As filed with the Securities and Exchange Commission on April 24, 1995
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------
HEALTHCARE SERVICES GROUP, INC.
PENNSYLVANIA 23-2018365
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2643 HUNTINGDON PIKE 19006
HUNTINGDON VALLEY, PENNSYLVANIA (Zip Code)
(Address of principal executive offices)
1991 INCENTIVE STOCK OPTION PLAN, 1995 INCENTIVE
AND NONQUALIFIED STOCK OPTION PLAN, OPTIONS
HELD BY DIRECTORS AND/OR CONSULTANTS, AND
1995 DIRECTORS' STOCK OPTION PLAN
(Full Title of the Plan)
DANIEL P. MCCARTNEY
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
HEALTHCARE SERVICES GROUP, INC.
2643 HUNTINGDON PIKE
HUNTINGDON VALLEY, PENNSYLVANIA 19006
(Name and Address of agent for service)
(215) 938-1661
(Telephone number, including area code, of agent for service)
WITH A COPY TO:
VICTOR M. ROSENZWEIG, ESQ.
OLSHAN GRUNDMAN FROME & ROSENZWEIG
505 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 753-7200
Approximate date of proposed sales pursuant to the plan:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per share price fee
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<S> <C> <C> <C> <C>
Common Stock
$.01 par value 450,000 shares(1)(2) $ 10.2637698 $ 4,618,696.41 $ 1,572.65
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock
$.01 par value 297,717 shares(1)(3) $ 9.87 $ 2,938,466.79 $ 1,013.26
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock
$.01 par value 500,000 shares (4) $ 11.375 $ 5,687,500.00 $ 1,961.21
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock
$.01 par value 150,000 shares $ 11.375 $ 1,706,250.00 $ 588.36
================================================================================================================================
</TABLE>
<PAGE>
(1) There are also registered hereby such indeterminate number of shares of
Common Stock as may become issuable by reason of the operation of the
anti-dilution provisions of the 1991 Incentive Stock Option Plan (the "1991
Plan") of Healthcare Services Group, Inc. (the "Company"), the 1995 Incentive
and Non-Qualified Stock Option Plan (the "1995 Plan") of the Company, stock
option agreements between the Company and Directors and/or consultants or the
1995 Directors' Stock Option Plan (the "Directors' Plan").
(2) The contents of Registration Statements on Form S-8 (No. 2-99215), (No.
2-95092), and (33-35915) are incorporated by reference. Includes 330,461 shares
with respect to which options were granted under the 1991 Plan at an average
exercise price of $9.8618. An additional 119,539 shares may be offered under the
1991 Plan at prices not presently determined. Pursuant to Rule 457(g) and (h),
the offering price for the shares which may be issued under the 1991 Plan is
estimated solely for the purpose of determining the registration fee and is
based on the average of the high and low prices of the Company's Common Stock
($11.375) as reported by the Nasdaq National Market ("Nasdaq") on April 18,
1995.
(3) Represents Common Stock to be issued upon the exercise of options held by
Directors and/or consultants, which have an average exercise price of $9.87 per
share.
(4) Consists of 500,000 shares with respect to which options may be granted
under the 1995 Plan. Pursuant to Rule 457(g) and (h), the offering price for the
shares which may be issued under the 1995 Plan is estimated solely for the
purpose of determining the registration fee and is based on the average of the
high and low prices of the Company's Common Stock ($11.375) as reported by
Nasdaq on April 18, 1995. The adoption of the 1995 Plan is subject to the
approval by the shareholders of the Company at the Company's next annual meeting
of shareholders.
(5) Consists of 150,000 shares with respect to which options may be granted
under the Directors' Plan. Pursuant to Rule 457(g) and (h), the offering price
for the shares which may be issued under the Directors' Plan is estimated solely
for the purpose of determining the registration fee and is based on the average
of the high and low prices of the Company's Common Stock ($11.75) as reported
by Nasdaq on April 21, 1995. The adoption of the Director's Plan is subject to
the approval by shareholders of the Company at the Company's next annual meeting
of shareholders.
================================================================================
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED APRIL 24, 1995
PROSPECTUS
458,000 SHARES
HEALTHCARE SERVICES GROUP, INC.
Common Stock, $.01 par value
This Prospectus relates to the reoffer and resale by certain selling
shareholders who may be deemed affiliates (the "Selling Shareholders") of shares
(the "Shares") of Common Stock, $.01 par value (the "Common Stock") of
Healthcare Services Group, Inc. (the "Company") that may be issued by the
Company to the Selling Shareholders upon the exercise of outstanding stock
options granted pursuant to (i) the Company's 1991 Incentive Stock Option Plan
for key employees (the "1991 Plan"), (ii) the Company's 1995 Incentive and Non-
Qualified Stock Option Plan (the "1995 Plan"), (iii) stock options held by
Directors pursuant to Stock Option Agreements with the Company and (iv) the
Company's Directors' Stock Option Plan (the "Directors' Plan"). Certain Selling
Shareholders may be deemed affiliates of the Company as such term is defined by
Rule 405 of the Securities Act of 1933, as amended (the "Act"). With respect to
the Shares that may be issued to the Selling Shareholders or additional
affiliates under the 1991 Plan, the 1995 Plan and the Directors' Plan, this
Prospectus also relates to certain Shares underlying options which have not as
of this date been granted. If and when such options are granted, the Company
will distribute a Prospectus Supplement as required by the Act.
The offer and sale of the Shares to the Selling Shareholders have been
previously registered under the Act. The Shares are being reoffered and may be
resold for the account of the Selling Shareholders and the Company will not
receive any of the proceeds from the resale of the Shares.
The Selling Shareholders have advised the Company that the resale of
their Shares may be effected from time to time in one or more transactions on
the NASDAQ National Market ("NASDAQ"), in negotiated transactions or otherwise
at market prices prevailing at the time of the sale or at prices otherwise
negotiated. See "Plan of Distribution." The Company will bear all expenses in
connection with the preparation of this Prospectus.
The Common Stock of the Company is traded on NASDAQ under the symbol
"HCSG". On April 21, 1995, the closing price for the Common Stock, as reported
by NASDAQ, was $11.75.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______ __, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; Northwest Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661; and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
TABLE OF CONTENTS
AVAILABLE INFORMATION................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................... 3
GENERAL INFORMATION..................................................... 4
USE OF PROCEEDS......................................................... 4
SELLING SHAREHOLDERS.................................................... 4
PLAN OF DISTRIBUTION.................................................... 5
LEGAL MATTERS........................................................... 5
ADDITIONAL INFORMATION.................................................. 5
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December
31, 1994 is incorporated by reference in this Prospectus and shall be deemed to
be a part hereof. All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of this offering, are deemed to be incorporated by reference in this Prospectus
and shall be deemed to be a part hereof from the date of filing of such
documents.
The Company's Application for Registration of its Common Stock under
Section 12(g) of the Exchange Act filed on April 30, 1984, is incorporated by
reference in this Prospectus and shall be deemed to be a part hereof.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents. Written requests for such copies should
be directed to Healthcare Services Group, Inc., 2643 Huntingdon Pike, Huntingdon
Valley, Pennsylvania 19006, Attention: Richard Hudson. Oral requests should be
directed to such officer (telephone number (215) 938-1661).
------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Selling Shareholder. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to any person in any state or other jurisdiction in which such offer or
solicitation is unlawful. The delivery of this Prospectus at any time does not
imply that information contained herein is correct as of any time subsequent to
its date.
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<PAGE>
GENERAL INFORMATION
The Company provides housekeeping, laundry and linen services to
long-term care facilities, including nursing homes and retirement complexes. The
Company believes that it is the largest provider of contractual housekeeping and
laundry services to the long-term care industry in the United States, rendering
such services to more than 800 facilities in 41 states and Canada.
The Company's principal executive offices are located at 2643
Huntingdon Pike, Huntingdon Valley, Pennsylvania 19006. The Company's telephone
number at such location is (215) 938-1661.
The Shares offered hereby were or will be purchased by the Selling
Shareholders upon exercise of options granted to them and will be sold for the
account of the Selling Shareholders.
USE OF PROCEEDS
The Company will receive the exercise price of the options when
exercised by the holders thereof. Such proceeds will be used for working capital
purposes by the Company. The Company will not receive any of the proceeds from
the reoffer and resale of the Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
This Prospectus relates to the reoffer and resale of Shares issued or
that may be issued to the Shareholders (who are deemed to be affiliates) under
the Stock Option Agreements or the 1991 Plan, the 1995 Plan or the Directors'
Plan.
The following table sets forth (i) the number of shares of Common Stock
beneficially owned by each Selling Shareholder at April 10, 1995, (ii) the
number of Shares of Common Stock to be offered for resale by each Selling
Shareholder and (iii) the number and percentage of shares of Common Stock to be
held by each Selling Shareholder after completion of the offering.
<TABLE>
<CAPTION>
Number of shares of
Class A Common Stock/
Number of Percentage of Class to
Number of shares of Shares to be be Owned After
Common Stock Owned at Offered for Completion of the
Name April 10, 1995(1) Resale Offering
- ---------------------------------------- ------------------------ ----------------- ------------------------
<S> <C> <C> <C>
Daniel P. McCartney(2).................. 943,106 75,000 868,106/10.8%
Joseph F. McCartney(3).................. 55,750 50,500 5,250/*
W. Thacher Longstreth(4)................ 41,500 41,500 0/*
Barton D. Weisman(5).................... 61,500(6) 53,500 8,000/*
Robert L. Frome(7)...................... 51,037 41,500 9,537/*
Thomas A. Cook(8)....................... 152,000 152,000 0/*
John M. Briggs(9)....................... 16,000 12,000 4,000/*
Robert J. Moss(10)...................... 32,000 32,000 0/*
</TABLE>
- ---------------
* less than one percent
(1) Includes shares issuable upon the exercise of options.
