SECURITIES EXCHANGE AGREEMENT between MH& SC, INCORPORATED and JUHL ENERGY DEVELOPMENT, INC., DANMAR AND ASSOCIATES, INC. and, for certain limited purposes, their respective stockholders June 24, 2008 TABLE OF CONTENTS

 

 

 

 

 

 

SECURITIES EXCHANGE AGREEMENT

 

between

 

MH & SC, INCORPORATED

 

and

 

JUHL ENERGY DEVELOPMENT, INC.,

DANMAR AND ASSOCIATES, INC.

and, for certain limited purposes, their respective stockholders

 

 

June 24, 2008

 

 

 

 

 

 

 

 

 

THIS SECURITIES EXCHANGE AGREEMENT is made and entered into on June 24, 2008, by and between MH & SC, INCORPORATED, a Delaware corporation (“Parent”), on the one hand, and JUHL ENERGY DEVELOPMENT, INC. (“Juhl Energy”) and DANMAR AND ASSOCIATES, INC. (“DanMar”), each a Minnesota corporation (Juhl Energy and DanMar being individually, a “Company” and together, the “Companies”), and the respective stockholders of the Companies whose names appear on the signature pages hereof (the “Stockholders”) solely for the purpose of agreeing with respect to himself or herself to Sections 1, 4, 7, 9 and 10 hereof, on the other hand.

 

WITNESSETH:

 

WHEREAS, the Board of Directors of each of Parent and the Companies have each determined that the Parent’s acquisition of the Companies is fair to and in the best interests of their respective entities and the stockholders thereof;

 

WHEREAS, in furtherance thereof, it is proposed that such acquisition be accomplished by all of the Stockholders contributing, selling and transferring to Parent all of their Shares (as defined below) pursuant to an offer by Parent to issue in exchange therefor newly-issued shares of common stock, par value $.001 per share, of Parent (“Parent Common Stock”), upon the terms and subject to the conditions set forth herein (the “Exchange Offer”);

 

WHEREAS, the Board of Directors of Parent and the Board of Directors of the Companies have approved this Agreement and transactions contemplated hereby, including the Exchange Offer;

 

WHEREAS, to induce Parent and the Companies to enter into this Agreement, the Stockholders have agreed to accept the Exchange Offer and become parties to this Agreement solely for the purpose of agreeing with respect to himself or herself to Sections 1, 4, 7, 9 and 10 hereof; and

 

WHEREAS, simultaneously with the closing of the Exchange Offer, Parent (as it will exist as of such time) is selling units (“Units”), with each unit consisting of one share of its series A convertible preferred stock, par value $.0001 per share, initially convertible into one share of Parent Common Stock (“Parent Preferred Stock”), and each Unit shall also contain one detachable Class A, Class B and Class C warrant (“Parent Warrants”) to each purchase one share of Parent Common Stock, all sold in a private placement to accredited investors (the “Private Placement”), for aggregate gross cash proceeds of $5,160,000 for 5,160,000 Units, pursuant to the terms of a Securities Purchase Agreement, dated as of June 24, 2008, for the purpose of expanding the business of the Companies following the closing of the Exchange Offer (the “Exchange”);

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows:

 

 

1.  The Exchange Offer.

 

1.1  Exchange.

 

(a)  Subject to the terms and conditions of this Agreement, upon execution and delivery hereof, the Parent hereby offers to the Stockholders to acquire their Shares solely in consideration and exchange for newly and duly issued, fully paid and non-assessable shares of Parent Common Stock as provided for in Section 1.3(a) hereof. This Exchange Offer shall be deemed accepted upon execution and delivery of this Agreement by the Stockholders.

 

(b)  Subject to the terms and conditions of this Agreement, at the Closing, (i) the Stockholders shall contribute, transfer, assign and deliver to Parent, and Parent agrees to acquire from such Stockholders, all of the outstanding Shares owned by them as specifically set forth on Schedule 1.1 hereto, and (ii) solely in consideration and exchange therefor, Parent shall issue to the Stockholders an aggregate of 15,250,000 newly and duly issued, fully paid and non-assessable shares of Parent Common Stock in accordance with the Exchange Ratio as provided for in Section 1.3(a) hereof.

 

(c)  As a result of the Exchange, the Companies shall become wholly-owned subsidiaries of Parent.

 

1.2  Certificate of Incorporation, By-laws, Directors and Officers.

 

(a)  The Certificate of Incorporation of Parent, as in effect immediately prior to the Closing, attached as Exhibit A hereto, shall be the Certificate of Incorporation of Parent from and after the Closing until further amended in accordance with applicable law; except that ARTICLE FIRST of the Certificate of Incorporation of Parent shall be amended immediately prior to the closing to read in its entirety as follows: “The name of the corporation is Juhl Wind, Inc.” 

 

(b)  The By-laws of Parent, as in effect immediately prior to the Closing, attached as Exhibit B hereto, shall be the By-laws of Parent from and after the Closing until amended in accordance with applicable law, the Certificate of Incorporation and such By-laws.

 

(c)  Pursuant to Section 5.4 below, the directors and officers of Juhl Energy in office immediately prior to the Closing shall become the directors and officers of Parent immediately following the Closing, and each shall hold his or her respective office or offices thereafter until his or her successor shall have been elected and shall have qualified in accordance with applicable law, or as otherwise provided in the Certificate of Incorporation or By-laws of Parent.

 

 

1.3  Manner and Basis of Exchanging the Shares.

 

(a)  At the Closing, the outstanding shares of common stock of the Companies (the “Shares”) beneficially owned by the Stockholders, which Shares constitute all of the issued and outstanding capital stock of the Companies, shall be contributed and transferred to the Parent and the Parent shall issue, and authorize its Transfer Agent to issue, the Parent Common Stock specified below to each Stockholder in accordance with the following exchange ratios (the “Exchange Ratios”).

 

Class of Stockholder		No. of Shares		No. of Shares of Parent Common Stock		Applicable Exchange Ratio
Holders of Juhl Energy Common Stock		1,000		12,500,000		1:12,500
Holders of DanMar Common Stock		1,000		2,750,000		1:2,750
Total				15,250,000

 

(b)  No fractional shares of Parent Common Stock shall be issued in the Exchange. If the number of Shares a Stockholder holds immediately prior to the Closing multiplied by the applicable Exchange Ratio would result in the issuance of a fractional share of Parent Common Stock, that product will be rounded down to the nearest whole number of shares of Parent Common Stock if it is less than the fraction of one-half (.5) of one share of Parent Common Stock or rounded up to the nearest whole number of shares of Parent Common Stock if the said product is equal to or greater than the fraction of one-half (.5) of one share of Parent Common Stock.

 

(c)  Each Share held in the treasury of either Company immediately prior to the Closing shall be cancelled and cease to exist.

 

(d)  After the Closing, there shall be no further registration of transfers of Shares on the transfer books of the Companies that are outstanding immediately prior to the Closing.

 

1.4  Surrender and Exchange of Certificates.

 

(a)  At the Closing, Parent shall deliver to its Transfer Agent a letter of instruction to prepare and deliver to the Companies’ counsel, who shall act as exchange agent for the benefit of the Stockholders (the “Exchange Agent”), (i) certificates representing the appropriate number of shares of Parent Common Stock issuable pursuant to Sections 1.1 and 1.3 hereof (such shares of Parent Common Stock, the “Exchange Fund”), in exchange for all outstanding Shares. The shares of Parent Common Stock evidenced by the certificates shall be registered in the names of the Stockholders and shall be in the denominations for each of them set forth opposite their respective names on Schedule 1.1 hereto.

 

 

(b)  Promptly following the Closing, the Exchange Agent shall mail to each holder of record of a certificate or certificates that immediately prior to the Closing represented outstanding Shares (the “Certificates”) and whose Shares were contributed to Parent and thereby converted into the right to receive shares of Parent Common Stock pursuant to Sections 1.1 and 1.3 hereof: (i) a letter of transmittal (which shall specify that delivery shall be effected and risk of loss and title to the Certificates shall pass only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other customary provisions as Parent and the Companies may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing shares of Parent Common Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Parent Common Stock that such holder has the right to receive pursuant to the provisions of Sections 1.1 and 1.3, and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Shares that are not registered in the transfer records of the Companies, a certificate representing the proper number of shares of Parent Common Stock may be issued to a transferee if the Certificate representing such Shares is presented to the Exchange Agent accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable transfer taxes have been paid. Until surrendered as contemplated by this Section 1.4(b), each Certificate that immediately prior to the Closing represented any outstanding Shares shall be deemed at and after the Closing to represent only the right to receive upon surrender as aforesaid the consideration specified in Section 1.3(a) hereof for the holder thereof.

