-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GgTBPncAkTY0wF9vy/64Ymi6wxXCGmODjPqRY4pEO1/ulvNPrZFIzbTsnpN9+H6N 3bBQkt9WGwCRu0ZmSUVxuQ== 0000921895-95-000017.txt : 19950425 0000921895-95-000017.hdr.sgml : 19950425 ACCESSION NUMBER: 0000921895-95-000017 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19950424 EFFECTIVENESS DATE: 19950513 SROS: NASD 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: 1933 Act SEC FILE NUMBER: 033-58765 FILM NUMBER: 95530740 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 April 24, 1995 Registration No. 33- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 -------------------- HEALTHCARE SERVICES GROUP, INC. PENNSYLVANIA 23-2018365 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2643 HUNTINGDON PIKE 19006 HUNTINGDON VALLEY, PENNSYLVANIA (Zip Code) (Address of principal executive offices) 1991 INCENTIVE STOCK OPTION PLAN, 1995 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN, OPTIONS HELD BY DIRECTORS AND/OR CONSULTANTS, AND 1995 DIRECTORS' STOCK OPTION PLAN (Full Title of the Plan) DANIEL P. MCCARTNEY CHAIRMAN AND CHIEF EXECUTIVE OFFICER HEALTHCARE SERVICES GROUP, INC. 2643 HUNTINGDON PIKE HUNTINGDON VALLEY, PENNSYLVANIA 19006 (Name and Address of agent for service) (215) 938-1661 (Telephone number, including area code, of agent for service) WITH A COPY TO: VICTOR M. ROSENZWEIG, ESQ. OLSHAN GRUNDMAN FROME & ROSENZWEIG 505 PARK AVENUE NEW YORK, NEW YORK 10022 (212) 753-7200 Approximate date of proposed sales pursuant to the plan: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. CALCULATION OF REGISTRATION FEE
================================================================================================================================ 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 450,000 shares(1)(2) $ 10.2637698 $ 4,618,696.41 $ 1,572.65 - -------------------------------------------------------------------------------------------------------------------------------- Common Stock $.01 par value 297,717 shares(1)(3) $ 9.87 $ 2,938,466.79 $ 1,013.26 - -------------------------------------------------------------------------------------------------------------------------------- Common Stock $.01 par value 500,000 shares (4) $ 11.375 $ 5,687,500.00 $ 1,961.21 - -------------------------------------------------------------------------------------------------------------------------------- Common Stock $.01 par value 150,000 shares $ 11.375 $ 1,706,250.00 $ 588.36 ================================================================================================================================
(1) There are also registered hereby such indeterminate number of shares of Common Stock as may become issuable by reason of the operation of the anti-dilution provisions of the 1991 Incentive Stock Option Plan (the "1991 Plan") of Healthcare Services Group, Inc. (the "Company"), the 1995 Incentive and Non-Qualified Stock Option Plan (the "1995 Plan") of the Company, stock option agreements between the Company and Directors and/or consultants or the 1995 Directors' Stock Option Plan (the "Directors' Plan"). (2) The contents of Registration Statements on Form S-8 (No. 2-99215), (No. 2-95092), and (33-35915) are incorporated by reference. Includes 330,461 shares with respect to which options were granted under the 1991 Plan at an average exercise price of $9.8618. An additional 119,539 shares may be offered under the 1991 Plan at prices not presently determined. Pursuant to Rule 457(g) and (h), the offering price for the shares which may be issued under the 1991 Plan is estimated solely for the purpose of determining the registration fee and is based on the average of the high and low prices of the Company's Common Stock ($11.375) as reported by the Nasdaq National Market ("Nasdaq") on April 18, 1995. (3) Represents Common Stock to be issued upon the exercise of options held by Directors and/or consultants, which have an average exercise price of $9.87 per share. (4) Consists of 500,000 shares with respect to which options may be granted under the 1995 Plan. Pursuant to Rule 457(g) and (h), the offering price for the shares which may be issued under the 1995 Plan is estimated solely for the purpose of determining the registration fee and is based on the average of the high and low prices of the Company's Common Stock ($11.375) as reported by Nasdaq on April 18, 1995. The adoption of the 1995 Plan is subject to the approval by the shareholders of the Company at the Company's next annual meeting of shareholders. (5) Consists of 150,000 shares with respect to which options may be granted under the Directors' Plan. Pursuant to Rule 457(g) and (h), the offering price for the shares which may be issued under the Directors' Plan is estimated solely for the purpose of determining the registration fee and is based on the average of the high and low prices of the Company's Common Stock ($11.75) as reported by Nasdaq on April 21, 1995. The adoption of the Director's Plan is subject to the approval by shareholders of the Company at the Company's next annual meeting of shareholders. ================================================================================ -2- Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION, DATED APRIL 24, 1995 PROSPECTUS 458,000 SHARES HEALTHCARE SERVICES GROUP, INC. Common Stock, $.01 par value This Prospectus relates to the reoffer and resale by certain selling shareholders who may be deemed affiliates (the "Selling Shareholders") of shares (the "Shares") of Common Stock, $.01 par value (the "Common Stock") of Healthcare Services Group, Inc. (the "Company") that may be issued by the Company to the Selling Shareholders upon the exercise of outstanding stock options granted pursuant to (i) the Company's 1991 Incentive Stock Option Plan for key employees (the "1991 Plan"), (ii) the Company's 1995 Incentive and Non- Qualified Stock Option Plan (the "1995 Plan"), (iii) stock options held by Directors pursuant to Stock Option Agreements with the Company and (iv) the Company's Directors' Stock Option Plan (the "Directors' Plan"). Certain Selling Shareholders may be deemed affiliates of the Company as such term is defined by Rule 405 of the Securities Act of 1933, as amended (the "Act"). With respect to the Shares that may be issued to the Selling Shareholders or additional affiliates under the 1991 Plan, the 1995 Plan and the Directors' Plan, this Prospectus also relates to certain Shares underlying options which have not as of this date been granted. If and when such options are granted, the Company will distribute a Prospectus Supplement as required by the Act. The offer and sale of the Shares to the Selling Shareholders have been previously registered under the Act. The Shares are being reoffered and may be resold for the account of the Selling Shareholders and the Company will not receive any of the proceeds from the resale of the Shares. The Selling Shareholders have advised the Company that the resale of their Shares may be effected from time to time in one or more transactions on the NASDAQ National Market ("NASDAQ"), in negotiated transactions or otherwise at market prices prevailing at the time of the sale or at prices otherwise negotiated. See "Plan of Distribution." The Company will bear all expenses in connection with the preparation of this Prospectus. The Common Stock of the Company is traded on NASDAQ under the symbol "HCSG". On April 21, 1995, the closing price for the Common Stock, as reported by NASDAQ, was $11.75. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is _______ __, 1995. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Northwest Atrium Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. TABLE OF CONTENTS AVAILABLE INFORMATION................................................... 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................... 3 GENERAL INFORMATION..................................................... 4 USE OF PROCEEDS......................................................... 4 SELLING SHAREHOLDERS.................................................... 4 PLAN OF DISTRIBUTION.................................................... 5 LEGAL MATTERS........................................................... 5 ADDITIONAL INFORMATION.................................................. 5 -2- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-K for the year ended December 31, 1994 is incorporated by reference in this Prospectus and shall be deemed to be a part hereof. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of this offering, are deemed to be incorporated by reference in this Prospectus and shall be deemed to be a part hereof from the date of filing of such documents. The Company's Application for Registration of its Common Stock under Section 12(g) of the Exchange Act filed on April 30, 1984, is incorporated by reference in this Prospectus and shall be deemed to be a part hereof. The Company hereby undertakes to provide without charge to each person to whom a copy of this Prospectus has been delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents. Written requests for such copies should be directed to Healthcare Services Group, Inc., 2643 Huntingdon Pike, Huntingdon Valley, Pennsylvania 19006, Attention: Richard Hudson. Oral requests should be directed to such officer (telephone number (215) 938-1661). ------------------------------ No dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Prospectus in connection with the offer made hereby, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or any Selling Shareholder. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, the securities offered hereby to any person in any state or other jurisdiction in which such offer or solicitation is unlawful. The delivery of this Prospectus at any time does not imply that information contained herein is correct as of any time subsequent to its date. -3- GENERAL INFORMATION The Company provides housekeeping, laundry and linen services to long-term care facilities, including nursing homes and retirement complexes. The Company believes that it is the largest provider of contractual housekeeping and laundry services to the long-term care industry in the United States, rendering such services to more than 800 facilities in 41 states and Canada. The Company's principal executive offices are located at 2643 Huntingdon Pike, Huntingdon Valley, Pennsylvania 19006. The Company's telephone number at such location is (215) 938-1661. The Shares offered hereby were or will be purchased by the Selling Shareholders upon exercise of options granted to them and will be sold for the account of the Selling Shareholders. USE OF PROCEEDS The Company will receive the exercise price of the options when exercised by the holders thereof. Such proceeds will be used for working capital purposes by the Company. The Company will not receive any of the proceeds from the reoffer and resale of the Shares by the Selling Shareholders. SELLING SHAREHOLDERS This Prospectus relates to the reoffer and resale of Shares issued or that may be issued to the Shareholders (who are deemed to be affiliates) under the Stock Option Agreements or the 1991 Plan, the 1995 Plan or the Directors' Plan. The following table sets forth (i) the number of shares of Common Stock beneficially owned by each Selling Shareholder at April 10, 1995, (ii) the number of Shares of Common Stock to be offered for resale by each Selling Shareholder and (iii) the number and percentage of shares of Common Stock to be held by each Selling Shareholder after completion of the offering.
