As filed with the Securities and Exchange Commission on December 15, 1999
Registration No. 333-
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.)
3220 Tillman Drive
Glenview Corporate Center, Suite 300 19020
Bensalem, Pennsylvania (Zip Code)
(Address of principal executive offices)
Employee Stock Purchase Plan
Deferred Compensation plan
Retirement (401-K) Savings Plan
(Full Title of the Plan)
Daniel P. McCartney
Chairman and Chief Executive Officer
Healthcare Services Group, Inc.
3220 Tillman Drive,
Glenview Corporate Center, Suite 300
Bensalem, Pennsylvania 19020
(Name and Address of agent for service)
(215) 639-4274
(Telephone number, including area code, of agent for service)
With a copy to:
Victor M. Rosenzweig, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
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
- -----------------------------------------------------------------------------------------------------------
Common Stock
$.01 par value
<S> <C> <C> <C> <C>
(1)(2) 1,100,000 $3.375 $3,712,500 $1,032.75
- -----------------------------------------------------------------------------------------------------------
Deferred -- 100% $4,000,000(4) $1,112.00
Compensation
Obligations (3)
===========================================================================================================
</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 or certain other provisions of the Employee Stock Purchase Plan
(the "Stock Purchase Plan"), the Deferred Compensation Plan and the Retirement
(401-K) Savings Plan ("401-k Plan", and together with the Stock Purchase Plan
and the Deferred Compensation Plan, the "Three Company Plans") of Healthcare
Services Group, Inc. (the "Company").
(2) Pursuant to Rule 457(g) and (h), the offering price for the shares which may
be issued under the Three Company Plans 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 ($3.375) as reported by the Nasdaq National
Market on December 9, 1999.
(3) The Deferred Compensation Obligations being registered are general unsecured
obligations of the Company to pay deferred compensation in the future to
participating members of a select group of management or other key employees in
accordance with the terms of the Deferred Compensation Plan.
(4) Estimated solely for purposes of determining the registration fee.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of
Form S-8 (Plan information and Registrant information) will be sent or given to
employees as specified by Rule 428(b)(1) of the Securities Act of 1933, as
amended (the "Securities Act"). Such documents need not be filed with the
Securities and Exchange Commission either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to Rule 424 of the
Securities Act. These documents, which include the statement of availability
required by Item 2 of Form S-8, and the documents incorporated by reference in
this Registration Statement pursuant to Item 3 of Form S-8 (part II hereof),
taken together, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act.
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 consolidated
(including its subsidiaries) (the "Company") Annual Report on
Form 10-K for the fiscal year ended December 31, 1998;
(b) The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999, June 30, 1999 and September 30,
1999; and
(c) 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
<PAGE>
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 underlying the Deferred
Compensation Plan.
The Company's Deferred Compensation Plan was adopted by the Board
of Directors of the Company on July 20, 1999 to provide additional retirement
benefits to a select group of management or certain other key employees of the
Company who have devoted extraordinary service to the Company (the "Key
Employees") and to ensure the retention of their services. Each calendar year,
every Key Employee who wishes to participate in the Deferred Compensation Plan
(each a "Key Employee Participant", collectively "Key Employee Participants")
may irrevocably elect to defer the receipt of up to 15% of his or her Earnings
for any calendar year during the term of his employment with the Company. For
purposes of this Item 4, Earnings refer to a Key Employee's total W-2
compensation earned with respect to services rendered to or on behalf of the
Company, exclusive of income attributable to the exercise of stock options and
the receipt of automobile allowances.
A Trust for the purpose of receiving contributions from the
Company and retaining such contributions (and the proceeds thereon from
investments, including the proceeds of any life insurance policies owned by the
trust, if any) as a source of funds to assist the Company in meeting its
obligations to provide the benefits of the Plan shall be set-up with PNC Bank,
N.A. as Trustee, pursuant to a Trust Agreement. The Company shall contribute and
allocate to each Key Employee Participant's account, as of the last day of each
calendar year, the number of full shares of Common Stock of the Company obtained
by dividing (a) an amount equal to twenty-five (25%) percent of the amount of
compensation deferred by the Key Employee Participant for such calendar year, as
embodied in the Salary Deferral Election form completed by the Key Employee
Participant at the beginning of each calendar year, by (b) the Market Price of
the Company's Common Stock on the last date of the calendar year. For purposes
of this Item 4, Market Price shall mean the Closing price of the Company's
Common Stock on the last day of the calendar year or if there was no trading of
the Company's Common Stock on such date, the Closing price on the nearest prior
business date on which trading occurred on a recognized securities exchange. To
be
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<PAGE>
eligible to receive an allocation of Common Stock, a Key Employee Participant
must be employed by the Company on the last date of the calendar year for which
the allocation is to be made.
The obligations of the Company under the Deferred Compensation
Plan (the "Deferred Compensation Obligations") will be general unsecured
obligations of the Company to pay deferred compensation from its general assets
in the future to Key Employee Participants. The Deferred Compensation
Obligations will be denominated and payable in United States dollars and will
rank pari passu with other unsecured and unsubordinated indebtedness of the
Company which from time to time will be outstanding.
No payment under the Deferred Compensation Plan shall be subject
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, voluntary or involuntary. Any attempt to dispose of any rights to
benefits payable under the Deferred Compensation Plan shall be void.
The Deferred Compensation Obligations are not subject to
redemption, in whole or in part, prior to the individual payment dates selected
by the Key Employee Participants, except the Key Employee Participants may
withdraw all or a portion of the value of their Plan accounts under certain
specified circumstances. The Company reserves the right to amend or terminate
the Plan at anytime.
The total amount of the Deferred Compensation Obligation is not
determinable because the amount will vary depending upon the level of
participation by Key Employees and the amounts of their Earnings. The duration
of the Deferred Compensation Plan is indefinite and is subject to the Company's
termination. The Deferred Compensation Obligations are not convertible into
another security of the Company. The Deferred Compensation Obligations will not
have the benefit of a negative pledge or any other affirmative or negative
covenant on the part of the Company. Each Key Employee Participant will be
responsible for acting independently with respect to, among other things, the
giving of notices, responding to any requests for consents, waivers or
amendments pertaining to the Deferred Compensation Obligations, enforcing
covenants and taking action upon a default by the Company.
Item 5. Interest of Named Experts and Counsel
Not Applicable.
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<PAGE>
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 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.
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<PAGE>
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 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. ss. 8365, which are also
applicable to the Company.
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<PAGE>
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 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 Employee Stock Purchase Plan
4(b) - Form of Deferred Compensation Plan
5 - Opinion of Olshan Grundman Frome Rosenzweig & Wolosky
LLP.
23(a) - Consent of Grant Thornton LLP, independent auditors.
