AGREEMENT AND PLAN OF MERGER BY AND AMONG HEALTHCARE SERVICES GROUP, INC., HCSG, INC., HCSG MERGER, LLC, SUMMIT SERVICES GROUP, INC., JOSEPH S. CUZZUPOLI, JOHN A. BULLOCK, LAWRENCE G. FRENI, WELLFLEET CAPITAL PARTNERS, INC., AND NAVONE INVESTMENTS,...
EXECUTION
VERSION
FINAL
BY
AND AMONG
HEALTHCARE
SERVICES GROUP, INC., HCSG, INC., HCSG MERGER, LLC,
SUMMIT
SERVICES GROUP, INC., XXXXXX X. XXXXXXXXX, XXXX X. XXXXXXX,
XXXXXXXX
X. XXXXX, WELLFLEET CAPITAL PARTNERS, INC., AND NAVONE
INVESTMENTS,
LLC
AND
XXXXXX
X. XXXXX, S. XXXXX XXXXXXXXX, AND P.H. XXXXXXXX XXXXX FOR
THE
LIMITED PURPOSES SET FORTH HEREIN
DATED:
SEPTEMBER 18, 2006
TABLE
OF CONTENTS
Page
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BACKGROUND
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1
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AGREEMENT
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4
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1.
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INCORPORATION
OF BACKGROUND
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4
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2.
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MERGER
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4
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2.1.
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The
Merger
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4
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2.2.
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Effective
Time
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4
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2.3.
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Effect
of the Merger
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4
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2.4.
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Articles
of Incorporation; Bylaws
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5
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2.5.
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Directors
and Officers
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5
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3.
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CONVERSION
OF SECURITIES; EXCHANGE OF CERTIFICATES
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6
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3.1.
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Conversion
of Securities
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6
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3.2.
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Exchange
of Certificates
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7
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3.3.
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Share
Transfer Books
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8
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4.
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REPRESENTATIONS
AND WARRANTIES OF INSIDER SHAREHOLDERS WITH RESPECT TO SUMMIT
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9
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4.1.
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Corporate
Status, Outstanding Stock
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9
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4.2.
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Due
Authorization and Validity of Agreement
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10
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4.3.
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Officers,
Directors, Bank Accounts, etc
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10
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4.4.
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Subsidiaries
and Joint Ventures
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10
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4.5.
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Financial
Statements
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10
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4.6.
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Summit
Loans
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11
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4.7.
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Leases
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11
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4.8.
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Personal
Property
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12
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4.9.
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Service
Agreements
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13
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4.10.
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Accounts
Receivable
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13
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4.11.
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Insurance
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13
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4.12.
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No
Unrecorded Liabilities
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13
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4.13.
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Service
Agreements, Leases, and Other Commitments
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14
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4.14.
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Collective
Bargaining Agreements and Other Employee Matters
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15
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4.15.
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Litigation
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16
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4.16.
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Conflicting
Interests
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16
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4.17.
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Compliance
with Law and Regulations
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17
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i
TABLE
OF CONTENTS
(continued)
Page
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4.18.
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Agreement
Not in Breach of Other Instruments Affecting Summit; Governmental
Consents
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17
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4.19.
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Tax
Matters
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19
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4.20.
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Absence
of Certain Actions
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20
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4.21.
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No
Material Adverse Change
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21
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4.22.
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Environmental
Matters
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21
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4.23.
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No
Broker or Finder
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22
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4.24.
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Statements
and Other Documents Not Misleading
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22
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4.25.
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Loans
to Officers, Directors, and Shareholders
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22
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4.26.
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Unpaid
State Sales Taxes and Waltham Lease
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23
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5.
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FURTHER
REPRESENTATIONS AND WARRANTIES OF THE SUMMIT SHAREHOLDERS
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23
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5.1.
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Ownership
of Capital Stock of Summit
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23
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5.2.
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Authorization;
Valid and Binding Agreement
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23
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5.3.
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Agreement
Not in Breach of Other Instruments Affecting the Summit Shareholders
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24
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5.4.
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Shareholders’
Vote
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24
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6.
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REPRESENTATIONS
AND WARRANTIES OF HIXON, PRITCHARD, AND XXXXX
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25
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6.1.
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Valid
and Binding Agreement
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25
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7.
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REPRESENTATIONS
AND WARRANTIES OF HEALTHCARE
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25
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7.1.
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Corporate
Status and Authority; Outstanding Stock
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25
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7.2.
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Status
of Healthcare Stock
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26
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7.3.
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Agreement
Not in Breach of Other Instruments Affecting Healthcare
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26
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7.4.
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Financial
Statements
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26
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7.5.
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Healthcare’s
SEC Filings
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26
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7.6.
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No
Broker or Finder; Purchase for Investment
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27
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7.7.
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Statements
and Other Documents Not Misleading
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27
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8.
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CONTINUATION
AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
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27
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9.
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CLOSING
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28
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9.1.
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Closing
Date
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28
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ii
TABLE
OF CONTENTS
(continued)
Page
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9.2.
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Deliveries
by the Summit Shareholders at Closing
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27
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9.3.
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Deliveries
by Healthcare at Closing
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28
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10.
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ADDITIONAL
TAX MATTERS
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29
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10.1.
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Filing
of Tax Returns; Payment of Taxes
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29
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10.2.
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Tax
Audits
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30
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10.3.
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General
Cooperation on Tax Matters
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30
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10.4.
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Disputes
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31
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10.5.
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Unpaid
State Sales Taxes
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31
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10.6.
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Tax
Treatment of Merger
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32
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11.
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INDEMNIFICATION
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32
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11.1.
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By
the Insider Shareholders
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32
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11.2.
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By
the Summit Shareholders
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33
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11.3.
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By
Xxxxx, Xxxxxxxxx and Xxxxx
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33
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11.4.
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By
Healthcare
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33
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11.5.
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Limitations
on Indemnification
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34
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11.6.
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Procedures
for Indemnification Claims
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37
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11.7.
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Payment
of Losses
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38
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11.8.
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Remedy
Exclusive
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38
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11.9.
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Unpaid
State Sales Taxes and Waltham Lease
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38
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12.
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CONFIDENTIALITY;
PUBLICITY
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38
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13.
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SECURITIES
LAWS COMPLIANCE PROCEDURES
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39
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13.1.
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Knowledge
Respecting Healthcare
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39
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13.2.
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Status
of Shares to be Issued
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40
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14.
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REGISTRATION
OF HEALTHCARE SHARES
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42
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15.
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FURTHER
ASSURANCES
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45
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16.
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RESTRICTIVE
COVENANTS
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45
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16.1.
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Covenant
Not To Compete
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45
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16.2.
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Covenant
Not To Solicit Clients Or Accounts
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46
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16.3.
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Covenant
Not To Solicit Or Hire Employees
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47
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16.4.
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Covenant
Not To Use Or Disclose Confidential Information
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48
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iii
TABLE
OF CONTENTS
(continued)
Page
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16.5.
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Remedies
for Breach
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49
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16.6.
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Extension
of Restriction
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49
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17.
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MISCELLANEOUS
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50
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17.1
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Resolution
of Disputes
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50
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17.2.
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Notices
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51
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17.3.
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Applicable
Law
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52
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17.4.
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Binding
Agreement
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52
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17.5.
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Expenses
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52
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17.6.
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Entire
Agreement
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52
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17.7.
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Amendments
and Waivers
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52
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17.8.
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Severability
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53
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17.9
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Use
of Defined Terms
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53
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17.10
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Counterparts
and Facsimiles
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53
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iv
EXHIBITS
EXHIBIT
“A-1”
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–
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Escrow
Agreement
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EXHIBIT
“A-2”
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–
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Waltham
Lease Indemnification Agreement
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EXHIBIT
“B”
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–
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Allocation
of Merger Consideration
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EXHIBIT
“D”
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–
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Form
of HCSG Operating Agreement
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EXHIBIT
“E”
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–
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Form
of Service Agreements
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EXHIBIT
“F”
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–
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Opinion
of Xxxxxxx XxXxxxxxx LLP
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EXHIBIT
“G”
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General
Releases in Favor of Summit
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EXHIBIT
“H”
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–
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Certification
by each Summit Shareholder Pursuant to the Foreign Investment Real
Property Tax Act
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EXHIBIT
“I-1”
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–
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Employment
Agreement of Xxxxxx X. Xxxxxxxxx
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EXHIBIT
“I-2”
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–
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Employment
Agreement of Xxxx X. Xxxxxxx
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EXHIBIT
“I-3”
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–
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Employment
Agreement of Xxxxxxxx X. Xxxxx
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v
SCHEDULES
SCHEDULE
4.1.1(a)
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–
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States
in which Summit is Qualified
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SCHEDULE
4.1.1(b)
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–
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Summit’s
Capital Stock
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SCHEDULE
4.1.1(c)
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–
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Summit’s
Options, Warrants, Rights, Shareholder Agreements Or Other
Investments
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SCHEDULE
4.1.1(d)
|
–
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Defaults
or Violations of Articles of Organization or Bylaws
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SCHEDULE
4.3
|
–
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Officers,
Directors, Bank Accounts, Safe Deposit Boxes, Authorized
Personnel
|
SCHEDULE
4.5
|
–
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Financial
Statements
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SCHEDULE
4.6
|
–
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Summit
Loan Obligations as of Closing Date
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SCHEDULE
4.7.1
|
–
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Leases
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SCHEDULE
4.7.4
|
–
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Assignment
or Sublet of Lease Interests
|
SCHEDULE
4.8
|
–
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Personal
Property Exceptions
|
SCHEDULE
4.9
|
–
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Service
Agreements
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SCHEDULE
4.10
|
–
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Accounts
Receivables, Set-Offs, Deductions or Defenses
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SCHEDULE
4.11
|
–
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Insurance
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SCHEDULE
4.12
|
–
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Unrecorded
Liabilities
|
SCHEDULE
4.13.1(c)
|
–
|
Summit
Loan Obligation Documentation
|
SCHEDULE
4.13.1(d)
|
–
|
Other
Commitments
|
SCHEDULE
4.13.2
|
–
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Defaults
under Summit Agreements, List of Summit’s Agreements Which may be
Terminated or not Renewed
|
SCHEDULE
4.14
|
–
|
Collective
Bargaining Agreements and Other Employee Matters
|
SCHEDULE
4.15
|
–
|
Litigation
|
SCHEDULE
4.16
|
–
|
Conflicting
Interests
|
vi
SCHEDULE
4.18
|
–
|
Agreement
Not in Breach of Other Instruments Affecting Summit; Governmental
Consent
|
SCHEDULE
4.19.3
|
–
|
Tax
Liabilities
|
SCHEDULE
4.19.5
|
–
|
Tax
Returns of Summit for Taxable Years Ended December 27, 2003, December
25,
2004 and December 30, 2005
|
SCHEDULE
4.20
|
–
|
Absence
of Certain Actions
|
SCHEDULE
4.25
|
–
|
Loans
to Officers, Directors and Shareholders
|
SCHEDULE
5.1
|
–
|
Restrictions
on Transfer
|
SCHEDULE
9.3.2
|
–
|
Summit
Bonus Employees
|
SCHEDULE
11.5.2(a)
|
–
|
Allocation
of Insider Shareholder Indemnification Limits
|
SCHEDULE
11.5.2(c)
|
–
|
Allocation
of Xxxxx, Xxxxxxxxx and Xxxxx Indemnification
Limits
|
vii
THIS
AGREEMENT AND PLAN OF MERGER
(this
“Agreement”) is made this 18th day of September 2006, by and among HEALTHCARE
SERVICES GROUP, INC.,
a
Pennsylvania corporation (“Healthcare”); HCSG,
INC.,
a
Massachusetts corporation (“Merger Sub”); HCSG
MERGER, LLC,
a
Massachusetts limited liability company (“HCSG”); SUMMIT
SERVICES GROUP, INC.,
a
Massachusetts corporation (“Summit”); XXXXXX
X. XXXXXXXXX
(“Cuzzupoli”), a resident of Massachusetts; XXXX X.
XXXXXXX
(“Xxxxxxx”), a resident of Massachusetts; XXXXXXXX
X. XXXXX
(“Xxxxx”), a resident of Massachusetts; WELLFLEET
CAPITAL PARTNERS,
INC.,
a
Massachusetts corporation (“Wellfleet”); NAVONE
INVESTMENTS, LLC,
a
Delaware limited liability company (“Navone”); XXXXXX
X. XXXXX
(“Xxxxx”), a resident of Mississippi; S.
XXXXX
XXXXXXXXX
(“Xxxxxxxxx”), a resident of Colorado; and P.
H. XXXXXXXX XXXXX
(“Xxxxx”), a resident of Massachusetts. Cuzzupoli, Bullock, and Xxxxx are
sometimes referred to in this Agreement individually as an “Insider Shareholder”
and collectively as the “Insider Shareholders.” Cuzzupoli, Bullock, Freni,
Wellfleet, and Navone are sometimes referred to in this Agreement individually
as a “Summit Shareholder” and collectively as the “Summit
Shareholders.”
A. Healthcare
and Summit are each in the business of providing housekeeping, laundry, and
food services to long-term healthcare facilities.
B. Merger
Sub and HCSG are newly-formed, wholly-owned subsidiaries of
Healthcare.
C. All
of
the issued and outstanding shares of capital stock of Summit (collectively,
the
“Summit Shares”) are held of record and beneficially as follows:
Number
and Kind of Shares
|
||
(i)
|
Cuzzupoli
|
115,552 –
Common
Stock
|
(ii)
|
Xxxxxxx
|
94,543
– Common Stock
|
(iii)
|
Xxxxx
|
11,905
– Common Stock
|
(iv)
|
Wellfleet
|
8,000
– Common Stock
|
(v)
|
Navone
|
138,500
– Series A Convertible Preferred
Stock
|
D. Wellfleet
and Navone are investors in Summit and are not actively involved in its management.
