX CONDITIONS TO FIRST CLOSING AND SECOND CLOSING

 

38

 

Section 9.1

 

Conditions to Each Party’s Obligation to Effect the First Closing

 

38

 

Section 9.2

 

Additional Conditions to Obligations of ABE and Acquisition Sub

 

38

 

Section 9.3

 

Additional Conditions to Obligations of SDWG

 

39

 

Section 9.4

 

Additional Conditions to the Obligations of HP and ABE to Effect the Second Closing

 

40

 

 

 

 

 

 

 

ARTICLE X TERMINATION AND AMENDMENT

 

41

 

Section 10.1

 

Termination

 

41

 

Section 10.2

 

Effect of Termination

 

41

 

Section 10.3

 

Fees and Expenses

 

42

 

Section 10.4

 

Termination of Obligations with Respect to the Second Closing

 

42

 

 

 

 

 

 

 

ARTICLE XI ESCROW AND INDEMNIFICATION

 

43

 

Section 11.1

 

Indemnification of the ABE Indemnified Persons

 

43

 

 

 

 

 

 

 

 

 



 

Section 11.2

 

Indemnification of the Partner Indemnified Persons

 

43

 

Section 11.3

 

Escrow Fund; Limitations on Liability

 

44

 

Section 11.4

 

Escrow Period

 

45

 

Section 11.5

 

Claims for Damages during Escrow Period

 

45

 

Section 11.6

 

Objections to Claims

 

46

 

Section 11.7

 

Resolution of Conflicts

 

46

 

Section 11.8

 

Partners’ Representative

 

47

 

Section 11.9

 

Actions of the Partners’ Representative

 

47

 

Section 11.10

 

Defense of Third-Party Claims

 

47

 

 

 

 

 

 

 

ARTICLE XII MISCELLANEOUS

 

48

 

Section 12.1

 

Survival of Representations and Covenants

 

48

 

Section 12.2

 

Notices

 

49

 

Section 12.3

 

Interpretation

 

50

 

Section 12.4

 

Counterparts

 

50

 

Section 12.5

 

Entire Agreement; No Third Party Beneficiaries

 

51

 

Section 12.6

 

Governing Law; Jurisdiction

 

51

 

Section 12.7

 

Assignment

 

51

 

Section 12.8

 

Amendment

 

51

 

Section 12.9

 

Extension; Waiver

 

51

 

Section 12.10

 

Specific Performance

 

51

 

Section 12.11

 

Severability

 

51

 

 

 

 

 

 

 

Annex I

Defined Terms

Exhibits

Exhibit A

 

Form of Escrow Agreement

Exhibit B

 

Purchase Price Allocation

Exhibit C

 

Aventine Partnership Interest Purchase Agreement

Exhibit D

 

Form of Non-Solicitation Agreement — SDWG and HP

Exhibit E

 

Form of Legal Opinion of Blackwell Sanders Peper Martin LLP

Exhibit F

 

Form of Employment Agreement for Bill Paulsen

Exhibit G

 

Form of Amendments to Agreement of Limited Partnership

Exhibit H

 

Form of Investor Rights Agreement - SDWG

Exhibit I

 

Form of Grain Origination Agreement

Exhibit J

 

Form of Legal Opinion of Faegre & Benson LLP

Exhibit K

 

Form of Non-Solicitation Agreement — ABE

 

 

 

Schedules

3.3

 

HGF Required Filings and Consents

3.5(d)

 

HGF Tax Matters

3.6

 

HGF Absence of Certain Changes or Events

 

 



 

3.7

 

HGF Title and Related Matters

3.8

 

HGF Proprietary Rights

3.9

 

HGF Employee Benefit Plans

3.10

 

HGF Bank Accounts

3.11(a)

 

HGF Material Contracts

3.11(c)

 

HGF Defaults

3.11(d)

 

HGF Indemnity Obligations

3.12

 

HGF Orders, Commitments and Returns

3.14

 

HGF Labor Matters

3.16

 

HGF Insider Transactions

3.17

 

HGF Employee Agreements

3.18

 

HGF Insurance

3.20

 

HGF Litigation

3.23

 

HGF Environmental

5.1

 

ABE Organization

5.2

 

ABE Capital Structure

5.3

 

ABE Governmental Approvals

5.6

 

ABE Absence of Certain Changes or Events

5.7

 

ABE Title and Related Matters

5.8

 

ABE Proprietary Rights

5.9

 

ABE Employee Benefit Plans

5.10

 

ABE Material Contracts

5.12

 

ABE Labor Matters

5.13

 

ABE Insider Transactions

5.14

 

ABE Employee Agreements

5.15

 

ABE Insurance

5.19

 

ABE Environmental

6.2

 

HGF Operation of Business

6.5

 

HGF Material Consents

8.7

 

Expansion Plan for Aberdeen Facilities

8.8

 

HGF Employees

9.2(i)

 

HGF Key Employees

 

 



PARTNERSHIP INTEREST AND STOCK PURCHASE AGREEMENT

THIS PARTNERSHIP INTEREST AND STOCK PURCHASE AGREEMENT, dated as of November 7, 2006 (this “ Agreement ”), is entered into by and among Advanced BioEnergy, LLC, a Delaware limited liability company (“ ABE ”), HGF Acquisition, LLC, a Delaware limited liability company and a wholly owned subsidiary of ABE (“ Acquisition Sub ”), Heartland Grain Fuels, L.P., a Delaware limited partnership (“ HGF ”), Heartland Producers, LLC, a South Dakota limited liability company and a limited partner of HGF (“ HP ”), South Dakota Wheat Growers Association, a South Dakota cooperative and a limited partner of HGF (“ SDWG ”), and Dakota Fuels, Inc., a Delaware corporation and the general partner of HGF (“ DF ”).

RECITALS

A.            DF is the sole general partner of HGF with a .818% Percentage Interest in HGF.

B.            HP is a limited partner of HGF with a 46.284% Percentage Interest in HGF and owns 49% of the outstanding DF Common Shares.

C.            SDWG is a limited partner of HGF with a 47.898% Percentage Interest in HGF and owns 51% of the outstanding DF Common Shares.

D.            The Selling HGF Partners desire to sell, and Acquisition Sub desires to purchase, all of the HGF Limited Partnership Interests and the DF Common Shares owned by the Selling HGF Partners subject to and on the terms and conditions set forth herein.

E.             Unless otherwise defined herein, capitalized terms used herein have the meaning set forth in Annex I hereto.

In consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE OF HGF LIMITED PARTNERSHIP INTERESTS AND DF COMMON SHARES

Section 1.1             Purchase and Sale of HGF Limited Partnership Interests and DF Common Shares .

(a)            Subject to the provisions of this Agreement, at the First Closing, SDWG shall sell, transfer, assign, convey and deliver to Acquisition Sub, and Acquisition Sub shall purchase, SDWG’s HGF Limited Partnership Interests and SDWG’s DF Common Shares, in each case free and clear of all Encumbrances.

(b)           Subject to the provisions of this Agreement, at the Second Closing, HP shall sell, transfer, assign, convey and deliver to Acquisition Sub, and Acquisition Sub shall purchase, HP’s HGF Limited Partnership Interest and HP’s DF Common Shares, in each case free and clear of all Encumbrances.

ARTICLE II

CLOSINGS; PURCHASE PRICE

Section 2.1             First Closing .  The closing of the acquisition of the HGF Limited Partnership Interests and DF Common Shares owned by SDWG (the “ First Closing ”) will take place at 10:00 a.m., Minneapolis time, on a date (the “ First Closing Date ”) to be specified by ABE and SDWG, which shall be no later than the second business day after satisfaction or waiver of the latest to occur of the

1

 



conditions set forth in Sections 9.1, 9.2 and 9.3, at the offices of Faegre & Benson LLP, 2200 Wells Fargo Center, Minneapolis, Minnesota, unless another date, time or place is agreed to in writing by ABE and SDWG.  The parties will endeavor to complete the First Closing on or prior to November 8, 2006.

Section 2.2            Second Closing .  The closing of the acquisition of the HGF Limited Partnership Interests and DF Common Shares owned by HP (the “ Second Closing ”) will take place at 10:00 a.m., Minneapolis time, on a date (the “ Second Closing Date ”) to be specified by ABE and HP, which shall be no later than the second business day after satisfaction or waiver of the latest to occur of the conditions set forth in Section 9.4, at the offices of Faegre & Benson LLP, 2200 Wells Fargo Center, Minneapolis, Minnesota, unless another date, time or place is agreed to in writing by ABE and HP.