 

1.5  Parent Common Stock. Parent agrees that it will cause the Parent Common Stock to be issued in exchange for the Shares at the Closing pursuant to Section 1.3(a) to be available for such purpose. Parent further agrees that, immediately prior to the Closing, there will be 2,500,000 shares of Parent Common Stock issued and outstanding, not including the securities to be issued in the Private Placement.

 

1.6  Tax Consequences. The parties to this Agreement intend and desire that, for U.S. Federal income tax purposes, the Exchange to take place pursuant to the Exchange Offer shall constitute a tax-free reorganization within the meaning of Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder.

 

1.7  Further Assurances. From time to time, from and after the Closing, as and when requested by Parent or its successors or assigns, the proper officers and directors of the Companies as of the Closing shall, for and on behalf and in the name of each of the Companies or otherwise, shall execute and deliver all such deeds, bills of sale, assignments and other instruments and shall take or cause to be taken such further actions as Parent or its successors or assigns may deem necessary or desirable in order to confirm or record or otherwise transfer to Parent title to and possession of all of the properties, rights, privileges, powers, franchises and immunities of the Companies or otherwise to carry out fully the provisions and purposes of this Agreement.

 

 

2.  Representations and Warranties of the Companies. The Companies hereby represent and warrant to Parent, except as set forth in the Companies’ Disclosure Schedules attached hereto, as follows:

 

2.1  Organization, Standing, Etc. Each of the Companies is a corporation duly organized and existing in good standing under the laws of the State of Minnesota, and has all requisite power and authority to carry on its business, to own or lease its properties and assets, to enter into this Agreement and to carry out the terms hereof. Copies of the Articles of Incorporation and By-laws of each of the Companies that have been delivered to Parent prior to the execution of this Agreement are true and complete and have not since been amended or repealed. The Companies have no subsidiaries or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business, other than Community Wind Development Group LLC, a [Minnesota] limited liability company, wholly owned by Juhl Energy.

 

2.2  Qualification. The Companies are duly qualified to conduct business as foreign corporations and are in good standing in each state or other jurisdiction wherein the nature of their activities or properties owned or leased makes such qualification necessary, except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the properties, assets, liabilities or results of operations of the Companies taken as a whole (“Material Adverse Effect”).

 

2.3  Capitalization of the Companies. There are 1,000 shares of common stock of Juhl Energy and 1,000 shares of common stock of DanMar issued and outstanding, and such Shares are duly authorized, validly issued, fully paid and, none of such Shares have been issued in violation of the preemptive rights of any person. The offer, issuance and sale of the Shares were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. The Companies have no outstanding options, rights or commitments to issue Shares or other Equity Securities of such Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Shares or other Equity Securities of the Companies.

 

2.4  Indebtedness. The Companies have no Indebtedness for Borrowed Money.

 

2.5  Stockholders of the Companies. Schedule 1.1 hereto contains a true and complete list of the names and addresses of the record owners of all of the outstanding Shares and other Equity Securities of the Companies, together with the number and percentage of securities held. To the best knowledge of the Companies, there is no voting trust, agreement or arrangement among any of the beneficial holders of the Shares affecting the nomination or election of directors or the exercise of the voting rights of the Shares; however, all of the Shares are in the control of two individuals.

 

2.6  Acts and Proceedings. The execution, delivery and performance of this Agreement has been duly authorized by the Board of Directors of the Companies, and all of the acts and other proceedings required for the due and valid authorization, execution, delivery and performance of this Agreement have been or, at the Closing, shall be, validly and appropriately taken.

 

 

2.7  Compliance with Laws and Instruments. The execution, delivery and performance by the Companies of this Agreement and the consummation by the Companies of the transactions contemplated by this Agreement: (a) will not require any authorization, consent or approval of, or filing or registration with, any court or governmental agency or instrumentality, except such as shall have been obtained prior to the Closing or as set forth in Schedule 2.7, (b) will not cause the Companies to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of the Articles of Incorporation or By-laws of the Companies, (c) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other contract, agreement or instrument to which either of the Companies is a party or by which the Companies or any of their respective properties is bound or affected, except where any such violation, conflict, breach or default could not reasonably be expected to have a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien upon any property or asset of the Companies. To the knowledge of the Companies, neither of the Companies is in violation of, or (with or without notice or lapse of time, or both) in default under, any term or provision of its Articles of Incorporation or By-laws or any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or any other material agreement or instrument to which either of the Companies is a party or by which either of the Companies or any of their respective properties is bound or affected, in each case except as could not reasonably be expected to have a Material Adverse Effect.

 

2.8  Binding Obligations. This Agreement constitutes the legal, valid and binding obligation of the Companies and is enforceable against the Companies in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

 

2.9  Broker’s and Finder’s Fees. No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Companies for any commission, fee or other compensation as a finder or broker, or in any similar capacity, except as disclosed in Schedule 2.9 hereto.

 

2.10  Financial Statements. Attached hereto as Schedule 2.10 are (a) the Companies’ audited consolidated balance sheet as of December 31, 2007, and audited consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2007, together with the related independent auditors’ report of Boulay, Heutmaker, Zibell & Co. P.L.L.P., and (b) the Companies’ unaudited consolidated balance sheet (the “Balance Sheet”) as of March 31, 2008 (the “Balance Sheet Date”). Such financial statements (i) are in accordance with the books and records of the Companies, (ii) present fairly in all material respects the financial condition of the Companies at the dates therein specified and the results of their operations and changes in financial position for the periods therein specified and (iii) have been prepared in all material respects in accordance with U.S. generally accepted accounting principles (“GAAP”) applied on a basis consistent with prior accounting periods (subject, in the case of the March 31, 2008 financial statements to normal year-end adjustments and the lack of all footnotes required for audited financial statements).

 

 

2.11  Absence of Undisclosed Liabilities. The Companies have no material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed in Schedule 2.11 and/or Schedule 2.12 hereto, (b) to the extent set forth on or reserved against in the Balance Sheet or the Notes to the Financial Statements, (c) current liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business since the Balance Sheet Date, none of which (individually or in the aggregate) have Material Adverse Affect, and (d) by the specific terms of any written agreement, document or arrangement identified in the Schedules hereto or which are not required to be disclosed thereby.

 

2.12  Changes. Since the Balance Sheet Date, except as disclosed in Schedule 2.12 hereto, the Companies have not (a) incurred any debts, obligations or liabilities, absolute, accrued, or, to the Companies’ knowledge, contingent, whether due or to become due, except for fees, expenses and liabilities incurred in connection with the Private Placement, the Exchange and related transactions, and current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right, of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) which could reasonably be expected to have a Material Adverse Effect, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any Shares or other securities or granted any options (including employee options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding Shares, (l) suffered or experienced any change in, or condition affecting, the financial condition of the Companies other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) could reasonably be expected to have a Material Adverse Effect, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party which has a Material Adverse Effect, (o) suffered any material loss not reflected in the Balance Sheet or its statement of operations for the period ended on the Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $25,000 in the aggregate, or (r) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

 

 

2.13  Schedule of Assets and Contracts. Attached hereto as Schedules 2.13(a) through 2.13(d) are various schedules listing assets and contracts of the Companies, as described herein.

 

(a)  Schedule 2.13(a) contains a true and complete list of all real property leased by the Companies, including a brief description of each item thereof and of the nature of the Companies’ interest therein, and of all tangible personal property owned or leased by the Companies having a cost or fair market value of greater than $25,000, including a brief description of each item and of the nature of the interest of either of the Companies therein. All the property listed in Schedule 2.13(a) as being leased by the Companies is held by the Companies under valid and enforceable leases having the rental terms, termination dates and renewal and purchase options described in Schedule 2.13(a); and there is not, under any such lease, any existing default or event of default or event which with notice or lapse of time, or both, would constitute a default by the Companies, and the Companies have not received any notice or claim of any such default. Neither of the Companies owns any real property.