X. Xxxxx
and
Xxxxxxxxx are the controlling parties of Navone and Xxxxx is the controlling
party of Wellfleet, and, as such, each is executing this Agreement. Hixon,
Pritchard, and Xxxxx shall be bound only by the provisions of Sections 1,
6, 8, 9, 11, 12, 15, 16 and 17 of this Agreement.
F. Healthcare
desires to acquire Summit by (a) a merger (the “First Merger”) of Merger Sub
with and into Summit, with Summit being the surviving entity, and (b)
immediately after the consummation and effectiveness of the First Merger, a
merger (the “Second Merger”) of Summit with and into HCSG, with HCSG being the
surviving entity (the First Merger and the Second Merger are sometimes
hereinafter collectively referred to as the “Merger”). The transaction is
intended to qualify as a “single integrated transaction” qualifying as a
reorganization under Internal Revenue Service Code Section 368(a)(1)(A) in
accordance with Rev. Rul. 2001-46, 2001-42 IRB 421.
G. Healthcare
and Summit entered into a Confidentiality Agreement made as of June 28,
2006.
H. The
consideration to be paid by Healthcare to the Summit Shareholders in the Merger
(the “Merger Consideration”) shall be Seventeen Million Two Hundred Thousand
Dollars ($17,200,000) of which (i) Nine Million Four Hundred Fifty Nine Thousand
Nine Hundred Eighty-Eight Dollars ($9,459,988) shall be payable in cash (the
“Cash Merger Consideration”), and (ii) Seven Million Seven Hundred Forty
Thousand and Twelve Dollars ($7,740,012) shall be payable by the issuance of
shares (the “Stock Merger Consideration”) of Healthcare common stock, $.01 par
value per share (the “Healthcare Common Stock”), valued at Twenty-One Dollars
($21.00) per share, subject to the provisions of Section 14.
2
I. Immediately
following the consummation of the Merger, Healthcare shall lend to Summit up
to an aggregate amount of Three Hundred Thousand Dollars ($300,000) (the “Bonus
Employees Loan”) which will be used to provide cash bonuses (collectively,
the “Summit Bonuses”) to a limited number of key employees of Summit
who are not shareholders of Summit and who will be selected by Xx. Xxxxxxxxx,
the President of Summit and are listed on Schedule
9.3.2
(such key employees, the “Summit Bonus Employees”).
J. An
issue exists regarding whether Summit is liable for certain unpaid sales, use
and/or gross receipts taxes owing to certain states (all of such unpaid sales
taxes, together with all interest and penalties in connection therewith, the
“Unpaid State Sales Taxes”). In order to ensure payment of all or
a portion of the Unpaid State Sales Taxes, the Summit Shareholders have agreed
that the sum of One Million Seven Hundred Sixty-Four Thousand Seventy-Seven
Dollars ($1,764,077) shall be set aside and deducted from the Cash Merger Consideration
(in the aggregate, the “Escrowed Cash Merger Consideration”) and
held in escrow in accordance with the terms of the Settlement and Escrow Agreement
attached hereto as Exhibit
“A-1”
(the “Escrow Agreement”).
K. Summit
is a party to a certain lease with 000 Xxxxxx Xxxxxx LLC for office space located
at 000 Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxxxxxxxx (the “Waltham Lease”).
In connection therewith, Cuzzupoli has agreed to indemnify Healthcare and Summit
for all liabilities arising under the Waltham Lease pursuant to the terms of
the Waltham Lease Indemnification Agreement attached hereto as Exhibit
“A-2”
(the “Waltham Lease Indemnification Agreement”).
L. The
Merger Consideration shall be distributed to the Summit Shareholders in
accordance with the schedule set forth on Exhibit
“B”
attached
hereto.
3
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Incorporation
of Background.
The Background to this Agreement is incorporated into and made part of this
Agreement.
2.1 The
Merger.
On the Closing Date (as defined in Section 9), Merger Sub shall be merged
with and into Summit, and immediately thereafter, Summit shall be merged with
and into HCSG. As a result of the First Merger, the separate corporate existence
of Merger Sub shall cease and Summit shall continue as the surviving corporation
of the First Merger (“First Survivor”), and as a result of the Second
Merger, the separate corporate existence of Summit shall cease and HCSG shall
continue as the surviving entity (“Second Survivor”).
2.2 Effective
Time.
Articles of Merger (the “Articles of Merger”) shall be duly executed
by Merger Sub and Summit, and Articles of Merger and a Certificate of Merger
(collectively, the “Second Merger Certificates”) shall be duly executed
by Summit and HCSG, and on the Closing Date (as defined in Section 9.1), the
Articles of Merger and the Second Merger Certificates (in that order) shall
be respectively filed with the Secretary of State of the Commonwealth of Massachusetts.
The date and time the Merger becomes effective under Massachusetts law is referred
to in this Agreement as the “Effective Time.”
The parties had agreed in principle on or before August 31, 2006 to substantially
all of the material terms and conditions related to the economic and business
aspects of the Merger.
2.3 Effect
of the Merger.
At the Effective Time, (a) the effect of the First Merger shall be as provided
in this Agreement, the Articles of Merger, and the applicable provisions of
the Massachusetts Business Corporation Law, and (b) the effect of the Second
Merger shall be as provided in this Agreement, the Second Merger Certificates
and the Massachusetts Business Corporation Law and the Massachusetts Limited
Liability Company Act. Without limiting the generality of the foregoing, at
the Effective Time, (i) with respect to the First Merger, all the property,
rights, privileges, powers, and franchises of Summit and Merger Sub shall vest
in First Survivor, and all debts, liabilities, and duties of Summit and Merger
Sub shall become the debts, liabilities, and duties of First Survivor, and (ii)
with respect to the Second Merger, all the property, rights, privileges, powers,
and franchises of Summit and HCSG shall vest in Second Survivor, and all debts,
liabilities, and duties of Summit and HCSG shall become the debts, liabilities,
and duties of Second Survivor.
4
2.4 Constituent
Documents.
At the Effective Time, (a) the Summit Articles of Organization (as defined in
Section 3.1(a)(ii)(B)) and Summit’s Bylaws as in effect immediately prior
to the Effective Time, respectively, shall be the Articles of Organization and
Bylaws of First Survivor, and (b) HCSG’s Operating Agreement as in effect
immediately prior to the Effective Time and in the form of Exhibit
“D”
attached hereto, as amended by the Second Merger Certificates, shall be the
operating agreement of Second Survivor (the “Operating Agreement”).
2.5 Directors
and Officers.
(a) With respect to the First Merger, the directors of Merger Sub immediately
prior to the Effective Time shall be the directors of First Survivor, each to
hold office in accordance with the Articles of Organization and Bylaws of First
Survivor, and the officers of Merger Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Organization and Bylaws of the Surviving
Corporation, and (b) with respect to the Second Merger, the directors of HCSG
immediately prior to the Effective Time shall be the directors of Second Survivor,
each to hold office in accordance with the Operating Agreement, and the officers
of HCSG immediately prior to the Effective Time shall be the officers of Second
Survivor, each to hold office in accordance with the Operating Agreement.
5
(a) At
the
Effective Time, by virtue of the First Merger and without any action on the
part
of Merger Sub, Summit, Healthcare or the Summit Shareholders:
(ii) Conversion
Generally.
(A) The
shares of Summit common stock, no par value per share (the “Summit Common
Stock”) included in the Summit Shares which are issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive the applicable Cash Merger Consideration and Stock Merger Consideration
as described on Exhibit
“B”
attached hereto.
(B) Notwithstanding
anything to the contrary set forth in Summit’s Articles of Organization,
as amended, in effect immediately prior to the Effective Time (the “Summit
Articles of Organization”), or that certain Redemption Agreement, dated
June 30, 2005, between Summit and Navone, the shares of Summit Series A
Convertible Preferred Stock, no par value per share (the “Summit Preferred
Stock”) included in the Summit Shares which are issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive the applicable Cash Merger Consideration and Stock Merger Consideration
as described on Exhibit “B”
attached hereto.
At
the
Effective Time, all shares of capital stock of Summit shall no longer be
outstanding and shall automatically cease to exist and each certificate
previously representing any such shares shall thereafter represent only the
right to receive the applicable portion of the Merger
Consideration.
(iii) Cancellation
of Certain Shares. Each share of Summit capital stock held, immediately
prior to the Effective Time, by Summit, Healthcare, or Merger Sub, shall be
canceled and extinguished without any conversion thereof, and no payment shall
be made with respect thereto.
6
(iv) Capital
Stock of Merger Sub.
At the Effective Time, each share of capital stock of Merger Sub that is issued
and outstanding immediately prior to the Effective Time will, by virtue of the
First Merger and without further action on the part of Healthcare, as the sole
stockholder of Merger Sub, be converted into and become one share of common
stock of First Survivor (and such share of First Survivor into which the shares
of Merger Sub capital stock are so converted shall be the only share of First
Survivor’s capital stock that is issued and outstanding immediately after
the Effective Time). The certificate evidencing ownership of shares of Merger
Sub capital stock will evidence ownership of such share of common stock of First
Survivor.
(b) At
the
Effective Time, by virtue of the Second Merger and without any action on the
part of Summit, HCSG or Healthcare, each share of capital stock of First
Survivor that is issued and outstanding immediately prior to the Effective
Time
will, by virtue of the Second Merger and without further action on the part
of
Healthcare, as the then sole stockholder of First Survivor, be converted into
and become one unit of membership interest of Second Survivor. The certificate
evidencing ownership of shares of First Survivor capital stock will evidence
ownership of such unit of membership interest of Second Survivor.
3.2 Exchange
of Certificates.
(a)
Exchange
Procedures.
(i) At
the
Effective Time, with respect to the First Merger, Healthcare will deliver to
each Summit Shareholder his or its applicable portion of the Stock Merger
Consideration.
(ii) Each
Summit Share issued and outstanding immediately prior to the Effective Time
shall be deemed at all times from and after the Effective Time to represent
only
the right to receive the Merger Consideration into which each such Summit share
is converted in the First Merger in accordance with Section 3.1(a). No
interest shall be paid or accrue on any Merger Consideration.
7
(b) Cash
Payment.
At the
Effective Time, Healthcare shall pay to each Summit Shareholder his or its
applicable portion of the Cash Merger Consideration, and deduct therefrom and
deposit with Xxxxx and Xxxxxxx Xxxxxx, a representative of Healthcare
(“Xxxxxx”), as the escrow agents (the “Escrow Agents”) under the Escrow
Agreement, the applicable portions of the Escrowed Cash Merger Consideration
to
be held in escrow pursuant to the Escrow Agreement, all in accordance with
the
schedule set forth on Exhibit
“B”
attached hereto.
(c) Further
Rights in Summit Shares.
Subject
to the rights of the Summit Shareholders under Section 14, all Merger
Consideration issued and paid upon conversion of the Summit Shares in accordance
with the terms of this Agreement shall be deemed to have been issued and paid
in
full satisfaction of all rights pertaining to such Summit Shares.
3.3 Share
Transfer Books.
At the Effective Time, the share transfer books of Summit shall be closed and,
thereafter, there shall be no further registration of transfers of shares of
Summit Common Stock and Summit Preferred Stock theretofore outstanding on the
records of Summit. From and after the Effective Time, the holders of certificates
representing Summit Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Summit Shares, except as
otherwise provided in this Agreement or by applicable laws.
8
4. Representations
and Warranties of Insider Shareholders with Respect to Summit.
As a material inducement to Healthcare to enter into this Agreement and to consummate
the Merger, each Insider Shareholder, severally and not jointly, makes the following
representations and warranties to Healthcare:
4.1.1 Corporate
Status and Outstanding Stock.
Summit
is a corporation duly organized, validly existing, and in good corporate
standing under the laws of the Commonwealth of Massachusetts, has the power
and
authority to own its properties and to carry on its business as it is now being
conducted, and is duly qualified to do business as a foreign corporation in
the
jurisdictions in which the failure to be so qualified would have a material
adverse effect on the business, assets, condition (financial or otherwise),
or
operations of Summit, which states in which Summit is so qualified are specified
in Schedule
4.1.1.(a).
Summit
has an authorized capital consisting of (a) Five Hundred Thousand (500,000)
shares of Summit Common Stock, and (b) One Hundred Fifty Thousand (150,000)
shares of Summit Preferred Stock, the issued and outstanding shares of which
are
as described in Section C of the Background to this Agreement. All of the issued
and outstanding shares of Summit Common Stock and Summit Preferred Stock are
validly issued, fully paid, and non-assessable. Except as described on
Schedule
4.1.1.(b),
there
are no shares of Summit’s capital stock held in its treasury. Except as
described on Schedule
4.1.1.(c),
there
are no options, warrants, rights, shareholder agreements, or other instruments
or agreements outstanding giving any person or entity the right to acquire
any
shares of capital stock of Summit, nor are there any commitments to issue or
execute any such options, warrants, rights, shareholder agreements, or other
instruments or agreements. There are no outstanding stock appreciation rights
or
similar rights measured with respect to Summit’s capital stock nor are there any
instruments or agreements giving anyone the right to acquire any such rights.
The minute books and stock records of Summit are complete and accurate in all
material respects and all signatures included therein are the genuine signatures
of the persons indicated as signing. True, correct, and complete copies of
Summit’s minute books and stock records, including the Summit Articles of
Organization and By-Laws and all amendments to both, have been delivered to
Healthcare. Except as described on Schedule
4.1.1.(d),
Summit
is not in default under or in violation of any provision of the Summit Articles
of Organization or its By-Laws.
9
4.2. Due
Authorization and Validity of Agreement.