23(b) - Consent of Olshan Grundman Frome Rosenzweig & Wolosky
LLP (included in its opinion filed as Exhibit 5).
24 - Powers of Attorney (included on page 9).
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<PAGE>
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:
(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.
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<PAGE>
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 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
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<PAGE>
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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<PAGE>
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 December 15,
1999.
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 December 15, 1999
- --------------------------- Chairman
Daniel P. McCartney
/s/ Thomas A. Cook
- --------------------------- Director and President December 15, 1999
Thomas A. Cook
/s/ W. Thacher Longstreth
- --------------------------- Director December 15, 1999
W. Thacher Longstreth
/s/ Barton D. Weisman
- --------------------------- Director December 15, 1999
Barton D. Weisman
/s/ Robert L. Frome
- --------------------------- Director December 15, 1999
Robert L. Frome
/s/ John M. Briggs
- --------------------------- Director December 15, 1999
John M. Briggs
/s/ Robert J. Moss
- --------------------------- Director December 15, 1999
Robert J. Moss
/s/ Joseph F. McCartney Director and Divisional Vice December 15, 1999
- --------------------------- President
Joseph F. McCartney
/s/ James L. DiStefano
- --------------------------- Chief Financial Officer December 15, 1999
James L. DiStefano and Treasurer
/s/ Richard W. Hudson Vice President - Finance December 15, 1999
- --------------------------- and Secretary (Principal
Richard W. Hudson Accounting Officer)
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HEALTHCARE SERVICES GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
Healthcare Services Group, Inc.
Employee Stock Purchase Plan
ARTICLE I-PURPOSE
1.01. Purpose.
The Healthcare Services Group, Inc. Employee Stock Purchase Plan (the
"Plan") is intended to provide a method whereby Employees of Healthcare Services
Group, Inc. and its subsidiary corporations (hereinafter referred to, unless the
context otherwise requires, as the "Company") will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
the Common Stock of the Company. It is the intention of the Company to have the
Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
ARTICLE II-DEFINITIONS
2.01. Committee.
"Committee" shall mean the individuals described in Article XI.
2.02. Common Stock.
"Common Stock" means the voting common stock of the Company, $0.01 par
value per share.
2.03. Earnings.
"Earnings" shall mean total W-2 compensation earned by an Employee with
respect to services rendered to or on behalf of the Company.
2.04. Employee.
"Employee" means any person who is customarily employed on a full-time
or part-time basis by the Company and is regularly scheduled to work more than
20 hours per week.
<PAGE>
2.05. Subsidiary Corporation.
"Subsidiary Corporation" shall mean any present or future corporation
which (i) would be a "subsidiary corporation" of the Company as that term is
defined in Section 424 of the Code and (ii) is designated as a participant in
the Plan by the Committee.
ARTICLE III-ELIGIBILITY AND PARTICIPATION
3.01. Initial Eligibility.
Any Employee who shall have completed two (2) years of continuous
employment with HCSG shall be eligible to participate in offerings under the
Plan which commence on or after such period of employment has concluded.
3.02. Leave of Absence.
For purposes of participation in the Plan, a person on leave of absence
shall be deemed to be an employee for the first (90) days of such leave of
absence and such employee's employment shall be deemed to have terminated at the
close of business on the 90th day of such leave of absence unless such employee
shall have returned to regular full-time or part-time employment (as the case
may be) prior to the close of business on such 90th day. Termination by the
Company of any employee's leave of absence, other than termination of such leave
of absence on return to full-time or part-time employment, shall terminate an
employee's employment for all purposes of the Plan and shall terminate such
employee's participation in the Plan and right to exercise any option.
3.03. Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no employee
shall be granted an option to purchase Common Stock under the Plan:
(a) if, immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company (for
purposes of this paragraph, the rules of Section 424(d) of the Code shall apply
in determining stock ownership of any employee); or
(b) which permits his rights to purchase stock under all employee stock
purchase plans (as described in Code Section 423) of the Company to accrue at a
rate which exceeds $25,000 in fair market value of the stock (determined at the
time such option is granted) for each calendar year in which such option is
outstanding.
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<PAGE>
3.04. Commencement of Participation.
An eligible Employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the Human Resources Department of the Company on or before the
date set therefor by the Committee, which date shall be prior to the Offering
Commencement Date for the Offering (as such terms are defined below). Payroll
deductions for a participant shall commence on the applicable Offering
Commencement Date when his authorization for a payroll deduction becomes
effective and shall end on the Offering Termination Date of the Offering to
which such authorization is applicable unless sooner terminated by the
participant as provided in Article VIII.
ARTICLE IV-OFFERINGS
4.01. Annual Offerings.
The Plan will be implemented by four (4) annual offerings of the
Company's Common Stock (the "Offerings"). The first Offering will begin January
1, 2000 and terminate on December 31, 2000. Each of the subsequent Offerings
will begin on the lst day of January in each of the years 2001, 2002 and 2003
with each such Offering terminating on December 31 of each such year. The
maximum number of shares issued in the respective years shall be:
o From January 1, 2000 to December 31, 2000: 200,000 shares.
o From January 1, 2001 to December 31, 2001: 200,000 shares, plus unissued
shares from the prior Offering, whether offered or not.
o From January 1, 2002 to December 31, 2002: 200,000 shares plus unissued
shares from the prior Offerings, whether offered or not.
o From January 1, 2003 to December 31, 2003: 200,000 shares plus unissued
shares from the prior Offerings, whether offered or not.
As used in the Plan, "Offering Commencement Date" means the January 1
on which the particular Offering begins and "Offering Termination Date" means
the December 31, on which the particular Offering terminates.
ARTICLE V-PAYROLL DEDUCTIONS
5.01. Amount of Deduction.
At the time a participant files his authorization for payroll
deduction, he shall elect an amount to have deducted from his Earnings on each
payday during the time he is a participant in an Offering subject to the
limitation described in Section 3.03(b).
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<PAGE>
5.02. Participant's Account.
All payroll deductions made for a participant shall be credited to his
account under the Plan.
5.03. Changes in Payroll Deductions.
A participant may discontinue his participation in the Plan as provided
in Article VIII, but no other change can be made during an Offering and,
specifically, a participant may not alter the amount of his payroll deductions
for that Offering.
5.04. Leave of Absence.
If a participant goes on a leave of absence, such participant shall
have the right to elect: (a) to withdraw the balance in his account pursuant to
Section 7.02, (b) to discontinue contributions to the Plan but remain a
participant in the Plan, or remain a participant in the Plan during such leave
of absence, authorizing deductions to be made from payments by the Company to
the participant during such leave of absence and undertaking to make cash
payments to the Plan at the end of each payroll period to the extent that
amounts payable by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.