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<PAGE>
(1) Includes shares issuable upon the exercise of options.
(2) Daniel P. McCartney has been Chief Executive Officer and Chairman of the
Board of the Company since 1977.
(3) Joseph F. McCartney has been a Director of the Company since 1983 and
Regional Vice President of the Company for more than five (5) years.
(4) W. Thacher Longstreth has been a Director of the Company since 1983.
(5) Barton D. Weisman has been a Director of the Company since 1983.
(6) Excludes 5,250 shares held by Mr. Weisman's wife, as to which shares he
disclaims beneficial ownership.
(7) Robert L. Frome has been a Director of the Company since 1983. See also
"Legal Matters".
(8) Thomas A. Cook has been a Director of the Company since 1987; President of
the Company since July, 1993 and prior thereto was Executive Vice President
and Chief Financial Officer of the Company for more than five (5) years.
(9) John M. Briggs has been a Director of the Company since 1993.
(10) Robert J. Moss has been a Director of the Company since 1992.
PLAN OF DISTRIBUTION
It is anticipated that all of the Shares will be offered by the Selling
Shareholders from time to time in the open market, either directly or through
brokers or agents, or in privately negotiated transactions. The Selling
Shareholders have advised the Company that they are not parties to any
agreement, arrangement or understanding as to such sales.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Shares
offered hereby have been passed upon for the Company by Messrs. Olshan Grundman
Frome & Rosenzweig, New York, New York 10022. Robert L. Frome, a member of
Olshan Grundman Frome & Rosenzweig, is a director and owns 9,537 shares and
holds options to purchase 41,500 shares of Common Stock of the Company. Victor
M. Rosenzweig, a member of Olshan Grundman Frome & Rosenzweig, also holds
options to purchase 10,000 shares of Common Stock. The shares underlying certain
of the options held by Mr. Frome and all of the options held by Mr. Rosenzweig
are being registered concurrently with this Prospectus. The balance of the
shares underlying certain of the options held by Mr. Frome were previously
registered.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-8 under the Securities Act with respect to the
Shares offered hereby. For further information with respect to the Company and
the securities offered hereby, reference is made to the Registration Statement.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, such statement being qualified in all respects by such
reference.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated herein by reference and made a part hereof:
(a) Healthcare Services Group, Inc.'s (the "Company") Annual Report on
Form 10-K for the fiscal year ended December 31, 1994;.
(b) The description of the Company's securities contained in the
Company's Registration Statement on Form 8- A filed April 30, 1984.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Certain legal matters in connection with the issuance of the Shares offered
hereby have been passed upon for the Company by Messrs. Olshan Grundman Frome &
Rosenzweig, New York, New York 10022. Robert L. Frome, a member of such firm, is
a Director of the Company and holds 9,537 shares of the Company's Common Stock,
$.01 par value (the "Common Stock") and has been granted options to purchase
41,500 shares of which options to purchase 36,500 shares are being registered
hereby. Victor M. Rosenzweig, a member of such firm, is a Director of the
Company and has been granted options to purchase 10,000 shares of Common Stock
all of which are being registered hereby.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Sections 1741 through 1750 of Subchapter C of Chapter 17 of the
Pennsylvania Business Corporation Law (the "BCL") contain, among other things,
provisions for mandatory and discretionary
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<PAGE>
indemnification of a corporation's directors, officers and other personnel.
Under Section 1741, unless otherwise limited by its by-laws, a corporation
has the power to indemnify directors and officers under certain prescribed
circumstances against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with a
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative, to which any of them is a party or threatened
to be made a party by reason of his being a representative, director or officer
of the corporation or serving at the request of the corporation as a
representative of another corporation, partnership, joint venture, trust or
other enterprise, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action or proceeding by judgment,
order, settlement or conviction or upon a plea of nolo contendere or its
equivalent does not of itself create a presumption that the person did not act
in good faith and in a manner that he reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 1742 provides for indemnification with respect to derivative
actions similar to that provided by Section 1741. However, indemnification is
not provided under Section 1742 with respect to any claim, issue or matter as to
which a director or officer has been adjudged to be liable to the corporation
unless and only to the extent that the proper court determines upon application
that, despite the adjudication of liability but in view of all of the
circumstances of the case, a director or officer is fairly and reasonably
entitled to indemnity for the expenses that the court deems proper.
Section 1743 provides that indemnification against expenses is mandatory to
the extent that the director or officer has been successful on the merits or
otherwise in defense of any such action or proceeding referred to in Section
1741 or 1742.
Section 1744 provides that unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation as authorized in the
specific case upon a determination that indemnification of directors and
officers is proper because the director or officer met the applicable standard
of conduct, and such determination will be made by the board of directors by a
majority vote of a quorum of directors not parties to the action or proceeding;
if a quorum is not obtainable or if obtainable and a majority of disinterested
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<PAGE>
directors so directs, by independent legal counsel; or by the shareholders.
Section 1745 provides that expenses incurred by a director or officer in
defending any action or proceeding referred to in the Subchapter may be paid by
the corporation in advance of the final disposition of such action or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation.
Section 1746 provides generally that except in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by the Subchapter shall not
be deemed exclusive of any other rights to which a director or officer seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding that office.
Section 1747 also grants a corporation the power to purchase and maintain
insurance on behalf of any director or officer against any liability incurred by
him in his capacity as officer or director, whether or not the corporation would
have the power to indemnify him against the liability under this Subchapter of
the BCL.
Sections 1748 and 1749 apply the indemnification and advancement of
expenses provisions contained in the Subchapter to successor corporations
resulting from consolidation, merger or division and to service as a
representative of a corporation or an employee benefit plan.
The foregoing provisions substantially overlap the provisions of the
Pennsylvania Directors' Liability Act, 42 Pa. C.S. Section 8365, which are also
applicable to the Company.
Article XI of the Company's By-laws provides, in part, that the Company
shall indemnify its directors, officers, employees and agents to the fullest
extent permitted by the BCL.
Article XII of the Company's By-laws provides, in part, that:
"A Director shall not be liable for monetary damages as such for any
action taken, or any failure to take action, unless (1): the director has
breached or failed to perform the duties of his office under Section 8363
of the Pennsylvania Consolidated Statutes and the breach or failure
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<PAGE>
to perform constitutes self-dealing, willful misconduct or recklessness;
provided, however, that the foregoing provision shall not relieve a
director of responsibility or liability of a director pursuant to any
criminal statute or for the payment of taxes pursuant to local, state or
Federal law."
The Company has purchased director and officer liability insurance for its
directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4(a) - Form of Non-Qualified Stock Option Agreement
granted to certain Directors (incorporated by
reference to Exhibit 10.9 of the Company's
Registration Statement on Form S-1 (Commission
File No. 2-98089)).
4(b) - Form of Stock Option Agreement for Consultants.
4(c) - 1991 Incentive Stock Option Plan as amended
(incorporated by reference to Exhibit 10.1 of the
Registrant's Registration Statement on Form S-18
(Commission File No. 2-87625-W)).
4(d) - 1995 Incentive and Non-Qualified Stock Option Plan
(the "1995 Plan").
4(e) - Form of Option Agreement for the 1995 Plan.
4(f) - 1995 Directors' Stock Option Plan (the "Directors'
Plan")
4(g) - Form of Option Agreement for the Directors' Plan
5 - Opinion of Olshan Grundman Frome & Rosenzweig.
23(a) - Consent of Grant Thornton, independent auditors.
23(b) - Consent of Olshan Grundman Frome & Rosenzweig
(included in its opinion filed as Exhibit 5).
24 - Powers of Attorney (included on page 12).
ITEM 9. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
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(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (i) and (ii) above do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement;
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at
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<PAGE>
that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled
by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
D. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, a copy of the registrant's latest annual report to
stockholders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause
to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Huntingdon, State of Pennsylvania, on this 18th day
of April, 1995.
HEALTHCARE SERVICES GROUP, INC.
(Registrant)
/s/ Daniel P. McCartney
---------------------------------------------------------
Daniel P. McCartney, Chief Executive Officer and Chairman
POWER OF ATTORNEYS AND SIGNATORIES
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated. Each of the undersigned officers and
directors of Healthcare Services Group, Inc. hereby constitutes and appoints
Daniel P. McCartney and Thomas A Cook and each of them singly, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him in his name in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission and to
prepare any and all exhibits thereto, and other documents in connection
therewith, and to make any applicable state securities law or blue sky filings,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite or necessary to be done to
enable Healthcare Services Group, Inc. to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
SIGNATURE TITLE DATE
/s/ Daniel P. McCartney
- ------------------------- Chief Executive Officer and April 18, 1995
Daniel P. McCartney Chairman
/s/ Thomas A. Cook
- ------------------------- Director and President April 18, 1995
Thomas A. Cook
/s/ W. Thacher Longstreth
- ------------------------- Director April 18, 1995
W. Thacher Longstreth
/s/ Barton D. Weisman
- ------------------------- Director April 18, 1995
Barton D. Weisman
/s/ Robert L. Frome
- ------------------------- Director April 18, 1995
Robert L. Frome
/s/ John M. Briggs
- ------------------------- Director April 18, 1995
John M. Briggs
/s/ Robert J. Moss
- ------------------------- Director April 18, 1995
Robert J. Moss
/s/ James L. DiStefano
- ------------------------- Chief Financial Officer April 18, 1995
James L. DiStefano and Treasurer
/s/ Richard W. Hudson
- ------------------------- Vice President - Finance April 18, 1995
Richard W. Hudson and Secretary (Principal
Accounting Officer)
-12-
STOCK OPTION AGREEMENT- 1993
STOCK OPTION AGREEMENT, made this 5th day of November, 1993
between Healthcare Services Group, Inc. (the Company), and Melvyn Mason, an
advisor and consultant to the Company (the "Optionee").