The execution, delivery, and performance of this Agreement have been duly authorized
by all necessary corporate action on behalf of Summit. This Agreement constitutes
the valid and binding obligation of Summit and the Insider Shareholders enforceable
against them in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, moratorium, and other similar laws affecting creditors’
rights generally and by general principles of equity, whether considered in
a proceeding at law or in equity.
4.3. Officers,
Directors, Bank Accounts, etc.
Schedule
4.3
discloses all directors and officers of Summit; all bank accounts and safe deposit
boxes of Summit; and all persons authorized to sign checks drawn on such accounts
and have access to such safe deposit boxes.
4.4. Subsidiaries
and Joint Ventures.
There is no corporation or other entity in which Summit owns, directly or indirectly,
a controlling interest or a majority of the outstanding shares or other equity
interest issued by such corporation or entity, nor does Summit own any other
capital stock, security, partnership interest, or other interest of any kind,
either direct or indirect, in any corporation, partnership, joint venture, association,
or other entity.
4.5. Financial
Statements.
The balance sheets of Summit as of December 27, 2003, December 25, 2004, and
December 31, 2005, and the related statements of operations, stockholders’
equity, and cash flows for the years then ended (collectively the “Year-End
Financial Statements”), and the balance sheet of Summit as of June 30,
2006, and the related statements of operations, stockholders’ equity,
and cash flow for the six-months then ended (the “June 30, 2006 Financial
Statements”), copies of all of which are attached as Schedule
4.5.,
were prepared in conformity with accounting principles generally accepted in
the United States of America (“GAAP”), except, in the case of the
June 30, 2006 Financial Statements, for the absence of footnotes and year-end
adjustments. The Year-End Financial Statements were audited by BDO Xxxxxxx,
LLP, certified public accountants, whose reports are included with such financial
statements. The June 30, 2006 Financial Statements are true and correct in all
material respects and fairly present the financial condition and results of
operation of Summit as of June 30, 2006 and for the six months then ended.
10
4.6 Summit
Loans.
Summit has a working capital loan and an equipment loan (the “Siemens
Debt”) from Siemens Capital, the aggregate outstanding balance of which
as of June 30, 2006 was Six Million Six Hundred Forty Thousand Two Hundred
Sixty-Six Dollars ($6,640,266). Summit also has a loan from Xxxxx (the “Xxxxx
Debt”), the outstanding balance of which as of June 30, 2006 was
One Hundred Fifty One Thousand Four Hundred Seventy Dollars ($151,470). The
Siemens Debt and the Xxxxx Debt, together with all amounts owing by Summit to
Boston Private Bank & Trust Company under that certain letter agreement
dated May 31, 2006, are hereinafter collectively referred to as the “Summit
Loan Obligations.” The
aggregate amounts of the respective Summit Loan Obligations outstanding as of
the Closing Date are set forth on Schedule
4.6.
4.7.1. Summit
has no interest in any real estate, except for those leases disclosed on
Schedule
4.7.1
(the
“Leases”).
4.7.2. Schedule
4.7.1
includes
a description of all Leases, including for each its date, the name of the
landlord (and owner if different than the landlord), the name of the lessee
and
any sublessee, the location and use of the property, the monthly base rental
payment, any scheduled or formula increases in base rent, the lease expiration
date, and all options to renew;
4.7.3. Summit
has delivered to Healthcare true and complete copies of all Leases, all
amendments and supplements thereto, and all such non-disturbance agreements
relating thereto;
4.7.4. except
as
disclosed on Schedule
4.7.4,
Summit
has not assigned any Lease or any interest therein or subleased any portion
of
the properties subject to any Lease;
11
4.7.5. each
Lease is in full force and effect;
4.7.6 Summit
is
not, and, to the actual knowledge of the Insider Shareholders, each landlord
under any Lease is not in default under any Lease, and no event has occurred
which, with the giving of notice or passage of time or both, would constitute
a
default by Summit or, to the actual knowledge of the Insider Shareholders,
any
landlord under any Lease; and
4.7.7 neither
the execution or performance of this Agreement, nor the consummation of any
of
the transactions contemplated herein, will result in a breach of or constitute
a
default under any of the Leases.
4.8.1. Except
as
disclosed on Schedule
4.8,
(i) to
the actual knowledge of the Insider Shareholders, Summit has good, valid, and
marketable title to all tangible personal property reflected on the June 30,
2006 Financial Statements and to all other personal property owned by it, free
and clear of all liens, mortgages, pledges, security interests, restrictions,
prior assignments, licenses to third parties, encumbrances, and claims of every
kind or character, and (ii) all equipment, furniture and fixtures, and other
tangible personal property of Summit is in good operating condition and repair,
reasonable wear and tear excepted, and except as aforesaid, does not require
any
repairs other than normal routine maintenance to maintain such property in
good
operating condition and repair.
4.8.2. The
name
“Summit Services Group” (the “Xxxx”) is the only trademark which is used by
Summit in the operation of its business. No claim has been asserted against
Summit involving any conflict or claim of conflict of the Xxxx with the marks
of
others or asserting any rights in the Xxxx. The Insider Shareholders have no
actual knowledge of any basis for any such claim of conflict. To the actual
knowledge of the Insider Shareholders, Summit is the sole and exclusive owner
of
the Xxxx and has the sole and exclusive right to use the Xxxx. Within the past
five (5) years, Summit has not done business under, and has not been known
by,
any name other than the Xxxx.
12
(a) the
service agreements under which Summit furnished its services as of June 30,
2006
(“Service Agreements”);
(b) the
controlling entity/management company of the Facility;
(c)
the
address of each Facility to which services are furnished;
and
(d)
the
currently agreed to monthly billing amount.
Each
Service Agreement is in substantially the form attached hereto as Exhibit
“E”,
and no
material changes to the form have been made to any Service
Agreement.
4.10. Accounts
Receivable.
Each of the accounts receivable included in the June 30, 2006 Financial
Statements constitutes a valid claim in the full amount thereof and was acquired
in the ordinary course of business. No account debtor has any valid set-off,
deduction, or defense with respect thereto, except as set forth on Schedule
4.10,
and no account debtor has asserted any such set-off, deduction, or defense against
any single invoice that has been billed to it for an amount in excess of One
Thousand Dollars ($1,000.00). The reserve for doubtful accounts reflected on
the June 30, 2006 Financial Statements has been properly determined in accordance
with GAAP applied on a basis consistent with prior periods.
4.11. Insurance.
Summit maintains insurance policies bearing the numbers, for the terms, with
the companies, in the amounts, having the named insureds, providing the general
coverage, and with the premiums disclosed on Schedule
4.11.
All of such policies are in full force and effect. Summit is not in default
of any provision thereof and all premiums due with respect to such policies
have been paid. Summit has not received notice from any issuer of any policy
issued to it of the insurer’s intention to cancel or refusal to renew
any such policy issued by such insurer. True, correct, and complete copies of
all such policies have been delivered to Healthcare.
4.12 No
Unrecorded Liabilities.
As of June 30, 2006, Summit has recorded all material liabilities required
to be recorded under GAAP applied on a basis consistent with prior periods,
and has no material liabilities except as and to the extent listed in the June 30,
2006 Financial Statements, disclosed in Schedule
4.12,
or as incurred since June 30, 2006 in the ordinary course of business.
13
4.13.1. Summit
is
not a party to or bound by any material written, oral, or implied contract,
agreement, lease, power of attorney, guaranty, surety arrangement, or other
commitment, including but not limited to any contract or agreement for the
purchase or sale of merchandise, equipment, or for the rendition of services,
except for the following (which are hereinafter collectively called the “Summit
Agreements”):
4.13.1
(a) Service
Agreements described on Schedule
4.9
which
are in effect effect as of the date of this Agreement;
4.13.1
(b) Leases
described on Schedule
4.7.1;
4.13.1
(c) Agreements,
documents, and instruments with respect to the Summit Loan Obligations listed
on
Schedule 4.13.1(c);
and
4.13.1
(d) other
commitments involving a maximum possible liability or obligation per agreement
on the part of Summit of more than Twenty Thousand Dollars ($20,000.00), and
such other equipment leases, automobile leases and other contracts and
agreements (collectively, the “Other Agreements”), all as described on
Schedule
4.13.1(d).
True,
correct, and complete copies of all of the Leases and Other Agreements
(including all amendments thereto), have been delivered to Healthcare.
Healthcare has been given full access to all of the Service
Agreements.
4.13.2 Full
Force and Effect.
All of
the Summit Agreements are in full force and effect and are valid, binding,
and
enforceable against the respective parties thereto in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, and other similar laws affecting creditors’ rights
generally and by general principles of equity, whether considered in a
proceeding at law or in equity. Except as disclosed on Schedule
4.13.2,
Summit
and, to the actual knowledge of the Insider Shareholders, all other parties
to
all of the Summit Agreements, have performed all material obligations required
to be performed to date under the Summit Agreements, and neither Summit nor,
to
the actual knowledge of the Insider Shareholders, any such other party is
materially in default or in arrears under the terms thereof, and no condition
exists or event has occurred which, with the giving of notice or lapse of time
or both, would constitute a default thereunder. Except as disclosed on
Schedule
4.13.2,
the
execution and delivery of this Agreement, the consummation of the transactions
provided for herein, and the fulfillment of the terms hereof by Summit, does
not
and will not, with or without the giving of notice, the lapse of time, or both,
result in the breach of any of the terms and provisions of, or constitute a
default under, or conflict with, or cause any acceleration of, any obligation
of
Summit under any Summit Agreement. Except as specifically disclosed on
Schedule
4.13.2,
the
Insider Shareholders have not been advised by any party to a Summit Agreement
of
its intention to terminate or materially amend any Summit Agreement or, if
Summit intends to request a renewal of same, of any intention to refuse to
renew
the same upon expiration of its term.
14
4.13.3. There
are
no outstanding written and oral guaranties made by Summit, which, if accepted,
would or could impose any debts, obligations, or liabilities upon
Summit.
4.14. Collective
Bargaining Agreements and Other Employee Matters.
Except as disclosed on Schedule
4.14,
Summit:
4.14.1. is
not a
party to any collective bargaining agreement;
4.14.2. is
not a
party to any written or oral employment agreement, consulting agreement, or
agreement to receive personal services, other than oral agreements at will
or
which are terminable on not more than thirty (30) days prior
notice;
4.14.3. does
not
maintain any pension and/or retirement plan for any of its
employees;
15
4.14.4. has
not
engaged in any transaction prohibited by any law relating to employees or
employment relationships; and
4.14.5 is
not in
arrears or default in payment of any obligation with respect to wages, fringe
benefits, bonuses, overtime, sick pay, severance pay, improper discharge,
vacation pay, time off, insurance premiums, or any other amounts due to
employees or due to any plan or arrangement for the benefit of employees, and
all amounts required to be accrued for such purposes as of June 30, 2006 under
GAAP have been reflected as accruals on the June 30, 2006 Financial
Statements.
4.15. Litigation.
Except
as disclosed on Schedule
4.15,
Summit is not a party to or, to the actual knowledge of the Insider Shareholders,
threatened, with any suit, action, arbitration, or administrative or other proceeding,
either at law or in equity, or governmental investigation, by or before any
court, governmental department, commission, board, agency or instrumentality,
domestic or foreign. To the actual knowledge of the Insider Shareholders, there
is no basis for any suit, action, arbitration, or administrative or other proceeding
against Summit which would, individually or in the aggregate, have a material
adverse effect on the business, assets, condition (financial or otherwise) or
operations of Summit. There is no judgment, decree, award, or order outstanding
against Summit. Summit is not contemplating the institution by it of any suit,
action, arbitration, administrative, or other proceeding.
4.16. Conflicting
Interests.
Except as disclosed on Schedule
4.16,
no director, officer, or employee of Summit and no Summit Shareholder or relative
or affiliate of any of the foregoing (a) has any pecuniary interest in any supplier
or customer of Summit or in any other business enterprise with which Summit
conducts business or with which Summit is in competition; (b) is indebted to
Summit for money borrowed; (c) is a party to any transaction or agreement with
Summit (apart from such person’s status as an employee or stockholder
as such); or (d) has any business or other interest in conflict with the interests
of Summit.
16
4.17. Compliance
with Law and Regulations.
Summit
is in compliance in all material respects, and has at all times during the past
five (5) years complied in all material respects, with all requirements of law,
federal, state, and local, and all requirements of all governmental bodies or
agencies having jurisdiction over it, the conduct of its business, the use of
its properties and assets, and all premises occupied by it. Without limiting
the foregoing, Summit has obtained and now holds all material licenses, permits,
certificates, and authorizations needed or required for the current conduct
of its business and the use of its properties and the premises occupied by it.
Summit has properly filed all material reports and other documents required
to be filed with any federal, state, local, and foreign government or subdivision
or agency thereof. Summit has not received notice from any federal, state, or
local authority or any insurance or inspection body that any of its properties,
facilities, equipment, or business procedures or practices fail to comply with
any applicable law, ordinance, regulation, building, or zoning law, or requirement
of any public authority or body. Summit has never received any notice from any
governmental authority or third party of any liability or condition that could
lead to exclusion from the Medicare, Medicaid, or similar government programs.
4.18. Agreement
Not in Breach of Other Instruments Affecting Summit; Governmental Consents.
Except
as disclosed on Schedule
4.18.,
the execution and delivery of this Agreement, the consummation of the transactions
provided for herein, and the fulfillment of the terms hereof by Summit: (a)
will not, with or without the giving of notice, the lapse of time, or both,
result in the imposition of any lien, security interest, or encumbrance on any
asset of Summit or in the breach of any of the terms and provisions of, or result
in a termination, impairment, or modification of, or constitute a material default
under, or conflict with, or cause any acceleration of any obligation of Summit
under, or permit any other party to modify or terminate, any agreement, indenture,
or other instrument by which Summit is bound, or any of the Summit Articles
of Organization or Bylaws, any judgment, decree, order, or award of any court,
governmental body, or arbitrator, or any applicable law, rule or regulation,
(b) do not require the consent of any governmental authority or other person,
and (c) will not result in any material limitation or restriction of any right
of Summit.