ARTICLE VI-GRANTING OF OPTION
6.01. Number of Option Shares.
On the Commencement Date of each Offering, a participating Employee
shall be deemed to have been granted an option to purchase a maximum number of
shares of Common Stock of the Company equal to an amount determined as follows:
an amount equal to (i) the aggregate amounts contributed to the Plan pursuant to
Section 5.01 and (ii) divided by 85 % of the Option Price of the Common Stock.
The Option Price of the Company's stock shall be determined as provided in
Section 6.02 below.
6.02. Option Price.
The Option Price of Common Stock purchased with payroll deductions made
during such annual offering for a participant therein shall be the lower of:
(a) 85 % of the closing price of the stock on the Offering Commencement
Date or the nearest prior business day on which trading occurred on a recognized
securities exchange; or
(b) 85% of the closing price of the stock on the Offering Termination
Date or the nearest prior business day on which trading occurred on a recognized
securities exchange.
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<PAGE>
If the Common Stock of the Company is not admitted to trading on any of
the aforesaid dates for which closing prices of the Common Stock are to be
determined, then reference shall be made to the fair market value of the Common
Stock on that date, as determined on such basis as shall be established or
specified for the purpose by the Committee.
ARTICLE VII-EXERCISE OF OPTION
7.01. Automatic Exercise.
Unless a participant gives written notice to the Company as hereinafter
provided, his option for the purchase of stock with payroll deductions made
during any offering will be deemed to have been exercised automatically on the
Offering Termination Date applicable to such offering, for the purchase of the
number of full shares of stock which the accumulated payroll deductions in his
account at that time will purchase at the applicable option price (but not in
excess of the number of shares for which options have been granted to the
employee pursuant to Section 6.01), and any excess in his account at that time
will be returned to him.
7.02. Withdrawal of Account.
By written notice to the Human Resources Department of the Company, at
any time prior to the Offering Termination Date applicable to any Offering, a
participant may elect to withdraw all the accumulated payroll deductions in his
account at such time.
7.03. Fractional Shares.
Fractional shares will not be issued under the Plan and any accumulated
payroll deductions which would have been used to purchase fractional shares will
be returned to any employee promptly following the termination of an Offering,
without interest.
7.04. Transferability of Option.
During a participant's lifetime, options held by such participant shall
be exercisable only by that participant.
7.05 Delivery of Stock.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant, as appropriate, the
stock purchased upon exercise of his option.
ARTICLE VIII-WITHDRAWAL
8.01. In General.
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As indicated in Section 7.02, a participant may withdraw payroll
deductions credited to his account under the Plan at any time by giving written
notice to the Human Resources Department of the Company. All of the
participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Offering. The Company may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election, under Section 3.02, to withdraw
such deductions.
8.02. Effect on Subsequent Participation.
A participant's withdrawal from any Offering will not have any effect
upon his eligibility to participate in any succeeding Offering or in any similar
plan which may hereafter be adopted by the Company.
8.03. Termination of Employment.
Upon termination of the participant's employment for any reason,
including retirement (but excluding death while in the employ of the Company or
continuation of a leave of absence for a period beyond 90 days), the payroll
deductions credited to his account will be returned to him, or, in the case of
his death subsequent to the termination of his employment, to the person or
persons entitled thereto under Section 12.01.
8.04. Termination of Employment Due to Death.
Upon termination of the participant's employment because of his death,
his beneficiary (as defined in Section 12.01) shall have the right to elect, by
written notice given to the Human Resources Department of the Company prior to
the earlier of the Offering Termination Date or the expiration of a period of
sixty (60) days commencing with the date of the death of the participant,
either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) to exercise the participant's option for the purchase of stock on
the Offering Termination Date next following the date of the participant's death
for the purchase of the number of full shares of stock which the accumulated
payroll deductions in the participant's account at the date of the participant's
death will purchase at the applicable option price, and any excess in such
account will be returned to said beneficiary, without interest.
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In the event that no such written notice of election shall be duly
received by the office of the Human Resources Department of the Company, the
beneficiary shall automatically be deemed to have elected, pursuant to paragraph
(b), to exercise the participant's option.
8.05. Leave of Absence.
A participant on leave of absence shall, subject to the election made
by such participant pursuant to ?5.04, continue to be a participant in the Plan
so long as such participant is on continuous leave of absence. A participant who
has been on leave of absence for more than 90 days and who therefore is not an
employee for the purpose of the Plan shall not be entitled to participate in any
offering provisions of the Plan, unless a participant on leave of absence
returns to regular full-time or part-time employment with the Company at the
earlier of: (a) the termination of such leave of absence or (b) three months
from the 90th day of such leave of absence, such participant's participation in
the Plan shall terminate on whichever of such dates first occurs.
ARTICLE IX-INTEREST
9.01. Payment of Interest
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participant. Moreover, no interest shall be paid
on any money which is distributed to an Employee or his beneficiary pursuant to
the provisions of Sections 7.02, 8.01, 8.03, 8.04 or 10.01.
ARTICLE X-STOCK
10.01. Maximum Shares.
The maximum number of shares which shall be issued under the Plan,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 12.04 shall be 200,000 shares in each annual Offering plus, in each
Offering all unissued shares from prior Offerings, whether offered or not, not
to exceed 800,000 shares for all Offerings. If the total number of shares for
which options are exercised on any Offering Termination Date in accordance with
Article VI exceeds the maximum number of shares for the applicable offering, the
Company shall make a pro-rata allocation of the shares available for delivery
and distribution in an nearly a uniform manner as shall be practicable and as it
shall determine to be equitable, and the balance of payroll deductions credited
to the account of each participant under the Plan shall be returned to him as
promptly as possible.
10.02. Participant's Interest in Option Stock.
The participant will have no interest in stock covered by his option
until such option has been exercised.
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10.03. Registration of Stock.
Stock to be delivered to a participant under the Plan will be
registered in the name of the participant, or, if the participant so directs by
written notice to the Human Resources Department of the Company prior to the
Offering Termination Date applicable thereto, in the names of the participant
and one such other person as may be designated by the participant, as joint
tenants with rights of survivorship or as tenants by the entireties, to the
extent permitted by applicable law.
10.04. Restrictions on Exercise.
The Board of Directors may, in its discretion, require as a condition
to the purchase of Common Stock hereunder that the shares of Common Stock
reserved for purchase hereunder shall have been duly listed, upon official
notice of issuance, upon a stock exchange, and that either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is his intention to
purchase the shares for investment and not for resale or distribution.
ARTICLE XI-ADMINISTRATION
11.01. Appointment of Committee
The Board of Directors shall appoint a committee (the "Committee") to
administer the Plan, which shall consist of no fewer than three (3) members of
the Board of Directors.