 

(b)  Except as expressly set forth in this Agreement, the Balance Sheet or the notes thereto, or as disclosed in Schedule 2.13(b) hereto, the Companies are not a party to any written or oral agreement not made in the ordinary course of business that is material to the Companies. Except as disclosed in Schedule 2.13(b) hereto, the Companies are not a party to any written or oral (a) agreement with any labor union, (b) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (c) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (d) bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with respect to any or all of the employees of the Companies or any other Person, (e) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of the Companies to any Lien or evidencing any Indebtedness, (f) guaranty of any Indebtedness, (g) other than as set forth in Schedule 2.13(a) hereto, lease or agreement under which either of the Companies is lessee of or holds or operates any property, real or personal, owned by any other Person under which payments to such Person exceed $25,000 per year or with an unexpired term (including any period covered by an option to renew exercisable by any other party) of more than 60 days, (h) lease or agreement under which either of the Companies is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by the Companies, (i) agreement granting any preemptive right, right of first refusal or similar right to any Person, (j) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of the Companies or any present or former officer, director or stockholder of the Companies, (k) agreement obligating the Companies to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (1) covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, (m) distributor, dealer, manufacturer’s representative, sales agency, franchise or advertising contract or commitment, (n) agreement to register securities under the Securities Act, (o) collective bargaining agreement, or (p) agreement or other commitment or arrangement with any Person continuing for a period of more than three months from the Closing Date which involves an expenditure or receipt by the Companies in excess of $25,000. Except as disclosed in Schedule 2.13(b), none of the agreements, contracts, leases, instruments or other documents or arrangements listed in Schedule 2.13(a) through Schedule 2.13(d) requires the consent of any of the parties thereto other than one or both of the Companies to permit the contract, agreement, lease, instrument or other document or arrangement to remain effective following consummation of the Exchange and the transactions contemplated hereby.

 

 

(c)  Schedule 2.13(c) contains a true and complete list of all insurance policies and insurance coverage with respect to the Companies, and their respective business, premises, properties, assets, employees and agents.

 

(d)  Schedule 2.13(d) contains a true and complete list of all patents, patent applications, trade names, trademarks, trademark registrations and applications, copyrights, copyright registrations and applications, and grants of licenses, both domestic and foreign, presently owned, possessed, used or held by the Companies; and, except as set forth in Schedule 2.16, the Companies own the entire right, title and interest in and to the same, free and clear of all Liens and restrictions. Schedule 2.13(d) also contains a true and complete list of all licenses granted to or by the Companies with respect to the foregoing. Except as disclosed in Schedule 2.13(d), none of the Companies’ patents, patent applications, trade names, trademarks, trademark registrations and applications, copyrights, copyright registrations and applications and grants of licenses set forth in Schedule 2.13(d) are subject to any pending or, to the knowledge of the Companies and the Stockholders, threatened challenge. Neither the execution nor delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will give any licensor or licensee of the Companies any right to change the terms or provisions of, terminate or cancel, any license to which either of the Companies is a party.

 

(e)  The Companies have furnished to Parent true and complete copies of all agreements and other documents and a description of all applicable oral agreements disclosed or referred to in Schedule 2.13(a) through Schedule 2.13(d), as well as any additional agreements or documents, requested by Parent. Each of the Companies has in all material respects performed all obligations required to be performed by it to date and is not in default in any respect under any of the contracts, agreements, leases, documents, commitments or other arrangements to which it is a party or by which it or any of its property is otherwise bound or affected. To the best knowledge of the Companies, all parties having material contractual arrangements with the Companies are in substantial compliance therewith and none are in material default thereunder. Neither of the Companies has outstanding any power of attorney.

 

2.14  Employees. The Companies have complied in all material respects with all laws relating to the employment of labor, and the Companies have encountered no material labor union difficulties. Except as set forth in Schedule 2.14, and other than pursuant to ordinary arrangements of employment compensation, the Companies are not under any obligation or liability to any officer, director, employee or Affiliate of the Companies.

 

 

2.15  Tax Returns and Audits. All required federal, state and local Tax Returns of the Companies have been accurately prepared in all material respects and duly and timely filed, and all federal, state and local Taxes required to be paid with respect to the periods covered by such returns have been paid to the extent that the same are material and have become due, except where the failure so to file or pay could not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Companies, the Companies are not and have not been delinquent in the payment of any Tax. To the knowledge of the Companies, the Companies have not had a Tax deficiency assessed against their. None of the Companies’ federal income tax returns nor any state or local income or franchise tax returns has been audited by governmental authorities. The reserves for Taxes reflected on the Balance Sheet are sufficient for the payment of all unpaid Taxes payable by the Companies with respect to the period ended on the Balance Sheet Date. There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Companies now pending, and the Companies have not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.

 

2.16  Patents and Other Intangible Assets.

 

(a)  Except as set forth in Schedule 2.16, the Companies (i) own or have the right to use, free and clear of all Liens, claims and restrictions, all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing used in or necessary for the conduct of their business as now conducted or proposed to be conducted without infringing upon a claimed right of any Person under or with respect to any of the foregoing and (ii) is not obligated to make any payments by way of royalties, fees or otherwise to any owner or licensor of, any patent, trademark, service mark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of their business.

 

(b)  To the knowledge of the Companies, the Companies own or have the unrestricted right to use all trade secrets, if any, including know-how, negative know-how, formulas, patterns, programs, devices, methods, techniques, inventions, designs, processes, computer programs and technical data (collectively, “intellectual property”) required for the development, operation and sale of their products, and all related technologies, products and services.

 

2.17  Employee Benefit Plans; ERISA.

 

(a)  Except as disclosed in Schedule 2.17 hereto, there are no “employee benefit plans” (within the meaning of Section 3(3) of the ERISA) nor any other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by the Companies. The plans listed in Schedule 2.17 hereto are hereinafter referred to as the “Employee Benefit Plans.”

 

(b)  All current and prior material documents, including all amendments thereto, with respect to each Employee Benefit Plan have been given to Parent or its advisors.

 

 

(c)  All Employee Benefit Plans are in material compliance with the applicable requirements of ERISA, the Internal Revenue Code of 1986, as amended (the “Code”), and any other applicable state, federal or foreign law.

 

(d)  There are no pending or, to the knowledge of the Companies, threatened, claims or lawsuits which have been asserted or instituted against any Employee Benefit Plan, the assets of any of the trusts or funds under the Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan with respect to the operation of such plan.

 

(e)  There is no pending or, to the knowledge of the Companies, threatened, investigation or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Employee Benefit Plan.

 

(f)  No actual or, to the knowledge of the Companies, contingent, liability exists with respect to the funding of any Employee Benefit Plan or for any other expense or obligation of any Employee Benefit Plan, except as disclosed on the financial statements of the Companies or the Schedules to this Agreement, and to the knowledge of the Companies, no contingent liability exists under ERISA with respect to any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.

 

2.18  Title to Property and Encumbrances. The Companies have good, valid and marketable title to all properties and assets used in the conduct of their business free of all Liens and other encumbrances, except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as could not reasonably be expected to have a Material Adverse Effect.

 

2.19  Insurance. The Companies have no insurance policies as of the date hereof. Except as otherwise disclosed in the Companies’ Disclosure Schedules, no suit, proceeding or action or threat of suit, proceeding or action has been asserted or made against the Companies within the last two years due to alleged bodily injury, death or property damage arising out of the function or malfunction of a product, procedure or service designed, manufactured, sold or distributed by the Companies.

 

2.20  Litigation. Except as disclosed in Schedule 2.20 hereto, there is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the knowledge of the Companies, threatened against or affecting the Companies or their properties, assets or business that could reasonably be expected to have a Material Adverse Effect. The Companies are not in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

 

2.21  Licenses. The Companies possess from the appropriate governmental authorities all licenses, permits, authorizations, approvals, franchises and rights necessary for the Companies to engage in the businesses currently conducted by them (except for those, the absence of which would not reasonably be expected to have a Material Adverse Effect), and all are in full force and effect.

 

 

2.22  Interested Party Transactions. Except as disclosed in Schedule 2.22 hereto, no officer, director or stockholder of the Companies or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any such Person or the Companies has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Companies or (ii) purchases from or sells or furnishes to the Companies any goods or services, or (b) a beneficial interest in any contract or agreement to which either of the Companies is a party or by which either of them may be bound or affected.

 

2.23  Hazardous Waste. There is no substance or material defined or designated as hazardous or toxic waste, material, substance or other similar term, by any environmental statute, regulation or ordinance currently in effect, on, about, or in any of the real property in which the Companies now have or previously had any leasehold or ownership interest.

