AGREEMENT AND PLAN OF MERGER

EXECUTION VERSION

FINAL

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, LLC

AND

THOMAS G. HIXON, S. KEITH PRITCHARD, AND P.H. BENJAMIN CHANG FOR

THE LIMITED PURPOSES SET FORTH HEREIN

DATED: SEPTEMBER 18, 2006

TABLE OF CONTENTS

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EXHIBITS

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SCHEDULES

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AGREEMENT AND PLAN OF MERGER

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"); JOSEPH S. CUZZUPOLI ("Cuzzupoli"), a resident of Massachusetts; JOHN A. BULLOCK ("Bullock"), a resident of Massachusetts; LAWRENCE G. FRENI ("Freni"), a resident of Massachusetts; WELLFLEET CAPITAL PARTNERS , INC. , a Massachusetts corporation ("Wellfleet"); NAVONE INVESTMENTS, LLC , a Delaware limited liability company ("Navone"); THOMAS G. HIXON ("Hixon"), a resident of Mississippi; S . KEITH PRITCHARD ("Pritchard"), a resident of Colorado; and P. H. BENJAMIN CHANG ("Chang"), a resident of Massachusetts. Cuzzupoli, Bullock, and Freni 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."

BACKGROUND

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:

D.  Wellfleet and Navone are investors in Summit and are not actively involved in its management.

E.  Hixon and Pritchard are the controlling parties of Navone and Chang is the controlling party of Wellfleet, and, as such, each is executing this Agreement. Hixon, Pritchard, and Chang 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.

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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 Mr. Cuzzupoli, 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 265 Winter Street LLC for office space located at 265 Winter Street, Waltham Massachusetts (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.

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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.   Merger .
 

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.

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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.

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3.    Conversion of Securities; Exchange of Certificates .

3.1   Conversion of Securities .

(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.

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(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.

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(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 Freni and Richard Hudson, a representative of Healthcare ("Hudson"), 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.

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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  Corporate Status, Outstanding Stock .

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.

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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 Seidman, 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.

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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 Hixon (the "Hixon 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 Hixon 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  Leases .

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;

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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  Personal Property .

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 "Mark") 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 Mark with the marks of others or asserting any rights in the Mark. 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 Mark and has the sole and exclusive right to use the Mark. Within the past five (5) years, Summit has not done business under, and has not been known by, any name other than the Mark.

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4.9  Service Agreements . There are listed on Schedule 4.9 :

(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.

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4.13.  Service Agreements, Leases, and Other Commitments .

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.

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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;

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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.

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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.

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4.19.  Tax Matters .

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.

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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;

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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.  Environmental Matters .

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.

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4.22.2. Summit owns no property that contains hazardous substances, pollutants, or contaminants as defin