17
4.19.1. “Taxes”
shall mean any tax (whether income, excise, customs, sales or use, value added,
ad valorem, real or personal property, license, transfer, employment, social
security or any other kind of tax or payment in lieu of tax no matter how
denominated), or any assessment, levy, impost, withholding, or other
governmental charge in the nature of a tax, and shall include all additions
to
tax, interest, penalties, and fines with respect thereto; and “Returns” shall
mean all reports, estimates, information statements, and returns of any nature,
including amended versions of any of the foregoing, relating to or required
to
be filed in connection with any Taxes pursuant to the statutes or regulations
of
any federal, state, local, or foreign government taxing authority.
4.19.2. Summit
has filed all Returns that are required to be filed by it on or prior to the
date of this Agreement. All such Returns are true, correct, and complete in
all
material respects as of their respective filing dates. All Taxes for which
Summit is liable and that are due in respect of periods on or prior to the
date
of this Agreement (including, without limitation, Taxes shown to be due on
all
filed Returns) have been paid and all Taxes that are required to be withheld
or
collected by Summit in respect of periods on or prior to the date of this
Agreement have been duly withheld and collected and, to the extent required,
have been paid to the appropriate governmental authority or properly deposited
as required by applicable law, rule or regulation.
4.19.3 Except
as
disclosed on Schedule
4.19.3,
no
taxing authority has asserted or, to the actual knowledge of the Insider
Shareholders, threatened to assert, any adjustment, deficiency, or assessment
for any Taxes against Summit, and no basis exists for any such adjustment,
deficiency, or assessment. There is no audit or investigation pending or, to
the
actual knowledge of the Insider Shareholders, threatened, by any taxing
authority with respect to any liability for Taxes of Summit.
18
4.19.4. There
are
no currently outstanding requests made by Summit for tax rulings,
determinations, or information that could affect the Taxes of Summit payable
in
respect of periods on or prior to the date of this Agreement.
4.19.5. Schedule
4.19.5
contains
a list of all Returns filed with respect to Summit for taxable years ended
on
December 27, 2003, December 25, 2004, and December 31, 2005. Summit has
delivered to Healthcare complete and accurate copies of all such
Returns.
4.19.6. Summit
has not been obligated to deduct and withhold Taxes under Section 1441 of the
Internal Revenue Code (the “Code”).
4.19.7. Except
for and in respect of the Summit Bonuses, Summit is not a party to any agreement
or arrangement that would result in the payment of any “excess parachute
payment” within the meaning of Section 280G of the Code.
4.19.8. Summit
has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
4.20. Absence
of Certain Actions.
Except as set forth on Schedule
4.20,
since June 30, 2006, Summit:
4.20.1. has
not
taken any action outside of the ordinary and usual course of
business;
4.20.2. has
not
increased its Summit Loan Obligations;
4.20.3.
has not
become contingently liable for any obligation or liability of
others;
4.20.4. has
paid
all of its material debts and obligations as they became due;
4.20.5. has
not
incurred any material debt, liability, or obligation of any nature to any party
except for obligations arising from the purchase of goods or the rendition
of
services in the ordinary course of business;
4.20.6. has
not
waived any right of material value;
19
4.20.7. has
used
its reasonable commercial efforts to preserve its business organization intact,
to keep available the services of its employees, and to preserve its
relationships with its customers, suppliers, and others with whom it
deals;
4.20.8. has
not
lost the services of any regional manager, vice president, or executive
officer;
4.20.9. has
not
been cancelled from any Service Agreement that was in effect as of June 30,
2006; and
4.20.10.
has not purchased or redeemed any shares of its capital stock, or transferred,
distributed or paid, directly or indirectly, any money or other property or
assets to any stockholder or to any other person, other than payment of
liabilities included in the June 30, 2006 Financial Statements on or after
the
scheduled maturity or due date thereof, payment of compensation to shareholders
and/or officers for services actually rendered at rates not in excess of the
rates as reflected in the June 30, 2006 Financial Statements, and payments
in
the ordinary course of business for goods and services in arm’s length
transactions.
4.21. No
Material Adverse Change.
Since June 30, 2006, there has not been any material adverse change in the financial
condition, business, or affairs of Summit or any material physical damage or
loss to any of Summit’s properties or assets or to the premises occupied
by Summit (whether or not such damage or loss is covered by insurance).
4.22.1. Summit
has complied in all material respects with all applicable legal requirements
of
any nature concerning the protection of human health, safety, or the
environment, including, without limitation, requirements concerning discharges
to the air, soil, surface water, or ground water and concerning the generation,
storage, treatment, disposal, or remediation of any waste (collectively,
“Environmental Law”), and for dealing with, storage, treatment, and disposal of
“hazardous substances,” “pollutants,” “contaminants,” or similarly described
materials, as those terms are defined under any Environmental
Law.
20
4.22.2. Summit
owns no property that contains hazardous substances, pollutants, or contaminants
as defined under any Environmental Law, polychlorinated biphenyls, asbestos,
radon exceeding the action level established by the Environmental Protection
Agency, urea formaldehyde foam insulation, or hazardous substance storage
tanks.
4.22.3. Summit
has never received any notice from any governmental authority or third party
of
any liability or condition that could give rise to a liability or an obligation
on the part of Summit to take remedial action or file reports under any
Environmental Law.
4.23. No
Broker or Finder.
None of Summit or the Insider Shareholders has incurred any obligation, contingent
or otherwise, to a broker, finder, agent, or other intermediary for introducing
the parties in connection with or otherwise procuring this Agreement or the
transactions contemplated hereby.
4.24. Statements
and Other Documents Not Misleading.
Neither this Agreement, including all Schedules and Exhibits hereto, nor any
other document, agreement or other instrument furnished by Summit or the Summit
Shareholders to Healthcare at the Closing in connection with the transactions
contemplated hereby, contains any untrue statement of any material fact or omits
to state any material fact necessary to be stated in order to make any statement
contained therein not misleading. There is no fact actually known to Summit
or to any Insider Shareholder which materially adversely affects Summit’s
business, financial condition, or affairs or any of its properties or assets
which has not been set forth in this Agreement, including the Schedules and
Exhibits hereto, or in the other documents furnished to Healthcare at the Closing
in connection with the transactions contemplated hereby.
4.25. Loans
to Officers, Directors, and Shareholders.
Except as disclosed on Schedule
4.25,
immediately prior to the Closing, no officer, director, or shareholder of Summit
was indebted to Summit.
21
4.26. Unpaid
State Sales Taxes and Waltham Lease.
Notwithstanding anything to the contrary set forth in this Section 4 or elsewhere
in this Agreement, the Insider Shareholders expressly disclaim and disavow any
effect on the accuracy and completeness of the representations and warranties
set forth in this Section 4, including, without limitation, Sections 4.5,
4.12, 4.19, 4.20 and 4.21, which may be caused by the existence of the Unpaid
State Sales Taxes or the obligations and liabilities of Summit under and in
respect of the Waltham Lease (the “Waltham Lease Obligations”),
and all of such representations and warranties shall be read and construed without
regard to any such effect thereon caused thereby. The agreement of the parties
with respect to the Unpaid State Sales Taxes is solely covered by the terms
of the Escrow Agreement, and with respect to the Waltham Lease Obligations is
solely covered by the Waltham Lease Indemnification Agreement, which agreements
contain rights in favor and for the benefit of Healthcare (and Summit) which
shall be the sole and exclusive remedies of Healthcare (and Summit) with respect
thereto; it being expressly agreed that Healthcare shall have no right to bring
any claim for any breach of the representations and warranties set forth in
this Section 4 on account of or in any way relating to the Unpaid State
Sales Taxes or the Waltham Lease Obligations.
5. Further
Representations and Warranties of the Summit Shareholders.
As a material inducement to Healthcare to enter into this Agreement and to consummate
the Merger, each Summit Shareholder, severally and not jointly, only as to himself
or itself, as the case may be, makes the following representations and warranties
to Healthcare:
5.1. Ownership
of Capital Stock of Summit.
Each Summit Shareholder owns the number of shares of Summit Common Stock or
Summit Preferred Stock, as the case may be, set forth opposite such Summit Shareholder’s
name in Section C of the Background to this Agreement. Except as disclosed on
Schedule 5.1,
each Summit Shareholder has good, marketable, and unencumbered title to such
shares, free and clear of all liens, security interests, pledges, claims, options,
and rights of others.
5.2. Authorization;
Valid and Binding Agreement.
This Agreement and the other documents and agreements to be executed and delivered
by each Summit Shareholder in connection herewith have been, in the case of
any Summit Shareholder which is an entity, duly authorized by all necessary
corporate or other action and have been or will be when executed and delivered
at or prior to the Closing, duly executed and delivered by each Summit Shareholder
and constitute, or will constitute when executed and delivered, the legal, valid,
and binding obligations of each Summit Shareholder, enforceable against him
or it in accordance with their terms, except as the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, moratorium and other similar
laws affecting creditors’ rights generally and by general principles of
equity, whether considered in a proceeding at law or in equity. No approval
of any governmental body or governmental agency or other third party is required
for any Summit Shareholder to consummate the transactions contemplated hereby.
22
5.3. Agreement
Not in Breach of Other Instruments Affecting the Summit Shareholders.
The execution and delivery of this Agreement, the consummation of the transactions
provided for herein, and the fulfillment of the terms hereof by each Summit
Shareholder do not and will not, with or without the giving of notice, the lapse
of time, or both, result in the breach of any of the terms and provisions of,
or constitute a default under, or conflict with, any agreement or other instrument
(including, without limitation, the Summit Articles of Organization and Bylaws)
by which such Summit Shareholder is bound, any judgment, decree, order, or award
of any court, governmental body, or arbitrator, or any law, rule or regulation
applicable to such Summit Shareholder.
5.4. Shareholders’
Vote.
Each Summit Shareholder has voted his or its Summit Shares in favor of the Merger.
5.5. No
Broker or Finder.
No Summit Shareholder has incurred any obligation, contingent or otherwise,
to a broker, finder, agent, or other intermediary for introducing the parties
in connection with or otherwise procuring this Agreement or the transactions
contemplated hereby.
23
6.1. Valid
and Binding Agreement.
Hixon, Pritchard, and Xxxxx each represents and warrants severally, with respect
to himself only, that he has duly executed this Agreement and that this Agreement
constitutes his valid and binding obligation, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium, and other similar laws affecting creditors’ rights generally
and by general principles of equity whether considered in a proceeding at law
or in equity.
7. Representations
and Warranties of Healthcare.
As a material inducement to Summit, the Summit Shareholders and Xxxxx, Xxxxxxxxx
and Xxxxx to enter into this Agreement and to consummate the Merger, Healthcare
makes the following representations and warranties to Summit, the Summit Shareholders,
Xxxxx, Xxxxxxxxx and Xxxxx:
7.1. Corporate
Status and Authority; Outstanding Stock.
Healthcare is a corporation duly organized, validly existing, and in corporate
good standing under the laws of the Commonwealth of Pennsylvania, and has the
corporate power to consummate the Merger as contemplated hereunder. The authorized
capital stock of Healthcare consists of Thirty Million (30,000,000) shares of
Healthcare Common Stock. As of June 30, 2006, Twenty Eight Million Eight Hundred
Sixty-Six Thousand (28,866,000) shares were issued and outstanding. The execution,
delivery, and performance of this Agreement and the other documents and agreements
to be executed and delivered by Healthcare in connection herewith have been
duly authorized by all necessary corporate action on the part of Healthcare.
This Agreement constitutes, and all such other documents and agreements to be
executed and delivered by Healthcare will constitute, when so executed and delivered,
the valid and binding obligations of Healthcare, enforceable against it in accordance
with their respective terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, and other similar laws affecting creditors’ rights
generally and by general principles of equity, whether considered in a proceeding
at law or in equity. No approval of any governmental body or governmental agency
or other third party is required for Healthcare to consummate the transaction
contemplated hereby.
24
7.2. Status
of Healthcare Stock.
The shares of Healthcare Common Stock included in the Stock Merger Consideration
to be issued pursuant to the terms of this Agreement will be duly authorized,
validly issued and outstanding, fully paid, and non-assessable.
7.3. Agreement
Not in Breach of Other Instruments Affecting Healthcare.
The execution and delivery of this Agreement, the consummation of the transactions
provided for herein, and the fulfillment of the terms hereof, by Healthcare,
do not and will not, with or without the giving of notice, the lapse of time
or both, result in the breach of any of the terms and provisions of, or constitute
a default under, or conflict with or cause any acceleration of any obligation
of Healthcare under, or permit any other party to modify or terminate, any agreement,
indenture or other instrument by which Healthcare is bound, or any of Healthcare’s
Articles of Incorporation or Bylaws, any judgment, decree, order or award of
any court, governmental body or arbitrator, or any applicable law, rule or regulation.
7.4. Financial
Statements.
The financial statements of Healthcare as of December 31, 2005, and the
fiscal year then ended, audited by Xxxxx Xxxxxxxx, LLP have been prepared in
conformity with GAAP. Since December 31, 2005, there has been no material
adverse change in the consolidated financial condition of Healthcare and its
subsidiaries.
7.5. Healthcare’s
SEC Filings.