Number of shares of Class A Common Stock/ Number of Percentage of Class to Number of shares of Shares to be be Owned After Common Stock Owned at Offered for Completion of the Name April 10, 1995(1) Resale Offering - ---------------------------------------- ------------------------ ----------------- ------------------------ Daniel P. McCartney(2).................. 943,106 75,000 868,106/10.8% Joseph F. McCartney(3).................. 55,750 50,500 5,250/* W. Thacher Longstreth(4)................ 41,500 41,500 0/* Barton D. Weisman(5).................... 61,500(6) 53,500 8,000/* Robert L. Frome(7)...................... 51,037 41,500 9,537/* Thomas A. Cook(8)....................... 152,000 152,000 0/* John M. Briggs(9)....................... 16,000 12,000 4,000/* Robert J. Moss(10)...................... 32,000 32,000 0/*
- --------------- * less than one percent (1) Includes shares issuable upon the exercise of options. -4- (1) Includes shares issuable upon the exercise of options. (2) Daniel P. McCartney has been Chief Executive Officer and Chairman of the Board of the Company since 1977. (3) Joseph F. McCartney has been a Director of the Company since 1983 and Regional Vice President of the Company for more than five (5) years. (4) W. Thacher Longstreth has been a Director of the Company since 1983. (5) Barton D. Weisman has been a Director of the Company since 1983. (6) Excludes 5,250 shares held by Mr. Weisman's wife, as to which shares he disclaims beneficial ownership. (7) Robert L. Frome has been a Director of the Company since 1983. See also "Legal Matters". (8) Thomas A. Cook has been a Director of the Company since 1987; President of the Company since July, 1993 and prior thereto was Executive Vice President and Chief Financial Officer of the Company for more than five (5) years. (9) John M. Briggs has been a Director of the Company since 1993. (10) Robert J. Moss has been a Director of the Company since 1992. PLAN OF DISTRIBUTION It is anticipated that all of the Shares will be offered by the Selling Shareholders from time to time in the open market, either directly or through brokers or agents, or in privately negotiated transactions. The Selling Shareholders have advised the Company that they are not parties to any agreement, arrangement or understanding as to such sales. LEGAL MATTERS Certain legal matters in connection with the issuance of the Shares offered hereby have been passed upon for the Company by Messrs. Olshan Grundman Frome & Rosenzweig, New York, New York 10022. Robert L. Frome, a member of Olshan Grundman Frome & Rosenzweig, is a director and owns 9,537 shares and holds options to purchase 41,500 shares of Common Stock of the Company. Victor M. Rosenzweig, a member of Olshan Grundman Frome & Rosenzweig, also holds options to purchase 10,000 shares of Common Stock. The shares underlying certain of the options held by Mr. Frome and all of the options held by Mr. Rosenzweig are being registered concurrently with this Prospectus. The balance of the shares underlying certain of the options held by Mr. Frome were previously registered. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission a Registration Statement on Form S-8 under the Securities Act with respect to the Shares offered hereby. For further information with respect to the Company and the securities offered hereby, reference is made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and in each instance, reference is made to the copy of such contract or document filed as an exhibit to the Registration Statement, such statement being qualified in all respects by such reference. -5- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Securities and Exchange Commission (the "Commission") are incorporated herein by reference and made a part hereof: (a) Healthcare Services Group, Inc.'s (the "Company") Annual Report on Form 10-K for the fiscal year ended December 31, 1994;. (b) The description of the Company's securities contained in the Company's Registration Statement on Form 8- A filed April 30, 1984. All reports and other documents subsequently filed by the Company pursuant to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents. ITEM 4. DESCRIPTION OF SECURITIES Not applicable. ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL Certain legal matters in connection with the issuance of the Shares offered hereby have been passed upon for the Company by Messrs. Olshan Grundman Frome & Rosenzweig, New York, New York 10022. Robert L. Frome, a member of such firm, is a Director of the Company and holds 9,537 shares of the Company's Common Stock, $.01 par value (the "Common Stock") and has been granted options to purchase 41,500 shares of which options to purchase 36,500 shares are being registered hereby. Victor M. Rosenzweig, a member of such firm, is a Director of the Company and has been granted options to purchase 10,000 shares of Common Stock all of which are being registered hereby. ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS Sections 1741 through 1750 of Subchapter C of Chapter 17 of the Pennsylvania Business Corporation Law (the "BCL") contain, among other things, provisions for mandatory and discretionary -6- indemnification of a corporation's directors, officers and other personnel. Under Section 1741, unless otherwise limited by its by-laws, a corporation has the power to indemnify directors and officers under certain prescribed circumstances against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, to which any of them is a party or threatened to be made a party by reason of his being a representative, director or officer of the corporation or serving at the request of the corporation as a representative of another corporation, partnership, joint venture, trust or other enterprise, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent does not of itself create a presumption that the person did not act in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful. Section 1742 provides for indemnification with respect to derivative actions similar to that provided by Section 1741. However, indemnification is not provided under Section 1742 with respect to any claim, issue or matter as to which a director or officer has been adjudged to be liable to the corporation unless and only to the extent that the proper court determines upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, a director or officer is fairly and reasonably entitled to indemnity for the expenses that the court deems proper. Section 1743 provides that indemnification against expenses is mandatory to the extent that the director or officer has been successful on the merits or otherwise in defense of any such action or proceeding referred to in Section 1741 or 1742. Section 1744 provides that unless ordered by a court, any indemnification under Section 1741 or 1742 shall be made by the corporation as authorized in the specific case upon a determination that indemnification of directors and officers is proper because the director or officer met the applicable standard of conduct, and such determination will be made by the board of directors by a majority vote of a quorum of directors not parties to the action or proceeding; if a quorum is not obtainable or if obtainable and a majority of disinterested -7- directors so directs, by independent legal counsel; or by the shareholders. Section 1745 provides that expenses incurred by a director or officer in defending any action or proceeding referred to in the Subchapter may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation. Section 1746 provides generally that except in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness, the indemnification and advancement of expenses provided by the Subchapter shall not be deemed exclusive of any other rights to which a director or officer seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding that office. Section 1747 also grants a corporation the power to purchase and maintain insurance on behalf of any director or officer against any liability incurred by him in his capacity as officer or director, whether or not the corporation would have the power to indemnify him against the liability under this Subchapter of the BCL. Sections 1748 and 1749 apply the indemnification and advancement of expenses provisions contained in the Subchapter to successor corporations resulting from consolidation, merger or division and to service as a representative of a corporation or an employee benefit plan. The foregoing provisions substantially overlap the provisions of the Pennsylvania Directors' Liability Act, 42 Pa. C.S. Section 8365, which are also applicable to the Company. Article XI of the Company's By-laws provides, in part, that the Company shall indemnify its directors, officers, employees and agents to the fullest extent permitted by the BCL. Article XII of the Company's By-laws provides, in part, that: "A Director shall not be liable for monetary damages as such for any action taken, or any failure to take action, unless (1): the director has breached or failed to perform the duties of his office under Section 8363 of the Pennsylvania Consolidated Statutes and the breach or failure -8- to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the foregoing provision shall not relieve a director of responsibility or liability of a director pursuant to any criminal statute or for the payment of taxes pursuant to local, state or Federal law." The Company has purchased director and officer liability insurance for its directors and officers. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS 4(a) - Form of Non-Qualified Stock Option Agreement granted to certain Directors (incorporated by reference to Exhibit 10.9 of the Company's Registration Statement on Form S-1 (Commission File No. 2-98089)). 4(b) - Form of Stock Option Agreement for Consultants. 4(c) - 1991 Incentive Stock Option Plan as amended (incorporated by reference to Exhibit 10.1 of the Registrant's Registration Statement on Form S-18 (Commission File No. 2-87625-W)). 4(d) - 1995 Incentive and Non-Qualified Stock Option Plan (the "1995 Plan"). 4(e) - Form of Option Agreement for the 1995 Plan. 4(f) - 1995 Directors' Stock Option Plan (the "Directors' Plan") 4(g) - Form of Option Agreement for the Directors' Plan 5 - Opinion of Olshan Grundman Frome & Rosenzweig. 23(a) - Consent of Grant Thornton, independent auditors. 23(b) - Consent of Olshan Grundman Frome & Rosenzweig (included in its opinion filed as Exhibit 5). 24 - Powers of Attorney (included on page 12). ITEM 9. UNDERTAKINGS. A. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: -9- (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement; (2) That, for the purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering. B. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at -10- that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. D. The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, a copy of the registrant's latest annual report to stockholders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. -11- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Huntingdon, State of Pennsylvania, on this 18th day of April, 1995. HEALTHCARE SERVICES GROUP, INC. (Registrant) /s/ Daniel P. McCartney --------------------------------------------------------- Daniel P. McCartney, Chief Executive Officer and Chairman POWER OF ATTORNEYS AND SIGNATORIES Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. Each of the undersigned officers and directors of Healthcare Services Group, Inc. hereby constitutes and appoints Daniel P. McCartney and Thomas A Cook and each of them singly, as true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him in his name in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission and to prepare any and all exhibits thereto, and other documents in connection therewith, and to make any applicable state securities law or blue sky filings, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite or necessary to be done to enable Healthcare Services Group, Inc. to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. SIGNATURE TITLE DATE /s/ Daniel P. McCartney - ------------------------- Chief Executive Officer and April 18, 1995 Daniel P. McCartney Chairman /s/ Thomas A. Cook - ------------------------- Director and President April 18, 1995 Thomas A. Cook /s/ W. Thacher Longstreth - ------------------------- Director April 18, 1995 W. Thacher Longstreth /s/ Barton D. Weisman - ------------------------- Director April 18, 1995 Barton D. Weisman /s/ Robert L. Frome - ------------------------- Director April 18, 1995 Robert L. Frome /s/ John M. Briggs - ------------------------- Director April 18, 1995 John M. Briggs /s/ Robert J. Moss - ------------------------- Director April 18, 1995 Robert J. Moss /s/ James L. DiStefano - ------------------------- Chief Financial Officer April 18, 1995 James L. DiStefano and Treasurer /s/ Richard W. Hudson - ------------------------- Vice President - Finance April 18, 1995 Richard W. Hudson and Secretary (Principal Accounting Officer) -12- EX-4.(B) 2 STOCK OPTION AGREEMENT FOR CONSULTANTS STOCK OPTION AGREEMENT- 1993 STOCK OPTION AGREEMENT, made this 5th day of November, 1993 between Healthcare Services Group, Inc. (the Company), and Melvyn Mason, an advisor and consultant to the Company (the "Optionee"). NOW, THEREFORE, the Company and the Optionee, by his acceptance of the grant of this Stock Option ("Option"), agree as follows: 1. GRANT OF OPTION The Company hereby grants to the Optionee as a separate inducement and agreement in connection with his performance by him of services to the Company, and not in lieu of any other remuneration for his services, an Option to purchase on the terms and conditions hereinafter set forth, all or part of an aggregate of 15,000 Shares of common stock of the Company (either unissued or treasury), a $.01 par value (the "Shares"). 2. TERM OF OPTION The option granted hereunder shall expire no later than November 6th, 1998 (the "Termination Date"). 3. TERMINATION OF EMPLOYMENT The option shall be exercisable only if, at all times beginning with the date of the granting of the option and ending on the date of such exercise, the Optionee continues to be a consultant and advisor to the Company and the Optionee has complied with all the terms of this Stock Option Agreement. If the Optionee shall cease to be so engaged by the Company and has complied with all of the terms of this Stock Option Agreement, the Option shall terminate within three (3) months after such date, unless the Optionee dies within such three (3) months period. In the event of such death, the Option shall be exercisable by the person or persons to whom the Optionee's right under the Option have passed by will or by the laws of descent and distribution for one year (1) from the date of death, but in no event after the Termination Date. 4. EXERCISE OF OPTION (a) Except as provided in Paragraph 3 hereof, the Option is exercisable, commencing on May 7th, 1994, at any time and from time to time thereafter prior to the Termination Date, except that the Option may not be exercised as to fractional shares. (b) Upon the exercise of the Option (and prior to the issuance of the certificates for the Shares in respect of which the Option is exercised), the Optionee shall comply with any applicable provisions regarding compliance with the Securities Act of 1933. 5. TRANSFERABILITY The Option granted hereunder shall be assignable or transferable by the Optionee. In the event of such transfer, the Optionee shall promptly notify the Company. 6. (a) PURCHASE PRICE The exercise price shall be $8.25 per Share. The purchase price shall be payable in United States dollars upon the exercise of an Option and shall be paid in cash, by certified check or bank draft. (b) ANTI-DILUTION The Option granted pursuant to this agreement shall continue notwithstanding any change or exchange of the Shares into or for a different number and/or kind of common shares of the Company or of a corporation or other entity which succeeds to the business of the Company or becomes its parent or subsidiary, whether or not such change or exchange results from recapitalization, split-up, corporate merger, consolidation or separation, stock dividends or liquidation, provided however that the Option, if still outstanding, shall terminate if and when the business conducted by the Company (or any successor to the Company) is substantially terminated or dissolved upon its liquidation. In the event of such a change or exchange, an appropriate adjustment shall be made in the number and/or kind of shares subject to option and/or in their per-share option price, and that in the event of a transaction to which Section 425 (a) of the Internal Revenue Code (or successor provision of law) is applicable, the foregoing shall be accomplished thereunder by assumption of the option or by the substitution of another non-qualified stock option. In no case shall the making of any change, exchange, substitution or assumption or related adjustment give the Optionee additional benefits which he did not have under the old option, and the excess of the aggregate fair market value of the shares subject to the Option immediately after such change, exchange, substitution or assumption and/or adjustment shall not be greater than such excess of the fair market value of the Shares subject to the Option immediately before. Adjustment of the number of Shares subject to the Option shall not make the Option become exercisable as to any fractional shares. Subject to the foregoing limitations, the terms of any such adjustment shall be determined by the Committee and such determination made in good faith shall be final, provided that if -2- pursuant to said Section 425 (a) another corporation or other successor assumes the Option or substitutes another Option, its determination of the terms made in good faith shall be final. 