Section 2.3            Escrow Agreement .  At the First Closing, (a) ABE will withhold and deposit into escrow 50,857 ABE Units issuable to SDWG pursuant to Section 2.4 of this Agreement (such ABE Units together with any ABE Units withheld at the Second Closing, the “ Indemnification Escrow Amount ”) and (b) the parties hereto will cause to be deposited by HGF into escrow cash in the amount of $7,794,124 and ABE will deposit 1,228,547 ABE Units (the “ HP Purchase Price Escrow Amount ” and together with the ABE Units withheld at the First Closing, the “ Escrow Amount ”).  At the Second Closing, (x) the Escrow Agent will withhold 49,143 ABE Units issuable to HP pursuant to Section 2.4 of this Agreement, (y) release 1,179,404 ABE Units to HP or its designees and (z) release the cash portion of the HP Purchase Price Escrow Amount to HP or its designees.  The Indemnification Escrow Amount shall be held in escrow for a period of six months from the First Closing to secure the indemnification obligations of the Selling HGF Partners.  The Escrow Amount shall be held and applied pursuant to the provisions of this Agreement and an escrow agreement in the form attached hereto as Exhibit A (the “ Escrow Agreement ”).

Section 2.4            Purchase Price .  The aggregate purchase price for the HGF Limited Partnership Interests and DF Common Shares owned by SDWG and HP shall be $15,860,020 in cash and 2,499,999 newly issued ABE Units.

(a)            At the First Closing, Acquisition Sub shall pay SDWG (1) $7,847,465 in cash and issue to SDWG 1,271,452 newly issued ABE Units (of which 50,857 ABE Units will be deposited in the Escrow Fund) with respect to its HGF Limited Partnership Interest and (2) $218,430 in cash with respect to its DF Common Shares.

(b)           At the Second Closing, Acquisition Sub shall pay HP (1) $7,584,260 in cash and issue to HP or its designees 1,228,547 newly issued ABE Units (of which 49,143 ABE Units will be deposited in the Escrow Fund) with respect to its HGF Limited Partnership Interest and (2) $209,864 in cash with respect to its DF Common Shares.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF HGF

HGF represents and warrants to ABE and Acquisition Sub that the statements contained in this Article III are true and correct, except as expressly set forth in the disclosure schedule delivered by HGF to ABE on or before the date of this Agreement (the “ HGF Disclosure Schedule ”).  The HGF Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article III.  For purposes of this Agreement, each statement or other item of information set forth in one section of the HGF Disclosure Schedule shall be deemed to be a part of the representation and warranty to which it relates and shall be deemed to be a disclosure for all other sections of the HGF Disclosure Schedule; provided, that the mere listing in the HGF Disclosure Schedule of a document or other item shall not be deemed adequate to disclose an exception or qualification to a representation or warranty made in this Agreement (unless it is reasonably

2

 



apparent that such exception or qualification relates to, or is applicable to, such representation or warranty).

Section 3.1             Organization of HGF .  HGF is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite partnership power to own, lease and operate its property and to carry on its business as now being conducted, and is duly qualified or licensed to do business and is in good standing as a foreign partnership in the State of South Dakota.  All of HGF’s offices, manufacturing facilities, and employees are located in South Dakota.

Section 3.2             HGF Partnership Interests .

(a)           The general partner of HGF is DF with a Percentage Interest of .818%.  The sole limited partners of HGF are SDWG, with a Percentage Interest of 47.898%, HP, with a Percentage Interest of 46.284%, and Aventine Renewable Energy, Inc., a Delaware corporation (“ Aventine ”), with a Percentage Interest of 5%.  Except as provided in the Agreement of Limited Partnership, all of the HGF Partnership Interests are validly issued and are not subject to repurchase rights by HGF.  Except as provided in the Agreement of Limited Partnership, there are no obligations, contingent or otherwise, of HGF to repurchase, redeem or otherwise acquire any HGF Partnership Interests or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.

(b)           DF, SDWG, HP and Aventine are the only partners of HGF, and no other person or entity has any right to purchase additional equity securities of HGF from HGF.  Except as provided in this Agreement and the other Transaction Documents or any transaction contemplated hereby or thereby, to HGF’s knowledge, there are no voting trusts, proxies or other agreements or understandings with respect to the voting of the HGF Partnership Interests.

Section 3.3             Authority; No Conflict; Required Filings and Consents .

(a)           HGF has all requisite partnership power and authority to enter into this Agreement.  The execution and delivery of this Agreement has been duly authorized by all necessary partnership action on the part of HGF.  This Agreement has been duly executed and delivered by HGF.  This Agreement constitutes, assuming the due authorization, execution and delivery by the other parties hereto and thereto, the valid and binding obligation of HGF, enforceable by ABE against HGF in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.

(b)           Except as set forth on the HGF Disclosure Schedule, the execution and delivery by HGF of this Agreement does not, and the consummation of the transactions contemplated by this Agreement and the Transaction Documents will not, (i) conflict with, or result in any violation or breach of any provision of HGF’s Certificate of Limited Partnership or its Agreement of Limited Partnership, (ii) to the knowledge of HGF, result in any violation or breach of, or constitute a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit) under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, contract or other agreement, instrument or obligation to which HGF is a party or by which it or any of its properties or assets may be bound, or (iii) to the knowledge of HGF, and assuming the accuracy of the representations and warranties made in this Agreement by ABE and Acquisition Sub, conflict with or violate any federal, state, local or municipal laws, statutes, ordinances, regulations and rules, or any orders, writs injunctions, awards, judgments and decrees applicable to its assets, properties and business.

(c)           None of the execution and delivery by HGF of this Agreement or the consummation of the transactions contemplated by this Agreement or the Transaction Documents will require HGF to obtain any consent, approval, order or authorization of, or to make any registration,

3

 



declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality (“ Governmental Entity ”), except for such consents, authorizations, filings, approvals and registrations that are listed on the HGF Disclosure Schedule.

Section 3.4             Financial Statements; Absence of Undisclosed Liabilities .

(a)           HGF has delivered to ABE copies of HGF’s audited balance sheets as of December 31, 2005, December 31, 2004 and December 31, 2003 and HGF’s unaudited balance sheet for the eight months ended August 31, 2006 and the related unaudited statements of operations, members’ equity and cash flow for the years ended December 31, 2005, December 31, 2004 and December 31, 2003 and the eight months ended August 31, 2006 (together with the HGF balance sheets, the “HGF Financial Statements ”).

(b)           The HGF Financial Statements are in accordance with the books and records of HGF and present fairly in all material respects, the financial position, results of operations and cash flows of HGF as of their historical dates and for the periods indicated.  The HGF Financial Statements have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) applied on a basis consistent with prior periods and except that unaudited financial statements may not contain footnotes and are subject to year-end adjustments.

(c)           HGF has no material debt, liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, and whether due or to become due, that is not reflected or reserved against in the August 31, 2006 HGF Balance Sheet (the “ Most Recent HGF Balance Sheet ”), except for those that may have been incurred after the date of the Most Recent HGF Balance Sheet, and except for those not required by GAAP to be reflected on the Most Recent HGF Balance Sheet. All debts, liabilities, and obligations incurred after the date of the Most Recent HGF Balance Sheet were incurred in the ordinary course of business.

Section 3.5             Tax Matters .

(a)           Since January 1, 2002, all Returns required to be filed by or on behalf of HGF have been duly filed on a timely basis, and such Returns are true, complete and correct in all material respects.  All Taxes shown to be payable on such Returns or on subsequent assessments with respect thereto, and all payments of estimated Taxes required to be made prior to the date hereof by or on behalf of HGF with respect to such Returns have been paid in full on a timely basis and no other Taxes are payable by HGF with respect to items or periods covered by such Returns (whether or not shown on or reportable on such Returns).  HGF has withheld and paid over all Taxes required to have been withheld and paid over, and complied with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto, in connection with amounts paid or owing to any employee, creditor, independent contractor or other third party.  There are no liens on any of the assets of HGF with respect to Taxes, other than liens for Taxes not yet due and payable or for Taxes that HGF is contesting in good faith through appropriate proceedings and for which appropriate reserves have been established on the Most Recent HGF Balance Sheet.  HGF has not at any time been (i) a member of an affiliated group of companies filing consolidated, combined or unitary income or franchise tax returns, or (ii) a member of any partnership or joint venture for a period for which the statute of limitations for any Tax potentially applicable as a result of such membership has not expired.

(b)           The amount of HGF’s liability for unpaid Taxes (whether actual or contingent) for all periods beginning on or after January 1, 2002 through the date of the Most Recent HGF Balance Sheet does not, in the aggregate, exceed the amount of the current liability accruals for Taxes reflected on the Most Recent HGF

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Balance Sheet, and the Most Recent HGF Balance Sheet reflects proper accrual in accordance with GAAP of all liabilities for Taxes payable after the date of the Most Recent HGF Balance Sheet attributable to transactions and events occurring prior to such date.  No material amount of taxable income or liability for Taxes has been realized or incurred (or prior to and including the First Closing Date will be realized or incurred) since such date other than in the ordinary course of business.