Healthcare’s Report on Form 10-K for the year ended December 31,
2005, and Reports on Form 10-Q filed during calendar year 2006, are true, correct
and complete in all material respects and do not contain a misstatement of a
material fact or fail to state a material fact required to be stated therein
or necessary to make the statements made therein not misleading as of the dates
such filings were made. Healthcare has filed all documents required to be filed
by it with the SEC, each of which when so filed was true, correct and complete
in all material respects.
25
7.6. No
Broker or Finder; Purchase for Investment.
Healthcare has not incurred any obligation, contingent or otherwise, to a broker,
finder, agent or other intermediary for introducing the parties in connection
with or otherwise procuring this Agreement or the transactions contemplated
hereby.
7.7. No
Material Adverse Change.
Since June 30, 2006, there has not been any material adverse change in the financial
condition, business, or affairs of Healthcare.
7.8.
Statements
and Other Documents Not Misleading.
Neither this Agreement, including all Schedules and Exhibits hereto, nor any
other document, agreement or other instrument furnished by Healthcare to one
or more of the Summit Shareholders at the Closing in connection with the transactions
contemplated hereby, contains any untrue statement of any material fact or omits
to state any material fact necessary to be stated in order to make any statement
contained therein not misleading. There is no fact actually known to Healthcare
which materially adversely affects Healthcare’s business, financial condition,
or affairs or any of its properties or assets which has not been set forth in
this Agreement, including the Schedules and Exhibits hereto, or in the other
documents furnished to the Summit Shareholders at the Closing in connection
with the transactions contemplated hereby.
8. Continuation
and Survival of Representations and Warranties.
All representations and warranties contained herein shall survive the Closing
Date for a period of one (1) year, except that the representations and warranties
set forth in Sections 5 and 7.2 shall survive until the expiration of the
applicable statute of limitations. Each representation and warranty contained
herein is independent of all other representations and warranties contained
herein (whether or not covering an identical or a related subject matter) and
must be viewed independently and separately. Exceptions or qualifications to
any representations or warranties contained herein shall not be construed as
exceptions or qualifications to any other warranty or representation. No representation
or warranty contained herein shall be deemed to be waived, affected or impaired
by any investigation made by or knowledge of any party to this Agreement.
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9.1. Closing
Date.
The closing of the transactions provided for in this Agreement (the “Closing”)
shall take place simultaneously with the execution and delivery of this Agreement
(the “Closing Date”), and shall be deemed effective as of the Effective
Time.
The parties had agreed in principle on or before August 31, 2006 to substantially
all of the material terms and conditions related to the economic and business
aspects of the Merger.
9.2. Deliveries
by the Summit Shareholders at Closing.
At the Closing, the Summit Shareholders will deliver or cause to be delivered
to Healthcare the following:
9.2.1. certificates
for the Summit Shareholders’ Shares, endorsed by the Summit Shareholders in
blank, or with stock transfer powers executed by the Summit Shareholders in
blank attached, with all required transfer tax stamps, if any,
affixed;
9.2.2. the
Certificate of the Clerk of Summit, dated the Closing Date, that all necessary
corporate action by the Summit Board of Directors and Summit Shareholders has
been taken to authorize the consummation by Summit of the transactions provided
for herein;
9.2.3. the
signed resignations of all directors of Summit dated and effective as of the
Closing Date;
9.2.4. the
stock
books and records, corporate minute books of Summit (containing the originals
of
all minutes and resolutions ever adopted or consented to or agreed to by the
Summit Shareholders, directors, or any committee of directors of Summit), and
the corporate seals of Summit;
9.2.5. the
favorable legal opinion of Xxxxxxx XxXxxxxxx LLP, counsel for the Summit
Shareholders and Summit, respectively, dated the Closing Date, in substantially
the form set forth in Exhibit
“F”
attached
hereto.
9.2.6. a
legal
existence and corporate good standing certificate for Summit, and a certified
copy of the Summit Articles of Organization and all amendments thereto, issued
by the Secretary of State of the Commonwealth of Massachusetts and dated as
of a
date within five (5) days prior to the Closing Date;
27
9.2.7. general
releases in favor of Summit executed by each Summit Shareholder and by each
Summit Director (to the extent not a Summit Shareholder) in the form attached
as
Exhibit
“G”
releasing Summit from all liability to such person.
9.2.8. certification
by each Summit Shareholder pursuant to the Foreign Investment Real Property
Tax
Act, in the form attached hereto as Exhibit
“H”;
9.2.9. the
employment agreements in the form of Exhibits
“I-1,” “I-2,” and “I-3”
executed
by Summit and by each of Cuzzupoli, Bullock, and Xxxxx;
9.2.10. the
Escrow Agreement duly executed and delivered by the Summit
Shareholders;
9.2.11. satisfactory
evidence that all indebtedness owing to Summit by any director, officer,
employee, or Summit Shareholder has been paid in full on or prior to the Closing
Date (other than indebtedness owing to Summit by Xxxxxx Xxxxx and Xxxxxx
Xxxxxxxx as disclosed on Schedule
4.16);
and
9.2.12. the
Waltham Lease Indemnification Agreement, duly executed and delivered by
Cuzzupoli.
9.3. Deliveries
by Healthcare at Closing.
At the Closing, Healthcare will deliver or cause to be delivered to (or for
the benefit of) the Summit Shareholders the following:
9.3.1. the
Cash
Merger Consideration (less the Escrowed Cash Merger Consideration) by wire
transfer instructions furnished by the Summit Shareholders, and stock
certificates evidencing the Stock Merger Consideration;
9.3.2. the
Bonus
Employees Loan to Summit to be used by Summit to pay the Summit Bonuses to
the
Summit Bonus Employees as described in Section I of the Background and as listed
on Schedule
9.3.2.;
provided that if a Summit Bonus Employee does not execute and deliver the a
Release of Rights in form and substance reasonably satisfactory to Healthcare,
the Bonus Employees Loan shall be reduced by the amount of the Summit Bonus
which would have been paid to such employee (it being agreed, however, that
if,
following the Closing Date, a Summit Bonus Employee so executes and delivers
such a Release of Rights, such employee will at such time receive the Summit
Bonus);
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9.3.3. payment
and discharge in full of all of the Summit Loan Obligations;
9.3.4. a
legal
existence and corporate good standing certificate for Healthcare issued by
the
Secretary of State of the Commonwealth of Pennsylvania, and a copy of
Healthcare’s Articles of Incorporation and all amendments thereto certified by
the Secretary of Healthcare;
9.3.5. the
Certificate of the Secretary of Healthcare, dated the Closing Date, that all
necessary corporate action by the Board of Directors of Healthcare has been
taken to authorize the consummation by Healthcare of the transactions provided
for herein;
9.3.6. the
Escrow Agreement duly executed and delivered by Healthcare and Xxxxxx;
9.3.7. the
delivery of the Escrowed Cash Merger Consideration to the Escrow Agents pursuant
to the terms of the Escrow Agreement; and
9.3.8. stamped
or certified copies of the Articles of Merger and Second Merger Certificates
from the Secretary of State of the Commonwealth of Massachusetts evidencing
the
effectiveness of the First Merger and the Second Merger, respectively, under
the
Massachusetts Business Corporation Law and the Massachusetts Limited Liability
Company Act, as applicable.
10.1.1. Following
the Closing, Healthcare shall control the preparation and filing of all Returns
required to be filed by Summit after the Closing Date (taking all valid
extensions into account). All Returns relating to Summit for tax periods
beginning on or prior to the Closing Date shall be prepared in a manner
consistent with past Summit practice unless otherwise required by applicable
law. Healthcare shall provide the Summit Shareholders with copies of all
completed Returns relating to Summit which it prepares for Tax periods beginning
on or prior to the Closing Date, including in respect of Summit’s 2006 fiscal
year, at least twenty (20) days prior to the due date for filing thereof, along
with supporting workpapers and other records and information, for the Summit
Shareholders’ review and approval. The Summit Shareholders and Healthcare shall
attempt in good faith to resolve any disagreements regarding any such Returns
prior to the due date for filing. In the event that the Summit Shareholders
and
Healthcare are unable to so resolve any dispute with respect to any such Return
at least ten (10) days prior to the due date for filing, such dispute shall
be
resolved pursuant to Section 10.4, which resolution shall be binding on the
parties (except to the extent such dispute gives rise to a claim for
indemnification under Section 11, in which case such Section 11 shall
remain applicable).
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10.1.2. Following
the Closing, Healthcare shall cause to be timely filed all Returns required
to
be filed by Summit relating to any tax period on or prior to the Closing Date,
and pay or cause to be paid all Taxes shown to be due thereon.
10.2. Tax
Audits.
If notice of any legal proceeding with respect to Taxes of Summit (a “Tax
Claim”) shall be received by any party(ies) hereto for which another party(ies)
may reasonably be expected to be liable pursuant to Section 11, the notified
party(ies) shall promptly notify such other party(ies) who may be so liable
in writing of such Tax Claim, and thereupon the proceedings relating to such
Tax Claim shall be governed by the applicable provisions of Section 12.
10.3. General
Cooperation on Tax Matters.
Healthcare and Summit, on the one hand, and the Summit Shareholders, on the
other hand, shall cooperate fully, as and to the extent reasonably requested
by the other party(ies), in connection with the filing of Returns and any audit,
litigation or other proceeding with respect to Taxes or that otherwise may be
subject to an indemnity under this Section 11, including any Tax Claims.
Such cooperation shall include Healthcare’s prompt provision to the Summit
Shareholders of copies of such supporting workpapers and other records and information
as they may reasonably request in connection with their review of the draft
Returns provided by Healthcare to the Summit Shareholders under Section 10.1.1.
Such cooperation shall also include the retention and (upon the other party(ies)’s
request) the provision of records and information that are reasonably relevant
to any such audit, litigation or other proceeding, and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder or to testify at any proceeding. Healthcare
agrees, and Healthcare agrees to cause Summit, (a) to retain all books and records
with respect to Tax matters relating to Summit for any taxable period beginning
on or before the Closing Date until the expiration of the applicable Tax statute
of limitations for the applicable taxable period, and to abide by all record
retention agreements entered into with any Taxing authority, and (b) to give
the other party(ies) reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party(ies) so requests,
to allow the other party(ies) to take possession of such books and records.
30
10.4. Disputes.
Any
dispute as to any matter covered under this Section 10, other than a matter
relating to or giving rise to a claim for indemnification under Section 11,
shall be resolved by an independent accounting firm mutually acceptable to
the
Summit Shareholders and Healthcare. The fees and expenses of such accounting
firm shall be borne equally by the Summit Shareholders, on the one hand,
and
Healthcare, on the other hand. If any dispute with respect to a Return is
not
resolved prior to the due date of such Return, such Return shall be filed
in the
manner which the party(ies) responsible for preparing such Return deems correct,
but the rights and obligations of the parties hereto under this Section 10
with respect thereto shall be adjusted as necessary to and shall conform
with
the resolution of the dispute by the independent accounting firm relating
thereto.
10.5. Unpaid
State Sales Taxes.
The
provisions of this Section 10 shall not apply to the issue relating to the
Unpaid State Sales Taxes disclosed in Section J of the Background to this
Agreement. The resolution of that issue shall be governed solely and exclusively
by the terms of the Escrow Agreement.
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10.6. Tax
Treatment of Merger.
Each
party hereto agrees to file all Federal and state income tax returns, and
to
report the Merger and the transactions contemplated herein for all tax reporting
and filing purposes, in a manner wholly consistent with the provisions set
forth
in Section F of the Background to this Agreement, and to take no position
for
Federal or state tax purposes inconsistent therewith.
11. Indemnification.
11.1. By
the
Insider Shareholders.
Subject
to the limitations set forth in Section 11.5, the Insider Shareholders severally
agree to indemnify and hold harmless Healthcare and its officers, directors,
successors and assigns, from, against and in respect of any and all losses,
damages, actions, suits, proceedings, demands, assessments and judgments,
and
any and all reasonable attorneys’ fees, costs and expenses incident to any of
the foregoing (all of the foregoing collectively, “Losses”), arising or
resulting from:
(a) any
breach of any representation or warranty set forth in Section 4 or any
non-fulfillment of any covenant or agreement on the part of the Insider
Shareholder Indemnitors or any of them contained in this Agreement (excluding
the covenants and agreements set forth in Section 16); and
(b) any
error
contained in any certificate or other document or instrument delivered by
the
Insider Shareholders to Healthcare pursuant to this
Agreement.
32
11.2 .By
the Summit Shareholders.
Subject
to the limitations set forth in Section 11.5 and in addition to the
indemnification obligations of the Insider Shareholders set forth in Section
11.1, the Summit Shareholders severally agree to indemnify and hold harmless
Healthcare and its officers, directors, successors and assigns from, against
and
in respect of any and all Losses arising or resulting from:
(a) any
breach of any representation and warranty set forth in Section 5 or any
non-fulfillment of any covenant or agreement on the part of the Summit
Shareholders or any of them contained in this Agreement (including the covenants
and agreements set forth in Section 16); and
(b)any
error
contained in any certificate or other document or instrument delivered by
the
Summit Shareholders to Healthcare pursuant to this Agreement.
11.3 By
Xxxxx, Xxxxxxxxx and Xxxxx.
Subject
to the limitations set forth in Section 11.5, Hixon, Pritchard, and Xxxxx
severally agree to indemnify and hold harmless Healthcare and its officers,
directors, successors and assigns from, against and in respect of any and
all
Losses arising or resulting from any breach of any representation or warranty
set forth in Section 6 or any non-fulfillment of any covenant or agreement
on the part of Hixon, Pritchard, or Xxxxx set forth in
Section 16.
11.4 By
Healthcare.