NOW, THEREFORE, the Company and the Optionee, by his
acceptance of the grant of this Stock Option ("Option"), agree as follows:
1. GRANT OF OPTION
The Company hereby grants to the Optionee as a
separate inducement and agreement in connection with his performance by him of
services to the Company, and not in lieu of any other remuneration for his
services, an Option to purchase on the terms and conditions hereinafter set
forth, all or part of an aggregate of 15,000 Shares of common stock of the
Company (either unissued or treasury), a $.01 par value (the "Shares").
2. TERM OF OPTION
The option granted hereunder shall expire no later
than November 6th, 1998 (the "Termination Date").
3. TERMINATION OF EMPLOYMENT
The option shall be exercisable only if, at all
times beginning with the date of the granting of the option and ending on the
date of such exercise, the Optionee continues to be a consultant and advisor to
the Company and the Optionee has complied with all the terms of this Stock
Option Agreement. If the Optionee shall cease to be so engaged by the Company
and has complied with all of the terms of this Stock Option Agreement, the
Option shall terminate within three (3) months after such date, unless the
Optionee dies within such three (3) months period. In the event of such death,
the Option shall be exercisable by the person or persons to whom the Optionee's
right under the Option have passed by will or by the laws of descent and
distribution for one year (1) from the date of death, but in no event after the
Termination Date.
4. EXERCISE OF OPTION
(a) Except as provided in Paragraph 3 hereof, the
Option is exercisable, commencing on May 7th, 1994, at any time and from time to
time thereafter prior to the Termination Date, except that the Option may not be
exercised as to fractional shares.
<PAGE>
(b) Upon the exercise of the Option (and prior to
the issuance of the certificates for the Shares in respect of which the Option
is exercised), the Optionee shall comply with any applicable provisions
regarding compliance with the Securities Act of 1933.
5. TRANSFERABILITY
The Option granted hereunder shall be assignable
or transferable by the Optionee. In the event of such transfer,
the Optionee shall promptly notify the Company.
6. (a) PURCHASE PRICE
The exercise price shall be $8.25 per Share. The
purchase price shall be payable in United States dollars upon the exercise of an
Option and shall be paid in cash, by certified check or bank draft.
(b) ANTI-DILUTION
The Option granted pursuant to this agreement
shall continue notwithstanding any change or exchange of the Shares into or for
a different number and/or kind of common shares of the Company or of a
corporation or other entity which succeeds to the business of the Company or
becomes its parent or subsidiary, whether or not such change or exchange results
from recapitalization, split-up, corporate merger, consolidation or separation,
stock dividends or liquidation, provided however that the Option, if still
outstanding, shall terminate if and when the business conducted by the Company
(or any successor to the Company) is substantially terminated or dissolved upon
its liquidation. In the event of such a change or exchange, an appropriate
adjustment shall be made in the number and/or kind of shares subject to option
and/or in their per-share option price, and that in the event of a transaction
to which Section 425 (a) of the Internal Revenue Code (or successor provision of
law) is applicable, the foregoing shall be accomplished thereunder by assumption
of the option or by the substitution of another non-qualified stock option. In
no case shall the making of any change, exchange, substitution or assumption or
related adjustment give the Optionee additional benefits which he did not have
under the old option, and the excess of the aggregate fair market value of the
shares subject to the Option immediately after such change, exchange,
substitution or assumption and/or adjustment shall not be greater than such
excess of the fair market value of the Shares subject to the Option immediately
before. Adjustment of the number of Shares subject to the Option shall not make
the Option become exercisable as to any fractional shares. Subject to the
foregoing limitations, the terms of any such adjustment shall be determined by
the Committee and such determination made in good faith shall be final, provided
that if
-2-
<PAGE>
pursuant to said Section 425 (a) another corporation or other successor assumes
the Option or substitutes another Option, its determination of the terms made in
good faith shall be final.
7. METHOD OF EXERCISE
The Option shall be exercisable only by delivery
of written notice to the Secretary of the Company at the Company's offices in
Huntingdon Valley, Pennsylvania, prior to the expiration of the Option as
specified in paragraphs 2 and 3 hereof. Such notice shall state the election to
exercise the option, and the number of Shares in respect of which it is being
exercised, and shall be signed by the person or persons so exercising such
Option. The date the Company receives written notice shall be the exercise date.
In the event the Option shall be exercised pursuant to the provisions of
paragraph 3 hereof by a person or persons other than the Optionee, such notice
shall be accompanied by proof satisfactory to the Company of the right of such
person or persons to exercise the Option. The Company shall issue and deliver,
upon receipt of notice and payment in full of the purchase price for the Shares
as to which the Option is being exercised, a certificate or certificates
representing such number of shares to which the Optionee is entitled to receive
under the Plan.
8. NOTICES
Any notice to be given to the Company shall be
addressed to the Secretary of the Company at the Company's office referred to in
Paragraph 7 above, and any notice to be given to the Optionee shall be addressed
to the Optionee at the address then appearing on the records of the Company, or
at such other address as either party may hereafter designate in writing to the
other. Except for purposes of determining the exercise date, any such notice
shall be deemed to have been duly given if and when enclosed in a properly
sealed envelope, addressed as aforesaid and deposited, first class postage
prepaid, in the United States mails.
9. RESTRICTIONS
(a) The Optionee acknowledges and agrees that this Option is
subject to the terms and conditions of the Plan and the Internal Revenue Code
provisions pursuant to which such Plan adopted.
(b) The Optionee acknowledges and agrees that Shares purchased
pursuant to the exercise of this Option shall be for investment and not with a
view to the distribution thereof unless the Company then has a current
registration statement under the Securities Act of 1933 which has been declared
effective and
-3-
<PAGE>
which covers the issuance or resale of such Shares. (The Company shall have no
obligation to file such a registration statement.)
10. ACKNOWLEDGMENTS
The Optionee acknowledges that:
(a) The particular needs of the Company's
customers are not generally known in the industry;
(b) The Company has a proprietary interest in
the identity of its customers and customer lists; and
(c) Documents and information regarding the
Company's methods of operation, sales, pricing, costs, and the specialized
requirements of the Company's customers are highly confidential and constitute
trade secrets.
11. TRADE SECRETS AND CONFIDENTIAL INFORMATION
During the term of his service to the Company, the
Optionee will have access to and become familiar with various trade secrets and
confidential information of the Company, including, but not necessarily limited
to, the documents and information referred to in paragraph 10 above. The
Optionee acknowledges that such confidential information and trade secrets are
owned and shall continue to be owned solely by the Company. During the term of
his service and for three (3) years after such service to the Company
terminates, the Optionee agrees not to use such information for any purpose
whatsoever or to divulge such information to any person other than the Company
or persons to whom the Company has given its consent, unless such information
has already become common knowledge or unless the Optionee is compelled to
disclose it by governmental process.
12. COVENANT NOT TO COMPETE
The Optionee agrees that:
(a) During the term of his service, the Optionee
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 the cleaning,
housekeeping, janitorial, and/or laundry business, whether commercial,
industrial, residential, wholesale, or retail, in any form whatsoever.
(b) For a period of two (2) years after his
service has been terminated for any reason, with or without cause, the Optionee
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
-4-
<PAGE>
indirectly, solicit or accept any customers or accounts that were customers or
accounts (or legal successors to customers or accounts) of the Company during
any period of time that the Optionee was employed by the Company.
(c) For a period of three (3) years after his
service has been terminated for any reason, with or without cause, the Optionee
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 customers or accounts which were
customers or accounts (or legal successors to customers or accounts) of the
Company, and for whose accounts the Optionee was responsible at any time while
in the employ of the Company.
(d) At no time during his service with the
Company, and for a period of three (3) years following termination of the
Optionee's service, will the Optionee accept any employment offered at any of
the facilities for which the Optionee has been directly or indirectly
responsible during the course of his employment with the Company, regardless of
any changes of ownership or affiliation of such facilities.
13. REMEDIES
(a) The Optionee acknowledges that compliance
with paragraph 11 and 12 is necessary to protect the business and good will of
the Company and that a breach of those paragraphs will irreparably and
continually damage the Company, for which money damages may not be adequate.
Consequently, the Optionee agrees that, in the event that he breaches or
threatens to breach any of these covenants, the Company shall be entitled to
both (a) a preliminary or a permanent injunction in order to prevent the
continuation of such harm and (b) money damages insofar as they can be
determined. Nothing in this Agreement, however, shall be construed to prohibit
the Company from also pursuing any other remedy, the parties having agreed that
all remedies are cumulative.
(b) In the event that there is a dispute arising
under or related to this Nonqualified Stock Option Agreement or that a party
seeks to enforce any of the terms of this Nonqualified Stock Option Agreement,
each party agrees that any legal proceeding will be instituted only in the Court
of Common Pleas, Montgomery County, Pennsylvania, or in the United States
District Court for the Eastern District of Pennsylvania. Each party irrevocably
consents to the jurisdiction of each of those courts and agrees that service of
the Complaint or other process may be made as provided in the applicable Rules
of Court or as provided in Paragraph 8 of this Nonqualified Stock Option
Agreement.