11.02. Authority of Committee
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
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11.03. Rules Governing the Administration of the Committee
The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee. The Committee may select
one of its members as its Chairman and shall hold its meetings at such times and
places as it shall deem advisable and may hold telephonic meetings. A majority
of its members shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. The Committee may correct any defect
or omission or reconcile any inconsistency in the Plan, in the manner and to the
extent it shall deem desirable. Any decision or determination reduced to writing
and signed by a majority of the members of the Committee shall be as fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
ARTICLE XII-MISCELLANEOUS
12.01. Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to
receive any stock and/or cash. Such designation of beneficiary may be changed by
the participant at any time by written notice to the Human Resources Department
of the Company. Upon the death of a participant and upon receipt by the Company
of proof of identity and existence at the participant's death of a beneficiary
validly designated by him under the Plan, the Company shall deliver such stock
and/or cash to such beneficiary. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the company shall deliver such stock
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such stock and/or cash
to the spouse or to any one or more dependents of the participant as the Company
may designate. No beneficiary shall, prior to the death of the participant by
whom he has been designated, acquire any interest in the stock or cash credited
to the participant under the Plan
12.02. Transferability.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant other than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Section 7.02.
12.03. Use of Funds.
All payroll deductions received or held by the Company under this Plan
may be used by the Company for any corporate purpose and the Company shall not
be obligated to segregate such payroll deductions.
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12.04. Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding, the outstanding shares of
Common Stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock split,
reverse stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding options and on the option
exercise price or prices applicable to such outstanding options. In addition, in
any such event, the number and/or kind of shares which may be offered in the
Offerings described in Article IV hereof shall also be proportionately adjusted.
No adjustments shall be made for stock dividends. For the purposes of this
Paragraph, any distribution of shares to shareholders in an amount aggregating
20% or more of the outstanding shares shall be deemed a stock split and any
distributions of shares aggregating less than 20% of the outstanding shares
shall be deemed a stock dividend.
(b) 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 stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date,
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common stock was entitled to
receive upon, and at the time of, such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.04 shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities and/or property as to which such holder of such option
might thereafter be entitled to receive.
12.05. Amendment and Termination.
The Board of Directors shall have complete power and authority to
terminate or amend the Plan; provided, however, that the Board of Directors
shall not, without the approval of the stockholders of the Corporation (i)
increase the maximum number of shares which may be issued under any Offering
(except pursuant to Section 12.04); (ii) amend the requirements as to the class
of employees eligible to purchase stock under the Plan or permit the members of
the Committee to purchase stock under the Plan. No termination, modification, or
amendment of the Plan may, without the consent of an employee then having an
option under the Plan to purchase stock, adversely affect the rights of such
employee under such option.
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12.06. Effective Date.
The Plan shall become effective as of January 1, 2000, subject to
approval by the holders of the majority of the Common Stock present and
represented at a special or annual meeting of the shareholders held on or before
June 30, 2000. If the Plan is not so approved, the Plan shall not become
effective.
12.07. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefit of any employee or class of employees to purchase any shares under the
Plan, or create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an employee's employment at any time.
12.08. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each employee
participating in the Plan, including, without limitation, such employee's estate
and the executors, administrators or trustees thereof, heirs and legatees, and
any receiver, trustee in bankruptcy or representative of creditors of such
employee.
12.09. Governing Law.
The law of the Commonwealth of Pennsylvania will govern all matters
relating to this Plan except to the extent it is superseded by the laws of the
United States.
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HEALTHCARE SERVICES GROUP, INC.
DEFERRED COMPENSATION PLAN
<PAGE>
ARTICLE 1.
STATEMENT OF PURPOSE
Section 1.1 GENERAL PURPOSE.
The purpose of the Supplemental Executive Retirement Plan as
set forth herein and as the same may hereafter be amended (the "Plan"), is to
secure and retain the services of a select group of management or highly
compensated employees (the "Key Employees") of Healthcare Services Group, Inc.
and its affiliates ("HCSG"), and to provide additional retirement benefits to
these Key Employees who have devoted extraordinary energies to HCSG.
Section 1.2 INTERNAL REVENUE CODE AND ERISA;
GENERAL CREDITOR STATUS OF PARTICIPANTS.
(a) TAX QUALIFICATION UNDER THE INTERNAL REVENUE CODE.
It is intended that the Plan not be a tax-qualified
plan under Section 401(a) or Section 403(a) of the Internal Revenue Code of
1986, as amended (the "Code").
(b) STATUS UNDER THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974.
It is intended that the Plan be entitled to all
statutory and regulatory exemptions under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") applicable to plans maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees.
(c) CREDITOR STATUS OF PARTICIPANTS.
It is intended that all benefits be paid from the
general assets of HCSG, that benefits accrued under the Plan be unfunded for
ERISA and Code purposes until paid, and that, as to unpaid accrued benefits
under the Plan, each Participant is an unsecured general creditor of HCSG.
ARTICLE 2.
DEFINITIONS
Section 2.1 "Account" means the entire interest of the Participant in
the Plan.
Section 2.2 "Age" means the chronological age (in years) attained by
the Employee at the most recent past anniversary of the date of his or her
birth.
<PAGE>
Section 2.3 "Beneficiary" means the person, persons or entity
entitled to receive benefits by reason of the death of a Participant under the
Plan.
Section 2.4 "Board" means the Board of Directors of HCSG.
Section 2.5 "Code" means the Internal Revenue Code of 1986, as
amended, and successor statutes of similar purpose. A reference to any specific
Section of the Code shall be a reference to the same or similar text if that
Section is renumbered or redesignated and a reference to one or more Sections of
a successor statute addressing the same or parallel concepts.
Section 2.6 "Committee" means the Committee appointed by the Board,
consisting of three (3) or more individuals, which shall be responsible for the
administration of the Plan. Members of the Committee may be Participants and may
be members of the Board.
Section 2.7 "Earnings" means an Employee's total W-2 compensation
earned with respect to services rendered to or on behalf of HCSG, exclusive of
income attributable to the exercise of stock options and the receipt of
automobile allowances.
Section 2.8 "Employee" means a person having a common law
employer/employee relationship with HCSG or any subsidiary thereof the majority
of the voting stock of which is owned directly or indirectly by HCSG. The term
shall not include persons characterized by HCSG as "independent contractors,"
"leased employees" or "consultants," regardless of whether such persons may be
characterized for income or payroll tax withholding or liability, worker's
compensation payments or unemployment compensation premium calculations by the
IRS or other governmental authority.