7. METHOD OF EXERCISE The Option shall be exercisable only by delivery of written notice to the Secretary of the Company at the Company's offices in Huntingdon Valley, Pennsylvania, prior to the expiration of the Option as specified in paragraphs 2 and 3 hereof. Such notice shall state the election to exercise the option, and the number of Shares in respect of which it is being exercised, and shall be signed by the person or persons so exercising such Option. The date the Company receives written notice shall be the exercise date. In the event the Option shall be exercised pursuant to the provisions of paragraph 3 hereof by a person or persons other than the Optionee, such notice shall be accompanied by proof satisfactory to the Company of the right of such person or persons to exercise the Option. The Company shall issue and deliver, upon receipt of notice and payment in full of the purchase price for the Shares as to which the Option is being exercised, a certificate or certificates representing such number of shares to which the Optionee is entitled to receive under the Plan. 8. NOTICES Any notice to be given to the Company shall be addressed to the Secretary of the Company at the Company's office referred to in Paragraph 7 above, and any notice to be given to the Optionee shall be addressed to the Optionee at the address then appearing on the records of the Company, or at such other address as either party may hereafter designate in writing to the other. Except for purposes of determining the exercise date, any such notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope, addressed as aforesaid and deposited, first class postage prepaid, in the United States mails. 9. RESTRICTIONS (a) The Optionee acknowledges and agrees that this Option is subject to the terms and conditions of the Plan and the Internal Revenue Code provisions pursuant to which such Plan adopted. (b) The Optionee acknowledges and agrees that Shares purchased pursuant to the exercise of this Option shall be for investment and not with a view to the distribution thereof unless the Company then has a current registration statement under the Securities Act of 1933 which has been declared effective and -3- which covers the issuance or resale of such Shares. (The Company shall have no obligation to file such a registration statement.) 10. ACKNOWLEDGMENTS The Optionee acknowledges that: (a) The particular needs of the Company's customers are not generally known in the industry; (b) The Company has a proprietary interest in the identity of its customers and customer lists; and (c) Documents and information regarding the Company's methods of operation, sales, pricing, costs, and the specialized requirements of the Company's customers are highly confidential and constitute trade secrets. 11. TRADE SECRETS AND CONFIDENTIAL INFORMATION During the term of his service to the Company, the Optionee will have access to and become familiar with various trade secrets and confidential information of the Company, including, but not necessarily limited to, the documents and information referred to in paragraph 10 above. The Optionee acknowledges that such confidential information and trade secrets are owned and shall continue to be owned solely by the Company. During the term of his service and for three (3) years after such service to the Company terminates, the Optionee agrees not to use such information for any purpose whatsoever or to divulge such information to any person other than the Company or persons to whom the Company has given its consent, unless such information has already become common knowledge or unless the Optionee is compelled to disclose it by governmental process. 12. COVENANT NOT TO COMPETE The Optionee agrees that: (a) During the term of his service, the Optionee will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, carry on or be engaged or interested in the cleaning, housekeeping, janitorial, and/or laundry business, whether commercial, industrial, residential, wholesale, or retail, in any form whatsoever. (b) For a period of two (2) years after his service has been terminated for any reason, with or without cause, the Optionee will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or -4- indirectly, solicit or accept any customers or accounts that were customers or accounts (or legal successors to customers or accounts) of the Company during any period of time that the Optionee was employed by the Company. (c) For a period of three (3) years after his service has been terminated for any reason, with or without cause, the Optionee will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, solicit or accept any customers or accounts which were customers or accounts (or legal successors to customers or accounts) of the Company, and for whose accounts the Optionee was responsible at any time while in the employ of the Company. (d) At no time during his service with the Company, and for a period of three (3) years following termination of the Optionee's service, will the Optionee accept any employment offered at any of the facilities for which the Optionee has been directly or indirectly responsible during the course of his employment with the Company, regardless of any changes of ownership or affiliation of such facilities. 13. REMEDIES (a) The Optionee acknowledges that compliance with paragraph 11 and 12 is necessary to protect the business and good will of the Company and that a breach of those paragraphs will irreparably and continually damage the Company, for which money damages may not be adequate. Consequently, the Optionee agrees that, in the event that he breaches or threatens to breach any of these covenants, the Company shall be entitled to both (a) a preliminary or a permanent injunction in order to prevent the continuation of such harm and (b) money damages insofar as they can be determined. Nothing in this Agreement, however, shall be construed to prohibit the Company from also pursuing any other remedy, the parties having agreed that all remedies are cumulative. (b) In the event that there is a dispute arising under or related to this Nonqualified Stock Option Agreement or that a party seeks to enforce any of the terms of this Nonqualified Stock Option Agreement, each party agrees that any legal proceeding will be instituted only in the Court of Common Pleas, Montgomery County, Pennsylvania, or in the United States District Court for the Eastern District of Pennsylvania. Each party irrevocably consents to the jurisdiction of each of those courts and agrees that service of the Complaint or other process may be made as provided in the applicable Rules of Court or as provided in Paragraph 8 of this Nonqualified Stock Option Agreement. -5- (c) If any provision of the Nonqualified Stock Option Agreement is adjudged by any court to be void or unenforceable, in whole or in part, that adjudication shall not affect the validity of the remainder of this Nonqualified Stock Option Agreement. Each provision, paragraph and subparagraph of this Nonqualified Stock Option Agreement is separate from the others and is a separate and distinct covenant. If a provision is determined to be void or unenforceable because it is too broad, the parties agree that the Court shall have the power to limit the restriction so as to make it enforceable. (d) If a party incurs costs or expenses in enforcing this Nonqualified Stock Option Agreement, including attorney's fees and costs, the defaulting party shall pay to the prevailing party, upon demand, those fees and costs. 14. GOVERNING LAW This Nonqualified Stock Option Agreement is made in, and shall be construed under the laws of, the Commonwealth of Pennsylvania. IN WITNESS WHEREOF,, intending to be legally bound, the parties have executed this Nonqualified Stock Option Agreement. HEALTHCARE SERVICES GROUP, INC By: (Seal) - ------------------------------ ----------------------------- Optionee Date -6- EX-4.(D) 3 1995 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN 1995 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN FOR KEY EMPLOYEES OF HEALTHCARE SERVICES GROUP, INC. 1. Purpose of the Plan This 1995 Incentive and Nonqualified Stock Option Plan (the "Plan") is intended as an incentive, to retain in the employ of Healthcare Services Group, Inc. (the "Company") and any Subsidiary of the Company (within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"), persons of training, experience and ability, to attract new employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries. It is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422 of the Code ("Incentive Options") while certain other options granted pursuant to the Plan shall be nonqualified stock options ("Nonqualified Options"). Incentive Options and the Nonqualified Options are hereinafter referred to collectively as "Options". 2. Administration of the Plan The Board of Directors of the Company (the "Board") shall appoint and maintain as administrator of the Plan a Committee (the "Committee") consisting of one or more Directors of the Company. The member(s) of the Committee, shall serve at the pleasure of the Board. The Committee, subject to Section 3 hereof, shall have full power and authority to designate recipients of Options, to determine the terms and conditions of respective Option agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan. Subject to Section 7 hereof, the Committee shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option. Notwithstanding any provision in the Plan to the contrary, Options may be granted under the Plan to any member of the Committee during the term of his membership on the Committee, subject to approval of the Board of Directors or the Audit Committee thereof. Subject to the provisions of the Plan, the Committee shall interpret the Plan and all Options granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Options granted under the Plan in the manner and to the extent that the Committee deems desirable to carry the Plan or any Options into effect. The act or determination of a majority of the Committee shall be deemed to be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority at a meeting duly held. Subject to the provisions of the Plan, any action taken or determination made by the Committee pursuant to this and the other paragraphs of the Plan shall be conclusive on all parties. 