-5-
<PAGE>
(c) If any provision of the Nonqualified Stock
Option Agreement is adjudged by any court to be void or unenforceable, in whole
or in part, that adjudication shall not affect the validity of the remainder of
this Nonqualified Stock Option Agreement. Each provision, paragraph and
subparagraph of this Nonqualified Stock Option Agreement is separate from the
others and is a separate and distinct covenant. If a provision is determined to
be void or unenforceable because it is too broad, the parties agree that the
Court shall have the power to limit the restriction so as to make it
enforceable.
(d) If a party incurs costs or expenses in
enforcing this Nonqualified Stock Option Agreement, including attorney's fees
and costs, the defaulting party shall pay to the prevailing party, upon demand,
those fees and costs.
14. GOVERNING LAW
This Nonqualified Stock Option Agreement is made
in, and shall be construed under the laws of, the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF,, intending to be legally bound, the
parties have executed this Nonqualified Stock Option Agreement.
HEALTHCARE SERVICES GROUP, INC
By:
(Seal)
- ------------------------------ -----------------------------
Optionee Date
-6-
1995 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
FOR KEY EMPLOYEES OF
HEALTHCARE SERVICES GROUP, INC.
1. Purpose of the Plan
This 1995 Incentive and Nonqualified Stock Option Plan (the "Plan") is
intended as an incentive, to retain in the employ of Healthcare Services Group,
Inc. (the "Company") and any Subsidiary of the Company (within the meaning of
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
persons of training, experience and ability, to attract new employees whose
services are considered valuable, to encourage the sense of proprietorship and
to stimulate the active interest of such persons in the development and
financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the Plan
shall constitute incentive stock options within the meaning of Section 422 of
the Code ("Incentive Options") while certain other options granted pursuant to
the Plan shall be nonqualified stock options ("Nonqualified Options"). Incentive
Options and the Nonqualified Options are hereinafter referred to collectively as
"Options".
2. Administration of the Plan
The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee") consisting
of one or more Directors of the Company. The member(s) of the Committee, shall
serve at the pleasure of the Board.
The Committee, subject to Section 3 hereof, shall have full power and
authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan. Subject
to Section 7 hereof, the Committee shall have the authority, without limitation,
to designate which Options granted under the Plan shall be Incentive Options and
which shall be Nonqualified Options. To the extent any Option does not qualify
as an Incentive Option, it shall constitute a separate Nonqualified Option.
Notwithstanding any provision in the Plan to the contrary, Options may be
granted under the Plan to any member of the Committee during the term of his
membership on the Committee, subject to approval of the Board of Directors or
the Audit Committee thereof.
Subject to the provisions of the Plan, the Committee shall interpret the Plan
and all Options granted under the Plan, shall make such rules as it deems
necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan in the manner and to the
extent that the Committee deems desirable to carry the Plan or any Options into
effect. The act or determination of a majority of the Committee shall be deemed
to be the act or determination of the Committee and any decision reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority at a meeting duly held. Subject
to the provisions of the Plan, any action taken or determination made by the
Committee pursuant to this and the other paragraphs of the Plan shall be
conclusive on all parties.
3. Designation of Optionees.
The persons eligible for participation in the Plan as recipients of Options
("Optionees") shall include only full-time key employees of the Company or any
Subsidiary. In selecting Optionees, and in determining the number of shares to
be covered by each Option granted to Optionees, the Committee may consider the
office or position held by the Optionee, the Optionee's degree of responsibility
for and contribution to the growth and success of the Company or any Subsidiary,
the Optionee's length of service, age, promotions, potential and any other
factors which the Committee may consider relevant. An employee who has been
granted an Option hereunder may be granted an additional Option or Options, if
the Committee shall so determine.
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<PAGE>
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Section 7 hereof, a total of five
hundred thousand (500,000) shares of common stock, $.01 par value ("Stock"), of
the Company shall be subject to the Plan. The shares of Stock subject to the
Plan shall consist of unissued shares or previously issued shares reacquired and
held by the Company or any Subsidiary of the Company, and such amount of shares
of Stock shall be and is hereby reserved for such purpose. Any of such shares of
Stock which may remain unsold and which are not subject to outstanding Options
at the termination of the Plan shall cease to be reserved for the purpose of the
Plan, but until termination of the Plan the Company shall at all times reserve a
sufficient number of shares of Stock to meet the requirements of the Plan.
Should any Option expire or be cancelled prior to its exercise in full or should
the number of shares of Stock to be delivered upon the exercise in full of an
Option be reduced for any reason, the shares of Stock theretofore subject to
such Option may again be subject to an Option under the Plan.
5. Terms and Conditions of Options.
Options granted under the Plan shall be subject to the following conditions
and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The purchase price of each share of Stock purchasable under
an Option shall be determined by the Committee at the time of grant but shall
not be less than 100% of the fair market value of such share of Stock on the
date the Option is granted in the case of an Incentive Option and not less than
100% of the fair market value of such share of Stock on the date the Option is
granted in the case of a Non-Qualified Option; provided, however, that with
respect to an Incentive Option, in the case of an Optionee who, at the time such
Option is granted, owns (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or of any Subsidiary, then the purchase price per share of Stock shall
be at least 110% of the Fair Market Value (as defined below) per share of Stock
at the time of grant. The exercise price for each incentive stock option shall
be subject to adjustment as provided in Section 7 below. The fair market value
("Fair Market Value") means the closing price of publicly traded shares of Stock
on the national securities exchange on which shares of Stock are listed, (if the
shares of Stock are so listed) or on the NASDAQ Stock Market System (if the
shares of Stock are regularly quoted on the NASDAQ Stock Market System), or, if
not so listed or regularly quoted, the mean between the closing bid and asked
prices of publicly traded shares of Stock in the over-the-counter market, or, if
such bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code.
(b) Option Term. The term of each Option shall be fixed by the Committee, but
no Option shall be exercisable more than ten years after the date such Option is
granted; provided, however, that in the case of an Optionee who, at the time
such Option is granted, owns more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary, then such Option shall
not be exercisable with respect to any of the shares subject to such Option
later than the date which is five years after the date of grant.
(c) Exercisability. Subject to paragraph (j) of this Section 5, Options shall
be exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at grant, provided, however, that except as
provided in paragraphs (f) and (g) of this Section 5, unless a shorter or longer
vesting period is otherwise determined by the Committee at grant, Options shall
be exercisable as follows: up to one-half (1/2) of the aggregate shares of Stock
purchasable under an Option shall be exercisable commencing one year after the
date of grant and an additional one-half (1/2) of the aggregate initial shares
of Stock purchasable under an Option shall be exercisable commencing two years
after the date of grant. The Committee may waive such installment exercise
provision at any time in whole or in part based on performance and/or such other
factors as the Committee may determine in its sole discretion, provided,
however, no Option shall be exercisable until more than six months have elapsed
from the date of grant of such Option.
(d) Method of Exercise. Options may be exercised in whole or in part at any
time during the option period, by giving written notice to the Company
specifying the number of shares to be purchased, accompanied by payment in full
of the purchase price, in cash, by check or such other instrument as may be
acceptable to the Committee. As determined by the Committee, in its sole
discretion, at or after grant, payment in full or in part may
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<PAGE>
also be made in the form of Stock owned by the Optionee for at least six months
(based on the Fair Market Value of the Stock on the trading day before the
Option is exercised); provided, however, that if such Stock was issued pursuant
to the exercise of an Incentive Option under the Plan, the holding requirements
for such Stock under the Code shall first have been satisfied. An Optionee shall
have the rights to dividends or other rights of a stockholder with respect to
shares subject to the Option after (i) the Optionee has given written notice of
exercise and has paid in full for such shares and (ii) becomes a stockholder of
record.
(e) Non-transferability of Options. Options are not transferable and may be
exercised solely by the Optionee during his lifetime, or after his death by the
person or persons entitled thereto under his will or the laws of descent and
distribution; provided that, with respect to options other than incentive stock
options, the Committee may grant options that are transferable, without payment
of consideration, to immediate family members of the optionee or to trusts or
partnerships for such family members. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to execution, attachment or
similar process, any Option contrary to the provisions hereof shall be void and
ineffective and shall give no right to the purported transferee.
(f) Termination by Death. Unless otherwise determined by the Committee at
grant, if any Optionee's employment with the Company or any Subsidiary
terminates by reason of death, the Option may thereafter be immediately
exercised, to the extent then exercisable (or on such accelerated basis as the
Committee shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year from the date of such death or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with the Company or any
Subsidiary terminates by reason of total and permanent disability as determined
under the Company's long term disability policy ("Disability"), any Option held
by such Optionee may thereafter be exercised, to the extent it was exercisable
at the time of termination due to Disability (or on such accelerated basis as
the Committee shall determine at or after grant), but may not be exercised after
three months from the date of such termination of employment or the expiration
of the stated term of such Option, whichever period is shorter.
(h) Termination by Reason of Retirement. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with the Company or any
Subsidiary terminates by reason of Normal or Early Retirement (as such terms are
defined below), any Option held by such Optionee may thereafter be exercised to
the extent it was exercisable at the time of such Retirement (as defined below)
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after three months from the date of such
termination of employment or the expiration of the stated term of such Option,
whichever period is shorter.
For purposes of this paragraph (h), Normal Retirement shall mean retirement
from active employment with the Company or any Subsidiary on or after the normal
retirement date specified in the applicable Company or Subsidiary pension plan
or if no such pension plan, age 65. Early Retirement shall mean retirement from
active employment with the Company or any Subsidiary pursuant to the early
retirement provisions of the applicable Company or Subsidiary pension plan or if
no such pension plan, age 55. Retirement shall mean Normal or Early Retirement.