Section 2.9 "Employment Termination Date" means the date on which the
Participant last renders services to HCSG or any successor thereto as an
employee, whether as a result of the Participant's death, disability, retirement
or otherwise. For the purposes of this definition:
(a) the existence of an employer/employee relationship
shall be determined at common law, and shall not include any relationship deemed
an employer/employee relationship for Code purposes to the extent that
relationship is not deemed an employer/employee relationship at common law; and
(b) the continued payment by HCSG to the Employee of
compensation subsequent to cessation by the Participant of his services to HCSG
in an employer/employee relationship shall not be deemed to extend or continue
an employer/employee relationship.
Section 2.10 "IRS" means the Internal Revenue Service.
Section 2.11 "Key Employee" means an Employee selected for
participation in the Plan by the Committee and who is employed in any of the
following executive or management capacities:
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(a) Corporate executive and corporate management
personnel;
(b) Divisional and Regional Managers; and
(c) District Managers.
Section 2.12 "Plan" means the Healthcare Services Group, Inc. Deferred
Compensation Plan, as set forth herein, and as the same may hereafter be
amended.
Section 2.13 "Participant" means a Key Employee who is eligible to
participate in the Plan. Each Participant shall be listed in a Schedule attached
hereto as Exhibit "A", as shall be amended from time to time to reflect the
addition or termination of Participants.
Section 2.14 "Plan Administrator" means the Committee.
Section 2.15 "Plan Year" means the calendar year. The initial Plan
Year shall be from January 1, 2000 ("Effective Date") through December 31, 2000.
Section 2.16 "Stock" means the voting common stock of HCSG, $0.01 par
value per share.
Section 2.17 "Trust" means the trust established by HCSG with PNC
Bank, N.A., as trustee ("Trustee"), pursuant to the Trust Agreement of even date
herewith (the "Trust Agreement"), for the purpose of receiving contributions
from HCSG and retaining such contributions (and the proceeds thereof from
investments, including the proceeds of any life insurance policies owned by the
trust, if any) as a source of funds to assist HCSG in meeting its obligation to
provide benefits under the Plan.
Section 2.18 "Vesting Date" means the date specified in Section 4.2(b)
that a Participant becomes fully vested in the Stock allocated to that
Participant's Account pursuant to Section 4.2(a)
ARTICLE 3.
PARTICIPATION
Section 3.1 Eligibility.
Participation in the Plan shall be strictly limited to
Key Employees.
Section 3.2 Commencement of Participation.
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Each Key Employee employed by HCSG on the Effective Date
of the Plan and who elects to participate in the Plan shall become a Participant
as of the Effective Date. Every other Key Employee shall become a participant on
the first day of the Plan Year coincident or next following the date such
individual became a Key Employee.
Section 3.3 Cessation of Participation.
Each Participant shall remain a Participant until the
earlier to occur of:
(a) the termination of his or her employment by HCSG;
or
(b) the date on which he or she receives a
distribution of the entire balance of his or her Account, so that he or she then
has no remaining balance in his or her Account.
ARTICLE 4.
ELECTION OF DEFERRALS,
INVESTMENT OF DEFERRALS, PAYMENT OF BENEFITS
Section 4.1 Election of Deferral.
Each year, every Participant may irrevocably elect to
defer the receipt of up to 15% of his or her Earnings for any calendar year
during the term of his employment with HCSG by filing a Salary Deferral Election
with the Plan Administrator prior to the end of the calendar year preceding the
calendar year for which the deferral election is to be effective. Such Salary
Deferral Election shall be in the form attached hereto as Exhibit "B".
Section 4.2 Employer Matching
(a) HCSG shall contribute and allocate to each
Participant's Account, as of the last day of each Plan Year, the number of full
shares of Stock obtained by dividing an amount equal to twenty-five percent
(25%) of the amount of compensation deferred by the Participant for such Plan
Year pursuant to the election described in Section 4.1, by the Market Price of
the Stock on the last day of the Plan Year. For this purpose Market Price shall
mean the Closing price of the Stock on the last day of the Plan Year or if there
was no trading of the Stock on such date, the Closing price on the nearest prior
business day on which trading occurred on a recognized securities exchange. To
be eligible to receive an allocation of Stock pursuant to this Section 4.2(a), a
Participant must be employed by HCSG on the last day of the Plan Year for which
the allocation is to be made.
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(b) Key Employees eligible to participate in the Plan
as of the Effective Date shall become fully vested and have a nonforfeitable
interest in the Stock allocated to their Account only if still employed by HCSG
on December 31, 2002. Each other Key Employee who becomes eligible and elects to
participate in the Plan shall have a fully vested nonforfeitable interest in the
Stock allocated to his or her Account, if still employed by HCSG, on the last
day of the Plan Year which commences on or after the third anniversary of the
later of (i) the date on which such individual became a Key Employee; or (ii)
the first day of the Plan Year in which a Key Employee elects to make
contributions to the Plan. In the event a Participant's employment is terminated
for any reason other than death, disability or retirement prior to the
Participant's Vesting Date, all Stock previously allocated to such Participant's
Account shall be forfeited and held by the Trustee to be allocated in subsequent
years pursuant to Section 4.2(a) hereof.
Section 4.3 Investment of Deferrals and Matching Contributions.
HCSG shall contribute to the Trust all amounts deferred
and contributed hereunder within ten (10) business days of the date such amounts
would otherwise have been paid to a Participant pursuant to HCSG's standard
payroll practices. All amounts contributed to the Trust and the earnings thereon
shall be held by the trustee of the Trust and invested in accordance with the
terms of the Trust Agreement.
Section 4.4 Payment of Benefits.
Within ninety (90) days of a Participant's Employment
Termination Date, the Plan Administrator shall direct the trustee of the Trust
to pay to the Participant or his or her designated Beneficiary, in a single lump
sum, the entire balance of the Participant's Account, valued as of the last day
of the month following the Participant's Employment Termination Date. Shares of
Stock allocated to a Participant's Account shall be distributed in-kind.
Section 4.5 Early Distribution of Benefits.
A Participant may request a distribution due to
Unforeseeable Emergency by submitting a written request to the Plan
Administrator accompanied by evidence to demonstrate that the circumstances
being experienced qualify as an Unforeseeable Emergency. The Plan Administrator
shall have the authority to require such evidence as it deems necessary to
determine if a distribution is warranted. If an application for a hardship
distribution due to an Unforeseeable Emergency is approved, the distribution
shall be limited to amounts contributed by the Participant to the Plan pursuant
to Section 4.1 (and the earnings thereon) and shall be further limited to an
amount sufficient to meet the emergency. The allowed distribution shall be
payable in a method determined by the Plan Administrator as soon as possible
after approval of such distribution. "Unforeseeable Emergency" means a severe
financial hardship to the Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent of the Participant,
loss of the Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. The circumstances that will constitute an
"Unforeseeable Emergency" will depend upon the facts of each case, but, in any
event, payment may not be made if such hardship is or may be relieved:
(a) Through reimbursement or compensation by insurance
or otherwise;
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(b) By liquidation of the Participant's assets, to the
extent that liquidation of such assets would not itself cause severe financial
hardship, or
(c) By cessation of Deferrals under the Plan.