(c)           ABE has been furnished by HGF with true and complete copies of (i) income tax audit reports, statements of deficiencies, closing or other agreements received by or on behalf of HGF relating to Taxes for all periods beginning on or after January 1, 2002, and (ii) all federal and state income or franchise tax Returns and state sales and use tax Returns for or including HGF for all periods beginning on or after January 1, 2002.  HGF does not do business in or derive income from any state other than states for which Returns have been duly filed and furnished to ABE.

(d)           Except as set forth on the HGF Disclosure Schedule, the Returns of HGF for periods beginning on or after January 1, 2002 have never been audited by a government or taxing authority, nor is any such audit in process, pending or, to HGF’s knowledge, threatened (in writing).  Since January 1, 2002, no deficiencies have been asserted (in writing), and HGF has not received notice (in writing) that it has not filed a Return or paid Taxes required to be filed or paid.  HGF is neither a party to any action or proceeding for assessment or collection of Taxes, nor has such event been asserted or threatened (in writing) against HGF or any of its assets.  No waiver or extension of any statute of limitations is in effect with respect to Taxes or Returns of HGF.  HGF has disclosed on its federal and state income and franchise Returns for periods beginning on or after January 1, 2002 all positions taken therein that could give rise to a substantial understatement penalty or comparable provisions of applicable state, local, foreign or other Tax laws.

(e)           Except as may be required as a result of the transactions contemplated hereby, HGF has not been and will not be required to include any material adjustment in taxable income for any Tax period beginning on or after January 1, 2002 (or portion thereof) or any comparable provision under state or foreign Tax laws as a result of transactions, events or accounting methods employed prior to the First Closing.

(f)            HGF is not, nor has it ever been, a party to any Tax sharing agreement.

(g)           HGF is not, nor has it been, taxable as a corporation under the Code.

Section 3.6            Absence of Certain Changes or Events .  Since August 31, 2006, other than as set forth in the HGF Disclosure Schedule, HGF has operated its business in the ordinary course consistent with its past practices, and, other than as set forth in the HGF Disclosure Schedule, since such date there has not been with respect to HGF any:

(a)           Material Adverse Effect on HGF or any change, event, circumstance, condition or effect that would reasonably be expected to result in a Material Adverse Effect on HGF;

(b)           amendment or change in its Certificate of Limited Partnership or Agreement of Limited Partnership;

(c)           incurrence, creation or assumption of:  (i) any material Encumbrance on any of its assets or properties (other than Permitted Encumbrances), (ii) any material liability for borrowed money or (iii) any material liability as a guarantor or surety with respect to the obligations of others;

(d)           payment or discharge of any material Encumbrance on any of its assets or properties, other than in the ordinary course of business, or payment or discharge of any of its liabilities, other than in the ordinary course of business, after the date of the Most Recent HGF Balance Sheet;

(e)           material damage, destruction or loss of any material property or material asset, whether or not covered by insurance;

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(f)            distribution made in respect of the HGF Partnership Interests (other than the distribution contemplated under Section 6.2(i)), any direct or indirect purchase or other acquisition of any HGF Partnership Interest or any change in any rights, preferences, privileges or restrictions of any HGF Partnership Interest;

(g)           material change or increase in the compensation payable or to become payable to any of its officers, managers, employees, partners, agents, consultants or independent contractors, or in any bonus, commission, expense reimbursement, pension, severance, retention, or insurance plan of HGF or in any other benefit payment or arrangement made to or with any of such officers, managers, employees, partners, agents, consultants or independent contractors; or material modification of any “nonqualified deferred compensation plan” as defined in Code Section 409A;

(h)           material change with respect to its management, supervisory or other key personnel of HGF; termination of employment of a material number of employees of HGF; termination of the engagement of a material number of agents, consultants, or independent contractors of HGF; or any union organizing activity at any HGF facility;

(i)            liability incurred by it to any of its officers, managers, employees, partners, agents, consultants, or independent contractors except for normal and customary compensation and expense allowances in the ordinary course of its business consistent with its past practices;

(j)            loan, advance (other than ordinary advances for work-related expenses) or capital contribution to, or any investment in, any of its officers, managers or partners or any firm or business enterprise in which any such person had a direct or indirect material interest at the time of such loan, advance, capital contribution or investment;

(k)           entering into, amendment of, relinquishment, termination or nonrenewal of any HGF Material Contract other than in the ordinary course of its business consistent with its past practices, default by HGF under any such Material Contract; or written assertion by the other party thereto of any material problems with its services or performance under such Material Contract or such other party’s desire to so amend in any material respect, relinquish, terminate or not renew any such Material Contract;

(l)            entering into by it of any Contract that by its terms requires or contemplates a current and/or future financial commitment, expense or obligation on its part that involves any individual payment in excess of $10,000 or aggregate payments in excess of $120,000 in any twelve month period;

(m)          making or entering into any Contract with respect to any acquisition, sale or transfer of any material asset of HGF that is not entered into in the ordinary course of its business consistent with past practices;

(n)           material change in accounting policies, methods or practices (including any change in depreciation or amortization policies or rates or revenue recognition policies); change in Tax elections or methods; or revaluation of any of its assets (other than in connection with or as a result of the transactions contemplated by this Agreement);

(o)           deferral of the payment of any material accounts payable, or any material discount, accommodation or other concession made in order to accelerate or induce the collection of any receivable, in each case other than in the ordinary course of business consistent with past practice;

(p)           payment, directly or indirectly, of any material liability before the same became due and payable in accordance with its terms or otherwise than in the ordinary course of its business consistent with past practice; or

 

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(q)           announcement of, any negotiation by or any entry into any Contract to do any of the things described in the preceding clauses (a) through (p) (other than negotiations and agreements with ABE and its representatives regarding the transactions contemplated by this Agreement).

Section 3.7             Title and Related Matters .

(a)           Except as set forth on the HGF Disclosure Schedule, HGF has good and valid title to all its properties, interests in properties and assets, real and personal, free and clear of all Encumbrances except Permitted Encumbrances.  The equipment of HGF used in the operation of its business is adequate for the business conducted by HGF and, to the knowledge of HGF, in good operating condition and repair, ordinary wear and tear excepted.  All personal property leases to which HGF is a party are valid, binding obligations of HGF and are enforceable against HGF, and, to HGF’s knowledge are valid, binding on, and are enforceable against the other parties thereto and are in effect in accordance with their respective terms, except in each case to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.  Except as set forth on the HGF Disclosure Schedule, to the knowledge of HGF, there is not under any of such leases any existing default or event of default or event which, with notice or lapse of time or both, would constitute a default.  The HGF Disclosure Schedule contains a copy of HGF’s depreciation schedule, which lists all fixed assets with an original cost greater than $5,000 True and correct copies of HGF’s personal property leases have been provided to ABE or its representatives.

(b)           The HGF Disclosure Schedule sets forth a complete list of (i) all real property and interests in real property owned in fee by HGF (individually, an “ Owned HGF Property ” and collectively, the “ Owned HGF Properties ”), and (ii) all real property and interests in real property leased or occupied by HGF, or which HGF has the right to occupy, now or in the future (individually, a “ Leased HGF Property ” and collectively, the “ Leased HGF Properties ”; the  Owned HGF Properties and the Leased HGF Properties may hereinafter be individually referred to as the “ HGF Property ” and collectively as the “ HGF Properties ”).  Each agreement pursuant to which HGF leases or occupies (or has the right to lease or otherwise occupy) any Leased HGF Property may hereinafter be referred to as a “ HGF Real Property Lease.

(c)           Title insurance policies have been issued insuring HGF’s fee simple title to each parcel of the Owned HGF Property in amounts at least equal to the purchase price thereof, and all premiums due under such policies have been paid and no claim has been made against any such policy.  True and correct copies of each of such title insurance policies have been provided to ABE or its representatives.  The Owned HGF Property constitutes all of the real property owned by HGF on the date hereof, and HGF has never owned any real property other than the Owned HGF Property.  There are no development or other agreements that limit the ability to protest real property taxes or assessments, fix minimum real estate taxes or require continued business operations with respect to any parcel of HGF Property.  Except as set forth on the HGF Disclosure Schedule, all HGF Property is in compliance with all laws and codes, including all zoning laws, codes and ordinances, for the current and intended purpose of the HGF Property.