(i) Other Termination. Unless otherwise determined by the Committee at grant,
if any Optionee's employment with the Company or any Subsidiary terminates for
any reason other than death, Disability or Retirement, the Option shall
thereupon terminate, except that the exercisable portion of any Option which was
exercisable on the date of such termination of employment may be exercised for
the lesser of three months from the date of termination or the balance of such
Option's term if the Optionee's employment with the Company or any Subsidiary is
involuntarily terminated by the Optionee's employer without Cause. Cause shall
mean a felony conviction or the failure of an Optionee to contest prosecution
for a felony or an Optionee's willful misconduct or dishonesty, any of which is
deemed by the Committee or the Board of Directors to be harmful to the business
or reputation of the Company or any Subsidiary. The transfer of an Optionee from
the employ of the Company to a Subsidiary, or vice versa, or from one Subsidiary
to another, shall not be deemed to constitute a termination of employment for
purposes of the Plan.
(j) Limit on Value of Incentive Option. The aggregate Fair Market Value,
determined as of the date the Option is granted, of the Stock for which
Incentive Options are exercisable for the first time by any Optionee during any
calendar year under the Plan (and/or any other stock option plans of the Company
or any Subsidiary) shall not exceed $100,000.
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<PAGE>
(k) Transfer of Incentive Option Shares. The stock option agreement
evidencing any Incentive Options granted under this Plan shall provide that if
the Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of Stock
issued to him pursuant to his exercise of an Incentive Option granted under the
Plan within the two-year period commencing on the day after the date of the
grant of such Incentive Option or within a one-year period commencing on the day
after the date of transfer of the share or shares to him pursuant to the
exercise of such Incentive Option, he shall, within ten days of such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of federal income tax withholding required by law.
6. Term of Plan.
No Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the date the Plan is approved by the Board, but Options granted
may extend beyond that date.
7. Capital Change of the Company.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, or other change in corporate structure affecting the Stock, the
Committee shall make an appropriate and equitable adjustment in the number and
kind of shares reserved for issuance under the Plan and in the number and option
price of shares subject to outstanding Options granted under the Plan, to the
end that after such event each Optionee's proportionate interest shall be
maintained as immediately before the occurrence of such event. Notwithstanding
the foregoing, there shall be no adjustment for the issuance of Shares on
conversion of notes, preferred stock or exercise of warrants or Shares issued by
the Board for such consideration as the Board deems appropriate.
8. Purchase for Investment.
Unless the Options and shares covered by the Plan have been registered under
the Securities Act of 1933, as amended, or the Company has determined that such
registration is unnecessary, each person exercising an Option under the Plan may
be required by the Company to give a representation in writing that he is
acquiring the shares for his own account for investment and not with a view to,
or for sale in connection with, the distribution of any part thereof.
9. Taxes.
The Company may make such provisions as it may deem appropriate, consistent
with applicable law, in connection with any Options granted under the Plan with
respect to the withholding of any taxes or any other tax matters.
10. Effective Date of Plan.
The Plan shall be effective on the date it is approved by the Board, provided
however that the Plan shall be subject to subsequent approval by majority vote
of a quorum of the Company's stockholders present and voting at a meeting held
within one (1) year from the date approved by the Board. Options may be granted,
but not exercised, before such stockholder approval is obtained. If the
stockholders fail to approve the Plan within the required time period, any
Options granted under this Plan shall be void and no additional Options may
thereafter be granted hereunder.
11. Amendment and Termination.
The Board may amend, suspend, or terminate the Plan, except that no amendment
shall be made which would impair the right of any Optionee under any Option
theretofore granted without his consent, and except that no amendment shall be
made which, without the approval of the stockholders would:
(a) materially increase the number of shares which may be issued under
the Plan, except as is provided in Section 7;
(b) materially increase the benefits accruing to the Optionees under
the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan; or
(d) decrease the Option exercise price to less than 100% of the Fair
Market Value on the date of grant thereof.
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<PAGE>
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without his consent. The Committee may also substitute new Options
for previously granted Options, including options granted under other plans
applicable to the participant and previously granted Options having higher
option prices, upon such terms as the Committee may deem appropriate.
12. Reorganization etc.
Notwithstanding any other provisions in Section 5 hereof, upon the
dissolution or liquidation of the Company, or upon a reorganization, merger or
consolidation of the Company with one or more corporations as a result of which
the Company is not the surviving corporation, or upon a sale of substantially
all of the property or more than 80% of the then outstanding shares of Common
Stock of the Company to another corporation, the Company shall give to each
Optionee at the time of adoption of the plan or agreement for liquidation,
dissolution, merger or sale either (1) a reasonable time thereafter within which
to exercise the Option in its entirety prior to the effective date of such
liquidation or dissolution, merger or sale, or (2) the right to exercise the
Option in its entirety as to an equivalent number of shares of Common Stock of
the corporation succeeding the Company or acquiring its business by reason of
such liquidation, dissolution, merger, consolidation or reorganization.
13. Government Regulations.
The Plan, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
14. General Provisions.
(a) Certificates. All certificates for shares of Stock delivered under the
Plan shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange or
trading system upon which the Stock is then listed, and any applicable Federal
or state securities law, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions.
(b) Employment Matters. The adoption of the Plan shall not confer upon any
Optionee of the Company or any Subsidiary, any right to continued employment
(or, in case the Optionee is also a director, continued retention as a director)
with the Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.
(c) Limitation of Liability. No member of the Board or the Committee, or any
officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) Registration of Options. Notwithstanding any other provision in the Plan,
no Option may be exercised unless and until the Stock to be issued upon the
exercise thereof has been registered under the Securities Act of 1933 and
applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration. The Company shall not be under any
obligation to register under applicable federal or state securities laws any
Stock to be issued upon the exercise of an Option granted hereunder, or to
comply with an appropriate exemption from registration under such laws in order
to permit the exercise of an Option and the issuance and sale of the Stock
subject to such Option; however, the Company may in its sole discretion register
such Stock at such time as the Company shall determine. If the Company chooses
to comply with such an exemption from registration, the Stock issued under the
Plan may, at the direction of the Committee, bear an appropriate restrictive
legend restricting the transfer or pledge of the Stock represented thereby, and
the Committee may also give appropriate stop-transfer instructions to the
transfer agent to the Company.
A-5
HEALTHCARE SERVICES GROUP, INC.
2643 Huntingdon Pike
Huntingdon Valley, Pennsylvania 19006
[ ]
To:
1. We are pleased to inform you that on [ ]
you were granted an incentive stock option pursuant to the 1995 Incentive and
Non-Qualified Stock Option Plan (the "Plan") of Healthcare Services Group, Inc.
(the "Company") to purchase [ ] shares (the "Shares") of Common Stock, par value
$.01 per share, of the Company, at a price of $[ ] per Share. This grant is a
separate inducement and agreement in connection with your employment by the
Company, and not in lieu of any salary or other remuneration for services.
2. No part of the option is currently exercisable. The option may
first be exercised, with respect to 50% of the option one year from the date of
grant. This option may first be exercised with respect to the remaining 50% of
the option two years from the date of grant.
3. To the extent this option is not exercised, it will expire [five]
years from the date of the grant.
4. This option is issued in accordance with and is subject to and
conditioned upon all of the terms and conditions of the Plan (a copy of which in
its present form is attached hereto), as from time to time amended, provided,
however, that no future amendment or termination of the Plan shall, without your
consent, alter or impair any of your rights or obligations under this option.
Reference is made to the terms and conditions of the Plan, all of which are
incorporated by reference in this option agreement as if fully set forth herein.
5. Unless at the time of the exercise of this option a registration
statement under the Securities Act of 1933, as amended (the "Act"), is in effect
as to such Shares, any Shares purchased by you upon the exercise of this option
shall be acquired for investment and not for sale or distribution, and if the
Company so requests, upon any exercise of this option, in whole or in part, you
will execute and deliver to the Company a certificate to such effect. The
Company shall not be obligated to issue any Shares pursuant to this option if,
in the opinion of counsel to the Company, the Shares to be so issued are
required to be registered
<PAGE>
or otherwise qualified under the Act or under any other applicable statute,
regulation or ordinance affecting the sale of securities, unless and until such
Shares have been so registered or otherwise qualified.
6. You understand and acknowledge that, under existing law, unless
at the time of the exercise of this option a registration statement under the
Act is in effect as to such Shares (i) any Shares purchased by you upon exercise
of this option may be required to be held indefinitely unless such Shares are
subsequently registered under the Act or an exemption from such registration is
available; (ii) any sales of such Shares made in reliance upon Rule 144
promulgated under the Act may be made only in accordance with the terms and
conditions of that Rule (which, under certain circumstances, restrict the number
of shares which may be sold and the manner in which shares may be sold); (iii)
in the case of securities to which Rule 144 is not applicable, compliance with
Regulation A promulgated under the Act or some other disclosure exemption will
be required; (iv) certificates for Shares to be issued to you hereunder shall
bear a legend to the effect that the Shares have not been registered under the
Act and that the Shares may not be sold, hypothecated or otherwise transferred
in the absence of an effective registration statement under the Act relating
thereto or an opinion of counsel satisfactory to the Company that such
registration is not required; (v) the Company will place an appropriate "stop
transfer" order with its transfer agent with respect to such Shares; and (vi)
the Company has undertaken no obligation to register the Shares or to include
the Shares in any registration statement which may be filed by it subsequent to
the issuance of the shares to you. In addition, you understand and acknowledge
that the Company has no obligation to you to furnish information necessary to
enable you to make sales under Rule 144.