Subject
to the limitations set forth in Section 11.5, Healthcare agrees to indemnify
and
hold harmless the Summit Shareholders, Hixon, Pritchard, and Xxxxx and their
respective shareholders, members, managers, officers, directors, successors
and
assigns from, against and in respect of any and all Losses arising or resulting
from:
(a)any
breach of any representation and warranty set forth in Section 7 or any
non-fulfillment of any covenant or agreement on the part of Healthcare contained
in this Agreement (excluding the indemnification obligations of Healthcare
contained in Section 14.3 which are separately covered thereunder);
and
(b)any
error
contained in any certificate or other document or instrument delivered by
Healthcare to the Summit Shareholders, Xxxxx, Xxxxxxxxx or Xxxxx pursuant
to
this Agreement.
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11.5. Limitations
on Indemnification.
11.5.1
No
party from whom indemnification is sought hereunder (an “Indemnifying Party”)
shall be required to indemnify any other party seeking such indemnification
hereunder (an “Indemnified Party”) except to the extent that the aggregate
amount of Losses for which the Indemnified Party is otherwise entitled to
indemnification pursuant to this Section 11 exceeds $250,000 (the
“Indemnification Threshold”), whereupon the Indemnified Party shall be entitled
to be paid the excess of the aggregate amount of all such Losses over the
Indemnification Threshold (irrespective of whether the Losses aggregating the
Indemnification Threshold relate to any Losses in excess of the Indemnification
Threshold), subject to the limitations on the maximum amount of recovery set
forth in Section 11.5.2. By way of example, if there is a single Loss suffered
by Healthcare of $100,000 and another single Loss suffered by Healthcare of
$150,000, the amount of any Loss in excess of the aggregate amount of those
two
Losses suffered by Healthcare shall be paid to Healthcare by the applicable
Indemnifying Party(ies). Notwithstanding the foregoing, the Indemnification
Threshold shall not apply to any Losses suffered by the Summit Shareholders
arising from any breach by Healthcare of its obligations under Section 14,
which Losses shall be indemnifiable in full by Healthcare.
11.5.2. The
aggregate amount of Losses, in excess of the Indemnification Threshold (to
the
extent applicable), payable by the Indemnifying Parties under this
Section 11 shall be limited as follows:
(a) The
aggregate amount of Losses payable by the Insider Shareholders to Healthcare
pursuant to Section 11.1 shall be capped, with respect to each Insider
Shareholder, at such Insider Shareholder’s respective portion of Three Million
Dollars ($3,000,000), which pro rata portions shall be as set forth on
Schedule
11.5.2.(a);
provided, however, that such pro rata portions of each such Insider
Shareholder’s liability under this Section 11.5.2(a) shall be reduced by the
amount of any Losses payable by such Insider Shareholder as a “Summit
Shareholder” under Section 11.5.2(b).
(b) The
aggregate amount of Losses payable by the Summit Shareholders to Healthcare
pursuant to Section 11.2 shall be capped, with respect to each Summit
Shareholder, at the respective portion of the Purchase Price payable to each
such Summit Shareholder in accordance with the allocation set forth in
Exhibit
“B”
attached
hereto; provided, however, that such respective portions of each such Summit
Shareholder’s liability under this Section 11.5.2(b) shall be reduced by the
amount of any Losses payable by such Summit Shareholder as an “Insider
Shareholder” (to the extent applicable) under Section 11.5.2(a). No Summit
Shareholder shall be liable in any way to Healthcare on account of any other
Summit Shareholder’s liability to Healthcare under Section 11.2, including on
account of any breach of any covenant or agreement set forth in
Section 16.
34
(c)
The aggregate amount of Losses payable by Xxxxx, Xxxxxxxxx and Xxxxx to Healthcare
pursuant to Section 11.3 shall be capped, with respect to each such person,
at the respective pro rata amounts set forth on Schedule 11.5.2(c). None
of Xxxxx, Xxxxxxxxx and Xxxxx shall be liable in any way to Healthcare on account
of the liability of either or both of the other named persons to Healthcare
under Section 11.3.
(d)
The aggregate amount of Losses payable by Healthcare to the Summit Shareholders,
Hixon, Pritchard, and Xxxxx pursuant to Section 11.4 shall be capped at the
aggregate amount of the Stock Merger Consideration.
(e)
For
the avoidance of doubt, in the event that a single claim is brought (or separate
claims are brought) by Healthcare under this Section 11 against Wellfleet
and Xxxxx, on the one hand, or Navone, Xxxxx and/or Xxxxxxxxx, on the other
hand, arising from the same claim or same set of circumstances giving rise to
such claim, the liability of Wellfleet and Xxxxx, on the one hand, or Navone,
Xxxxx and/or Xxxxxxxxx, on the other hand, shall not be additive but shall be
limited to the single largest amount under Section 11.5.2.(b) or (c), as the
case may be. By way of example, if Healthcare brings a claim for indemnification
under Section 11 against both Wellfleet and Xxxxx asserting a violation
of a restrictive covenant under Section 16, the amount to which Healthcare
will be entitled to recover if successful will be capped at the portion of the
Merger Consideration payable to Wellfleet in accordance with Exhibit “B”
attached hereto (which amount is also the same amount allocable to Xxxxx on
Schedule 11.5.2(c)); if, on the other hand, Healthcare brings a claim
for indemnification under Section 11 against both Navone and Xxxxxxxxx
asserting a violation of a restrictive covenant under Section 16, the amount
to which Healthcare will be entitled to recover if successful will be capped
at the portion of the purchase price payable to Navone in accordance with Exhibit
“B” attached hereto (which amount is greater than the amount
allocable to Xxxxxxxxx on Schedule 11.5.2(c)).
35
11.5.3. No
Indemnifying Party shall be liable for any Losses pursuant to this
Section 11 unless a written claim for indemnification in accordance with
Section 11.6 is given by the Indemnified Party to the Indemnifying Party with
respect thereto within one (1) year after the Closing, except that this time
limitation shall not apply to (a) any Losses related to or arising directly
or
indirectly out of any claim for indemnification made by Healthcare under (i)
Section 11.2 with respect to any breach of any representation or warranty made
by the Summit Shareholders in Section 5, or (ii) Sections 11.2 or 11.3
with respect to any breach by the Summit Shareholders, Xxxxx, Xxxxxxxxx or
Xxxxx
of the covenants and agreements under Section 16, as to which in each such
case a written claim for indemnification in accordance with Section 11.6 is
given by Healthcare to the applicable Indemnifying Party with respect thereto
within the applicable statute of limitations, and (b) any Losses related to
or
arising directly or indirectly out of any claims for indemnification made by
the
Summit Shareholders under Section 14.3, as to which a written claim for
indemnification in accordance with Section 11.6 is given by the applicable
Summit Shareholders to Healthcare with respect thereto within the applicable
statute of limitations.
11.5.4. Healthcare
acknowledges that it has been afforded the opportunity to conduct a full due
diligence investigation of Summit. Accordingly, Healthcare shall have no right
to bring any claim for indemnification against the Insider Shareholders or
the
Summit Shareholders arising from or relating to any matter that was actually
known to Healthcare as of the Closing Date.
36
11.5.5.
All Losses shall be determined, and any indemnification in respect of Losses
shall be made, net of any tax benefits actually realized by the Indemnified
Party by reason of the matter giving rise to such Losses.
11.6.1.
In the event that any claim shall be asserted against any Indemnified Party
which, if sustained, would result in such Indemnified Party suffering a Loss,
such Indemnified Party shall, within fifteen (15) days after learning of such
claim, notify the applicable Indemnifying Party(ies) of the existence, nature
and amount of such claim and shall extend to the applicable Indemnifying
Party(ies) a reasonable opportunity to defend against such claim at the
Indemnifying Party(ies)’ sole expense and through legal counsel satisfactory to
the Indemnified Party, such satisfaction not to be withheld or delayed
unreasonably; provided, that the Indemnifying Party(ies) proceed in good faith,
expeditiously and diligently. No effort to recover the amount of the Losses
related to such claim shall be made by an Indemnified Party while such defense
is still being made until the earlier of (a) the resolution of said claim by
the
applicable Indemnifying Party(ies) with the claimant, or (b) the termination
of
the defense by the applicable Indemnifying Party(ies) against such claim or
the
failure of the Indemnifying Party(ies) to prosecute such defense in good faith
in an expeditious and diligent manner. Any Indemnified Party shall, at its
option and sole expense, have the right to participate in any defense undertaken
by any applicable Indemnifying Party(ies) with legal counsel of its own
selection. No settlement or compromise of any claim which may result in a Loss
may be made by the Indemnifying Party(ies) without the prior written consent
of
the Indemnified Party unless, prior to such settlement or compromise, the
Indemnifying Party(ies) acknowledge in writing their obligation to pay in full
the amount of the settlement or compromise and all associated expenses and
the
Indemnified Party is furnished with security reasonably satisfactory to the
Indemnified Party that the applicable Indemnifying Party(ies) will in fact
pay
such amount and expenses.
37
11.6.2. Any
Indemnified Party and Indemnifying Party(ies) may agree in writing, at any
time,
as to the existence and amount of a claim and the resulting Loss attributable
thereto and, upon the execution of such agreement, such claim and Loss shall
be
deemed established.
11.7. Payment
of Losses.
Any Indemnifying Party(ies) shall pay in cash the amount of each established
Loss to the Indemnified Party within ten (10) days after the final establishment
and resolution thereof.
11.8. Remedy
Exclusive.
Subject to the provisions of Sections 10 and 16, and except for Losses resulting
from a party’s fraud, gross negligence, or wilfull misconduct, the remedies
of the parties under this Section 11 shall be the exclusive remedies for
and in respect of all breaches of this Agreement.
11.9. Unpaid
State Sales Taxes and Waltham Lease.
Notwithstanding anything to the contrary set forth in this Section 11 or
elsewhere in this Agreement, this Section 11 shall not apply to, and Healthcare
shall not have any right to bring any claim for indemnification with respect
to, the Unpaid State Sales Taxes or the Waltham Lease Obligations. The agreement
of the parties with respect to the Unpaid State Sales Taxes is solely covered
by the terms of the Escrow Agreement, and with respect to the Waltham Lease
Obligations is solely covered by the Waltham Lease Indemnification Agreement,
which agreements contain rights in favor and for the benefit of Healthcare (and
Summit) which shall be the sole and exclusive remedies of Healthcare (and Summit)
with respect thereto.
12. Confidentiality;
Publicity.
The parties acknowledge that the transaction contemplated by this Agreement
is of a confidential nature. Healthcare is a publicly-held company and will
make the appropriate disclosures after this Agreement is executed. The Summit
Shareholders, Hixon, Pritchard, and Xxxxx shall not make any disclosures about
the transactions contemplated hereby until after Healthcare makes its initial
disclosures regarding same.
38
13.1. Knowledge
Respecting Healthcare.
Each Summit Shareholder represents and warrants that (a) such Summit Shareholder
understands that the shares of Healthcare Common Stock included in the Stock
Merger Consideration have not been registered under the 1933 Act nor qualified
under any state securities laws, and that they are being offered and sold pursuant
to an exemption from such registration and qualification based in part upon
their representations contained herein; (b) such Summit Shareholder is an “accredited
investor” as defined under Rule 501 promulgated under the 1933 Act; (c)
such Summit Shareholder is a sophisticated investor with knowledge and experience
in business and financial matters, knows, or has had the opportunity to acquire,
all information concerning the business, affairs, financial condition and prospects
of Healthcare which such Summit Shareholder deems relevant to make a fully informed
decision regarding the consummation of the transactions contemplated hereby
and is able to bear the economic risk and lack of liquidity inherent in holding
such Summit Shareholders’ respective shares of Healthcare Common Stock
included in the Stock Merger Consideration; (d) such Summit Shareholder has
been supplied with the information necessary to obtain from the Internet copies
of all Forms 10-K, 10-Q and 8-K, and all proxy statements, filed by Healthcare
during calendar years 2005 and 2006; (e) such Summit Shareholder has been afforded
an opportunity to ask questions of, and receive answers from, representatives
of Healthcare concerning the business and operations of Healthcare, and all
other matters deemed relevant to such Summit Shareholder; and (f) such Summit
Shareholder has had an opportunity to evaluate all information regarding Healthcare
as such Summit Shareholder has deemed necessary or desirable in connection with
the transactions contemplated by this Agreement, has independently evaluated
the transactions contemplated by this Agreement and has reached such Summit
Shareholder’s own decision to enter into this Agreement. Without limiting
the foregoing, each Summit Shareholder understands and acknowledges that neither
Healthcare nor anyone acting on its behalf has made any representations or warranties
other than those contained herein respecting Healthcare or the future conduct
of Healthcare’s business or of Summit’s business, and no Summit
Shareholder has relied upon any representations or warranties other than those
contained herein in the belief that they were made on behalf of Healthcare.
39
13.2. Status
of Shares to be Issued.
Each Summit Shareholder represents, warrants, agrees, acknowledges, and confirms
that such Summit Shareholder
has been advised and understands as follows:
13.2.1. Such
Summit Shareholder is acquiring the shares of Healthcare Common Stock included
in the Stock Merger Consideration to be issued to such Summit Shareholder for
such Summit Shareholder’s own account and without a view to any distribution or
resale thereof, other than a distribution or resale which, in the opinion of
counsel for such Summit Shareholder (which opinion shall be satisfactory in
form
and substance to Healthcare), may be made without violating the registration
provisions of the Securities Act of 1933, as amended (the “1933 Act”) or any
applicable blue sky laws. Such Summit Shareholder has no present intention
of
selling, granting any participation in, or otherwise distributing the shares
of
Healthcare Common Stock included in the Stock Merger Consideration acquired
by
such Summit Shareholder, subject to the provisions of Section 14. Such Summit
Shareholder has no contract, undertaking, agreement or arrangement to sell
or
transfer, or grant any participation, with respect to any shares of Healthcare
Common Stock included in the Merger Consideration to be acquired by such Summit
Shareholder. Such Summit Shareholder acknowledges that unless and until the
shares of Healthcare Common Stock included in the Stock Merger Consideration
are
registered pursuant to Section 14, such shares of Healthcare Common Stock
are “restricted securities” within the meaning of Rule 144 under the 1933 Act
and have not been registered under the 1933 Act or any state securities laws
and
must be held indefinitely unless they are subsequently registered under the
1933
Act or an exemption from such registration is available.