(d)           HGF has paid all rent due and is not otherwise in material default under any HGF  Real Property Lease and to the knowledge of HGF no other party is in default thereof and no party to the HGF Real Property Leases has delivered written notice of any exercise of any termination rights with respect thereto.  True and correct copies of each of the HGF Real Property Leases have been provided to ABE or its representatives.  Each HGF Real Property Lease constitutes the entire agreement between the parties thereto.  There are no disputes, oral agreements or forbearance programs in effect as to any of the HGF Real Property Leases.  Except as set out in the HGF Disclosure Schedule:  (i) no

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estoppel certificates have been given by HGF to any mortgagee or other third party that would preclude the assertion of any claim by the tenant under any HGF Real Property Lease, affect any of the tenant’s rights or obligations under such HGF Real Property Lease or otherwise be binding upon any successor to HGF’s position under such HGF Real Property Lease; (ii) HGF has not contested since January 1, 2004, and is not currently contesting, any operating costs, real estate taxes or assessments or other charges payable by the tenant under such HGF Real Property Lease; (iii) there are no purchase options, rights of first refusal, first option or other rights held by HGF with respect to such HGF Real Property Lease, or the real estate and/or buildings affected by such HGF Real Property Lease that are not contained within such HGF Real Property Lease; and (iv) HGF has not exercised any option or right to terminate, renew or extend or otherwise affect the rights or obligations of the tenant under such HGF Real Property Lease or to purchase the real property subject to such HGF Real Property Lease.

(e)           All of the land, buildings, structures and other improvements used by HGF in the conduct of its business are included in the HGF Property.  Except for the HGF Real Property Leases and those items set forth in Section 3.7 of the HGF Disclosure Schedule, there are no leases, subleases or occupancy agreements in effect with respect to the HGF Property.  There are no pending or, to the knowledge of HGF, threatened or contemplated actions or proceedings regarding condemnation or other eminent domain actions or proceedings affecting the HGF Property or any part thereof or of any sale or other disposition of the HGF Property or any part thereof in lieu of condemnation.  No portion of the HGF Property has suffered any material damage by fire or other casualty which has not heretofore been completely repaired and restored.

Section 3.8             Proprietary Rights .

(a)           The HGF Disclosure Schedule sets forth all:  (1) patents and patent applications owned by HGF; (2) all material software used in the HGF Business,  (3) Internet domain names used in the HGF Business, (4) all registered copyrights and applications to register copyrights, (5) trademarks (with separate listings of registered and unregistered trademarks), and (6) trade names (the “HGF Proprietary Rights” ).  The HGF Disclosure Schedule sets forth all licenses and other agreements with third parties (the “ Third Party Licenses ”) relating to any material patents, copyrights, software, technology, processes or trademarks (the “ Third Party Technology” ) that HGF is licensed or otherwise authorized by such third parties to use, market, distribute or incorporate into HGF products.  Except as set forth on the HGF Disclosure Schedule, HGF owns all right, title and interest in and to or has the right to use all HGF Proprietary Rights.  No claims have been asserted or threatened in writing against HGF by any person challenging HGF’s use of any HGF Proprietary Rights or challenging or questioning the validity or effectiveness of any material license or agreement relating thereto or alleging a violation of any person’s or entity’s privacy, personal or confidentiality rights.  To HGF’s knowledge, none of HGF’s products nor the use or exploitation of any HGF Proprietary Rights or the Third Party Technology in HGF’s current business infringes on the rights of or constitutes misappropriation of any proprietary information or intangible property right of any third person or entity.

(b)           To HGF’s knowledge, no current or former officer, manager, employee, partner, agent, consultant, or independent contractor of HGF:  (1) is in material violation of any term or covenant of any employment contract, patent disclosure agreement, invention assignment agreement, nondisclosure agreement, noncompetition agreement or any other contract with any other person by virtue of such officer’s, manager’s, employee’s, partner’s, agent’s, consultant’s or independent contractor’s being employed by, or performing services for, HGF or using trade secrets or proprietary information of others; or (2) has developed any technology, software or other copyrightable, patentable or otherwise proprietary work for HGF that is subject to any contract under which such officer, manager, employee, partner, agent, consultant or independent contractor has assigned or otherwise granted to any

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third party any rights in or to such technology, software or other copyrightable, patentable or otherwise proprietary work.

(c)           To HGF’s knowledge, there is no material unauthorized use, disclosure, infringement or misappropriation of any HGF Proprietary Rights or any Third Party Technology to the extent licensed by or through HGF by any person.  HGF has not entered into any agreement to indemnify any other person against any charge of infringement of any HGF Proprietary Rights.

(d)           HGF has taken all steps customary and reasonable in its industry to protect and preserve the confidentiality and proprietary nature of all HGF Proprietary Rights other confidential information not otherwise protected by patents, patent applications or copyright (“ Confidential Information ”).

Section 3.9             Employee Benefit Plans .

(a)           The HGF Disclosure Schedule lists, with respect to HGF and any trade or business (whether or not incorporated) that is treated as a single employer with HGF (an “ ERISA Affiliate ”) within the meaning of Section 414(b), (c), (m) or (o) of the Code, (i) all employee benefit plans (as defined in Section 3(3) of ERISA), (ii) each loan to a non-officer employee, loans to officers and any equity or phantom equity based plans, supplemental retirement, severance, sabbatical, medical, dental, vision care, disability, employee relocation, cafeteria benefit (Code Section 125) or dependent care (Code Section 129), life insurance or accident insurance plans, programs or arrangements, (iii) all bonus, pension, profit sharing, savings, deferred compensation or incentive plans, programs or arrangements, (iv) other fringe or employee benefit plans, programs or arrangements that apply to senior management of HGF and that do not generally apply to all employees, and (v) any current or former employment or executive compensation or severance agreements, written or otherwise, for the benefit of, or relating to, any present or former employee, consultant or director of HGF as to which (with respect to any of items (i) through (v) above) any potential liability is borne by HGF (together, the “ HGF Employee Plans ”).

(b)           HGF has delivered to ABE or its representatives a copy of each of the HGF Employee Plans and related plan documents (including trust documents, insurance policies or contracts, employee booklets, summary plan descriptions and other authorizing documents, and, to the extent still in its possession, any material employee communications relating thereto) and has, with respect to each HGF Employee Plan that is subject to ERISA reporting requirements, provided copies of the most recent Form 5500 reports filed.  Any HGF Employee Plan intended to be qualified under Section 401(a) of the Code (i) is the subject of an unrevoked favorable determination letter from the IRS with respect to such plan’s qualified status under the Code, as amended by that Tax legislation commonly known as “GUST” and “EGTRRA,” (ii) has remaining a period of time under the Code or applicable Treasury regulations or IRS pronouncements in which to request, and make any amendments necessary to obtain, such a letter from the IRS, or (iii) is a prototype or volume submitter plan entitled, under applicable IRS guidance, to rely on the favorable opinion or advisory letter issued by the IRS to the sponsor of such prototype or volume submitter plan.  HGF has also furnished ABE with the most recent IRS letter issued with respect to each such HGF Employee Plan that is maintained solely by HGF and its ERISA Affiliates (a “Single Employer Plan” ), and to HGF’s knowledge, nothing has occurred since the issuance of each such letter which could reasonably be expected to cause the loss of the tax-qualified status of such HGF Employee Plan.  To HGF’s knowledge, nothing has occurred since the issuance of the most recent IRS letter that could reasonably be expected to cause the loss of the tax-qualified status of any HGF Employee Plan subject to Code Section 401(a) that is a Multi-Employer Plan or Multiple-Employer Plan.

(c)           (i) With respect to any HGF Employee Plans that are Single-Employer Plans, and to HGF’s knowledge, with respect to any HGF Employee Plans that are Multiple-Employer Plans, none of the HGF Employee Plans promises or provides retiree medical or other retiree welfare benefits to