3. Designation of Optionees. The persons eligible for participation in the Plan as recipients of Options ("Optionees") shall include only full-time key employees of the Company or any Subsidiary. In selecting Optionees, and in determining the number of shares to be covered by each Option granted to Optionees, the Committee may consider the office or position held by the Optionee, the Optionee's degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Optionee's length of service, age, promotions, potential and any other factors which the Committee may consider relevant. An employee who has been granted an Option hereunder may be granted an additional Option or Options, if the Committee shall so determine. A-1 4. Stock Reserved for the Plan. Subject to adjustment as provided in Section 7 hereof, a total of five hundred thousand (500,000) shares of common stock, $.01 par value ("Stock"), of the Company shall be subject to the Plan. The shares of Stock subject to the Plan shall consist of unissued shares or previously issued shares reacquired and held by the Company or any Subsidiary of the Company, and such amount of shares of Stock shall be and is hereby reserved for such purpose. Any of such shares of Stock which may remain unsold and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option expire or be cancelled prior to its exercise in full or should the number of shares of Stock to be delivered upon the exercise in full of an Option be reduced for any reason, the shares of Stock theretofore subject to such Option may again be subject to an Option under the Plan. 5. Terms and Conditions of Options. Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: (a) Option Price. The purchase price of each share of Stock purchasable under an Option shall be determined by the Committee at the time of grant but shall not be less than 100% of the fair market value of such share of Stock on the date the Option is granted in the case of an Incentive Option and not less than 100% of the fair market value of such share of Stock on the date the Option is granted in the case of a Non-Qualified Option; provided, however, that with respect to an Incentive Option, in the case of an Optionee who, at the time such Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, then the purchase price per share of Stock shall be at least 110% of the Fair Market Value (as defined below) per share of Stock at the time of grant. The exercise price for each incentive stock option shall be subject to adjustment as provided in Section 7 below. The fair market value ("Fair Market Value") means the closing price of publicly traded shares of Stock on the national securities exchange on which shares of Stock are listed, (if the shares of Stock are so listed) or on the NASDAQ Stock Market System (if the shares of Stock are regularly quoted on the NASDAQ Stock Market System), or, if not so listed or regularly quoted, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code. (b) Option Term. The term of each Option shall be fixed by the Committee, but no Option shall be exercisable more than ten years after the date such Option is granted; provided, however, that in the case of an Optionee who, at the time such Option is granted, owns more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary, then such Option shall not be exercisable with respect to any of the shares subject to such Option later than the date which is five years after the date of grant. (c) Exercisability. Subject to paragraph (j) of this Section 5, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant, provided, however, that except as provided in paragraphs (f) and (g) of this Section 5, unless a shorter or longer vesting period is otherwise determined by the Committee at grant, Options shall be exercisable as follows: up to one-half (1/2) of the aggregate shares of Stock purchasable under an Option shall be exercisable commencing one year after the date of grant and an additional one-half (1/2) of the aggregate initial shares of Stock purchasable under an Option shall be exercisable commencing two years after the date of grant. The Committee may waive such installment exercise provision at any time in whole or in part based on performance and/or such other factors as the Committee may determine in its sole discretion, provided, however, no Option shall be exercisable until more than six months have elapsed from the date of grant of such Option. (d) Method of Exercise. Options may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may A-2 also be made in the form of Stock owned by the Optionee for at least six months (based on the Fair Market Value of the Stock on the trading day before the Option is exercised); provided, however, that if such Stock was issued pursuant to the exercise of an Incentive Option under the Plan, the holding requirements for such Stock under the Code shall first have been satisfied. An Optionee shall have the rights to dividends or other rights of a stockholder with respect to shares subject to the Option after (i) the Optionee has given written notice of exercise and has paid in full for such shares and (ii) becomes a stockholder of record. (e) Non-transferability of Options. Options are not transferable and may be exercised solely by the Optionee during his lifetime, or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution; provided that, with respect to options other than incentive stock options, the Committee may grant options that are transferable, without payment of consideration, to immediate family members of the optionee or to trusts or partnerships for such family members. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee. (f) Termination by Death. Unless otherwise determined by the Committee at grant, if any Optionee's employment with the Company or any Subsidiary terminates by reason of death, the Option may thereafter be immediately exercised, to the extent then exercisable (or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one year from the date of such death or until the expiration of the stated term of such Option as provided under the Plan, whichever period is shorter. (g) Termination by Reason of Disability. Unless otherwise determined by the Committee at grant, if any Optionee's employment with the Company or any Subsidiary terminates by reason of total and permanent disability as determined under the Company's long term disability policy ("Disability"), any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after three months from the date of such termination of employment or the expiration of the stated term of such Option, whichever period is shorter. (h) Termination by Reason of Retirement. Unless otherwise determined by the Committee at grant, if any Optionee's employment with the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (as defined below) (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after three months from the date of such termination of employment or the expiration of the stated term of such Option, whichever period is shorter. For purposes of this paragraph (h), Normal Retirement shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65. Early Retirement shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55. Retirement shall mean Normal or Early Retirement. (i) Other Termination. Unless otherwise determined by the Committee at grant, if any Optionee's employment with the Company or any Subsidiary terminates for any reason other than death, Disability or Retirement, the Option shall thereupon terminate, except that the exercisable portion of any Option which was exercisable on the date of such termination of employment may be exercised for the lesser of three months from the date of termination or the balance of such Option's term if the Optionee's employment with the Company or any Subsidiary is involuntarily terminated by the Optionee's employer without Cause. Cause shall mean a felony conviction or the failure of an Optionee to contest prosecution for a felony or an Optionee's willful misconduct or dishonesty, any of which is deemed by the Committee or the Board of Directors to be harmful to the business or reputation of the Company or any Subsidiary. The transfer of an Optionee from the employ of the Company to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment for purposes of the Plan. (j) Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Option is granted, of the Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000. A-3 (k) Transfer of Incentive Option Shares. The stock option agreement evidencing any Incentive Options granted under this Plan shall provide that if the Optionee makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any share or shares of Stock issued to him pursuant to his exercise of an Incentive Option granted under the Plan within the two-year period commencing on the day after the date of the grant of such Incentive Option or within a one-year period commencing on the day after the date of transfer of the share or shares to him pursuant to the exercise of such Incentive Option, he shall, within ten days of such disposition, notify the Company thereof and immediately deliver to the Company any amount of federal income tax withholding required by law. 6. Term of Plan. No Option shall be granted pursuant to the Plan on or after the tenth anniversary of the date the Plan is approved by the Board, but Options granted may extend beyond that date. 7. Capital Change of the Company. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Stock, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee's proportionate interest shall be maintained as immediately before the occurrence of such event. Notwithstanding the foregoing, there shall be no adjustment for the issuance of Shares on conversion of notes, preferred stock or exercise of warrants or Shares issued by the Board for such consideration as the Board deems appropriate. 8. Purchase for Investment. Unless the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person exercising an Option under the Plan may be required by the Company to give a representation in writing that he is acquiring the shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. 9. Taxes. The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Options granted under the Plan with respect to the withholding of any taxes or any other tax matters. 