7. This option (or installment thereof) is to be exercised by
delivering to the Company a written notice of exercise in the form attached
hereto as Exhibit A, specifying the number of Shares to be purchased, together
with payment of the purchase price of the Shares to be purchased. The date the
Company receives the written notice shall be the exercise date. The purchase
price is to be paid in cash or, by delivering shares of the Company's stock
already owned by you and having a fair market value on the date of exercise
equal to the exercise price of the option, or a combination of such shares and
cash, or otherwise in accordance with the Plan.
8. You acknowledge that:
A. The particular needs of the Company's customers are not
generally known in the industry;
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<PAGE>
B. The Company has a proprietary interest in the identity of
its customers and customer lists; and
C. Documents and information regarding the Company's methods of
operation, sales, pricing, costs, and the specialized requirements of the
Company's customers are highly confidential and constitute trade secrets.
9. During the term of your employment, you will have access to and
become familiar with various trade secrets and confidential information of the
Company, including, but not necessarily limited to, the documents and
information referred to in paragraph 8 above. You acknowledge that such
confidential information and trade secrets are owned and shall continue to be
owned solely by the Company. During the term of your employment and after such
employment terminates, you agree not to use such information for any purpose
whatsoever or to divulge such information to any person other than the Company
or persons to whom the Company has given its consent, unless such information
has already become common knowledge or unless you are compelled to disclose it
by governmental process.
10. You agree that:
A. During the term of your employment, you 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 the cleaning, housekeeping,
janitorial, and/or laundry business, whether commercial, industrial,
residential, wholesale, or retail, in any form whatsoever.
B. For a period of two (2) years after your employment has been
terminated for any reason, with or without cause, you 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 customers or accounts that were customers or accounts (or legal
successors to customers or accounts) of the Company during any period of time
that you were employed by the Company.
C. For a period of three (3) years after your employment has
been terminated for any reason, with or without cause, you 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 customers or accounts which were customers or
accounts (or legal successors to customers or accounts) of the Company, and for
whose accounts you were responsible at any time while in the employ of the
Company.
-3-
<PAGE>
D. At no time during your employment with the Company, and for
a period of three (3) years following termination of your employment, will you
accept any employment offered at, or in a position having direct responsibility
for, any of the facilities for which you have been directly or indirectly
responsible during the course of your employment with the Company, regardless of
any changes of ownership or affiliation of such facilities.
E. In the event your employment with the Company terminates for
any reason, you will be able to earn a livelihood without violating the
foregoing restrictions and your ability to earn a livelihood without violating
such restrictions is a material condition to the grant of this option.
11. REMEDIES
A. You acknowledge that compliance with paragraphs 9 and 10 is
necessary to protect the business and good will of the Company and that a breach
of those paragraphs will irreparably and continually damage the Company, for
which money damages may not be adequate. Consequently, you agree that, in the
event that you breach or threaten to breach any of these covenants, the Company
shall be entitled to both (a) a preliminary or a permanent injunction in order
to prevent the continuation of such harm and (b) money damages insofar as they
can be determined. Nothing in this Stock Option Agreement, however, shall be
construed to prohibit the Company from also pursuing any other remedy, the
parties having agreed that all remedies are cumulative.
B. In the event that there is a dispute arising under or
related to this Stock Option Agreement or that a party seeks to enforce any of
the terms of this Stock Option Agreement, each party agrees that any legal
proceeding will be instituted only in the Court of Common Pleas, Montgomery
County, Pennsylvania, or in the United States District Court for the Eastern
District of Pennsylvania. Each party irrevocably consents to the jurisdiction of
each of those courts and agrees that service of the Complaint or other process
may be made as provided in the applicable Rules of Court or as provided in
Paragraph 7 of this Stock Option Agreement.
C. If any provision of the Stock Option Agreement is adjudged
by any court to be void or unenforceable, in whole or in part, that adjudication
shall not affect the validity of the remainder of this Stock Option Agreement.
Each provision, paragraph and subparagraph of this Stock Option Agreement is
separate from the others and is a separate and distinct covenant. If a provision
is determined to be void or unenforceable because it is too broad, the parties
agree that the Court shall have the power to limit the restriction so as to make
it enforceable.
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<PAGE>
D. If a party incurs costs or expenses in enforcing this Stock
Option Agreement, including attorney's fees and costs, the defaulting party
shall pay to the prevailing party, upon demand, those fees and costs.
12. This Stock Option Agreement is made in, and shall be construed
under the laws of, the Commonwealth of Pennsylvania.
Would you kindly evidence your acceptance of this option and your
agreement to comply with the provisions hereof and of the Plan by executing this
letter under the words "Agreed To and Accepted."
Very truly yours,
HEALTHCARE SERVICES GROUP, INC.
By:-----------------------------
Daniel P. McCartney
Chairman and Chief Executive
Officer
AGREED TO AND ACCEPTED:
- -----------------------
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<PAGE>
EXHIBIT A
Healthcare Services Group, Inc.
2643 Huntington Pike
Huntingdon Valley, Pennsylvania 19006
Gentlemen:
Notice is hereby given of my election to purchase _____ shares
of Common Stock, $.01 par value (the "Shares"), of Healthcare Services Group,
Inc. (the "Company"), at a price of $ per Share, pursuant to the provisions of
the stock option granted to me on _________________, under the Company's 1995
Incentive and Non-Qualified Stock Option Plan. Enclosed in payment for the
Shares is:
----
/___/ my check in the amount of $________.
----
/___/ ___________ Shares having a total value
$________, such value being based on the
closing price(s) of the Shares on the date
hereof.
The following information is supplied for use in issuing and
registering the Shares purchased hereby:
Number of Certificates
and Denominations ___________________
Name ___________________
Address ___________________
___________________
Social Security Number ___________________
Dated: _______________, ____
Very truly yours,
________________________
-6-
HEALTHCARE SERVICES GROUP, INC.
1995 DIRECTORS' STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the Healthcare Services Group, Inc. 1995 Directors' Stock
Option Plan (the "Plan") is to secure for Healthcare Services Group, Inc. and
its stockholders the benefits arising from stock ownership by its Directors. The
Plan will provide a means whereby such Directors may purchase shares of the
common stock, $.01 par value, of Healthcare Services Group, Inc. pursuant to
options granted in accordance with the Plan.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the respective
meanings set forth in this Article:
2.1 "Committee" shall mean the Stock Option Committee of the Board of
Directors of the Corporation, Healthcare Services Group, Inc., which shall
consist of two or more members of the Board of Directors of the Board of
Directors of the Corporation.
2.2 "Chairman" shall mean the duly appointed Chairman of any standing
Committee of the Board.
2.3 "Company" shall mean Healthcare Services Group, Inc. and any of its
subsidiaries.
2.4 "Director" shall mean any person who is a member of the Board of
Directors of the Company.
2.5 "Eligible Director" shall be any Director of the Company.
2.6 "Exercise Price" shall mean the price per Share at which an Option may be
exercised.
2.7 "Fair Market Value" shall mean the closing price of publicly traded
Shares on the national securities exchange on which Shares are listed (if the
Shares are so listed) or on the Nasdaq Stock Market System (if the Shares are
regularly quoted on the Nasdaq Stock Market System), or, if not so listed or
regularly quoted, the mean between the closing bid and asked prices of publicly
traded Shares in the over-the-counter market Electronic Bulletin Board, or, if
such bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company.
2.8 "Option" shall mean an Option to purchase Shares granted pursuant to the
Plan.
2.9 "Option Agreement" shall mean the written agreement described in Article
VI herein.
2.10 "Permanent Disability" shall mean the condition of an Eligible Director
who is unable to participate as a member of the Board by reason of any medically
determined physical or mental impairment which can be expected to result in
death or which can be expected to last for a continuous period of not less than
twelve (12) months.
2.11 "Purchase Price" shall be the Exercise Price multiplied by the number of
whole Shares with respect to which an Option may be exercised.
2.12 "Shares" shall mean shares of common stock, $.01 par value, of the
Company.
ARTICLE III
ADMINISTRATION
3.1 General. This Plan shall be administered by the Committee in accordance
with the express provisions of this Plan.
B-1
<PAGE>
3.2 Powers of the Committee. The Committee shall have full and complete
authority to adopt such rules and regulations and to make all such other
determinations not inconsistent with the Plan as may be necessary for the
administration of the Plan.
ARTICLE IV
SHARES SUBJECT TO PLAN
Subject to adjustment in accordance with Article IX, an aggregate of 150,000
Shares are reserved for issuance under this Plan. Shares sold under this Plan
may be either authorized, but unissued Shares or reacquired Shares. If an
Option, or any portion thereof, shall expire or terminate for any reason without
having been exercised in full, the unpurchased Shares covered by such Option
shall be available for future grants of Options.
ARTICLE V
GRANTS
5.1 Grants of Options. Subject to the express provisions of the Plan, the
Committee shall have the authority, in its discretion, to determine the Eligible
Directors to whom the Options shall be granted, the number of Shares which shall
be subject to each Option, the purchase price of each Share which shall be
subject to each Option, the period(s) during which such Options shall be
exercisable (whether in whole or in part), and the other terms and provisions
thereof. In determining the Eligible Directors to whom Options shall be granted
and the number of Shares for which Options shall be granted, the Committee shall
consider the length of service of the Eligible Director and the amount of
earnings of the Company.
5.2 Determination Final. The determination of the Committee on matters
referred to this Article V shall be final.
ARTICLE VI
TERMS OF OPTION
Each Option shall be evidenced by a written Option Agreement executed by the
Company and the Eligible Director which shall specify the Grant Date, the number
of Shares subject to the Option, the Exercise Price and shall also include or
incorporate by reference the substance of all of the following provisions and
such other provisions consistent with this Plan as the Board may determine.