ARTICLE 5.
BENEFICIARY DESIGNATIONS
Section 5.1 Designation by Participant.
Each Participant shall have the right to designate one or
more primary Beneficiaries and one or more contingent Beneficiaries to receive
the amount represented by his or her Account in the event of his or her death.
Beneficiary designation(s) shall be made on the form attached hereto as Exhibit
"C" or on such other forms as may be prescribed by the Plan Administrator. The
Participant shall have the right to revoke or change Beneficiary designations
from time to time, and each such change shall constitute a revocation of all
prior designations. No Beneficiary designation shall be effective unless in
writing and delivered to the Plan Administrator prior to the death of the
Participant. Any such Beneficiary designation shall be subordinate to any court
order applicable to the Participant's interest in the Plan.
Section 5.2 Default Provision.
If a Participant dies without having designated a
Beneficiary, or if no such designated Beneficiary survives the Participant, any
benefit payable by reason of the death of the Participant shall be payable to
his or her surviving spouse, or, if there is no surviving spouse, to his or her
surviving children, in equal shares. If the Participant dies with no surviving
spouse or children, any benefit shall be paid to the Participant's estate.
ARTICLE 6.
PLAN ADMINISTRATION
Section 6.1 Authority and Delegation.
In general, affairs of the Plan shall be administered by
the Plan Administrator subject to the supervision and review of the Board.
However, the Plan Administrator has the right, but not the obligation, to
delegate any of its duties and authorities hereunder to any person or persons
not disabled, as a matter of law, to perform such duties or to exercise such
authorities. The Plan Administrator shall provide written reports to the Board,
no less frequently than annually, concerning the operation of the Plan and Trust
since the date of the last report.
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<PAGE>
Section 6.2 Duties, Responsibilities and Authority of the Plan
Administrator.
The Plan Administrator shall have the following duties
and the authority to take such actions as are reasonably necessary and desirable
to discharge the same:
(a) to maintain and preserve records relating to each
Participant and each Beneficiary;
(b) to recommend to the Board what sums, if any,
should be contributed to the Plan;
(c) prepare and to furnish to each Participant and to
others entitled to receive the same, all information and notices required under
Federal law or the provisions of the Plan;
(d) to prepare and file or publish and distribute, as
required by law, all returns, reports, notices, descriptions and other
information required under law to be so filed or published and distributed;
(e) to construe all provisions of the Plan, to correct
any defect therein, and to supply any omissions therefrom, as more fully
described in Section 6.4 of the Plan;
(f) to arrange for bonding, if necessary;
(g) to determine eligibility for benefits and to
provide procedures for the appeal of denied claims for benefits;
(h) to determine whether any court order is applicable
to the interest of the Participant under the Plan and to take such action as is
appropriate in connection with such order;
(i) to solicit, receive, retain and act upon
Beneficiary designations and other communications received from the Participant
and others;
(j) to promulgate such policies, procedures and rules
of general and specific application as the Plan Administrator, in its
discretion, deems necessary or desirable to administer the Plan and to further
the purposes for which it exists, and from time to time to change such policies,
procedures and rules;
(k) to publish forms to be used in connection with the
administration of the Plan and to determine the circumstances in which the use
of such forms will be required;
(l) to determine whether or not the consent of any
person is required in connection with the exercise of any rights or privileges
under the Plan and to withhold action pending the receipt of such consent where
required;
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(m) to delegate to qualified persons or entities such
of its ministerial duties as it sees fits to so delegate and to rescind such
delegations; provided, however, that the Plan Administrator shall remain
responsible for the authorized acts of the delegatees;
(n) to provide the trustees of the Trust with the
information required pursuant to the Trust Agreement; and
(o) to exercise such other powers and discharge such
other duties and responsibilities as are specified in the Plan as being within
the province of the Plan Administrator.
Section 6.3 Reporting and Disclosure.
The Plan Administrator shall keep all individual and
group records relating to each Participant, his or her Beneficiary (or
Beneficiaries) and others having an interest in his or her benefits under the
Plan and the Trust and all other records as may be necessary or desirable, in
the judgment of the Plan Administrator, for the proper operation of the Plan.
Such records shall be made available for examination and copying by the
Participant and his or her Beneficiary (or Beneficiaries); provided, however,
that each Participant and representative shall have the right to see or copy
only those records pertaining to such person and those records and documents of
general application.
Section 6.4 Construction of the Plan.
The Plan Administrator shall take such steps as are
considered necessary and appropriate to remedy any inequity that results from
incorrect information received or communicated in good faith or as the
consequence of an administrative error. The Plan Administrator shall interpret
the Plan and shall determine the questions arising thereunder in the
administration, interpretation and application of the Plan. The Plan
Administrator shall reconcile any inconsistency under the Plan and shall supply
any omissions with respect to the Plan. Subject to Section 7.3, all such
corrections, reconciliations, interpretations and supplied omissions shall be
final and binding on all parties.
Section 6.5 Engagement of Assistants and Advisers.
HCSG shall have the right to engage the services of such
persons and organizations as it, in its sole discretion, deems necessary or
advisable to facilitate the operation of the Plan and the accomplishment of its
purposes.
Section 6.6 Bonding.
HCSG shall arrange for such bonding as is required by
law, but no bonding in excess of the amount required by law shall be required
under the Plan or the Trust.
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Section 6.7 Discretion.
The Plan Administrator shall have the greatest lawful
degree of discretion in the administration and construction of the Plan. The
manner in which the Plan is administered or construed shall not be guided by,
and there shall be no precedential value ascribed to, the manner in which the
Plan was administered or construed at an earlier date, nor shall the manner in
which any plan, fund, program or arrangement similar to the Plan be considered
precedential to the manner in which the Plan is to be administered or construed.
ARTICLE 7.
CLAIMS AND REVIEW
Section 7.1 Claims Procedure.
If the Participant or the Participant's Beneficiary
(hereinafter the "Claimant") is denied all or a portion of an expected benefit
under the Plan for any reason, he or she may file a claim with the Committee.
The Committee shall notify the Claimant within thirty (30) days of allowance or
denial of the claim. The notice of the Committee's decision shall be in writing,
sent by mail to Claimant's last known address, and, if a denial of the claim,
shall contain the following information: the specific reasons for the denial;
specific reference to pertinent provisions of the Plan on which the denial is
based; if applicable, a description of any additional information or material
necessary to perfect the claim and an explanation of why such information or
material is necessary; and an explanation of the review process.