10. Effective Date of Plan. The Plan shall be effective on the date it is approved by the Board, provided however that the Plan shall be subject to subsequent approval by majority vote of a quorum of the Company's stockholders present and voting at a meeting held within one (1) year from the date approved by the Board. Options may be granted, but not exercised, before such stockholder approval is obtained. If the stockholders fail to approve the Plan within the required time period, any Options granted under this Plan shall be void and no additional Options may thereafter be granted hereunder. 11. Amendment and Termination. The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made which would impair the right of any Optionee under any Option theretofore granted without his consent, and except that no amendment shall be made which, without the approval of the stockholders would: (a) materially increase the number of shares which may be issued under the Plan, except as is provided in Section 7; (b) materially increase the benefits accruing to the Optionees under the Plan; (c) materially modify the requirements as to eligibility for participation in the Plan; or (d) decrease the Option exercise price to less than 100% of the Fair Market Value on the date of grant thereof. A-4 The Committee may amend the terms of any Option theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any Optionee without his consent. The Committee may also substitute new Options for previously granted Options, including options granted under other plans applicable to the participant and previously granted Options having higher option prices, upon such terms as the Committee may deem appropriate. 12. Reorganization etc. Notwithstanding any other provisions in Section 5 hereof, upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the property or more than 80% of the then outstanding shares of Common Stock of the Company to another corporation, the Company shall give to each Optionee at the time of adoption of the plan or agreement for liquidation, dissolution, merger or sale either (1) a reasonable time thereafter within which to exercise the Option in its entirety prior to the effective date of such liquidation or dissolution, merger or sale, or (2) the right to exercise the Option in its entirety as to an equivalent number of shares of Common Stock of the corporation succeeding the Company or acquiring its business by reason of such liquidation, dissolution, merger, consolidation or reorganization. 13. Government Regulations. The Plan, and the granting and exercise of Options hereunder, and the obligation of the Company to sell and deliver shares under such Options, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 14. General Provisions. (a) Certificates. All certificates for shares of Stock delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or trading system upon which the Stock is then listed, and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. (b) Employment Matters. The adoption of the Plan shall not confer upon any Optionee of the Company or any Subsidiary, any right to continued employment (or, in case the Optionee is also a director, continued retention as a director) with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees at any time. (c) Limitation of Liability. No member of the Board or the Committee, or any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. (d) Registration of Options. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Stock to be issued upon the exercise thereof has been registered under the Securities Act of 1933 and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration. The Company shall not be under any obligation to register under applicable federal or state securities laws any Stock to be issued upon the exercise of an Option granted hereunder, or to comply with an appropriate exemption from registration under such laws in order to permit the exercise of an Option and the issuance and sale of the Stock subject to such Option; however, the Company may in its sole discretion register such Stock at such time as the Company shall determine. If the Company chooses to comply with such an exemption from registration, the Stock issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Stock represented thereby, and the Committee may also give appropriate stop-transfer instructions to the transfer agent to the Company. A-5 EX-4.(E) 4 FORM OF OPTION AGREEMENT FOR THE 1995 PLAN HEALTHCARE SERVICES GROUP, INC. 2643 Huntingdon Pike Huntingdon Valley, Pennsylvania 19006 [ ] To: 1. We are pleased to inform you that on [ ] you were granted an incentive stock option pursuant to the 1995 Incentive and Non-Qualified Stock Option Plan (the "Plan") of Healthcare Services Group, Inc. (the "Company") to purchase [ ] shares (the "Shares") of Common Stock, par value $.01 per share, of the Company, at a price of $[ ] per Share. This grant is a separate inducement and agreement in connection with your employment by the Company, and not in lieu of any salary or other remuneration for services. 2. No part of the option is currently exercisable. The option may first be exercised, with respect to 50% of the option one year from the date of grant. This option may first be exercised with respect to the remaining 50% of the option two years from the date of grant. 3. To the extent this option is not exercised, it will expire [five] years from the date of the grant. 4. This option is issued in accordance with and is subject to and conditioned upon all of the terms and conditions of the Plan (a copy of which in its present form is attached hereto), as from time to time amended, provided, however, that no future amendment or termination of the Plan shall, without your consent, alter or impair any of your rights or obligations under this option. Reference is made to the terms and conditions of the Plan, all of which are incorporated by reference in this option agreement as if fully set forth herein. 5. Unless at the time of the exercise of this option a registration statement under the Securities Act of 1933, as amended (the "Act"), is in effect as to such Shares, any Shares purchased by you upon the exercise of this option shall be acquired for investment and not for sale or distribution, and if the Company so requests, upon any exercise of this option, in whole or in part, you will execute and deliver to the Company a certificate to such effect. The Company shall not be obligated to issue any Shares pursuant to this option if, in the opinion of counsel to the Company, the Shares to be so issued are required to be registered or otherwise qualified under the Act or under any other applicable statute, regulation or ordinance affecting the sale of securities, unless and until such Shares have been so registered or otherwise qualified. 6. You understand and acknowledge that, under existing law, unless at the time of the exercise of this option a registration statement under the Act is in effect as to such Shares (i) any Shares purchased by you upon exercise of this option may be required to be held indefinitely unless such Shares are subsequently registered under the Act or an exemption from such registration is available; (ii) any sales of such Shares made in reliance upon Rule 144 promulgated under the Act may be made only in accordance with the terms and conditions of that Rule (which, under certain circumstances, restrict the number of shares which may be sold and the manner in which shares may be sold); (iii) in the case of securities to which Rule 144 is not applicable, compliance with Regulation A promulgated under the Act or some other disclosure exemption will be required; (iv) certificates for Shares to be issued to you hereunder shall bear a legend to the effect that the Shares have not been registered under the Act and that the Shares may not be sold, hypothecated or otherwise transferred in the absence of an effective registration statement under the Act relating thereto or an opinion of counsel satisfactory to the Company that such registration is not required; (v) the Company will place an appropriate "stop transfer" order with its transfer agent with respect to such Shares; and (vi) the Company has undertaken no obligation to register the Shares or to include the Shares in any registration statement which may be filed by it subsequent to the issuance of the shares to you. In addition, you understand and acknowledge that the Company has no obligation to you to furnish information necessary to enable you to make sales under Rule 144. 7. This option (or installment thereof) is to be exercised by delivering to the Company a written notice of exercise in the form attached hereto as Exhibit A, specifying the number of Shares to be purchased, together with payment of the purchase price of the Shares to be purchased. The date the Company receives the written notice shall be the exercise date. The purchase price is to be paid in cash or, by delivering shares of the Company's stock already owned by you and having a fair market value on the date of exercise equal to the exercise price of the option, or a combination of such shares and cash, or otherwise in accordance with the Plan. 8. You acknowledge that: A. The particular needs of the Company's customers are not generally known in the industry; -2- B. The Company has a proprietary interest in the identity of its customers and customer lists; and C. Documents and information regarding the Company's methods of operation, sales, pricing, costs, and the specialized requirements of the Company's customers are highly confidential and constitute trade secrets. 9. During the term of your employment, you will have access to and become familiar with various trade secrets and confidential information of the Company, including, but not necessarily limited to, the documents and information referred to in paragraph 8 above. You acknowledge that such confidential information and trade secrets are owned and shall continue to be owned solely by the Company. During the term of your employment and after such employment terminates, you agree not to use such information for any purpose whatsoever or to divulge such information to any person other than the Company or persons to whom the Company has given its consent, unless such information has already become common knowledge or unless you are compelled to disclose it by governmental process. 