6.1 Term. The term of the Option shall be five (5) years from the Grant Date
of each Option, subject to earlier termination in accordance with Articles VI
and X.
6.2 Restriction on Exercise. Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Board at grant, provided, however, that except in the case of the Eligible
Director's death or Permanent Disability, upon which events the Option will
become immediately exercisable, unless a longer vesting period is otherwise
determined by the Committee at grant, Options shall be exercisable as follows:
one-half of the aggregate Shares purchasable under an Option shall be
exercisable commencing one year after the Grant Date and an additional one-half
of the Shares purchasable under an Option shall be exercisable commencing two
years after the Grant Date. The Board may waive such installment exercise
provision at any time in whole or in part based on performance and/or such other
factors as the Board may determine in its sole discretion, provided, however,
that no Option shall be exercisable until more than six months have elapsed from
the Grant Date.
6.3 Exercise Price. The Exercise Price for each Share subject to an Option
shall be the Fair Market Value of the Share as determined in Section 2.7 herein.
6.4 Manner of Exercise. An Option shall be exercised in accordance with its
terms, by delivery of a written notice of exercise to the Company and payment of
the full purchase price of the Shares being purchased. An Eligible Director may
exercise an Option with respect to all or less than all of the Shares for which
the Option may then be exercised, but an Eligible Director must exercise the
Option in full Shares.
B-2
<PAGE>
6.5 Payment. The Purchase Price of Shares purchased pursuant to an Option or
portion thereof, may be paid:
(a) in United States Dollars, in cash or by check, bank draft or money
order payable to the Company; or
(b) by delivery of Shares already owned by an Eligible Director (for a
period of at least six months) with an aggregate Fair Market Value on the
date of exercise equal to the Purchase Price.
6.6 Transferability. No Option shall be transferable, otherwise than by will
or the laws of descent and distribution, and an Option shall be exercisable
during the Eligible Director's lifetime only by the Eligible Director, his
guardian or legal representative or to immediate family members of the Eligible
Director or pursuant to a qualified domestic relations order; provided that the
Committee may grant options that are transferable, without payment of
consideration, to immediate family members of the optionee or to trusts or
partnerships for such family members.
6.7 Termination of Membership on the Board. If an Eligible Director's
membership on the Board terminates for any reason, an Option vested on the date
of termination may be exercised in whole or in part at any time within one (1)
year after the date of such termination (but in no event after the term of the
Option expires) and shall thereafter terminate.
ARTICLE VII
GOVERNMENT AND OTHER REGULATIONS
7.1 Delivery of Shares. The obligation of the Company to issue or transfer
and deliver Shares for exercised Options under the Plan shall be subject to all
applicable laws, regulations, rules, orders and approvals which shall then be in
effect.
7.2 Holding of Stock After Exercise of Option. The Option Agreement shall
provide that the Eligible Director, by accepting such Option, represents and
agrees, for the Eligible Director and his permitted transferees hereunder that
none of the Shares purchased upon exercise of the Option shall be acquired with
a view to any sale, transfer or distribution of the Shares in violation of the
Securities Act of 1933, as amended (the "Act") and the person exercising an
Option shall furnish evidence satisfactory to that Company to that effect,
including an indemnification of the Company in the event of any violation of the
Act by such person. Notwithstanding the foregoing, the Company in its sole
discretion may register under the Act the Shares issuable upon exercise of the
Options under the Plan.
ARTICLE VIII
WITHHOLDING TAX
The Company may in its discretion, require an Eligible Director to pay to the
Company, at the time of exercise of an Option an amount that the Company deems
necessary to satisfy its obligations to withhold federal, state or local income
or other taxes (which for purposes of this Article includes an Eligible
Director's FICA obligation) incurred by reason of such exercise. When the
exercise of an Option does not give rise to the obligation to withhold federal
income taxes on the date of exercise, the Company may, in its discretion,
require an Eligible Director to place Shares purchased under the Option in
escrow for the benefit of the Company until such time as federal income tax
withholding is required on amounts included in the Eligible Director's gross
income as a result of the exercise of an Option. At such time, the Company, in
its discretion, may require an Eligible Director to pay to the Company an amount
that the Company deems necessary to satisfy its obligation to withhold federal,
state or local taxes incurred by reason of the exercise of the Option, in which
case the Shares will be released from escrow upon such payment by an Eligible
Director.
ARTICLE IX
ADJUSTMENTS
9.1 Proportionate Adjustments. If the outstanding Shares are increased,
decreased, changed into or exchanged into a different number or kind of Shares
or securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an
B-3
<PAGE>
appropriate and proportionate adjustment shall be made by the Committee or the
Board of Directors to the maximum number and kind of Shares as to which Options
may be granted under this Plan. A corresponding adjustment changing the number
or kind of Shares allocated to unexercised Options or portions thereof, which
shall have been granted prior to any such change, shall likewise be made. Any
such adjustment in the outstanding Options shall be made without change in the
Purchase Price applicable to the unexercised portion of the Option with a
corresponding adjustment in the Exercise Price of the Shares covered by the
Option. Notwithstanding the foregoing, there shall be no adjustment for the
issuance of Shares on conversion of notes, preferred stock or exercise of
warrants or Shares issued by the Board for such consideration as the Board deems
appropriate.
9.2 Reorganization, etc. Notwithstanding any other provision in Article VI
hereof, upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or more than 80% of the then
outstanding Shares of the Company to another corporation, the Company shall give
to each Eligible Director at the time of adoption of the plan or agreement for
liquidation, dissolution, merger or sale either (1) a reasonable time thereafter
within which to exercise the Option in its entirety prior to the effective date
of such liquidation or dissolution, merger or sale, or (2) the right to exercise
the Option in its entirety as to an equivalent number of Shares of stock of the
corporation succeeding the Company or acquiring its business by reason of such
liquidation, dissolution, merger, consolidation or reorganization.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 Amendments. The Board may at any time amend or revise the terms of the
Plan, provided no such amendment or revision shall, unless appropriate
stockholder approval of such amendment or revision is obtained:
(a) increase the maximum number of Shares which may be sold pursuant to
Options granted under the Plan, except as permitted under the provisions of
Article IX;
(b) change the minimum Exercise Price set forth in Article VI; or
(c) permit the granting of Options to any one other than as provided in
Article V.
10.2 Termination. The Board at any time may suspend or terminate this Plan.
This Plan, unless sooner terminated, shall terminate on the tenth anniversary of
its adoption by the Board. No Option may be granted under this Plan while this
Plan is suspended or after it is terminated.
10.3 Consent of Holder. No amendment, suspension or termination of the Plan
shall, without the consent of the holder of Options, alter or impair any rights
or obligations under any Option theretofore granted under the Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Privilege of Stock Ownership. No Eligible Director entitled to exercise
any Option granted under the Plan shall have any of the rights or privileges of
a stockholder of the Company with respect to any Shares issuable upon exercise
of an Option until certificates representing the Shares shall have been issued
and delivered.
11.2 Plan Expenses. Any expenses incurred in the administration of the Plan
shall be borne by the Company.
11.3 Use of Proceeds. Payments received from an Eligible Director upon the
exercise of Options shall be used for general corporate purposes of the Company.
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<PAGE>
11.4 Governing Law. The Plan has been adopted under the laws of the
Commonwealth of Pennsylvania. The Plan and all Options which may be granted
hereunder and all matters related thereto, shall be governed by and construed
and enforceable in accordance with the laws of the Commonwealth of Pennsylvania
as it then exists.
ARTICLE XII
STOCKHOLDER APPROVAL
This Plan is subject to approval, at a duly held stockholders' meeting within
twelve (12) months after the date the Board approves this Plan, by the
affirmative vote of holders of a majority of the voting Shares of the Company
represented in person or by proxy and entitled to vote at the meeting. Options
may be granted, but not exercised, before such stockholder approval is obtained.
If the stockholders fail to approve the Plan within the required time period,
any Options granted under this Plan shall be void, and no additional Options may
thereafter be granted hereunder.
B-5
HEALTHCARE SERVICES GROUP, INC.
2643 Huntingdon Pike
Huntingdon Valley, Pennsylvania 19006
[ ]
To: [Name of Director]
1. We are pleased to inform you that on [ ] you were
granted a non-qualified stock option pursuant to the 1995 Directors' Stock
Option Plan (the "Plan") of Healthcare Services Group, Inc. (the "Company") to
purchase [ ] shares (the "Shares") of Common Stock, par value $.01 per share, of
the Company, at a price of $[ ] per Share. This grant is a separate inducement
and agreement in connection with your service as a Director of the Company, and
not in lieu of any salary or other remuneration for services.
2. No part of the option is currently exercisable. The option may
first be exercised, with respect to 50% of the option one year from the date of
grant. This option may first be exercised with respect to the remaining 50% of
the option two years from the date of grant.
3. To the extent this option is not exercised, it will expire [five]
years from the date of the grant.
4. This option is issued in accordance with and is subject to and
conditioned upon all of the terms and conditions of the Plan (a copy of which in
its present form is attached hereto), as from time to time amended, provided,
however, that no future amendment or termination of the Plan shall, without your
consent, alter or impair any of your rights or obligations under this option.
Reference is made to the terms and conditions of the Plan, all of which are
incorporated by reference in this option agreement as if fully set forth herein.
5. Unless at the time of the exercise of this option a registration
statement under the Securities Act of 1933, as amended (the "Act"), is in effect
as to such Shares, any Shares purchased by you upon the exercise of this option
shall be acquired for investment and not for sale or distribution, and if the
Company so requests, upon any exercise of this option, in whole or in part, you
will execute and deliver to the Company a certificate to such effect. The
Company shall not be obligated to issue any Shares pursuant to this option if,
in the opinion of counsel to the Company, the Shares to be so issued are
required to be registered
<PAGE>
or otherwise qualified under the Act or under any other applicable statute,
regulation or ordinance affecting the sale of securities, unless and until such
Shares have been so registered or otherwise qualified.