 

2.24  Customers, Suppliers and Independent Contractors. Since the Balance Sheet Date, the Companies have not been advised that any material customer, supplier or independent contractor of the Companies intends to terminate or materially curtail its business relationship with the Companies which could reasonably be expected to have a Material Adverse Effect.

 

2.25  Questionable Payments. Neither of the Companies nor to their knowledge, any director, officer, stockholder, agent, employee or other Person associated with or acting on behalf of the Companies, has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

 

2.26  Obligations to or by Stockholders. Except as disclosed in Schedule 2.26, the Companies have no liability or obligation or commitment to any Stockholder or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any Stockholder, nor does any Stockholder or any such Affiliate or associate have any liability, obligation or commitment to either of the Companies.

 

2.27  Disclosure. No representation or warranty by the Companies herein and no information disclosed in the schedules or exhibits hereto by the Companies, when considered as a whole together with all other information furnished to Parent, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

 

3.  Representations and Warranties of Parent. Parent represents and warrants to the Companies and the Stockholders as follows:

 

 

3.1  Organization and Standing. Parent is a corporation duly organized and existing in good standing under the laws of the State of Delaware. Parent has heretofore delivered to the Companies complete and correct copies of its Certificate of Incorporation and By-laws as now in effect. Parent has full corporate power and authority to carry on its business as it is now being conducted and to own or lease its properties and assets. Parent does not have any subsidiaries or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business. Parent is, or as of the Closing, will be, duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect on Parent. True, correct and complete copies of the organizational documents of Parent have been delivered to the Companies prior to the execution of this Agreement, and no action has been taken to amend or repeal such organizational documents.  Parent is not in violation or breach of any of the provisions of its organizational documents, except for such violations or breaches as would not have a Material Adverse Effect.

 

3.2  Corporate Authority. Parent has full corporate power and authority to enter into this Agreement and the other agreements to be made pursuant thereto, and to carry out the transactions contemplated hereby, including the Exchange and the Private Placement. All corporate acts and proceedings required for the authorization, execution, delivery and performance of this Agreement and the Private Placement, and such other agreements and documents by Parent in connection therewith have been duly and validly taken or will have been so taken prior to the Closing. The Board of Directors of Parent, at a meeting duly called and held, has determined that this Agreement and the transactions contemplated by this Agreement are advisable and in the best interests of Parent’s stockholders and has duly authorized this Agreement and the transactions contemplated by this Agreement.

 

3.3      Broker’s and Finder’s Fees. No person, firm, corporation or other entity is entitled by reason of any act or omission of Parent to any broker’s or finder’s fees, commission or other similar compensation with respect to the execution and delivery of this Agreement, or with respect to the consummation of the transactions contemplated hereby, including the Exchange and the Private Placement.

 

3.4      Capitalization of Parent.

 

(a)  The authorized capital stock of Parent consists of (i) 1,000,000,000 shares of Parent Common Stock (which shall be reduced to 100,000,000 shares of Parent Common Stock prior to Closing), of which 2,500,000 shares are issued and outstanding on the date hereof, and (ii) 20,000,000 shares of undesignated preferred stock, none of which are issued or outstanding, prior to taking into consideration the issuance of Parent Common Stock in the Exchange or Parent Preferred Stock in the Private Placement. The Parent has no other shares of capital stock reserved for issuance upon the exercise of any other options or any warrants and no shares of capital stock are reserved for issuance to any party, including upon the conversion of any outstanding convertible notes, debentures or securities. Parent has no outstanding options, rights, calls, preemptive rights, subscriptions or commitments to issue any Equity Securities of Parent.

 

 

(b)  There is no plan or arrangement to issue capital stock by Parent except as set forth in this Agreement and the Private Placement. Except as contemplated by this Agreement or granted in the Private Placement, there are no registration rights. There is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to which the Parent is a party or by which it is bound with respect to any Equity Securities of Parent.

 

(c) There are no outstanding contractual obligations (contingent or otherwise) of Parent to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, Parent or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity or person.

 

3.5  Validity of Shares.

 

(a)  All outstanding shares of the capital stock of Parent are (i) validly issued and outstanding, fully paid and non-assessable, (ii) were not issued in violation of the preemptive rights of any person, (iii) were issued in transactions that were (A) exempt from the registration and prospectus delivery requirements of the Securities Act, (B) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (C) accomplished in conformity with all other applicable securities laws.

 

(b)  The 15,250,000 shares of Parent Common Stock to be issued at the Closing pursuant to Section 1.3(a) hereof, when issued and delivered in accordance with the terms hereof, shall be duly and validly issued, fully paid and non-assessable and not in violation of any preemptive rights. Based, in part, on the representations and warranties of the Stockholders as contemplated by Section 4 hereof and assuming the accuracy thereof, the issuance of the Parent Common Stock upon the Exchange pursuant to Section 1.3(a) will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state blue sky or securities laws.

 

3.6  SEC Reporting and Compliance.

 

(a)  Parent filed a registration statement on Form SB-2 (No. 333-141010) under the Securities Act which became effective on December 4, 2007, and has not been withdrawn. To Parent’s knowledge, all shares held by selling stockholders in such registration statement, other than those held by Affiliates of Parent, have been sold in accordance with the Plan of Distribution set forth in such registration statement.

 

(b)  Since December 4, 2007, Parent has filed with the Commission all registration statements, proxy statements, information statements, reports, schedules, forms and other documents required to be filed pursuant to the Securities Act, the Exchange Act and the rules and regulations of the Commission on a timely basis (or has received a valid extension of such time of filing and has filed any such reports or other documents prior to the expiration of any such extension). Parent has not filed with the Commission a certificate on Form 15 pursuant to Rule 12h-3 of the Exchange Act.

 

(c)  Parent has delivered or made available to the Companies true and complete copies of its registration statement (including all amendments thereto and supplements to the prospectus contained therein) and reports (collectively, the “Parent SEC Documents”) filed by Parent with the Commission. The Parent SEC Documents, as of their respective dates (or, if amended, supplemented or superseded by a filing prior to the date hereof, then as of the date of such amendment, supplement or superseding filing) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the Commission promulgated thereunder applicable thereto, and did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading.

 

 

(d)  Except as set forth on Schedule 3.6, Parent has not filed, and nothing has occurred with respect to which Parent would be required to file, any report on Form 8-K since May 30, 2008. Prior to and until the Closing, Parent will provide to the Companies copies of any and all amendments or supplements to the Parent SEC Documents filed with the Commission since May 30, 2008, and all subsequent registration statements and reports filed by Parent subsequent to the filing of the Parent SEC Documents with the Commission and any and all subsequent documents or notices filed by the Parent with the Commission or delivered to the stockholders of Parent.

 

(e)  Parent is not an investment company within the meaning of Section 3 of the Investment Company Act.

 

(f)  The shares of Parent Common Stock are quoted on the Over-the-Counter (OTC) Bulletin Board under the symbol “MHSC.OB,” and Parent is in compliance in all material respects with all rules and regulations of the OTC Bulletin Board applicable to it and the Parent Common Stock.

 

(g)  The Parent SEC Documents include all certifications and statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), and each of such certifications and statements contain no qualifications or exceptions to the matters certified therein other than a knowledge qualification, permitted under such provision, and have not been modified or withdrawn and neither Parent nor any of its officers has received any notice from the SEC or any other Governmental Entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications or statements.

 

3.7  Financial Statements. The balance sheets, and statements of income, changes in financial position and stockholders’ equity contained in the Parent SEC Documents (i) have been prepared in accordance with GAAP applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (ii) are in accordance with the books and records of the Parent, and (iii) present fairly in all material respects the financial condition of the Parent at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified. The financial statements included in the Annual Report on Form 10-KSB for the year ended December 31, 2007 (the “Parent Financial Statements”) are audited by, and include the related opinion of McElravy, Kinchen & Associates, P.C., Parent’s independent registered public accounting firm.