Section 7.2 Request for Review.
A Claimant is entitled to request a review by the Board
of any denial of his or her claim by the Committee. The request for review must
be submitted to the Board in writing within thirty (30) days of receipt of the
notice of the denial. Absent a request for review within the thirty (30) day
period, the claim will be deemed to be conclusively denied.
Section 7.3 Review Procedure.
The Claimant or his or her representative shall be
entitled to review all pertinent documents and to submit issues and comments in
writing to the Board. The Board in their sole discretion may afford the Claimant
a hearing. The Board shall render a review decision in writing within sixty (60)
days after receipt of a request for a review. The Claimant shall receive written
notice of the Board's review decision, which shall contain specific reasons for
the decision with references to the pertinent provisions of the Plan.
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<PAGE>
ARTICLE 8.
PLAN AMENDMENT AND TERMINATION
Section 8.1 Amendment.
The provisions of the Plan may be amended at any time and
from time to time by the Board or any subcommittee thereof or any officer of
HCSG to whom the Board has delegated such authority. Any such amendment shall be
by written instrument, shall be communicated to the Participants, and shall not
deprive the Participant of any benefit previously earned or accrued as of the
date of the proposed amendment.
Section 8.2 Plan Termination.
(a) HCSG reserves the right to terminate the Plan in
whole or in part at any time and without notice to any person or entity.
Notwithstanding the foregoing, no such termination shall deprive the Participant
of any benefit earned or accrued as of the date of the proposed termination. In
the event of any such termination, HCSG, at its option, may distribute the
Account of all Participants as though the date of termination or partial
termination of the Plan were the Participants' Employment Termination Date, and
may accelerate the payment of benefits to all distributees then receiving a
stream of benefits under the Plan, or, HCSG may elect to continue all such
streams of benefit payments and to defer the distribution of benefits to all
other potential distributees until a later date. A termination of the Plan shall
be duly authorized by the Board or any subcommittee thereof or any officer of
HCSG to whom the Board has delegated such authority. Upon a termination of the
Plan for any reason, each Participant shall become fully vested in all of the
Stock contributed and allocated to his or her Account pursuant to Section
4.2(a).
(b) In the event of a Change In Control (hereinafter
defined), the Plan shall be terminated and the Accounts of all Participant's
shall be distributed as though the date of termination were an Employment
Termination Date for each Participant. A "Change In Control" shall occur if:
(i) (A) any person (a "Person"), as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Act") and/or its wholly owned subsidiaries; (B) any ESOP or other employee
benefit plan of HCSG and any trustee or other fiduciary in such capacity holding
securities under such plan; (C) any corporation owned, directly or indirectly,
by the shareholders of HCSG in substantially the same proportions as their
ownership of stock of HCSG; or (D) any other Person who is as of the date of
this Plan presently an executive officer of HCSG or any group of Persons of
which he voluntarily is a part) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of HCSG
representing 30% or more of the combined voting power of HCSG's then outstanding
securities or such lesser percentage of voting power but not less than 15% as
the Board of Directors of HCSG shall determine;
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<PAGE>
(ii) during any two-year period beginning on
the effective date of this Plan, Directors of HCSG in office at the beginning of
such period plus any new Director (other than a Director designated by a Person
who has entered into an agreement with HCSG to effect a transaction within the
purview of subsections (A) or (C) hereof) whose election by the Board of
Directors or whose nomination for election by HCSG's shareholders was approved
by a vote of at least two-thirds of the Directors then still in office who
either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved shall cease for any reason to
constitute at least a majority of the Board of Directors; or
(iii) HCSG's shareholders or HCSG's Board of
Directors shall approve (A) any consolidation or merger of HCSG in which HCSG is
not the continuing or surviving corporation or pursuant to which HCSG's Stock
would be converted into cash, securities, and/or other property, other than a
merger of HCSG in which holders of Stock immediately prior to the merger have
the same proportionate ownership of Stock of the surviving corporation
immediately after the merger as they had in the Stock immediately before (B) any
sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets or earning power
of HCSG; or (C) the liquidation or dissolution of HCSG.
ARTICLE 9.
MISCELLANEOUS PROVISIONS
Section 9.1 Non-alienation of Benefits.
Except as provided in an order of a court of competent
jurisdiction to the contrary, none of the payments, benefits or rights of the
Participant or any Beneficiary shall be subject to any claim of any creditor
other than HCSG, and, in particular, to the fullest extent permitted by law, all
such payments, benefits and rights shall be free from attachment, garnishment,
trustee's process or any other legal or equitable process available to any
creditor of the Participant or any Beneficiary of the Participant other than
HCSG. Neither the Participant nor any Beneficiary shall have the right to
alienate, anticipate, commute, pledge, encumber or assign any of the benefits or
payments which he or she may expect to receive, contingently or otherwise, under
the Plan or the Trust, except that the Participant may designate one or more
Beneficiaries as hereinabove provided.
Section 9.2 Terms of Employment.
Neither the establishment of the Plan nor any
modification thereof, nor the creation of any fund, Trust or account, nor the
admission of any person to participation in the Plan, nor the payment of any
benefits shall be construed as giving any Employee the right to be retained in
the service of HCSG; and each Employee shall remain subject to retention in the
employ of HCSG and to discharge from such employ to the same extent and on the
same conditions as if the Plan was never adopted.
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<PAGE>
Section 9.3 Severability of Provisions.
If any provision of the Plan is found by a court of
competent jurisdiction to be unlawful or unenforceable, such provision shall be
deemed null and void, and the balance of the Plan shall continue in full force
and effect, as if such unlawful or unenforceable provision had not been
included.
Section 9.4 Effect on Other Parties.
The Plan as set forth herein, and as amended from time to
time, shall be binding upon the heirs, executors, administrators, successors,
assigns and other personal representatives of the Participant.
Section 9.5 Headings and Captions.
The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan and
shall not be employed in the construction of the Plan.
Section 9.6 Gender and Number.
All provisions in the Plan are intended to be
gender-neutral. Accordingly, except where otherwise clearly indicated by
context, the masculine, feminine and neuter form of any word shall include all
other gender-designating forms, the singular shall include the plural and
vice-versa.
Section 9.7 Payments to Legally Incapacitated Persons.
Any benefit payable to or for the benefit of a minor, an
incompetent person or other person incapable of effectively receipting therefor
shall be deemed paid when paid to such person's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payments shall fully discharge the payor, the Plan Administrator, HCSG and
all other parties with respect thereto.
Section 9.8 Reliance on Data and Consents.