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any person (other than as required under applicable statutory law or regulation); (ii) there has been no “prohibited transaction,” as such term is defined in Section 406 of ERISA and Section 4975 of the Code, with respect to any HGF Employee Plan; (iii) each HGF Employee Plan has been administered in all material respects in accordance with its terms and in all material respects in compliance with the requirements prescribed by any and all statutes, rules and regulations (including ERISA and the Code), and HGF and each subsidiary or ERISA Affiliate have performed all material obligations required to be performed by them under, are not in any material respect in default, under or violation of, and have no knowledge of any material default or violation by any other party to, any of the HGF Employee Plans; (iv) neither HGF nor any subsidiary or ERISA Affiliate is subject to any material liability or penalty under Sections 4976 through 4980 of the Code or Title I of ERISA with respect to any of the HGF Employee Plans; (v) all material contributions required to be made by HGF or any subsidiary or ERISA Affiliate to any HGF Employee Plan have been made on or before their due dates and a reasonable amount has been accrued for contributions to each HGF Employee Plan for the current plan years; (vi) no “reportable event” within the meaning of Section 4043 of ERISA (excluding any such event for which the 30 day notice requirement has been waived under the regulations to Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA has occurred; and (vii) except as set forth in the HGF Disclosure Schedule, no HGF Employee Plan is covered by, and neither HGF nor any ERISA Affiliate has incurred or expects to incur any material liability under, Title IV of ERISA or Section 412 of the Code.  With respect to each HGF Employee Plan subject to ERISA as either an employee pension plan within the meaning of Section 3(2) of ERISA or an employee welfare benefit plan within the meaning of Section 3(1) of ERISA, HGF has prepared in good faith and timely filed all material governmental reports required to be filed by HGF (which were true and correct in all material respects as of the date filed) and has properly and timely filed and distributed or posted all material notices and reports to participants required to be filed, distributed or posted by HGF with respect to each such HGF Employee Plan.  Since January 1, 2002, no suit, administrative proceeding, action or other litigation has been brought, or to the knowledge of HGF is threatened, against or with respect to any such HGF Employee Plan, including any audit or inquiry by the IRS or United States Department of Labor.  Except as set forth in the HGF Disclosure Schedule, neither HGF nor any ERISA Affiliate is a party to, or has made any contribution to or otherwise incurred any obligation under, any “multi-employer plan” as defined in Section 3(37) of ERISA (a “ Multi-Employer Plan ”) or any plan maintained by more than one unrelated employer (a “ Multiple-Employer Plan ”).  Neither HGF nor any ERISA Affiliate has been notified by any Multiple-Employer Plan that it is a “substantial employer” with respect to such Multiple-Employer Plan that is subject to the withdrawal provisions of Section 4063 of ERISA, nor would HGF or any ERISA Affiliate have any liability to the Pension Benefit Guaranty Corporation under Section 4063 of ERISA if it withdrew from such a Multiple-Employer Plan on or before the date of this Agreement.

(d)           With respect to each HGF Employee Plan, HGF has complied in all material respects with (i) the applicable health care continuation and notice provisions of COBRA, (ii) the applicable requirements of the FMLA, (iii) the applicable requirements of HIPAA (iv) the applicable requirements of the ADA; (v) the ADEA, and (vi) the applicable requirements of WHCRA.

(e)           Except as set forth in the HGF Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not (i) entitle any current or former officer, manager, employee, partner, agent, consultant, independent contractor or other service provider of HGF or any other ERISA Affiliate to severance benefits or any other payment (including, without limitation, unemployment compensation, golden parachute or bonus), except as expressly provided in this Agreement, or (ii) accelerate the time of payment or vesting of any such benefits, or (iii) increase or accelerate any benefits or the amount of compensation due any such employee or service provider.

(f)            There has been no amendment to, written interpretation or written announcement by HGF or other ERISA Affiliate relating to, or change in participation or coverage under, any HGF

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Employee Plan which would materially increase the expense of maintaining such Plan above the level of expense incurred with respect to that Plan for the most recent fiscal year included in the HGF Financial Statements other than as required by law.  No HGF Employee Plan will be subject to any surrender fees or services fees upon termination other than the normal and reasonable administrative fees associated with the termination of benefit plans.

(g)           The HGF Disclosure Schedule lists all “nonqualified deferred compensation plans” (within the meaning of Section 409A of the Code) to which HGF is a party.  Each such nonqualified deferred compensation plan to which HGF is a party complies in all material respects with the requirements of paragraphs (2), (3) and (4) of Section 409A(a) by its terms and has been operated in material compliance with such requirements.  No event has occurred that would be treated by Section 409A(b) as a transfer of property for purposes of Section 83 of the Code.

Section 3.10           Bank Accounts .  The HGF Disclosure Schedule sets forth the names and locations of all banks, trust companies, savings and loan associations, and other financial institutions at which HGF maintains accounts of any nature and the names of all persons authorized to draw thereon or make withdrawals therefrom.

Section 3.11           Contracts .

(a)            The HGF Disclosure Schedule lists all Contracts to which HGF is a party and (i) which require HGF to pay any third party an amount in excess of $10,000 per payment or in excess of $120,000 in the aggregate in any twelve month period, (ii) which require payments to HGF from any third party in an amount in excess of $10,000 per payment or in excess of $120,000 in the aggregate in any twelve month period, (iii) which restrict HGF from competing with any person or from carrying on its business anywhere in the world, or (iv) under which HGF guarantees the obligation of other persons or has agreed to acquire or guarantee the obligations of any other persons (collectively, the “HGF Material Contracts” ).

(b)           All of the HGF Material Contracts are valid, binding obligations of HGF and are enforceable against HGF, and to HGF’s knowledge, are valid, binding obligations of, and are enforceable against, the other parties thereto in accordance with their respective terms, except in each case to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.  No HGF Material Contract contains any liquidated damages, penalty or similar provision.  To the knowledge of HGF, no party to any such HGF Material Contract intends to cancel, withdraw, modify or amend such contract, agreement or arrangement.

(c)           Except as set forth on the HGF Disclosure Schedule, HGF is not in default under or in breach or violation of, nor, to HGF’s knowledge, is there any valid basis for any claim of default by HGF under, or breach or violation by HGF of, any material provision of any HGF Material Contract.  To the knowledge of HGF, no other party is in default under or in breach or violation of, nor is there any valid basis for any claim of default by any other party under or any breach or violation by any other party of, any HGF Material Contract.

(d)           Except as set forth on the HGF Disclosure Schedule, none of the HGF Material Contracts provides for indemnification by HGF of any third party.  No claims have been made or, to HGF’s knowledge, threatened that could require indemnification by HGF, and HGF has not paid any amounts to indemnify any third party as a result of indemnification requirements of any kind.

Section 3.12           Orders, Commitments and Returns .  All agreements, contracts, or commitments for the purchase of supplies by HGF were made in the ordinary course of business.  Except as set forth on the HGF Disclosure Schedule, HGF does not have any oral contracts or arrangements for the sale of any

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product or service by HGF that require payments to or from any third party in an amount in excess of $10,000 per payment or in excess of $120,000 in the aggregate in any twelve month period.

Section 3.13           Compliance With Law .  To HGF’s knowledge, HGF and the operation of its business are in compliance in all material respects with all applicable laws and regulations material to the operation of its business.

Section 3.14           Labor Matters; No Discrimination .

(a)           HGF’s employees are not unionized.  To HGF’s knowledge, there is no union organizing activity pending with respect to HGF or the HGF Business.  HGF is not a party to a collective bargaining agreement.  HGF has not experienced any material work stoppage or other material labor difficulty.

(b)           There is not and has not been any claim against HGF or its officers, managers or employees, or to HGF’s knowledge, threatened against HGF or its officers, managers or employees, (i) based on actual or alleged unlawful discrimination, including but not limited to unlawful harassment because of race, national origin, age, sex, disability, religion or other protected-class status, or (ii) based on other actual or alleged tortious or otherwise unlawful conduct related to any person’s employment, or (iii) based on actual or alleged breach of contract, promissory estoppel, or other cause of action with respect to any person’s employment by HGF.

(c)           Except as set forth in the HGF Disclosure Schedule, there are no pending claims against HGF under any workers’ compensation plan or policy or for long term disability.  HGF has no material obligations under COBRA with respect to any former employees or qualifying beneficiaries thereunder.  There are no proceedings pending or, to the knowledge of HGF, threatened, between HGF and any of its employees.  The HGF Disclosure Schedule lists each HGF employee who is currently on leave from active employment, the reason for such leave, and the expected date of return to active employment, each person who is on a reduced schedule as an accommodation for a disability or under FMLA or any other similar state law.  No employee of HGF has been involuntarily terminated since August 31, 2006.

(d)           Except as set forth on the HGF Disclosure Schedule, no key employee of HGF has given notice to HGF, nor does HGF otherwise have knowledge, that any such key employee intends to terminate his or her employment with HGF.  The employment of each of the employees of HGF is “at will” and HGF does not have any obligation to provide any particular form or period of notice prior to terminating the employment of any of their respective employees, except as set forth on the HGF Disclosure Schedule.  As of the date hereof, except as contemplated by this Agreement, HGF has not entered into any Contract that obligates or purports to obligate ABE or Acquisition Sub to continue to employ any present or former employee or to offer to engage any present or former agent, consultant or independent contractor of HGF.

Section 3.15           Trade Regulation .  No claims have been communicated or threatened in writing against HGF with respect to wrongful termination of any dealer, distributor or any other marketing entity, discriminatory pricing, price fixing, unfair competition, false advertising, or any other violation of any laws or regulations relating to anti-competitive practices or unfair trade practices of any kind.