 

 

3.8  Events Subsequent to Financial Statements. Since March 31, 2008, there has not been:

 

(a) any sale, lease, transfer, license or assignment of any assets, tangible or intangible, of Parent;

 

(b) any damage, destruction or property loss, whether or not covered by insurance, affecting adversely the properties or business of Parent;

 

(c) any declaration or setting aside or payment of any dividend or distribution with respect to the shares of capital stock of Parent or any redemption, purchase or other acquisition of any such shares;

 

(d) any subjection to any lien on any of the assets, tangible or intangible, of Parent;

 

(e) any incurrence of indebtedness or liability or assumption of obligations by Parent;

 

(f) any waiver or release by Parent of any right of any material value;

 

(g) any compensation or benefits paid to officers or directors of Parent;

 

(h) any change made or authorized in the articles of incorporation or bylaws of Parent;

 

(i) any loan to or other transaction with any officer, director or stockholder of Parent giving rise to any claim or right of Parent against any such person or of such person against Parent; or

 

(j) any material adverse change in the condition (financial or otherwise) of the respective properties, assets, liabilities or business of Parent.

 

3.9  Liabilities. Except as otherwise disclosed in Parent’s financial statements, Parent does not have any liability or obligation whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. In addition, Parent represents that upon Closing, Parent will not have any liability or obligation whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. Furthermore, there is no pending proceeding that has been commenced against Parent that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement.  To the knowledge of Parent, no such proceeding has been threatened.

 

3.10  Tax Matters. Parent has duly filed all federal, state, local and foreign tax returns required to be filed by or with respect to it with the Internal Revenue Service or other applicable taxing authority, and no extensions with respect to such tax returns have been requested or granted. Parent has paid, or adequately reserved against in Parent’s financial statements, all material taxes due, or claimed by any taxing authority to be due, from or with respect to it. To the knowledge of Parent, there has been no material issue raised or material adjustment proposed (and none is pending) by the Internal Revenue Service or any other taxing authority in connection with any of Parent’s tax returns. No waiver or extension of any statute of limitations as to any material federal, state, local or foreign tax matter has been given by or requested from Parent. For the purposes of this Section 3.10, a tax is due (and must therefore either be paid or adequately reserved against in Parent’s financial statements) only on the last date payment of such tax can be made without interest or penalties, whether such payment is due in respect of estimated taxes, withholding taxes, required tax credits or any other tax.

 

 

3.11  Governmental Consents. All consents, approvals, orders or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority on the part of Parent required in connection with the consummation of the Exchange and the Private Placement have been or shall have been obtained prior to, and be effective as of, the Closing.

 

3.12  Compliance with Laws and Other Instruments. The execution, delivery and performance by Parent of this Agreement and the consummation by it of the transactions contemplated by this Agreement, including the Exchange and the Private Placement: (a) will not require any authorization, consent or approval of, or filing or registration with, any court or governmental agency or instrumentality, except (i) such as shall have been obtained prior to the Closing, or (ii) as set forth in Schedule 3.12; (b) will not cause the Parent to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of its Certificate of Incorporation or By-laws; (c) will not violate or be in conflict with in a material manner, result in a material breach of or constitute (with or without notice or lapse of time, or both) a material default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other material contract, agreement or instrument to which the Parent is a party or by which the Parent or any of its properties are bound or affected, except where any such violation, conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; and (d) will not result in the creation or imposition of any material Lien upon any property or asset of the Parent. Parent is not in violation of, or (with or without notice or lapse of time, or both) in default under, any term or provision of its Certificate of Incorporation or By-laws, to its knowledge, or any indenture, loan or credit agreement, deed of trust, mortgage, security agreement, except as could not reasonably be expected to have a Material Adverse Effect on the Parent, or any other material agreement or instrument to which the Parent is a party or by which it or any of its properties are bound or affected.

 

3.13  Binding Obligations. This Agreement constitutes the legal, valid and binding obligation of the Parent, and is enforceable against the Parent, in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

 

3.14  No General Solicitation. In issuing the Parent Common Stock in the Exchange hereunder, neither Parent nor, to its knowledge, anyone acting on its behalf has offered to sell the Parent Common Stock by any form of general solicitation or advertising.

 

3.15  Litigation. There is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the knowledge of Parent, threatened against or affecting Parent or its properties, assets or business. Parent is not in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

 

 

3.16  Obligations to or by Stockholders. Except as disclosed in the Parent SEC Documents or on Schedule 3.16, the Parent has no liability or obligation or commitment to any stockholder of Parent or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any stockholder of Parent, nor does any stockholder of Parent or any such Affiliate or associate have any liability, obligation or commitment to Parent.

 

3.17  Material Contracts.  Parent has provided to the Companies, prior to the date of this Agreement, true, correct and complete copies of each written material Parent contract, including each amendment, supplement and modification thereto.

 

3.18  Employees. Except as disclosed in the Parent SEC Documents, Parent has no employees, independent contractors or other Persons providing services to it.  Except as would not have a Material Adverse Effect, Parent is in full compliance with all relevant laws regarding employment, wages, hours, benefits, equal opportunity, collective bargaining, the payment of Social Security and other taxes, occupational safety and health and plant closing.  Parent is not liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing laws. No director, officer or employee of Parent is a party to, or is otherwise bound by, any contract (including any confidentiality, non-competition or proprietary rights agreement) with any other party that in any way adversely affects or will materially affect (a) the performance of his or her duties as a director, officer or employee of Parent or (b) the ability of Parent to conduct its business.  Except as set forth in the Parent SEC Documents, each employee of Parent is employed on an at-will basis and Parent does not have any contract with any of its employees which would interfere with its ability to discharge its employees.

 

3.19  Interested Party Transactions.  Except as disclosed in Schedule 3.19, no officer, director or stockholder of Parent or any Affiliate or “associate” (as such term is defined in Rule 405 of the Commission under the Securities Act) of any such party, has or has had, either directly or indirectly, (a) an interest in any Person which (a) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by Parent, or (b) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish Parent any goods or services; or (b) a beneficial interest in any contract or agreement to which Parent is a party or by which it may be bound or affected.

 

3.20  Governmental Inquiries.  Parent has provided to the Companies a copy of each material written inspection report, questionnaire, inquiry, demand or request for information received by Parent from any governmental authority, and Parent’s response thereto, and each material written statement, report or other document filed by Parent with any governmental authority.

 

3.21  Bank Accounts and Safe Deposit Boxes.  Schedule 3.21 discloses the title and number of each bank or other deposit or financial account, and each lock box and safety deposit box used by Parent, the financial institution at which that account or box is maintained and the names of the persons authorized to draw against the account or otherwise have access to the account or box, as the case may be.

 

 

3.22  Intellectual Property.  Parent does not own, use or license any Intellectual Property in its business as presently conducted, except as set forth in Schedule 3.22.

 

3.23  Stock Option Plans; Employee Benefits. Parent has no stock option plans providing for the grant by Parent of stock options to directors, officers or employees. Parent has no employee benefit plans or arrangements covering their present and former employees or providing benefits to such persons in respect of services provided to Parent. Neither the consummation of the transactions contemplated hereby alone, nor in combination with another event, with respect to each director, officer, employee and consultant of Parent, will result in (a) any payment (including, without limitation, severance, unemployment compensation or bonus payments) becoming due from Parent, (b) any increase in the amount of compensation or benefits payable to any such individual or (c) any acceleration of the vesting or timing of payment of compensation payable to any such individual.  No agreement, arrangement or other contract of Parent provides benefits or payments contingent upon, triggered by, or increased as a result of a change in the ownership or effective control of Parent.

 

3.24  Disclosure. No representation or warranty by Parent herein and no information disclosed in the schedules or exhibits hereto by Parent when considered as a whole together with all other information furnished to the Companies contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein misleading.

 

4.  Additional Representations, Warranties and Covenants of the Stockholders. Each of the Stockholders jointly represents and warrant to, and covenants with, Parent as follows:

 

4.1  Acts and Proceedings. Such Stockholder has full right, power and authority to enter into, deliver and perform this Agreement and all acts and proceedings required for the authorization, execution and delivery of this Agreement and the performance of this Agreement by such Stockholder have been lawfully and validly taken.

 

4.2  Compliance with Laws and Instruments. The execution, delivery and performance by such Stockholder of this Agreement and each of the other documents contemplated hereby and the consummation by such Stockholder of the transactions contemplated hereby (a) will not cause such Stockholder to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government or (iii) any order, judgment or decree of any court and (b) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other agreement or instrument to which such Stockholder is bound or affected.