HCSG, the Plan Administrator and all other person or
entities associated with the operation of the Plan and the provision of benefits
under the Plan, may reasonably rely on the veracity, the accuracy and the
completeness of all data provided by the Participant, his or her Beneficiary (or
Beneficiaries), and his or her representatives, including, without limitation,
data with respect to age, health and marital status. Furthermore, HCSG and the
Plan Administrator with respect to the Plan may reasonably rely on all consents
and designations filed under the Plan, regardless of by whom filed, without duty
to inquire into the genuineness of any such consent or designation. None of the
aforementioned persons or entities associated with the operation of the Plan, or
the benefits provided under the Plan shall have any duty to inquire into any
such data, and all may rely on such data being current to the date of
presentation, it being the duty of Participants, Beneficiaries and their
respective representatives to advise appropriate parties of any change in such
data.
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<PAGE>
Section 9.9 Entire Agreement.
This instrument shall constitute the entire agreement
among the parties with respect to the subject matter hereof, and shall supersede
all previous understandings on the subject.
Section 9.10 Controlling Law.
The Plan shall be construed and enforced according to the
law of the Commonwealth of Pennsylvania to the extent not preempted by Federal
law, which shall otherwise control.
This Deferred Compensation Plan is hereby approved and adopted this
____ day of ______________, 1999.
HEALTHCARE SERVICES GROUP, INC.
BY:_____________________________________
President
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<PAGE>
EXHIBIT "A"
PARTICIPANTS
<PAGE>
EXHIBIT "B"
DEFERRAL ELECTION FORM
In accordance with the rights granted to me under the Healthcare Services Group,
Inc. Deferred Compensation Plan, (the "Plan"), I hereby elect to defer the
following specified percentage of my compensation during the 2000 calendar year:
__________. The amount deferred shall be withheld ratably from each payment of
my compensation (including salary and bonus) and shall be invested and paid in
accordance with the terms and conditions of the Plan.
WITNESS:
- -------------------------------------- ------------------------------------
Signature
------------------------------------
Print Name
------------------------------------
Date
<PAGE>
EXHIBIT "C"
HEALTHCARE SERVICES GROUP, INC.
DEFERRED COMPENSATION
BENEFICIARY DESIGNATION
Participant's Name:____________________________________________________________
Address:_______________________________________________________________________
City:__________________________ State:________________ Zip Code:_______________
Date of Birth: / / Social Security: - -
------ ------ ------ ------ ------ -----
PART 1 -- PRIMARY BENEFICIARY (BENEFICIARIES)
I name the following as the Primary Beneficiary or Beneficiaries to
receive any benefits payable upon my death under the Healthcare Services Group,
Inc. Deferred Compensation Plan in the proportions indicated:
1. Name: ____________________________________ Relationship_______________
Address:______________________________________________________________
Percentage of total benefit to paid to this person __________________%
2. Name:_____________________________________ Relationship_______________
Address:______________________________________________________________
Percentage of total benefit to paid to this person ___________________%
3. Name:_____________________________________ Relationship_______________
Address:______________________________________________________________
Percentage of total benefit to paid to this person ___________________%
If I have named more than one Primary Beneficiary, and if at least one, but
fewer than all, of those Primary Beneficiaries survives me, I direct that the
death benefit be divided among my surviving Primary Beneficiaries in the ratio
established by the percentages indicated. If the percentages do not add up to
100%, the benefit payable shall be allocated by the ratio of the percentages.
<PAGE>
PART 2 -- SECONDARY BENEFICIARY (BENEFICIARIES)
If all of my Primary Beneficiaries designated in Part 1 die before I
die, and if I fail prior to my death to name substitute Primary Beneficiaries,
any benefit payable upon my death shall be paid to the following Secondary
Beneficiaries:
1. Name:_____________________________________ Relationship_______________
Address:______________________________________________________________
Percentage of total benefit to paid to this person ___________________%
2. Name:_____________________________________ Relationship_______________
Address:______________________________________________________________
Percentage of total benefit to paid to this person ___________________%
3. Name:_____________________________________ Relationship_______________
Address:______________________________________________________________
Percentage of total benefit to paid to this person ___________________%
If I have named more than one Secondary Beneficiary, and if one or more of those
Secondary Beneficiaries fails to survive me, I direct that the death benefit be
divided among my surviving Secondary Beneficiaries in the ratio established by
the percentages indicated. If the percentages do not add up to 100%, the benefit
payable shall be allocated by the ratio of the percentages.
The execution of this form and delivery thereof to the Plan Administrator
revokes all prior designations of beneficiaries that I have made.
Date:______________________________________________ _________________________
Signature
Witnesses:
___________________________________________________ __________________________
Received, Plan Administrator
By: ______________________________________
Date: ____________________________________
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue, New York, New York 10022
(212) 753-7200
December 15, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Healthcare Services Group, Inc.
Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-8
dated the date hereof (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 1,100,000 shares (the "Shares") of common stock, par value $.01 per share
(the "Common Stock") and the maximum aggregate amount of $4 million of deferred
compensation obligations (the "Obligations") of the Company to be offered to
employees of the Company under the Company's Deferred Compensation Plan (the
"Deferred Compensation Plan"). The Shares will be issued and sold by the Company
in accordance with the Deferred Compensation Plan, the Company's Employee Stock
Purchase Plan (the "Purchase Plan") and the Retirement (401-K) Savings Plan (the
"401-k Plan" and collectively with the Purchase Plan and the Deferred
Compensation Plan, the "Plans").
<PAGE>
Securities and Exchange Commission
December 15, 1999
Page -2-
We advise you that we have examined originals or copies
certified or otherwise identified to our satisfaction of the Certificate of
Incorporation and Bylaws of the Company, minutes of meetings of the Board of
Directors and stockholders of the Company, the Plans, the documents to be sent
or given to participants in the Plans 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
described in the relevant Plan, will be duly and validly issued, fully paid and
non-assessable. In addition, it is our opinion that the Obligations, when
established pursuant to the terms of the Deferred Compensation Plan, will be
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms and the terms of the Deferred Compensation Plan,
except as enforceability (1) may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or similar laws affecting creditors'
rights generally, and (2) is subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
Very truly yours,
/s/ Olshan Grundman Frome Rosenzweig & Wolosky LLP
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated February 17, 1999, accompanying the
consolidated financial statements of Healthcare Services Group, Inc. and
Subsidiaries, appearing in the 1998 Annual Report of the Company to its
shareholders and accompanying the schedule included in the Annual Report on Form
10-K for the year ended December 31, 1998, which are incorporated by reference
in this Registration Statement. We consent to the incorporation by reference in
the Registration Statement of the aforementioned reports.
GRANT THORNTON LLP
Edison, New Jersey
December 10, 1999