10. You agree that: A. During the term of your employment, you will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, carry on or be engaged or interested in the cleaning, housekeeping, janitorial, and/or laundry business, whether commercial, industrial, residential, wholesale, or retail, in any form whatsoever. B. For a period of two (2) years after your employment has been terminated for any reason, with or without cause, you will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, solicit or accept any customers or accounts that were customers or accounts (or legal successors to customers or accounts) of the Company during any period of time that you were employed by the Company. C. For a period of three (3) years after your employment has been terminated for any reason, with or without cause, you will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, solicit or accept any customers or accounts which were customers or accounts (or legal successors to customers or accounts) of the Company, and for whose accounts you were responsible at any time while in the employ of the Company. -3- D. At no time during your employment with the Company, and for a period of three (3) years following termination of your employment, will you accept any employment offered at, or in a position having direct responsibility for, any of the facilities for which you have been directly or indirectly responsible during the course of your employment with the Company, regardless of any changes of ownership or affiliation of such facilities. E. In the event your employment with the Company terminates for any reason, you will be able to earn a livelihood without violating the foregoing restrictions and your ability to earn a livelihood without violating such restrictions is a material condition to the grant of this option. 11. REMEDIES A. You acknowledge that compliance with paragraphs 9 and 10 is necessary to protect the business and good will of the Company and that a breach of those paragraphs will irreparably and continually damage the Company, for which money damages may not be adequate. Consequently, you agree that, in the event that you breach or threaten to breach any of these covenants, the Company shall be entitled to both (a) a preliminary or a permanent injunction in order to prevent the continuation of such harm and (b) money damages insofar as they can be determined. Nothing in this Stock Option Agreement, however, shall be construed to prohibit the Company from also pursuing any other remedy, the parties having agreed that all remedies are cumulative. B. In the event that there is a dispute arising under or related to this Stock Option Agreement or that a party seeks to enforce any of the terms of this Stock Option Agreement, each party agrees that any legal proceeding will be instituted only in the Court of Common Pleas, Montgomery County, Pennsylvania, or in the United States District Court for the Eastern District of Pennsylvania. Each party irrevocably consents to the jurisdiction of each of those courts and agrees that service of the Complaint or other process may be made as provided in the applicable Rules of Court or as provided in Paragraph 7 of this Stock Option Agreement. C. If any provision of the Stock Option Agreement is adjudged by any court to be void or unenforceable, in whole or in part, that adjudication shall not affect the validity of the remainder of this Stock Option Agreement. Each provision, paragraph and subparagraph of this Stock Option Agreement is separate from the others and is a separate and distinct covenant. If a provision is determined to be void or unenforceable because it is too broad, the parties agree that the Court shall have the power to limit the restriction so as to make it enforceable. -4- D. If a party incurs costs or expenses in enforcing this Stock Option Agreement, including attorney's fees and costs, the defaulting party shall pay to the prevailing party, upon demand, those fees and costs. 12. This Stock Option Agreement is made in, and shall be construed under the laws of, the Commonwealth of Pennsylvania. Would you kindly evidence your acceptance of this option and your agreement to comply with the provisions hereof and of the Plan by executing this letter under the words "Agreed To and Accepted." Very truly yours, HEALTHCARE SERVICES GROUP, INC. By:----------------------------- Daniel P. McCartney Chairman and Chief Executive Officer AGREED TO AND ACCEPTED: - ----------------------- -5- EXHIBIT A Healthcare Services Group, Inc. 2643 Huntington Pike Huntingdon Valley, Pennsylvania 19006 Gentlemen: Notice is hereby given of my election to purchase _____ shares of Common Stock, $.01 par value (the "Shares"), of Healthcare Services Group, Inc. (the "Company"), at a price of $ per Share, pursuant to the provisions of the stock option granted to me on _________________, under the Company's 1995 Incentive and Non-Qualified Stock Option Plan. Enclosed in payment for the Shares is: ---- /___/ my check in the amount of $________. ---- /___/ ___________ Shares having a total value $________, such value being based on the closing price(s) of the Shares on the date hereof. The following information is supplied for use in issuing and registering the Shares purchased hereby: Number of Certificates and Denominations ___________________ Name ___________________ Address ___________________ ___________________ Social Security Number ___________________ Dated: _______________, ____ Very truly yours, ________________________ -6- EX-4.(F) 5 1995 DIRECTOR'S STOCK OPTION PLAN HEALTHCARE SERVICES GROUP, INC. 1995 DIRECTORS' STOCK OPTION PLAN ARTICLE I PURPOSE The purpose of the Healthcare Services Group, Inc. 1995 Directors' Stock Option Plan (the "Plan") is to secure for Healthcare Services Group, Inc. and its stockholders the benefits arising from stock ownership by its Directors. The Plan will provide a means whereby such Directors may purchase shares of the common stock, $.01 par value, of Healthcare Services Group, Inc. pursuant to options granted in accordance with the Plan. ARTICLE II DEFINITIONS The following capitalized terms used in the Plan shall have the respective meanings set forth in this Article: 2.1 "Committee" shall mean the Stock Option Committee of the Board of Directors of the Corporation, Healthcare Services Group, Inc., which shall consist of two or more members of the Board of Directors of the Board of Directors of the Corporation. 2.2 "Chairman" shall mean the duly appointed Chairman of any standing Committee of the Board. 2.3 "Company" shall mean Healthcare Services Group, Inc. and any of its subsidiaries. 2.4 "Director" shall mean any person who is a member of the Board of Directors of the Company. 2.5 "Eligible Director" shall be any Director of the Company. 2.6 "Exercise Price" shall mean the price per Share at which an Option may be exercised. 2.7 "Fair Market Value" shall mean the closing price of publicly traded Shares on the national securities exchange on which Shares are listed (if the Shares are so listed) or on the Nasdaq Stock Market System (if the Shares are regularly quoted on the Nasdaq Stock Market System), or, if not so listed or regularly quoted, the mean between the closing bid and asked prices of publicly traded Shares in the over-the-counter market Electronic Bulletin Board, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company. 2.8 "Option" shall mean an Option to purchase Shares granted pursuant to the Plan. 2.9 "Option Agreement" shall mean the written agreement described in Article VI herein. 2.10 "Permanent Disability" shall mean the condition of an Eligible Director who is unable to participate as a member of the Board by reason of any medically determined physical or mental impairment which can be expected to result in death or which can be expected to last for a continuous period of not less than twelve (12) months. 2.11 "Purchase Price" shall be the Exercise Price multiplied by the number of whole Shares with respect to which an Option may be exercised. 2.12 "Shares" shall mean shares of common stock, $.01 par value, of the Company. ARTICLE III ADMINISTRATION 3.1 General. This Plan shall be administered by the Committee in accordance with the express provisions of this Plan. B-1 3.2 Powers of the Committee. The Committee shall have full and complete authority to adopt such rules and regulations and to make all such other determinations not inconsistent with the Plan as may be necessary for the administration of the Plan. ARTICLE IV SHARES SUBJECT TO PLAN Subject to adjustment in accordance with Article IX, an aggregate of 150,000 Shares are reserved for issuance under this Plan. Shares sold under this Plan may be either authorized, but unissued Shares or reacquired Shares. If an Option, or any portion thereof, shall expire or terminate for any reason without having been exercised in full, the unpurchased Shares covered by such Option shall be available for future grants of Options. ARTICLE V GRANTS 5.1 Grants of Options. Subject to the express provisions of the Plan, the Committee shall have the authority, in its discretion, to determine the Eligible Directors to whom the Options shall be granted, the number of Shares which shall be subject to each Option, the purchase price of each Share which shall be subject to each Option, the period(s) during which such Options shall be exercisable (whether in whole or in part), and the other terms and provisions thereof. In determining the Eligible Directors to whom Options shall be granted and the number of Shares for which Options shall be granted, the Committee shall consider the length of service of the Eligible Director and the amount of earnings of the Company. 5.2 Determination Final. The determination of the Committee on matters referred to this Article V shall be final. ARTICLE VI TERMS OF OPTION Each Option shall be evidenced by a written Option Agreement executed by the Company and the Eligible Director which shall specify the Grant Date, the number of Shares subject to the Option, the Exercise Price and shall also include or incorporate by reference the substance of all of the following provisions and such other provisions consistent with this Plan as the Board may determine. 