-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OCq/Zm/niSZXjMLkfONO4R8pwuWY3DwTubV0WbobD/OlqoJOfurmcd+swM3beXG3 9G/+H7VX1smmqlicoeW+SQ== 0000921895-99-000906.txt : 19991216 0000921895-99-000906.hdr.sgml : 19991216 ACCESSION NUMBER: 0000921895-99-000906 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19991215 EFFECTIVENESS DATE: 19991215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHCARE SERVICES GROUP INC CENTRAL INDEX KEY: 0000731012 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TO DWELLINGS & OTHER BUILDINGS [7340] IRS NUMBER: 232018365 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-92835 FILM NUMBER: 99775365 BUSINESS ADDRESS: STREET 1: 2643 HUNTINGDON PIKE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 BUSINESS PHONE: 2159381661 MAIL ADDRESS: STREET 1: 2643 HUNTINGDON PIKEE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 S-8 1 FORM S-8 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
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 (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) ===========================================================================================================
(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. 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 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 -2- 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. -3- 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. -4- 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. -5- 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). -6- 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. -7- 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 -8- 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. -9- 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) -10- EX-4.(A) 2 EMPLOYEE STOCK PURCHASE PLAN HEALTHCARE SERVICES GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN 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. 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. -2- 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). -3- 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. -4- 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. -5- 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. -6- 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. -7- 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. -8- 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. -9- 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. -10- 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. -11- EX-4.(B) 3 DEFERRED COMPENSATION PLAN HEALTHCARE SERVICES GROUP, INC. DEFERRED COMPENSATION PLAN 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. 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: -2- (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. -3- 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. -4- (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; -5- (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. -6- 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; -7- (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. -8- 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. -9- 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; -10- (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. -11- 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. -12- 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 -13- EXHIBIT "A" PARTICIPANTS 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 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. 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: ____________________________________ EX-5 4 OPINION 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"). 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 EX-23.(A) 5 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 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 -----END PRIVACY-ENHANCED MESSAGE-----