 

4.3  Binding Obligation. This Agreement and each of the other agreements and documents being entered into by such Stockholder in connection herewith constitutes the legal, valid and binding obligation of such Stockholder and is enforceable against such Stockholder in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

 

 

4.4  Title to Shares. Such Stockholder has good, valid and marketable title to all Shares indicated on Schedule 1.1 hereto as being owned by such Stockholder, free and clear of all Liens except as indicated on Schedule 1.1 hereto. To the knowledge of such Stockholder, there is no voting trust, agreement or arrangement among any of the beneficial holders of Shares affecting the exercise of the voting rights of such units, and such Stockholder is not a party to or bound or affected by any such voting trust, agreement or arrangement.

 

4.5  Information. Each Stockholder has had an opportunity to ask and receive answers to any questions he, she or it may have had concerning the terms and conditions of the Exchange and the Parent Common Stock to be issued therein and has obtained any additional information that he or she has requested.

 

4.6  Resale of Stock. Each Stockholder is acquiring Parent Common Stock to be purchased for himself or for herself from the Parent for investment, and not with a view to selling or otherwise distributing any of said Parent Common Stock in violation of the Securities Act or the securities laws of any state; provided, however, that the provisions of this paragraph shall not prejudice such Stockholder’s right at all times to sell or otherwise dispose of all or any of the Parent Common Stock so acquired by such Stockholder pursuant to an effective registration statement under the Securities Act, or under an exemption from such registration available under the Securities Act.

 

5.  Additional Agreements.

 

5.1  Access and Information. The Companies and Parent shall each afford to the other and to the other’s accountants, counsel and other representatives full access, during normal business hours throughout the period prior to the Closing, and subsequent to the Closing until all pre-Closing filing requirements are met, solely for the purposes of filing any documents required to be filed with the Commission, to all of its properties, books, contracts, commitments and records (including but not limited to tax returns) and during such period, each shall furnish promptly to the other all information concerning its business, properties and personnel as such other party may reasonably request, provided that no investigation pursuant to this Section 5.1 shall affect any representations or warranties made herein. Each party shall hold, and shall cause its employees and agents to hold, in strict confidence, all such information (other than such information which: (i) is already in such party’s possession; (ii) becomes generally available to the public other than as a result of a disclosure by such party or its directors, officers, managers, employees, agents or advisors; or (iii) becomes available to such party on a non-confidential basis from a source other than a party hereto or its advisors provided that such source is not known by such party to be bound by a confidentiality agreement with or other obligation of secrecy to a party hereto or another party until such time as such information is otherwise publicly available; provided, however, that (A) any such information may be disclosed to such party’s directors, officers, employees and representatives of such party’s advisors who need to know such information for the purpose of evaluating the transactions contemplated hereby (it being understood that such directors, officers, employees and representatives shall be informed by such party of the confidential nature of such information), (B) any disclosure of such information may be made as to which the party hereto furnishing such information has consented in writing, and (C) any such information may be disclosed pursuant to a judicial, administrative or governmental order or request; provided, however, that the requested party will promptly so notify the other party so that the other party may seek a protective order or appropriate remedy and/or waive compliance with this Agreement and if such protective order or other remedy is not obtained or the other party waives compliance with this provision, the requested party will furnish only that portion of such information which is legally required and will exercise its best efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded the information furnished).  If this Agreement is terminated, each party will deliver to the other all documents and other materials (including copies) obtained by such party or on its behalf from the other party as a result of this Agreement or in connection herewith, whether so obtained before or after the execution hereof.

 

 

5.2  Commercially Reasonable Efforts. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In order to obtain any necessary governmental or regulatory action or non-action, waiver, consent, extension or approval, each of Parent and the Companies agrees to take all reasonable actions and to enter into all reasonable agreements as may be necessary to obtain timely governmental or regulatory approvals and to take such further action in connection therewith as may be necessary. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of Parent and the Companies shall take all such necessary action.

 

5.3  Publicity. No party shall issue any press release or public announcement pertaining to the Exchange that has not been agreed upon in advance by Parent and the Companies, except as Parent reasonably determines to be necessary in order to comply with the rules of the Commission or of the principal trading exchange or market for Parent Common Stock and after reasonable advance notice to the Companies.

 

5.4  Appointment of Directors. At the Closing, Parent shall accept the resignations of the current officers and directors of Parent as provided by Section 6.3(i) hereof, and shall increase the size of the Board of Directors of Parent to five (5) directors and cause the existing directors of Juhl Energy to be elected to the Board of Directors of Parent. One additional Parent director may be nominated by the Lead Investor at any time during the three-year period after the Closing Date and at that time the size of the Board of Directors shall be increased to accommodate such additional director. Parent agrees that the Lead Investor’s director nominee shall continue to be nominated for election during such period. The Lead Investor’s nominee shall be reasonably acceptable to Parent (as constituted following the Exchange) and, if required, considered independent under applicable market rules. The Lead Investor appointee shall be appointed to be a member of the audit or compensation committees of Parent’s Board of Directors. The Lead Investor director shall be entitled to the same cash and/or equity-based compensation granted to other directors of Parent.

 

 

5.5  Parent Name Change. Immediately prior to the Closing, Parent shall take all required legal actions to change its corporate name to “Juhl Wind, Inc.” by means of an amendment to its Certificate of Incorporation.

 

5.6  Closing of Private Placement. As of the Closing, the Parent shall take such actions as are necessary to close on the sale of $5,160,000 in Units, to accredited investors only, pursuant to Regulation D and Rule 506 promulgated under the Securities Act in accordance with and as described in the Memorandum.

 

5.7  Long-Term Incentive Plan. Immediately following the Closing, Parent may establish a new long-term incentive plan under which the total number of shares of Parent Common Stock authorized for issuance shall be 2,500,000 shares of Parent Common Stock. The new long-term incentive plan will be used for attracting and retaining employees, management, directors and outside consultants and shall be granted from time to time under the guidance and approval of Parent's Compensation Committee, and in accordance with such plan.

 

5.8  Issuance of Additional Shares. At the Closing, Parent shall issue 2,250,000 restricted shares of Parent Common Stock to Greenview Capital, Inc., as compensation for certain advisory services rendered on behalf of the Companies in connection with the transactions contemplated by this Agreement. The stock certificates evidencing the shares of Parent Common Stock to be issued pursuant to this Section 5.8 shall bear a customary Securities Act restrictive legend.

 

5.9  Capital Markets Initiatives. The Companies and Parent agree to place, at the Closing, $500,000 of the net proceeds received by Parent in the Private Placement into a segregated bank account for capital markets initiatives and related investor relations purposes during the twelve (12) months following the Closing with a firm or firms reasonably acceptable to Parent. Such account shall be in the name of, and managed by Sovereign Bancorp Ltd. (“Sovereign”) in trust for and for the benefit of, Parent. Sovereign shall release the funds contained in such account and make all expenditures relating to the matters described in this Section 5.9 with the funds contained in such account based on periodic authorizations of the President or Chief Executive Officer of Parent, as reasonably approved in each case by Sovereign.

 

5.10  Executive Employment Agreements. At the Closing, each of Dan Juhl and John Mitola will enter into Executive Employment Agreements with Parent or Juhl Energy to serve in the respective positions of Chief Executive Officer and President through at least December 31, 2011.

 

6.  Closing; Deliveries.

 

6.1  Closing Date. Subject to the terms and conditions set forth herein, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place simultaneously with the execution and delivery of this Agreement and the consummation of the sale of Units for not less than $5,160,000 in aggregate gross proceeds pursuant in the Private Placement (the “Closing Date”). All proceedings to be taken and all documents to be executed at the Closing, including those in connection with the Private Placement and this Agreement, shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed. The Closing shall occur at the offices of Greenberg Traurig, LLP referred to in Section 10.1 hereof. At the Closing, Parent shall present to the Transfer Agent for delivery to each Stockholder the certificate representing the Parent Common Stock to be issued pursuant to Sections 1.1 and 1.3 hereof to them in accordance with Sections 1.4 and 4 hereof. Such presentment for delivery shall be against delivery to Parent of the certificates, opinions, agreements and other instruments referred to in Section 6.1 below. Parent will deliver at such Closing to the Companies the officers’ certificate, agreements, instruments and opinion referred to in Section 6.2 below. All of the other documents and certificates and agreements referenced in this Section 6 will also be executed as described therein. The Companies and the Parent may waive compliance with any of the closing deliveries specified in this Section 6. At or immediately following the Closing, the Parent shall cause to be delivered to the Companies all records and documents relating to the Parent which the Parent possesses, including, without limitation, books, records, government filings, tax returns, charter documents, corporate records, stock record books, consent decrees, orders, and correspondence, director and stockholder minutes and resolutions, stock ownership records, financial information and records, electronic files containing any financial information and records, and other documents associated with Parent.