40
13.2.2. At
the
Closing, there shall be endorsed on the certificates evidencing the shares
of
Healthcare Common Stock included in the Stock Merger Consideration delivered
at
Closing a legend substantially similar to the following:
“THE
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR THE SECURITIES LAWS
OF ANY OTHER JURISDICTION AND ARE “RESTRICTED SECURITIES” AS DEFINED
BY RULE 144 UNDER THE 1933 ACT. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED
OR DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT REGISTERING
THE SHARES UNDER THE 1933 ACT AND THE SECURITIES LAWS OF ANY STATE REQUIRING
SUCH REGISTRATION, OR IN LIEU THEREOF, AN OPINION OF COUNSEL, WHICH OPINION
IS SATISFACTORY TO THE ISSUER OF THE SHARES, TO THE EFFECT THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACTS.
13.2.3. Except
under certain limited circumstances, the above restrictions on the transfer
of
the shares of Healthcare Common Stock included in the Stock Merger Consideration
will also apply to any and all shares of capital stock or other securities
of
Healthcare issued or otherwise acquired with respect to such shares, including,
without limitation, shares and securities issued or acquired as a result of
any
stock dividend, stock split or exchange or any distribution of shares or
securities pursuant to any corporate reorganization, reclassification or similar
event of Healthcare.
13.2.4. Healthcare
and its transfer agent may refuse to effect a transfer of any of the shares
of
Healthcare Common Stock included in the Stock Merger Consideration by the Summit
Shareholders or any of their successors, personal representatives or assigns
in
violation of the provisions of this Section 13.
41
14.1.
Healthcare agrees that by October 8, 2006, Healthcare will file, at is sole
cost
and expense, a registration statement on Form S-3 (the “Registration Statement”)
with the Securities and Exchange Commission (the “Commission”) which seeks to
register for resale all of the shares of Healthcare Common Stock included in
the
Stock Merger Consideration acquired by the Summit Shareholders at the Closing
(all such shares of Healthcare Common Stock, for purposes of this Section 14,
the “Registrable Securities”). Healthcare will use its best efforts to cause the
Registration Statement to comply in all material respects with all requirements
of the 1933 Act and the Commission and to become effective as soon as
commercially practicable and remain continuously effective thereafter until
the
earlier of (a) the date all of the Registrable Securities covered by the
Registration Statement have been sold, or (b) two (2) years following the date
the Registration Statement is declared effective by the Commission (the
“Effectiveness Period”). Healthcare shall prepare and file with the Commission
such amendments to the Registration Statement and supplements to the prospectus
contained therein (as may be amended or supplemented from time to time, the
“Prospectus”) as may be necessary to keep the Registration Statement effective
and the Registration Statement and Prospectus accurate and complete during
such
period that the Registration Statement is required to remain effective as
aforesaid. In addition, Healthcare will use its best efforts to register or
qualify, at its sole cost and expense, the resale of the Registrable Securities
under such state securities or blue sky laws of such jurisdictions as the Summit
Shareholders may reasonably request, to keep each such registration or
qualification effective during the period the Registration Statement is required
to be kept effective by Healthcare as provided above, and to do any and all
other acts which may be reasonably necessary or advisable to enable the Summit
Shareholders to consummate the disposition of Registrable Securities in such
states. Notwithstanding anything to the contrary set forth in this Agreement,
including this Section 14, in the event that (i) the Registration Statement
is not filed by October 8, 2006, or (ii) the Commission does not declare the
Registration Statement effective by January 31, 2007, then in either such case
each Summit Shareholder shall have the absolute and unrestricted right at any
time during the 30-day period after, (A) in the case of clause (i) above,
October 8, 2006, and (B) in the case of clause (ii) above, January 31, 2007,
upon in either such case not less than ten (10) days’ prior written notice to
Healthcare (any such written notice, a “Stock Tender Notice”), to tender all or
any portion of his or its Registrable Securities to Healthcare in exchange
for a
cash payment equal to the number of such Registrable Securities so tendered
multiplied by Twenty-One Dollars ($21.00) per share (the “Per Share Tender
Price”); it being agreed that the number of Registrable Securities to be so
redeemed and the Per Share Tender Price shall be equitably adjusted in the
event
of any stock splits, stock dividends, combinations, recapitalizations,
reorganizations or other similar events affecting the Healthcare Common Stock.
After its receipt of any Stock Tender Notice, Healthcare shall pay in full
by
wire transfer to the applicable Summit Shareholder furnishing such notice any
cash payment required hereunder on the tenth (10th)
day
following the date of the applicable Stock Tender Notice.
42
14.2. In
connection with the obligations of Healthcare to file the Registration Statement
under Section 14.1, Healthcare agrees during the Effectiveness Period
to:
(a) upon
request, furnish to each Summit Shareholder such number of copies of the
Registration Statement and Prospectus, and each amendment and supplement
thereto, and such other documents as each Summit Shareholder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by each Summit Shareholder, and in connection herewith, Healthcare
consents to the use of the Prospectus by each Summit Shareholder in connection
with the offering and sale of the Registrable Securities;
(b) notify
the Summit Shareholders in writing of the happening of any event as a result
of
which the Prospectus contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any Summit Shareholder, promptly prepare (and, when completed,
furnish written notice to each Summit Shareholder of same) a supplement or
amendment to the Prospectus so that, as thereafter delivered to any purchasers
of the Registrable Securities, such Prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading; provided, that upon any such notification
by
Healthcare, each Summit Shareholder will not offer or sell any Registrable
Securities until Healthcare has notified each Summit Shareholder that Healthcare
has prepared a supplement or amendment to the Prospectus and delivered copies
thereof to each Summit Shareholder;
43
(c) cause
all
Registrable Securities to be listed, prior to the date of the first sale of
any
Registrable Securities pursuant to the Registration Statement, on each
securities exchange on which the Healthcare Common Stock is listed;
(d) in
the
event of the issuance of any stop order suspending the effectiveness of the
Registration Statement, or of any order suspending or preventing the use of
the
Prospectus or suspending the qualification of any Registrable Securities for
sale in any jurisdiction, Healthcare will use its best efforts to promptly
obtain the withdrawal of any such order; and
(e) obtain,
at the time the Commission is to declare the Registration Statement effective,
an opinion or opinions, reasonably acceptable to the Summit Shareholders in
form
and substance, from securities counsel to Healthcare.
14.3. Healthcare
will indemnify and hold harmless each Summit Shareholder from and against any
and all Losses arising out of or based upon any untrue statement or alleged
untrue statement of any material fact contained in the Prospectus or other
document incident to any registration, qualification or compliance or any
omission or alleged omission to state therein any material fact required to
be
stated therein or necessary to make the statements therein not misleading,
or
any violation by Healthcare of any rule or regulation promulgated under the
1933
Act applicable to Healthcare and relating to any action or inaction required
of
Healthcare in connection with any such registration, qualification or
compliance; provided, however, that Healthcare will not be liable in any such
case if and to the extent that any such Loss arises out of or is based on any
untrue statement or omission based upon written information furnished to
Healthcare in any instrument duly executed by a Summit Shareholder and stated
to
be specifically or use in the Registration Statement or Prospectus.
Notwithstanding anything to the contrary set forth in Section 11 or this Section
14.3, the limitations on indemnification under Section 11.5 shall not apply
to
any claim for indemnification under this Section 14.3, but the procedures
applicable to indemnification claims under Section 11.6 shall apply thereto
and
be followed.
44
15. Further
Assurances.
Each party to this Agreement agrees to execute and deliver all such other instruments
and take all such other action as any party may reasonably request from time
to time, before or after Closing and without payment of further consideration,
in order to effectuate the transactions provided for herein. The parties shall
cooperate fully with each other and with their respective counsel and accountants
in connection with any steps required to be taken as part of their respective
obligations under this Agreement, including, without limitation, the preparation
of financial statements and tax returns, subject to the provisions of Section 10.
(a) With
respect to Cuzzupoli and Xxxxxxx, for a period of the longer of (i) six (6)
years following the Closing Date, and (ii) six (6) years after his employment
with Summit or with Healthcare has been terminated, for any reason, he will
not,
either solely or jointly with, or as manager or agent for, any person,
corporation, trust, joint venture, partnership, or other business entity,
directly or indirectly, carry on or be engaged or interested in (whether as
employee, sole proprietor, partner, consultant, or owner (other than as a
passive investor owning less than five percent (5%) of the publicly traded
equity securities of any company)) any housekeeping, laundry, linen, and/or
food
services business which is conducted on a contract basis, in any form
whatsoever, which services healthcare institutions within the continental United
States.
45
(b) With
respect to Xxxxx, for a period of the longer of (i) three (3) years following
the Closing Date, and (ii) three (3) years after his employment with Summit
or
with Healthcare has been terminated, for any reason, he will not, either solely
or jointly with, or as manager or agent for, any person, corporation, trust,
joint venture, partnership, or other business entity, directly or indirectly,
carry on or be engaged or interested in (whether as employee, sole proprietor,
partner, consultant, or owner (other than as a passive investor owning less
than
five percent (5%) of the publicly traded equity securities of any company))
any
housekeeping, laundry, linen, and/or food services business which is conducted
on a contract basis, in any form whatsoever, which services health care
institutions within the continental United States.
(c) With
respect to Xxxxx, Wellfleet, Navone, Hixon, and Xxxxxxxxx, for a period of
six
(6) years following the Closing Date, he/it will not, either solely or jointly
with, or as manager or agent for, any person, corporation, trust, joint venture,
partnership, or other business entity, directly or indirectly, carry on or
be
engaged or interested in (whether as employee, sole proprietor, partner,
consultant, or owner (other than as a passive investor owning less than five
percent (5%) of the publicly traded equity securities of any company)) any
housekeeping, laundry, linen, and/or food services business which is conducted
on a contract basis, in any form whatsoever, which services health care
institutions within the continental United States.
(a) With
respect to Cuzzupoli and Xxxxxxx, for a period of the longer of (i) six (6)
years following the Closing Date, and (ii) six (6) years after his employment
with Summit or with Healthcare has been terminated, for any reason, he will
not,
either solely or jointly with, or as manager or agent for, any person,
corporation, trust, joint venture, partnership, or other business entity,
directly or indirectly, solicit or accept any housekeeping, laundry, linen,
and/or food services business which is conducted on a contract basis from any
clients or accounts that were clients or accounts (or legal successors to
clients or accounts) of Summit or Healthcare within eighteen (18) months prior
to his separation from Summit or Healthcare.
46
(b) With
respect to Xxxxx, for a period of the longer of (i) three (3) years following
the Closing Date, and (ii) three (3) years after his employment with Summit
or
with Healthcare has been terminated, for any reason, he will not, either solely
or jointly with, or as manager or agent for, any person, corporation, trust,
joint venture, partnership, or other business entity, directly or indirectly,
solicit or accept any housekeeping, laundry, linen, and/or food services
business which is conducted on a contract basis from any clients or accounts
that were clients or accounts (or legal successors to clients or accounts)
of
Summit or Healthcare within eighteen (18) months prior to his separation from
Summit or Healthcare.
(c) With
respect to Xxxxx, Wellfleet, Navone, Hixon, and Xxxxxxxxx, for a period of
six
(6) years following the Closing Date, he/it will not, either solely or jointly
with, or as manager or agent for, any person, corporation, trust, joint venture,
partnership, or other business entity, directly or indirectly, solicit or accept
any housekeeping, laundry, linen, and/or food services business which is
conducted on a contract basis from any clients or accounts that were clients
or
accounts (or legal successors to clients or accounts) of Summit or Healthcare
within eighteen (18) months prior to Closing.
(a) With
respect to Cuzzupoli and Xxxxxxx, for a period of the longer of (i) six (6)
years following the Closing Date, and (ii) six (6) years after his employment
with Summit or with Healthcare has been terminated, for any reason, he will
not,
directly or indirectly, solicit for employment, hire, or offer employment to,
or
otherwise aid or assist any person or entity other than Summit or Healthcare,
in
soliciting for employment, hiring, or offering employment to, any employee
of
Summit or Healthcare, or former employee of Summit or Healthcare who was
employed by Summit or Healthcare within six (6) months before the cessation
of
his employment.
47
(b) With
respect to Xxxxx, for a period of the longer of (i) three (3) years following
the Closing Date, and (ii) three (3) years after his employment with Summit
or
with Healthcare has been terminated, for any reason, he will not, directly
or
indirectly, solicit for employment, hire, or offer employment to, or otherwise
aid or assist any person or entity other than Summit or Healthcare, in
soliciting for employment, hiring, or offering employment to, any employee
of
Summit or Healthcare, or former employee of Summit or Healthcare who was
employed by Summit or Healthcare within six (6) months before the cessation
of
his employment.
(c) With
respect to Xxxxx, Wellfleet, Navone, Hixon, and Xxxxxxxxx, for a period of
six
(6) years following the Closing Date, he/it will not, directly or indirectly,
solicit for employment, hire, or offer employment to, or otherwise aid or assist
any person or entity other than Summit or Healthcare, in soliciting for
employment, hiring, or offering employment to, any employee of Summit or
Healthcare, or former employee of Summit or Healthcare who was employed by
Summit or Healthcare within six (6) months prior to the Closing
Date.