Section 3.16           Insider Transactions .  Except as set forth on the HGF Disclosure Schedule, no affiliate of HGF has any interest in any equipment or other property, real or personal, tangible or intangible of HGF, including, without limitation, any HGF Proprietary Rights or, to the knowledge of HGF, any creditor, supplier, customer, manufacturer, agent, representative, or distributor of HGF’s products; provided, however, that no such affiliate or other person shall be deemed to have such an interest solely by virtue of the ownership of less than 5% of the outstanding stock or debt securities of

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any publicly-held company, the stock or debt securities of which are traded on a recognized stock exchange.

Section 3.17           Employees, Independent Contractors and Consultants .  The HGF Disclosure Schedule lists all currently effective written consulting, independent contractor and/or employment agreements and other material agreements entered into by HGF and any individual officers, managers, employees, partners,  consultants, or independent contractors.  True and correct copies of all such written agreements have been provided to ABE or its representatives.  Also shown on the HGF Disclosure Schedule are the names, positions, salaries or other rate of compensation, including bonuses, of all persons presently employed by, or performing contract services for, HGF whose annual cash compensation, including bonuses in the last twelve months, exceeds $75,000.  Except as set forth on the HGF Disclosure Schedule, no bonus or other payment will become due to any HGF officer, manager, employee, partner, agent, consultant, or independent contractor as a result of this Agreement and the transactions contemplated hereby.

Section 3.18           Insurance .  HGF has insurance policies in effect covering the risks associated with its business and properties which are of such character and are in such amounts as are customarily maintained by entities engaged in the same or similar business similarly situated.  The HGF Disclosure Schedule contains a list of the principal policies of fire, liability and other forms of insurance currently held by HGF, and all claims made by HGF since January 1, 2006, under such policies.  To the knowledge of HGF, HGF has not done anything, either by way of action or inaction, that might invalidate such policies in whole or in part. There is no claim pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds.  All premiums due and payable under all such policies and bonds have been paid and HGF is otherwise in compliance with the terms of such policies and bonds in all material respects.  HGF has no knowledge of any threatened termination of, or material premium increase with respect to, any of such policies.

Section 3.19           Accounts Receivable .  Subject to any reserves set forth in the Most Recent HGF Balance Sheet, the accounts receivable shown on the Most Recent HGF Balance Sheet represent bona fide claims against debtors for sales and other charges, and are not subject to discount except for normal cash and immaterial trade discounts.

Section 3.20           Litigation .  Except as set forth on the HGF Disclosure Schedule, there is no private or governmental action, suit, charge, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of HGF, threatened against HGF or any of its properties or any of its employees, officers, managers or partners (in their capacities as such).  There is no judgment, decree, probable cause or other finding, or order against HGF, or, to the knowledge of HGF, any of its managers, officers or partners (in their capacities as such).

Section 3.21           Governmental Authorizations and Regulations . HGF has obtained each material federal, state, county, local or foreign governmental or regulatory consent, license, permit, grant, order or other authorization of a Governmental Entity that is required for the operation of HGF’s business or the holding of any interest in any of its properties and to HGF’s knowledge, all of such authorizations are in full force and effect.  HGF has provided ABE or its representatives copies of all such authorizations.

Section 3.22           Subsidiaries .  HGF has no subsidiaries.  HGF does not own or control (directly or indirectly) any capital stock, bonds or other securities of, and does not have any proprietary interest in, any other corporation, limited liability company, general or limited partnership, firm, association or business organization, entity or enterprise, and HGF does not control (directly or indirectly) the management or policies of any other corporation, limited liability company, partnership, firm, association or business organization, entity or enterprise.

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Section 3.23           Compliance with Environmental Requirements .

(a)            Except as set forth on the HGF Disclosure Schedule, to HGF’s knowledge, HGF has obtained all permits, licenses and other authorizations which are required under federal, state and local laws and relating to pollution or protection of the environment, including laws or provisions relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, or hazardous or toxic materials, substances, or wastes into air, surface water, groundwater, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants or hazardous or toxic materials, substances, or wastes or which are intended to assure the safety of employees, workers or other persons (collectively “ Environmental Laws ”).  To HGF’s knowledge, HGF is in compliance with all terms and conditions of all such permits, licenses and authorizations.  All such material permits, licenses and authorizations currently held by HGF are identified in the HGF Disclosure Schedule.

(b)           Except as set forth on the HGF Disclosure Schedule, there are no conditions, circumstances, activities, practices, incidents, or actions known to HGF which could reasonably be expected to form the basis of any claim, action, suit, proceeding, hearing, or investigation of, by, against or relating to HGF, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, or hazardous or toxic substance, material or waste.  Except as set forth on the HGF Disclosure Schedule, there is no Environmental Claim pending or, to HGF’s knowledge, threatened against HGF.

(c)            True and correct copies of all reports, licenses, permits, authorizations, disclosures and other documents of which it is aware relating in any way to the status of any of the HGF Property or otherwise relating to the business of HGF with respect to any Environmental Law have been provided to ABE or its representatives.

Section 3.24           Partnership Documents .  HGF has furnished to ABE or its representatives copies of (i) its Certificate of Limited Partnership and the HGF Agreement of Limited Partnership, as amended to date, (ii) all material permits, orders, and consents issued by any regulatory agency with respect to HGF or its operations, and all applications for such permits, orders and consents, (iii) records of any limited partnership proceedings, including any consents, actions, and meetings of the limited partners, the board of directors and any committees thereof.  The records of HGF provided hereunder are complete and accurate in all material respects, and the signatures appearing on all documents contained therein are the true or facsimile signatures of the persons purporting to have signed the same.

Section 3.25           No Brokers .  Neither HGF nor any Selling HGF Partner is obligated for the payment of fees or expenses of any broker or finder in connection with the origin, negotiation or execution of this Agreement or the other Transaction Documents or in connection with any transaction contemplated hereby or thereby.

Section 3.26           Offers .  HGF has suspended or terminated, and has the legal right to terminate or suspend, all negotiations and discussions of Acquisition Transactions with parties other than ABE.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF DF, SDWG AND HP

Each of DF, SDWG and HP represents and warrants to ABE and Acquisition Sub on behalf of itself only and not jointly that the statements contained in this Article IV with respect to it are true and correct:

Section 4.1             Organization . Such party is a limited liability company, cooperative or corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.

Section 4.2             Authority; No Conflict; Required Filings and Consents .

(a)           Such party has all requisite corporate or limited liability company power to enter into this Agreement and all Transaction Documents to which it is or will become a party and to consummate the transactions contemplated by this Agreement and such Transaction Documents. The execution and delivery of this Agreement and such Transaction Documents and the consummation of the transactions contemplated by this Agreement and such Transaction Documents have been duly authorized by all necessary action on the part of such party including approval by its board, subject only, to the approval by HP’s members under the provisions Section 3.9(b)(ii) of the HP Operating Agreement.

(b)           This Agreement has been and such Transaction Documents have been or, to the extent not executed by it as of the date hereof, will be duly executed and delivered by such party. This Agreement and each of the Transaction Documents to which such party is a party constitutes, and each of the Transaction Documents to which it will become a party, when executed and delivered by such party, will constitute, assuming the due authorization, execution and delivery by the other parties hereto and thereto, and assuming the accuracy of the representations and warranties made in this Agreement by ABE and Acquisition Sub, the valid and binding obligation of such party, enforceable by ABE against it in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.

(c)           The execution and delivery by such party of this Agreement and the Transaction Documents to which it is or will become a party does not, and the consummation of the transactions contemplated by this Agreement and the Transaction Documents to which it is or will become a party will not, (i) conflict with, or result in any violation or breach of any provision of its organizational and other governing documents, (ii) to its knowledge, result in any violation or breach of, or constitute a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, contract or other agreement, instrument or obligation to which it is a party or by which it or any of its properties or assets may be bound, except for the items disclosed in Section 3.3(b) of the HGF Disclosure Schedule, if any, or (iii) to its knowledge, and assuming the accuracy of the representations and warranties made in this Agreement by ABE and Acquisition Sub, conflict with or violate any federal, state, local or municipal laws, statutes, ordinances, regulations and rules, or any orders, writs injunctions, awards, judgments and decrees applicable to its assets, properties and business (and any regulations promulgated thereunder).

(d)           Assuming the accuracy of the representations and warranties made in this Agreement by ABE and Acquisition Sub, none of the execution and delivery by such party of this Agreement or of any other Transaction Document to which it is or will become a party or the consummation of the transactions contemplated by this Agreement or such Transaction Document will require such party to obtain any consent, approval, order or authorization of, or make any registration,

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declaration or filing with, any Governmental Entity, except for such consents, orders, authorizations, filings, approvals, declarations and registrations that are listed on the HGF Disclosure Schedule.

Section 4.3             Litigation . There is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of such party, threatened against it that would in any way affect its ability to consummate the transactions contemplated by this Agreement. There is no judgment, decree or order against such party that would in any way affect its ability to consummate the transactions contemplated by this Agreement.