6. You understand and acknowledge that, under existing law, unless
at the time of the exercise of this option a registration statement under the
Act is in effect as to such Shares (i) any Shares purchased by you upon exercise
of this option may be required to be held indefinitely unless such Shares are
subsequently registered under the Act or an exemption from such registration is
available; (ii) any sales of such Shares made in reliance upon Rule 144
promulgated under the Act may be made only in accordance with the terms and
conditions of that Rule (which, under certain circumstances, restrict the number
of shares which may be sold and the manner in which shares may be sold); (iii)
in the case of securities to which Rule 144 is not applicable, compliance with
Regulation A promulgated under the Act or some other disclosure exemption will
be required; (iv) certificates for Shares to be issued to you hereunder shall
bear a legend to the effect that the Shares have not been registered under the
Act and that the Shares may not be sold, hypothecated or otherwise transferred
in the absence of an effective registration statement under the Act relating
thereto or an opinion of counsel satisfactory to the Company that such
registration is not required; (v) the Company will place an appropriate "stop
transfer" order with its transfer agent with respect to such Shares; and (vi)
the Company has undertaken no obligation to register the Shares or to include
the Shares in any registration statement which may be filed by it subsequent to
the issuance of the shares to you. In addition, you understand and acknowledge
that the Company has no obligation to you to furnish information necessary to
enable you to make sales under Rule 144.
7. This option (or installment thereof) is to be exercised by
delivering to the Company a written notice of exercise in the form attached
hereto as Exhibit A, specifying the number of Shares to be purchased, together
with payment of the purchase price of the Shares to be purchased. The date the
Company receives the written notice shall be the exercise date. The purchase
price is to be paid in cash or, by delivering shares of the Company's stock
already owned by you and having a fair market value on the date of exercise
equal to the exercise price of the option, or a combination of such shares and
cash, or otherwise in accordance with the Plan.
8. You acknowledge that:
A. The particular needs of the Company's customers are not
generally known in the industry;
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<PAGE>
B. The Company has a proprietary interest in the identity of
its customers and customer lists; and
C. Documents and information regarding the Company's methods of
operation, sales, pricing, costs, and the specialized requirements of the
Company's customers are highly confidential and constitute trade secrets.
9. During the term of your service as a director, you will have
access to and become familiar with various trade secrets and confidential
information of the Company, including, but not necessarily limited to, the
documents and information referred to in paragraph 8 above. You acknowledge that
such confidential information and trade secrets are owned and shall continue to
be owned solely by the Company. During the term of your service as a director
and for three years after such service to the Company terminates, you agree not
to use such information for any purpose whatsoever or to divulge such
information to any person other than the Company or persons to whom the Company
has given its consent, unless such information has already become common
knowledge or unless you are compelled to disclose it by governmental process.
10. You agree that:
A. During the term of your service as a director, you 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 the cleaning,
housekeeping, janitorial, and/or laundry business, whether commercial,
industrial, residential, wholesale, or retail, in any form whatsoever.
B. For a period of two (2) years after your directorship has
been terminated for any reason, with or without cause, you 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 customers or accounts that were customers or
accounts (or legal successors to customers or accounts) of the Company during
any period of time that you were a Director of the Company.
C. For a period of three (3) years after your directorship has
been terminated for any reason, with or without cause, you 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 customers or accounts which were customers or
accounts (or legal successors to customers or accounts) of the Company, and for
whose accounts you were responsible at any time while you were a Director of the
Company.
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<PAGE>
11. REMEDIES
A. You acknowledge that compliance with paragraphs 9 and 10 is
necessary to protect the business and good will of the Company and that a breach
of those paragraphs will irreparably and continually damage the Company, for
which money damages may not be adequate. Consequently, you agree that, in the
event that you breach or threaten to breach any of these covenants, the Company
shall be entitled to both (a) a preliminary or a permanent injunction in order
to prevent the continuation of such harm and (b) money damages insofar as they
can be determined. Nothing in this Stock Option Agreement, however, shall be
construed to prohibit the Company from also pursuing any other remedy, the
parties having agreed that all remedies are cumulative.
B. In the event that there is a dispute arising under or
related to this Stock Option Agreement or that a party seeks to enforce any of
the terms of this Stock Option Agreement, each party agrees that any legal
proceeding will be instituted only in the Court of Common Pleas, Montgomery
County, Pennsylvania, or in the United States District Court for the Eastern
District of Pennsylvania. Each party irrevocably consents to the jurisdiction of
each of those courts and agrees that service of the Complaint or other process
may be made as provided in the applicable Rules of Court or as provided in
Paragraph 7 of this Stock Option Agreement.
C. If any provision of the Stock Option Agreement is adjudged
by any court to be void or unenforceable, in whole or in part, that adjudication
shall not affect the validity of the remainder of this Stock Option Agreement.
Each provision, paragraph and subparagraph of this Stock Option Agreement is
separate from the others and is a separate and distinct covenant. If a provision
is determined to be void or unenforceable because it is too broad, the parties
agree that the Court shall have the power to limit the restriction so as to make
it enforceable.
D. If a party incurs costs or expenses in enforcing this Stock
Option Agreement, including attorney's fees and costs, the defaulting party
shall pay to the prevailing party, upon demand, those fees and costs.
12. This Stock Option Agreement is made in, and shall be construed
under the laws of, the Commonwealth of Pennsylvania.
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<PAGE>
Would you kindly evidence your acceptance of this option and your
agreement to comply with the provisions hereof and of the Plan by executing this
letter under the words "Agreed To and Accepted."
Very truly yours,
HEALTHCARE SERVICES GROUP, INC.
By:---------------------------------
Daniel P. McCartney
Chairman and Chief Executive
Officer
AGREED TO AND ACCEPTED:
- -----------------------
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<PAGE>
EXHIBIT A
Healthcare Services Group, Inc.
2643 Huntington Pike
Huntingdon Valley, Pennsylvania 19006
Gentlemen:
Notice is hereby given of my election to purchase _____ shares of
Common Stock, $.01 par value (the "Shares"), of Healthcare Services Group, Inc.
(the "Company"), at a price of $ per Share, pursuant to the provisions of the
stock option granted to me on _________________, under the Company's 1995
Directors' Stock Option Plan. Enclosed in payment for the Shares is:
----
/___/ my check in the amount of $________.
----
/___/ ___________ Shares having a total value
$________, such value being based on the
closing price(s) of the Shares on the date
hereof.
The following information is supplied for use in issuing and
registering the Shares purchased hereby:
Number of Certificates
and Denominations ___________________
Name ___________________
Address ___________________
___________________
Social Security Number ___________________
Dated: _______________, ____
Very truly yours,
--------------------------
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OLSHAN GRUNDMAN FROME & ROSENZWEIG
505 Park Avenue
New York, New York 10022
(212) 753-7200
April 20, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549
Re: Healthcare Services Group, Inc.
Registration Statement on Form S-8
----------------------------------
Gentlemen:
Reference is made to the Registration Statement on Form S-8 dated
April 20, 1995 (the "Registration Statement"), filed with the Securities and
Exchange Commission by Healthcare Services Group, Inc., a Pennsylvania
corporation (the "Company"). The Registration Statement relates to an aggregate
of 1,397,717 shares (the "Shares") of common stock, par value $.01 per share
(the "Common Stock"). The Shares will be issued and sold by the Company pursuant
to and in accordance with the Company's 1995 Incentive and Non-qualified Stock
Option Plan (the "Plan"), its 1995 Directors' Stock Option Plan (the "Directors'
Plan"), its 1991 Incentive Stock Option Plan (the "Incentive Plan") and certain
Non-Qualified Stock Option agreements entered into with certain Directors and/or
consultants and the Company (the "Stock Option Agreements"). The Plan and the
Directors' Plan are subject to stockholder approval.
We advise you that we have examined originals or copies certified
or otherwise identified to our satisfaction of the Certificate of Incorporation
and By-laws of the Company, minutes of meetings of the Board of Directors and
stockholders of the Company, the Plan, the Directors' Plan, the Incentive Plan,
the Stock Option Agreements, a Prospectus relating to the resale of
<PAGE>
Securities and Exchange Commission
April 20, 1995
Page -2-
Common Stock underlying options held by affiliates of the Company (the
"Prospectus"), and such other documents, instruments and certificates of
officers and representatives of the Company and public officials, and we have
made such examination of the law, as we have deemed appropriate as the basis for
the opinion hereinafter expressed. In making such examination, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, and the conformity to original documents of documents
submitted to us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares,
when issued and paid for in accordance with the terms and conditions set forth
in the Plan, the Directors' Plan, the Incentive Plan and the Stock Option
Agreements will be duly and validly issued, fully paid and non-assessable.
We consent to the reference to this firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ OLSHAN GRUNDMAN FROME & ROSENZWEIG
--------------------------------------
OLSHAN GRUNDMAN FROME & ROSENZWEIG
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 24, 1995, accompanying the financial
statements of Healthcare Services Group, Inc. appearing in the 1994 Annual
Report of the Company to its shareholders included in the Annual Report on Form
10-K for the year ended December 31, 1994 which is incorporated by reference in
this Registration Statement and Prospectus. We consent to the incorporation by
reference in the Registration Statement and Prospectus of the aforementioned
report.
GRANT THORNTON LLP
/s/ GRANT THORNTON LLP
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Parsippany, New Jersey
April 18, 1995