16.4. Covenant
Not To Use Or Disclose Confidential Information.
The Summit Shareholders, Chang, Hixon, and Xxxxxxxxx shall not at any time use
for his or its personal benefit, or disclose, communicate or divulge to, or
use for the direct or indirect benefit of any person or entity, any Confidential
Information of Summit or Healthcare. “Confidential Information,”
as used in the preceding sentence, means any information regarding Summit’s
or Healthcare’s business methods, business policies, procedures, techniques,
research, or development projects or results; historical or projected financial
information, budgets, trade secrets or other knowledge or processes of or developed
by Summit or Healthcare, any names, addresses, and specialized requirements
of clients or accounts or any such data on or relating to past, present, or
prospective clients or accounts of Summit or Healthcare; or any other confidential
information relating to or dealing with the business, operations, or activities
of Summit or Healthcare, excepting in each case information otherwise lawfully
known generally by, or readily accessible to, the trade or the general public.
48
16.5. Remedies
for Breach.
Each Summit Shareholder, Chang, Hixon, and Xxxxxxxxx acknowledges that the restrictions
contained in this Section 16 are reasonable and necessary in order to protect
Healthcare’s legitimate interests and that any violation thereof would
result in irreparable injury to Healthcare. Each Summit Shareholder, Chang,
Hixon, and Xxxxxxxxx therefore acknowledges and agrees that, in the event of
any violation thereof, Healthcare shall be authorized and entitled to obtain,
from any court of competent jurisdiction, preliminary and permanent injunctive
relief as well as an equitable accounting of all profits or benefits arising
out of such violation, which rights and remedies shall be cumulative and in
addition to any other rights or remedies to which Healthcare may be entitled.
Each subsection in this Section 16 is separable from every other, and constitutes
a separate and distinct covenant. If any provision, paragraph, or subsection
of this Section 16 is determined to be unenforceable because it is excessively
broad as to time, duration, geographical scope, activity, or subject, the parties
agree that the applicable court shall have the power to limit and reduce the
offending portion(s) and/or to delete such specific words or phrases which such
court shall deem necessary to permit enforcement of the covenants in this Section
16 to the maximum extent compatible with the applicable law as it then appears.
16.6. Extension
of Restriction.
In the event of any breach or violation of any of the restrictions contained
in this Section 16, the time period therein specified shall xxxxx during the
time of any violation thereof and that portion remaining at the time of commencement
of any violation shall not begin to run until such violation has been fully
and finally cured.
49
(a) If
there
is a dispute between or among the parties arising under or related to this
Agreement, each party agrees that any legal proceeding
(i) instituted
by Healthcare, Merger Sub, HCSG, and/or Summit may be instituted only in the
Court of Common Pleas of Bucks County, Pennsylvania or in the United States
District Court for the Eastern District of Pennsylvania and,
(ii)
instituted by the Summit Shareholders, Hixon, Pritchard, and/or Xxxxx may be
instituted only in the State Courts sitting in Suffolk County, Boston,
Massachusetts or in the United States District Court for the District of
Massachusetts sitting in Boston, Massachusetts.
Each
party irrevocably consents to the jurisdiction and venue of each of such courts
and agrees that the service of any applicable complaint or other process may
be
made as provided in the applicable Rules of Court or as provided in Section
17.2
of this Agreement.
(b) If
any
party hereto incurs costs or expenses as a result of any dispute arising under
or related to this Agreement, including legal fees or costs, the prevailing
party in that dispute shall be paid, upon demand, and from time-to-time, by
the
non-prevailing party, all of those costs and expenses (i.e., losing party
pays).
50
17.2. Notices.
All notices and other communications given in connection with this Agreement
shall be in writing and shall be deemed to have been duly made if delivered
in person, or deposited with a same day or overnight courier, to the following:
If
to: Healthcare:
|
0000
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx
Corporate Center
Xxxxxxxx,
XX 00000
Attn:
Xx. Xxxxxx Xxxx, President
|
|
|
With
a copy to:
|
Xxxxxx
X. XxXxxxxx, Esquire
Xxxxx
XxXxxxxx Xxxxxx LLP
0000
Xxxxx 000, X.X. Xxx 000
Xxxxxxx
Xxxxxxx, XX 00000
|
|
|
If
to: Merger Sub
|
0000
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx
Xxxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attn:
Xx. Xxxxxx Xxxx, President
|
|
|
With
a copy to:
|
Xxxxxx
X. XxXxxxxx, Esquire
Xxxxx
XxXxxxxx Xxxxxx LLP
0000 Xxxxx 000, X.X. Xxx 000 Xxxxxxx
Xxxxxxx, XX 00000
|
|
|
If
to: Summit:
|
0000
Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx
Xxxxx, XX 00000
Attn:
Xxxxxx X. Xxxxxxxxx, President
|
|
|
With
a copy to:
|
Xxxxxx
X. Xxxxx, Esquire
Xxxxxxx
XxXxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000
|
|
|
If
to Cuzzupoli:
|
00
Xxx Xxxxxx Xxxx
Xxxxxx,
XX 00000
|
|
|
If
to Xxxxxxx:
|
000
Xxxxxxxxxxxx Xxxxxx, Xxxx #0
Xxxxxx,
XX 00000
|
|
|
If
to Xxxxx:
|
0
Xxxxxxxx Xxxx
Xxxxx,
XX 00000
|
|
|
If
to Wellfleet/Xxxxx:
|
000
Xxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxx,
XX 00000
|
|
|
If
to Navone:
|
000
Xxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
|
|
|
If
to Xxxxx:
|
000
Xxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
|
|
|
If
to Xxxxxxxxx:
|
000
Xxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
|
Any
address or number may be changed in accordance with the provisions of this
Section 17.2.
51
17.3. Applicable
Law.
This Agreement shall be governed by, and construed in accordance with, the laws
of the Commonwealth of Pennsylvania, without regard to conflicts of laws principles,
except that the provisions of Sections 2 and 3 relating to the Merger shall
be governed by, and construed in accordance with, the laws of the Commonwealth
of Massachusetts.
17.4. Binding
Agreement.
This Agreement shall be binding upon and shall inure to the benefit of the parties
to this Agreement, and their respective heirs, executors, successors, and assigns.
Healthcare shall not assign its rights or obligations hereunder without the
Summit Shareholders’ prior written consent, and no such assignment, notwithstanding
the Summit Shareholder’s consent, shall relieve Healthcare from liability
for performance of the obligations to be performed pursuant to this Agreement.
17.5. Expenses.
Each party to this Agreement shall bear all costs, charges, and expenses incurred
by the party in connection with this Agreement and the consummation of the transaction
contemplated by this Agreement including, but not limited to, the fees of the
respective counsel.
17.6. Entire
Agreement.
This Agreement and all Exhibits and Schedules hereto constitute the entire agreement
between the parties without respect to the subject matter hereof, and their
prior negotiations and agreements with respect to such subject matter, whether
written or oral, are merged into this Agreement.
17.7. Amendments
and Waivers.
This Agreement may only be amended by a written instrument duly executed and
delivered by all of the parties hereto. No waiver of any provision of this Agreement
shall be effective unless in writing duly executed and delivered by the party
against whom such waiver is to be enforced.
52
17.8. Severability.
In the case one or more of the provisions of this Agreement shall for any reason
be held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part
of a provision of this Agreement; but this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of a provision,
had never been contained herein and such provision or part of a provision, shall
be reformed so that it would be valid, legal, and enforceable to the maximum
extent applicable.
17.9 .Use
of Defined Terms.
All words used herein in the singular or plural shall be deemed to have been
used in the plural or singular where the context or construction so requires.
Any defined term shall indicate all or any number of the members of the relevant
class.
17.10. Counterparts
and Facsimiles.
This Agreement may be executed in counterparts, each of which shall be deemed
an original, and will be effective when all parties hereto have executed the
original or a counterpart of this Agreement. Facsimile counterparts, containing
a signature of a party hereto, shall also be deemed an original for purposes
of this Agreement.
[Signatures
on Following Pages]
53
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
HEALTHCARE SERVICES GROUP, INC. | ||
|
|
|
By: | ||
Xxxxxx Xxxx, President |
||
HCSG, INC. | ||
|
|
|
By: | ||
Xxxxxx Xxxx, President |
||
HCSG MERGER, LLC | ||
|
|
|
By: | ||
Xxxxxx Xxxx, President |
||
SUMMIT SERVICES GROUP, INC. | ||
|
|
|
By: | ||
Xxxxxx X. Xxxxxxxxx |
||
President |
Xxxxxx X. Xxxxxxxxx |
||
Xxxx X. Xxxxxxx |
||
Xxxxxxxx X. Xxxxx |
||
WELLFLEET CAPITAL PARTNERS, INC. | ||
P.H. Xxxxxxxx Xxxxx |
||
NAVONE INVESTMENTS, LLC | ||
S. Xxxxx Xxxxxxxxx, President |
||
Xxxxxx
X.
Xxxxx, S. Xxxxx Xxxxxxxxx and P.H. Xxxxxxxx Xxxxx are executing this Agreement,
in consideration of the amounts payable to Navone Investments, LLC and Wellfleet
Capital Partners under this Agreement and intending to be legally bound, but
are
bound only by the provisions of Sections 1, 6, 8, 9, 11, 12, 15, 16 and 17
of
this Agreement.
Xxxxxx X. Xxxxx |
S. Xxxxx Xxxxxxxxx |
P.H. Xxxxxxxx Xxxxx |
||
EXHIBIT
“A-1”
ESCROW
AGREEMENT
EXHIBIT
“A-2”
WALTHAM
LEASE INDEMNIFICATION AGREEMENT
EXHIBIT
“B”
ALLOCATION
OF MERGER CONSIDERATION
EXHIBIT
“D”
FORM
OF HCSG MERGER LLC OPERATING AGREEMENT
EXHIBIT
“E”
FORM
OF SERVICE AGREEMENTS
EXHIBIT
“F”
OPINION
OF XXXXXXX XxXXXXXXX LLP
EXHIBIT
“G”
GENERAL
RELEASES IN FAVOR OF SUMMIT
EXHIBIT
“H”
CERTIFICATION
BY EACH SUMMIT SHAREHOLDER
PURSUANT
TO THE FOREIGN INVESTMENT REAL PROPERTY TAX ACT
EXHIBIT
“I-1”
EMPLOYMENT
AGREEMENT OF XXXXXX X. XXXXXXXXX
EXHIBIT
“I-2”
EMPLOYMENT
AGREEMENT OF XXXX X. XXXXXXX
EXHIBIT
“I-3”
EMPLOYMENT
AGREEMENT OF XXXXXXXX X. XXXXX
SCHEDULE
4.1.1(a)
STATES
IN WHICH SUMMIT IS QUALIFIED
SCHEDULE
4.1.1(b)
SUMMIT’S
CAPITAL STOCK
SCHEDULE
4.1.1(c)
SUMMIT’S
OPTIONS, WARRANTS, RIGHTS,
SHAREHOLDER
AGREEMENTS OR OTHER INVESTMENTS
SCHEDULE
4.1.1(d)
DEFAULTS
OR VIOLATIONS OF ARTICLES OF ORGANIZATION OR BYLAWS
SCHEDULE
4.3
OFFICERS,
DIRECTORS, BANK ACCOUNTS,
SAFE
DEPOSIT BOXES, AUTHORIZED PERSONNEL
SCHEDULE
4.5
FINANCIAL
STATEMENTS
SCHEDULE
4.7.1
LEASES
SCHEDULE
4.7.4
ASSIGNMENT
OR SUBLET OF LEASE INTERESTS
SCHEDULE
4.8
PERSONAL
PROPERTY EXCEPTIONS
SCHEDULE
4.9
SERVICE
AGREEMENTS
SCHEDULE
4.10
ACCOUNTS
RECEIVABLE, SET-OFFS, DEDUCTIONS OR DEFENSES
SCHEDULE
4.11
INSURANCE
SCHEDULE
4.12
UNRECORDED
LIABILITIES
SCHEDULE
4.13.1(c)
SUMMIT
LOAN OBLIGATION DOCUMENTATION
SCHEDULE
4.13.1(d)
OTHER
COMMITMENTS
SCHEDULE
4.13.2
DEFAULTS
UNDER SUMMIT AGREEMENTS,
LIST
OF SUMMIT’S AGREEMENTS
WHICH
MAY BE TERMINATED OR NOT RENEWED
SCHEDULE
4.14
COLLECTIVE
BARGAINING AGREEMENTS
AND
OTHER EMPLOYEE MATTERS
SCHEDULE
4.15
LITIGATION
SCHEDULE
4.16
CONFLICTING
INTERESTS
SCHEDULE
4.18
AGREEMENT
NOT IN BREACH OF OTHER INSTRUMENTS
AFFECTING
SUMMIT; GOVERNMENTAL CONSENT
SCHEDULE
4.19.3
TAX
LIABILITIES
SCHEDULE
4.19.5
TAX
RETURNS OF SUMMIT FOR TAXABLE YEARS
ENDED
DECEMBER 27, 2003, DECEMBER 25, 2004, AND DECEMBER 30,
2005
SCHEDULE
4.20
ABSENCE
OF CERTAIN ACTIONS
SCHEDULE
4.25
LOANS
TO OFFICERS, DIRECTORS AND SHAREHOLDERS
SCHEDULE
5.1
RESTRICTIONS
ON TRANSFER
SCHEDULE
9.3.2
SUMMIT
BONUS EMPLOYEES
SCHEDULE
11.5.2(a)
ALLOCATION
OF INSIDER SHAREHOLDER INDEMNIFICATION LIMITS
SCHEDULE
11.5.2(c)
ALLOCATION
OF
XXXXX,
XXXXXXXXX AND XXXXX INDEMNIFICATION LIMITS