Section 4.4             Offers . Such party has suspended or terminated, and has the legal right to terminate or suspend, all negotiations and discussions of Acquisition Transactions with parties other than ABE.

Section 4.5             Purchase for Investment . SDWG has total assets in excess of $5,000,000 as contemplated in the definition of “accredited investor” in Rule 501(a) of the Securities Act and is an accredited investor. SDWG is acquiring the ABE Units for its own account and not with a view to the distribution or resale thereof within the meaning of Section 2(11) of the Securities Act; and further represents that it has not adopted a plan or agreement providing for its dissolution, for a pro rata or similar distribution of the ABE Units being acquired by it, or adopted resolutions relative to the foregoing and it does not have a preexisting plan for distribution of the ABE Units. SDWG has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and the risks of the transactions contemplated hereby.

Section 4.6             Ownership of HGF Limited Partnership Interests and DF Common Shares . Each of SDWG and HP owns its HGF Limited Partnership Interests free and clear of all Encumbrances and each of SDWG and HP owns its DF Common Shares free and clear of all Encumbrances. The DF Common Shares are validly authorized, duly issued, fully paid and nonassessable, constitute all of the outstanding capital stock of DF and there are no outstanding warrants, options, subscriptions, or other agreements pursuant to which DF is or may become obligated to issue shares of capital stock or other securities of DF. DF is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite corporate power to own, lease and operate its property and to carry on its business as now being conducted and has not engaged in any business other than as general partner of HGF.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF ABE AND ACQUISITION SUB

ABE and Acquisition Sub jointly and severally represent and warrant to HGF and the Selling HGF Partners that the statements contained in this Article V are true and correct, except as expressly set forth in the disclosure schedule delivered by ABE to HGF and the Selling HGF Partners on or before the date of this Agreement (the “ ABE Disclosure Schedule ”). The ABE Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article V. As used in this Article V, the term “ABE” shall be deemed to include ABE and each of its subsidiaries. For purposes of this Agreement, each statement or other item of information set forth in one section of the ABE Disclosure Schedule shall be deemed to be a part of the representation and warranty to which it relates and shall be deemed to be a disclosure for all other sections of the ABE Disclosure Schedule; provided, that the mere listing in the ABE Disclosure Schedule of a document or other item shall not be deemed adequate to disclose an exception or qualification to a representation or warranty made in this Agreement (unless it is reasonably apparent that such exception or qualification relates to, or is applicable to, such representation or warranty).

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Section 5.1             Organization of ABE and Acquisition Sub . ABE is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite limited liability company power to own, lease and operate its property and to carry on its business as now being conducted, and is duly qualified or licensed to do business and is in good standing as a foreign limited liability company in each jurisdiction in which the nature of its business or ownership or leasing of properties makes such qualification or licensing necessary and where the failure to be so qualified or licensed could reasonably be expected to result in a Material Adverse Effect with respect to ABE. The ABE Disclosure Schedule contains a true and complete listing of the location of all offices, manufacturing facilities, and any other offices or facilities of ABE and its subsidiaries and a true and complete list of all states in which ABE or any of its subsidiaries maintains any employees. The ABE Disclosure Schedule contains a true and complete list of all states in which ABE or any of its subsidiaries is duly qualified or licensed to transact business as a foreign entity. Acquisition Sub is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite limited liability company power to own, lease and operate its property and to carry on its business as now being conducted, and is duly qualified or licensed to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of its business or ownership or leasing of properties makes such qualification or licensing necessary and where the failure to be so qualified or licensed could reasonably be expected to result in a Material Adverse Effect with respect to ABE.

Section 5.2             ABE Capital Structure .

(a)           All of the outstanding ABE Units were validly issued, and are not subject to any capital calls, are fully vested and not subject to forfeiture by the holder thereof. All outstanding ABE Units were issued in compliance with applicable federal and state securities laws. Except as set forth in the ABE Operating Agreement, there are no obligations, contingent or otherwise, of ABE to repurchase, redeem or otherwise acquire any ABE Units or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity. The ABE Disclosure Schedule sets forth: (i) the number of ABE Units or other equity securities of ABE, including restricted ABE Units, owned by Revis L. Stephenson III and Don Gales; (ii) the number of ABE Units or other equity securities of ABE that Mr. Stephenson and Mr. Gales have the right to purchase or otherwise acquire by virtue of the exercise of options or otherwise; and (iii) the status of Mr. Stephenson’s and Mr. Gales’ right to purchase or otherwise acquire ABE Units.

(b)           Except as set forth in the ABE Disclosure Schedule, there are no equity securities of any class or series of ABE, or any security exchangeable into or exercisable for such equity securities, issued, reserved for issuance or outstanding. Except for this Agreement and as may be contemplated by the Investor Rights Agreement, there are no options, warrants, equity securities, calls, rights, commitments, understandings or agreements of any character to which ABE is a party or by which it is bound obligating ABE to issue, deliver or sell, or cause to be issued, delivered or sold, additional ABE Units or obligating ABE to grant, extend or enter into any such option, warrant, equity security, call, right, commitment or agreement. Except for this Agreement, the sale of ABE Units contemplated by the Form SB-2 registration statement filed by ABE with the SEC on September 13, 2006 and option grants after the date hereof to new employees of ABE in the ordinary course of business, ABE is not in discussion, formal or informal, with any person or entity regarding the issuance of any equity or debt securities of ABE. Except as provided in this Agreement, the ABE Operating Agreement and the other Transaction Documents or any transaction contemplated hereby or thereby, there are no voting trusts, proxies or other agreements or understandings with respect to the voting of the ABE Units. No ABE securityholder had the right, whether pursuant to applicable law, contract or otherwise, to purchase or acquire any portion of a prior issuance of ABE securities that was not satisfied, waived (including, if applicable, through the expiration of a relevant notice period) to the extent not satisfied, or validly

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cancelled. ABE has not granted any person or entity any registration rights with respect to any of its securities, issued or unissued.

(c)           Except for restrictions under the ABE Operating Agreement, the ABE Disclosure Schedule sets forth any agreements restricting the transfer of any securities of ABE, identifying the parties thereto, the number of securities subject to restriction and a summary of the restrictions (the “ Lock-Up Agreements ”). The Lock-Up Agreements are in full force and effect and are valid and binding obligations of the parties thereto in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity. The ABE Disclosure Schedule sets forth a list of all prior transfers of ABE securities.

Section 5.3             Authority; No Conflict; Required Filings and Consents .

(a)           Each of ABE and Acquisition Sub has all requisite limited liability company power and authority to enter into this Agreement and all Transaction Documents to which it is or will become a party and to consummate the transactions contemplated by this Agreement and such Transaction Documents. The execution and delivery of this Agreement and such Transaction Documents and the consummation of the transactions contemplated by this Agreement and such Transaction Documents have been duly authorized by all necessary limited liability company action on the part of ABE and Acquisition Sub. This Agreement has been and such Transaction Documents have been or, to the extent not executed by ABE or Acquisition Sub as of the date hereof, will be duly executed and delivered by ABE and/or Acquisition Sub. This Agreement and each of the Transaction Documents to which ABE or Acquisition Sub is a party constitutes, and each of the Transaction Documents to which ABE or Acquisition Sub will become a party, when executed and delivered by ABE and/or Acquisition Sub, will constitute, assuming the due authorization, execution and delivery by the other parties hereto and thereto, the valid and binding obligation of ABE and/or Acquisition Sub, enforceable by HGF and the Selling HGF Partners against ABE and/or Acquisition Sub in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.

(b)           Except as set forth on the ABE Disclosure Schedule, the execution and delivery by ABE and Acquisition Sub of this Agreement and the Transaction Documents to which each is or will become a party does not, and the consummation of the transactions contemplated by this Agreement and the Transaction Documents to which each is or will become a party will not, (i) conflict with, or result in any violation or breach of any provision of the Certificate of Organization or operating agreement of ABE or Acquisition Sub, (ii) to the knowledge of ABE result in any violation or breach of, or constitute a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit) under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, contract or other agreement instrument or obligation to which ABE is a party or by which it or any of its properties or assets may be bound, or (iii) to the knowledge of ABE and assuming the accuracy of the representations and warranties made in this Agreement by SDWG, conflict with or violate any foreign, federal, state, local or municipal laws, statutes, ordinances, regulations and rules, or any orders, writs injunctions, awards, judgments and decrees applicable to the assets, properties and business.

(c)           None of the execution and delivery by ABE or Acquisition Sub of this Agreement or of any other Transaction Document to which ABE or Acquisition Sub is or will become a party or the consummation of the transactions contemplated by this Agreement or such Transaction Document will require ABE or Acquisition Sub to obtain any consent, approval, order or authorization

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of, or to make any registration, declaration or filing with, any Governmental Entity, except for such consents, authorizations, filings, approvals and registrations that are listed on the ABE Disclosure Schedule.