 

 

6.2  Closing Deliveries of the Companies and the Stockholders. At Closing, the Companies shall deliver the following documents to Parent:

 

(a)  A certificate, dated the Closing Date, executed on the Companies’ behalf by each of their Chief Executive Officer and President, certifying the following:

 

(i) the representations and warranties of each Company under this Agreement are true and correct in all material respects on the Closing Date;

 

(ii) each Company has performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date; and

 

(iii) there does not exist on the Closing Date any Default or Event of Default or any event or condition that, with the giving of notice or lapse of time, or both, would constitute a Default or Event of Default, and since the Balance Sheet Date, there has been no change that has or will have a Material Adverse Effect on such Company, except as a result of the transactions contemplated by this Agreement.

 

(b)  An opinion of Synergy Law Group, Chicago, Illinois, counsel for the Companies, to the effect set forth in Exhibit C hereto.

 

(c)  A certificate, dated the Closing Date, executed by each of the Companies’ Secretary, certifying that: (i) all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required for the execution and delivery of this Agreement and the consummation of the Exchange shall have been duly made or obtained, and all material consents by third parties that are required for the Exchange have been obtained; and (ii) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the carrying out of the transactions contemplated by this Agreement.

 

 

(d)  Copies of resolutions of the Board of Directors, certified by the Secretary of the Companies, authorizing and approving the execution, delivery and performance of this Agreement and all other documents and instruments to be delivered pursuant hereto.

 

(e)  A certificate of incumbency executed by the Secretary of the Companies certifying the names, titles and signatures of the officers authorized to execute this Agreement and any documents referred to herein, and further certifying that the Articles of Incorporation and By-laws of the Companies delivered to Parent at the time of the execution of this Agreement have been validly adopted and have not been amended or modified.

 

(f)  All written consents, satisfactory in form and substance to Parent, from each party to the leases, contracts, instruments and other documents listed in Schedule 2.13(a) through Schedule 2.13(d) consenting to the change in ownership upon the effectiveness of the Exchange, of all of the rights and interests of the Companies in and to such leases, contracts, instruments and documents, except to the extent the failure to so obtain such consents could not reasonably be expected to have a Material Adverse Effect.

 

(g)  Evidence as of a recent date of the good standing and existence of each of the Companies issued by the Secretary of State of the State of Minnesota and evidence that each Company is qualified to transact business as a foreign corporation and is in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary.

 

(h)  Such additional supporting documentation and other information with respect to the transactions contemplated hereby as Parent or its counsel may reasonably request.

 

6.3  Deliveries of Parent. At Closing, Parent shall deliver the following documents to the Companies:

 

(a)  A certificate, dated the Closing Date, executed on its behalf by its Chief Executive Officer or other duly authorized officers, certifying the following: (i) the representations and warranties of Parent under this Agreement are true and correct in all material respects on the Closing Date; (ii) Parent has performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date; and (iii) there does not exist on the Closing Date any Default or Event of Default or any event or condition, that with the giving of notice or lapse of time, or both, would constitute a Default of Event of Default, and since the Parent Balance Sheet Date, there has been no change that has or will have a Material Adverse Effect on the Parent.

 

(b)  An opinion of Greenberg Traurig, LLP, New York, New York, special counsel for Parent, to the effect set forth in Exhibit F hereto.

 

 

(c)  A certificate, dated the Closing Date, executed by the Secretary of Parent, certifying that: (i) all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required for the execution and delivery of this Agreement and the consummation of the Exchange shall have been duly made or obtained, and all material consents by third parties required for the Exchange have been obtained; and (ii) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the carrying out of the transactions contemplated by this Agreement.

 

(d)  Copies of resolutions of Parent’s Board of Directors, certified by the Secretary, authorizing and approving the execution, delivery and performance of this Agreement and the transactions contemplated hereby, including the Exchange and the Private Placement and all other documents and instruments to be delivered by it pursuant hereto.

 

(e)  A certificate of incumbency executed by the Secretary of Parent certifying the names, titles and signatures of the officers authorized to execute this Agreement and any documents referred to herein, and further certifying that the Certificate of Incorporation (including the Certificate of Designation of the Series A Convertible Preferred Stock) and By-laws of Parent appended thereto have not been amended or modified.

 

(f)  A certificate of Island Stock Transfer Company, Parent’s transfer agent and registrar, certifying as of the business day prior to the date any securities are first issued in the Private Placement, and before taking into consideration the Exchange, a true and complete list of the names and addresses of the record owners of all of the outstanding shares of Parent Common Stock, together with the number of shares of Parent Common Stock held by each record owner.

 

(g)  A letter from the Transfer Agent setting forth the number of shares of Parent Common Stock that would be issued and outstanding as of the Closing Date after taking into consideration the closing of the Exchange.

 

(h)  An agreement in writing from McElravy & Associates, P.C. in favor of Parent, in form and substance reasonably satisfactory to the Companies, to deliver copies of the audit opinions with respect to any and all financial statements of Parent that had been audited by such firm and any consents that may be required by Parent to be included in such financial statements in registration statements to be filed in the future by Parent.

 

(i)  the executed resignation of Cory Heitz as the sole director and officer of Parent, and (ii) the executed release from Cory Heitz in the form attached hereto as Exhibit E.

 

(j)  Evidence as of a recent date of the good standing and corporate existence of Parent issued by the Secretary of State of the State of Delaware and evidence that the Parent is qualified to transact business as a foreign corporation and is in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary.

 

 

(k)  Such additional supporting documentation and other information with respect to the transactions contemplated hereby as the Companies or its counsel may reasonably request.

 

7.  Survival of Representations and Warranties. The representations and warranties of the parties made in Sections 2 and 3 of this Agreement shall survive six (6) months beyond the Closing. This Section 7 shall not limit any claim for fraud based on such representations and warranties. Nothing in this Section 7 shall impair or alter any covenant or agreement of the parties which by its terms contemplates performance after the Closing.

 

8.  Amendment of Agreement. This Agreement may be amended or modified at any time in all respects by an instrument in writing executed by Parent and the Companies, provided that any amendment that materially and adversely affects the rights or changes the obligation of any Stockholder (as opposed to the Companies) shall require the consent of any such Stockholder.

 

9.  Definitions. Unless the context otherwise requires, the terms defined in this Section 9 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

 

“Affiliate” shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, the indicated Person.

 

“Agreement” shall mean this Agreement.

 

“Balance Sheet” and “Balance Sheet Date” shall have the meanings assigned to such terms in Section 2.10 hereof.

 

“Certificates” shall have the meaning assigned thereto in Section 1.4(b).

 

“Closing” and “Closing Date” shall have the meanings assigned to such terms in Section 6.1 hereof.

 

“Code” shall have the meaning assigned to it in the recitals.

 

“Commission” shall mean the U.S. Securities and Exchange Commission.

 

“Companies” shall mean both Juhl Energy Development, Inc. and DanMar and Associates, Inc., each a Minnesota corporation.

 

“Company Incentive Plan” shall have the meaning assigned to it in Section 1.5 hereof.

 

“Default” shall mean a default or failure in the due observance or performance of any covenant, condition or agreement on the part of the Companies to be observed or performed under the terms of this Agreement if such default or failure in performance shall remain unremedied for ten (10) days after receipt of written notice of such default.

 

 

“Employee Benefit Plans” shall have the meaning assigned to it in Section 2.17 hereof.

 

“Equity Security” shall mean any stock, interest or similar equity security of an issuer or any security (whether stock or Indebtedness for Borrowed Money) convertible, with or without consideration, into any stock, interest or similar equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant, option or right to subscribe to or purchase any stock, interest or similar equity security, or any such warrant, option or right.

 

“ERISA” shall mean the Employee Retirement Income Securities Act of 1974, as amended.

 

“Exchange” shall have the meaning assigned thereto in Recitals.

 

“Exchange Agent” shall have the meaning assigned thereto in Section 1.4(b)

 

“Exchange Offer” shall have the meaning assigned thereto in the Recitals.