Section 5.4            SEC Filings . Each report, registration statement and definitive proxy statement filed by ABE with the Securities and Exchange Commission (the documents, the “ ABE SEC Documents ”), including the consolidated financial statements contained therein (the “ABE Financial Statements” ): (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto and were timely filed; and (ii) as of the respective dates thereof did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading. The ABE Financial Statements (i) are in accordance with the books and records of ABE; (ii) were prepared in accordance with GAAP on a consistent basis throughout the periods covered, except as may be indicated in the notes to such financial statements and, in the case of unaudited statements, as permitted by Form 10-QSB of the SEC, and except that unaudited financial statements may not contain footnotes and are subject to year-end adjustments; and (iii) fairly present the consolidated financial position of ABE and its subsidiaries as of the respective dates thereof and the consolidated results of operations, cash flows and the changes in members’ equity of ABE and its subsidiaries for the periods covered thereby. Except as set forth in the ABE Financial Statements, neither ABE nor its subsidiaries has any material debt, liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, whether due or to become due other than liabilities incurred in the ordinary course of business subsequent to June 30, 2006, and liabilities of the type not required under GAAP to be reflected in such financial statements.

Section 5.5             Tax Matters .

(a)           All Returns required to be filed prior to the date hereof by or on behalf of ABE have been duly filed on a timely basis, and such Returns are true, complete and correct in all material respects. All Taxes shown to be payable on such Returns or on subsequent assessments with respect thereto, and all payments of estimated Taxes required to be made prior to the date hereof by or on behalf of ABE with respect to such Returns have been paid in full on a timely basis and no other Taxes are payable by ABE with respect to items or periods covered by such Returns (whether or not shown on or reportable on such Returns). ABE has withheld and paid over all Taxes required to have been withheld and paid over, and complied with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto, in connection with amounts paid or owing to any employee, creditor, independent contractor or other third party. There are no liens on any of the assets of ABE with respect to Taxes, other than liens for Taxes not yet due and payable or for Taxes that ABE is contesting in good faith through appropriate proceedings and for which appropriate reserves have been established on the most recent balance sheet included in the ABE SEC Documents (the “Most Recent ABE Balance Sheet ”). ABE has not at any time been (i) a member of an affiliated group of companies filing consolidated, combined or unitary income or franchise tax returns, or (ii) a member of any partnership or joint venture for a period for which the statue of limitations for any Tax potentially applicable as a result of such membership has not expired.

(b)           The amount of ABE’s liability for unpaid Taxes (whether actual or contingent) for all periods through the date of the Most Recent ABE Balance Sheet does not, in the aggregate, exceed the amount of the current liability accruals for Taxes reflected on the Most Recent ABE Balance Sheet, and the Most Recent ABE Balance Sheet reflects proper accrual in accordance with GAAP of all liabilities for Taxes payable after the date of the Most Recent ABE Balance Sheet attributable to transactions and events occurring prior to such date. No material amount of taxable income or liability for Taxes has been realized or incurred (or prior to and including the First Closing Date will be realized or incurred) since such date other than in the ordinary course of business.

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(c)           HGF and the Selling HGF Partners have been furnished by ABE with true and complete copies of (i) income tax audit reports, statements of deficiencies, closing or other agreements received by or on behalf of ABE relating to Taxes, and (ii) all federal and state income or franchise tax Returns and state sales and use tax Returns for or including ABE for all periods since the inception of ABE. ABE does not do business in or derive income from any state other than states for which Returns have been duly filed and furnished to HGF and the Selling HGF Partners.

(d)           The Returns of ABE have never been audited by a government or taxing authority, nor is any such audit in process, pending or, to ABE’s knowledge, threatened. No deficiencies have been asserted, and ABE has not received notice (in writing) that it has not filed a Return or paid Taxes required to be filed or paid. ABE is neither a party to any action or proceeding for assessment or collection of Taxes, nor has such event been asserted or threatened (in writing) against ABE or any of its assets. No waiver or extension of any statute of limitations is in effect with respect to Taxes or Returns of ABE. ABE has disclosed on its federal and state income and franchise Returns all positions taken therein that could give rise to a substantial understatement penalty or comparable provisions of applicable state, local, foreign or other Tax laws.

(e)           Except as may be required as a result of the transactions contemplated hereby, ABE has not been and will not be required to include any material adjustment in taxable income for any Tax period (or portion thereof) or any comparable provision under state or foreign Tax laws as a result of transactions, events or accounting methods employed prior to the First Closing.

(f)            ABE is not, nor has it ever been, a party to any Tax sharing agreement.

(g)           ABE is not, nor has it ever been, taxable as a corporation under the Code. Since its organization, Acquisition Sub has been treated as a disregarded entity for federal income tax purposes and wholly-owned by ABE.

Section 5.6            Absence of Certain Changes or Events . Since the date of the Most Recent ABE Balance Sheet, other than as set forth in the ABE Disclosure Schedule, ABE has operated its business in the ordinary course consistent with its past practices, and, other than as set forth in the ABE Disclosure Schedule, since such date there has not been with respect to ABE any:

(a)           Material Adverse Effect on ABE or any change, event, circumstance, condition or effect that would reasonably be expected to result in a Material Adverse Effect on ABE;

(b)           amendment or change in its Certificate of Organization or Operating Agreement or the organizational documents of any of its subsidiaries;

(c)           incurrence, creation or assumption of: (i) any material Encumbrance on any of its assets or properties (other than Permitted Encumbrances), (ii) any material liability for borrowed money or (iii) any material liability as a guarantor or surety with respect to the obligations of others;

(d)           payment or discharge of any material Encumbrance on any of its assets or properties, other than in the ordinary course of business, or payment or discharge of any of its liabilities, other than in the ordinary course of business, after the date of the Most Recent ABE Balance Sheet;

(e)           material damage, destruction or loss of any material property or material asset, whether or not covered by insurance;

(f)            distribution made in respect of, the ABE Units, any direct or indirect purchase or other acquisition of any ABE Units or any change in any rights, preferences, privileges or restrictions of any ABE Units;

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(g)           material change or increase in the compensation payable or to become payable to any of its officers, managers, employees, members, agents, consultants, or independent contractors, or in any bonus, commission, expense reimbursement, pension, severance, retention, or insurance plan of ABE or in any other benefit payment or arrangement made to or with any of such officers, managers, employees, members, agents, consultants, or independent contractors or any material modification of any “nonqualified deferred compensation plan” as defined in Code Section 409A;

(h)           material change with respect to its management, supervisory or other key personnel of ABE, termination of employment of a material number of employees of ABE; termination of the engagement of a material number of agents, consultants, or independent contractors of ABE; or any union organizing activity at any ABE facility;

(i)            liability incurred by it to any of its officers, managers, employees, members, agents, consultants, or independent contractors except for normal and customary compensation and expense allowances in the ordinary course of its business consistent with its past practices;

(j)            loan, advance (other than ordinary advances for work-related expenses) or capital contribution to, or any investment in, any of its officers, managers or members or any firm or business enterprise in which any such person had a direct or indirect material interest at the time of such loan, advance, capital contribution or investment;

(k)           entering into, amendment of, relinquishment, termination or nonrenewal of any ABE Material Contract other than in the ordinary course of its business consistent with its past practices, default by ABE under any such Material Contract; or written assertion by the other party thereto of any material problems with its services or performance under such Material Contract or such other party’s desire to so amend in any material respect, relinquish, terminate or not renew any such Material Contract;

(l)            entering into any Contract that by its terms requires or contemplates a current and/or future financial commitment, expense, or obligation on its part that involves any individual payment in excess of $10,000 or aggregate payments in excess of $120,000 in any twelve month period;

(m)          making or entering into any Contract with respect to any acquisition, sale, or transfer of any material asset of ABE that is not entered into in the ordinary course of its business consistent with past practices;

(n)           material change in accounting policies, methods or practices (including any change in depreciation or amortization policies or rates or revenue recognition policies); change in Tax elections or methods; or revaluation of any asset, other than as a result of transactions contemplated by this Agreement;

(o)           deferral of the payment of any material accounts payable, or any material discount, accommodation or other concession made in order to accelerate or induce the collection of any receivable, in each case other than in the ordinary course of business consistent with past practice;

(p)           payment, directly or indirectly, of any material liability before the same became due and payable in accordance with its terms or otherwise than in the ordinary course of business consistent with past practice; or

(q)           announcement of, any negotiation by or any entry into any Contract to do any of the things described in the preceding clauses (a) through (p) (other than negotiations and agreements with HGF, DF, SDWG and HP and their representatives regarding the transactions contemplated by this Agreement).

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Section 5.7             Title


 
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