 

“Exchange Ratios” shall have the meaning assigned thereto in Section 1.3(a).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Event of Default” shall mean (a) the failure of the Companies to pay any Indebtedness for Borrowed Money, or any interest or premium thereon, within five (5) days after the same shall become due, whether such Indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, (b) an event of default under any material agreement or instrument evidencing or securing or relating to any such Indebtedness, or (c) the failure of the Companies to perform or observe any material term, covenant, agreement or condition on its part to be performed or observed under any agreement or instrument evidencing or securing or relating to any such Indebtedness when such term, covenant or agreement is required to be performed or observed.

 

“GAAP” shall mean generally accepted accounting principles in the United States, as in effect from time to time.

 

"knowledge" and "know" means, when referring to any person or entity, the actual knowledge of the Chief Executive Officer, President or Chief Financial Officer or the person or entity of the particular matter or fact with respect to which it is used,

 

“Indebtedness” shall mean any obligation of the Companies which under generally accepted accounting principles is required to be shown on the balance sheet of the Companies as a liability, excluding however, accounts payable, accrued expenses and other short term liabilities.

 

“Indebtedness for Borrowed Money” shall mean (a) all Indebtedness in respect of money borrowed including, without limitation, Indebtedness which represents the unpaid amount of the purchase price of any property and is incurred in lieu of borrowing money or using available funds to pay such amounts and not constituting an account payable or expense accrual incurred or assumed in the ordinary course of business of the Companies, (b) all Indebtedness evidenced by a promissory note, bond or similar written obligation to pay money, or (c) all such Indebtedness guaranteed by the Companies or for which either of the Companies is otherwise contingently liable.

 

 

“Investment Company Act” shall mean the Investment Company Act of 1940, as amended.

 

“Lead Investor” shall mean Vision Opportunity Master Fund, Ltd.

 

“Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other law.

 

“Material Adverse Effect” shall have the meaning assigned to it in Section 2.2 hereof.

 

“Parent” shall mean MH & SC, Incorporated, a Delaware corporation.

 

“Parent Balance Sheet Date” shall have the meaning assigned to it in Section 3.14 hereof.

 

“Parent Common Stock” shall have the meaning assigned to it in the Recitals.

 

“Parent Employee Benefit Plans” shall have the meaning assigned to it in Section 3.17 hereof.

 

“Parent Financial Statements” shall have the meaning assigned to it in Section 3.7 hereof.

 

“Parent Preferred Stock” shall have the meaning assigned to it in the Recitals.

 

“Parent SEC Documents” shall have the meaning assigned to it in Section 3.6 hereof.

 

“Parent Warrants” shall have the meaning assigned to it in Recitals.

 

“Permitted Liens” shall mean (a) Liens for taxes and assessments or governmental charges or levies not at the time due or in respect of which the validity thereof shall currently be contested in good faith by appropriate proceedings; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers’, warehousemen’s, mechanics,’ laborers,’ materialmen’s and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings; and (c) Liens incidental to the conduct of the business of the Companies that were not incurred in connection with the borrowing of money or the obtaining of advances or credits and which do not in the aggregate materially detract from the value of its property or materially impair the use made thereof by the Companies in its business.

 

 

“Person” shall include all natural persons, corporations, business trusts, associations, limited liability companies, partnerships, joint ventures and other entities and governments and agencies and political subdivisions.

 

“Private Placement” shall have the meaning assigned to it in the Recitals.

 

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

 

“Tax” or “Taxes” shall mean (a) any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including, but not limited to, taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp), together with any interest thereon, penalties, fines, damages, costs, fees, additions to tax or additional amounts with respect thereto, imposed by the United States or other applicable jurisdiction; (b) any liability for the payment of any amounts described in clause (a) as a result of being a stockholder of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability, including, without limitation, by reason of Regulation section 1.1502-6; and (c) any liability for the payments of any amounts as a result of being a party to any Tax Sharing Agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (a) or (b).

 

“Tax Return” shall include all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065) required to be supplied to a Tax authority relating to Taxes.

 

“Transfer Agent” means Island Stock Transfer Company, Parent’s transfer agent and registrar.

 

“Units” shall have the meaning assigned to it in the Recitals.

 

 

10.  Miscellaneous.

 

10.1  Notices. Any notice, request or other communication hereunder shall be given in writing and shall be served either personally by overnight delivery or delivered by mail, certified return receipt and addressed to the following addresses:

 

 

If to Parent:		MH & SC, Incorporated
		3505 Castlegate Court
		Lexington, Kentucky 40502
		Attention: Mr. Cory Heitz, Chief Executive Officer

 

If to the Companies:		Juhl Energy Development, Inc./DanMar and Associates, Inc.
		996 190th Avenue
		Woodstock, Minnesota 56186
		Attention: Mr. Dan Juhl, President

Notices shall be deemed received at the earlier of actual receipt or three (3) business days following mailing. Counsel for a party (or any authorized representative) shall have authority to accept delivery of any notice on behalf of such party.

 

10.2  Entire Agreement. This Agreement, including the schedules and exhibits attached hereto and other documents referred to herein, contains the entire understanding of the parties hereto with respect to the subject matter hereof. This Agreement supersedes all prior agreements and undertakings between the parties with respect to such subject matter.

 

10.3  Expenses. Each party shall bear and pay all of the legal, accounting and other expenses incurred by it in connection with the transactions contemplated by this Agreement.

 

10.4  Time. Time is of the essence in the performance of the parties’ respective obligations herein contained.

 

10.5  Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

 

10.6  Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and heirs; provided, however, that no Stockholder shall directly or indirectly transfer or assign any of his or her rights hereunder in whole or in part without the written consent of the Parent and the Companies, which shall not be unreasonably withheld, and any such transfer or assignment without said consent shall be void.

 

10.7  No Third Parties Benefited. This Agreement is made and entered into for the sole protection and benefit of the parties hereto (including all Stockholders who acquire shares of Parent Common Stock), their successors, assigns and heirs, and no other Person shall have any right or action under this Agreement.

 

10.8  Counterparts. This Agreement may be executed in one or more counterparts, with the same effect as if all parties had signed the same document. Each such counterpart shall be an original, but all such counterparts together shall constitute a single agreement.

 

10.9  Recitals, Schedules and Exhibits. The Recitals, Schedules and Exhibits to this Agreement are incorporated herein and, by this reference, made a part hereof as if fully set forth herein.

 

10.10  Section Headings and Gender. The Section headings used herein are inserted for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. All personal pronouns used in this Agreement shall include the other genders, whether used in the masculine, feminine or neuter gender, and the singular shall include the plural, and vice versa, whenever and as often as may be appropriate.

 

10.11  Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware. This Agreement and the transactions contemplated hereby shall be subject to the exclusive jurisdiction of the courts of the State of Delaware. The parties to this Agreement agree that any breach of any term or condition of this Agreement or the transactions contemplated hereby shall be deemed to be a breach occurring in the State of Delaware by virtue of a failure to perform an act required to be performed in the State of Delaware. The parties to this Agreement irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of Delaware for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby, or any judgment entered by any court in prospect hereof brought in the State of Delaware and further irrevocably waive any claim that any suit, action or proceeding brought in the State of Delaware has been brought in an inconvenient forum. With respect to any action before the above courts, the parties hereto agree to service of process by certified or registered United States mail, postage prepaid, addressed to the party in question.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding and effective as of the day and year first above written.

 

 

 

PARENT:
MH & SC, INCORPORATED
By:	/s/ Cory Heitz
	Cory Heitz
	Chief Executive Officer
THE COMPANIES:
JUHL ENERGY DEVELOPMENT, INC.
By:	/s/ Dan Juhl
	Dan Juhl
	President
DANMAR AND ASSOCIATES, INC.
By:	/s/ Dan Juhl
	Dan Juhl
	President

 

The undersigned Stockholders execute and deliver this Agreement for the sole purpose of agreeing to the terms of Section 1 (The Exchange Offer), Section 4 (Additional Representations, Warranties and Covenants of the Stockholders), Section 7 (Survival of Representations and Warranties), Section 8 (Amendment of Agreement), Section 9 (Definitions), and Section 10 (Miscellaneous).

 

/s/ Dan Juhl		/s/ John Mitola
Dan Juhl		John Mitola
/s/ Mary Juhl
Mary Juhl

 

JUHL FAMILY LIMITED PARTNERSHIP			MITOLA FAMILY LIMITED PARTNERSHIP
By:	/s/ Dan Juhl		By:	John Mitola
	Name:Dan Juhl			Name: John Mitola
	Title: General Partner			Title: General Partner