6.1 Term. The term of the Option shall be five (5) years from the Grant Date of each Option, subject to earlier termination in accordance with Articles VI and X. 6.2 Restriction on Exercise. Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Board at grant, provided, however, that except in the case of the Eligible Director's death or Permanent Disability, upon which events the Option will become immediately exercisable, unless a longer vesting period is otherwise determined by the Committee at grant, Options shall be exercisable as follows: one-half of the aggregate Shares purchasable under an Option shall be exercisable commencing one year after the Grant Date and an additional one-half of the Shares purchasable under an Option shall be exercisable commencing two years after the Grant Date. The Board may waive such installment exercise provision at any time in whole or in part based on performance and/or such other factors as the Board may determine in its sole discretion, provided, however, that no Option shall be exercisable until more than six months have elapsed from the Grant Date. 6.3 Exercise Price. The Exercise Price for each Share subject to an Option shall be the Fair Market Value of the Share as determined in Section 2.7 herein. 6.4 Manner of Exercise. An Option shall be exercised in accordance with its terms, by delivery of a written notice of exercise to the Company and payment of the full purchase price of the Shares being purchased. An Eligible Director may exercise an Option with respect to all or less than all of the Shares for which the Option may then be exercised, but an Eligible Director must exercise the Option in full Shares. B-2 6.5 Payment. The Purchase Price of Shares purchased pursuant to an Option or portion thereof, may be paid: (a) in United States Dollars, in cash or by check, bank draft or money order payable to the Company; or (b) by delivery of Shares already owned by an Eligible Director (for a period of at least six months) with an aggregate Fair Market Value on the date of exercise equal to the Purchase Price. 6.6 Transferability. No Option shall be transferable, otherwise than by will or the laws of descent and distribution, and an Option shall be exercisable during the Eligible Director's lifetime only by the Eligible Director, his guardian or legal representative or to immediate family members of the Eligible Director or pursuant to a qualified domestic relations order; provided that the Committee may grant options that are transferable, without payment of consideration, to immediate family members of the optionee or to trusts or partnerships for such family members. 6.7 Termination of Membership on the Board. If an Eligible Director's membership on the Board terminates for any reason, an Option vested on the date of termination may be exercised in whole or in part at any time within one (1) year after the date of such termination (but in no event after the term of the Option expires) and shall thereafter terminate. ARTICLE VII GOVERNMENT AND OTHER REGULATIONS 7.1 Delivery of Shares. The obligation of the Company to issue or transfer and deliver Shares for exercised Options under the Plan shall be subject to all applicable laws, regulations, rules, orders and approvals which shall then be in effect. 7.2 Holding of Stock After Exercise of Option. The Option Agreement shall provide that the Eligible Director, by accepting such Option, represents and agrees, for the Eligible Director and his permitted transferees hereunder that none of the Shares purchased upon exercise of the Option shall be acquired with a view to any sale, transfer or distribution of the Shares in violation of the Securities Act of 1933, as amended (the "Act") and the person exercising an Option shall furnish evidence satisfactory to that Company to that effect, including an indemnification of the Company in the event of any violation of the Act by such person. Notwithstanding the foregoing, the Company in its sole discretion may register under the Act the Shares issuable upon exercise of the Options under the Plan. ARTICLE VIII WITHHOLDING TAX The Company may in its discretion, require an Eligible Director to pay to the Company, at the time of exercise of an Option an amount that the Company deems necessary to satisfy its obligations to withhold federal, state or local income or other taxes (which for purposes of this Article includes an Eligible Director's FICA obligation) incurred by reason of such exercise. When the exercise of an Option does not give rise to the obligation to withhold federal income taxes on the date of exercise, the Company may, in its discretion, require an Eligible Director to place Shares purchased under the Option in escrow for the benefit of the Company until such time as federal income tax withholding is required on amounts included in the Eligible Director's gross income as a result of the exercise of an Option. At such time, the Company, in its discretion, may require an Eligible Director to pay to the Company an amount that the Company deems necessary to satisfy its obligation to withhold federal, state or local taxes incurred by reason of the exercise of the Option, in which case the Shares will be released from escrow upon such payment by an Eligible Director. ARTICLE IX ADJUSTMENTS 9.1 Proportionate Adjustments. If the outstanding Shares are increased, decreased, changed into or exchanged into a different number or kind of Shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an B-3 appropriate and proportionate adjustment shall be made by the Committee or the Board of Directors to the maximum number and kind of Shares as to which Options may be granted under this Plan. A corresponding adjustment changing the number or kind of Shares allocated to unexercised Options or portions thereof, which shall have been granted prior to any such change, shall likewise be made. Any such adjustment in the outstanding Options shall be made without change in the Purchase Price applicable to the unexercised portion of the Option with a corresponding adjustment in the Exercise Price of the Shares covered by the Option. Notwithstanding the foregoing, there shall be no adjustment for the issuance of Shares on conversion of notes, preferred stock or exercise of warrants or Shares issued by the Board for such consideration as the Board deems appropriate. 9.2 Reorganization, etc. Notwithstanding any other provision in Article VI hereof, upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the property or more than 80% of the then outstanding Shares of the Company to another corporation, the Company shall give to each Eligible Director at the time of adoption of the plan or agreement for liquidation, dissolution, merger or sale either (1) a reasonable time thereafter within which to exercise the Option in its entirety prior to the effective date of such liquidation or dissolution, merger or sale, or (2) the right to exercise the Option in its entirety as to an equivalent number of Shares of stock of the corporation succeeding the Company or acquiring its business by reason of such liquidation, dissolution, merger, consolidation or reorganization. ARTICLE X AMENDMENT OR TERMINATION OF PLAN 10.1 Amendments. The Board may at any time amend or revise the terms of the Plan, provided no such amendment or revision shall, unless appropriate stockholder approval of such amendment or revision is obtained: (a) increase the maximum number of Shares which may be sold pursuant to Options granted under the Plan, except as permitted under the provisions of Article IX; (b) change the minimum Exercise Price set forth in Article VI; or (c) permit the granting of Options to any one other than as provided in Article V. 10.2 Termination. The Board at any time may suspend or terminate this Plan. This Plan, unless sooner terminated, shall terminate on the tenth anniversary of its adoption by the Board. No Option may be granted under this Plan while this Plan is suspended or after it is terminated. 10.3 Consent of Holder. No amendment, suspension or termination of the Plan shall, without the consent of the holder of Options, alter or impair any rights or obligations under any Option theretofore granted under the Plan. ARTICLE XI MISCELLANEOUS PROVISIONS 11.1 Privilege of Stock Ownership. No Eligible Director entitled to exercise any Option granted under the Plan shall have any of the rights or privileges of a stockholder of the Company with respect to any Shares issuable upon exercise of an Option until certificates representing the Shares shall have been issued and delivered. 11.2 Plan Expenses. Any expenses incurred in the administration of the Plan shall be borne by the Company. 11.3 Use of Proceeds. Payments received from an Eligible Director upon the exercise of Options shall be used for general corporate purposes of the Company. B-4 11.4 Governing Law. The Plan has been adopted under the laws of the Commonwealth of Pennsylvania. The Plan and all Options which may be granted hereunder and all matters related thereto, shall be governed by and construed and enforceable in accordance with the laws of the Commonwealth of Pennsylvania as it then exists. ARTICLE XII STOCKHOLDER APPROVAL This Plan is subject to approval, at a duly held stockholders' meeting within twelve (12) months after the date the Board approves this Plan, by the affirmative vote of holders of a majority of the voting Shares of the Company represented in person or by proxy and entitled to vote at the meeting. Options may be granted, but not exercised, before such stockholder approval is obtained. If the stockholders fail to approve the Plan within the required time period, any Options granted under this Plan shall be void, and no additional Options may thereafter be granted hereunder. B-5 EX-4.(G) 6 FORM OF OPTION AGREEMENT FOR THE DIRECTOR'S PLAN HEALTHCARE SERVICES GROUP, INC. 2643 Huntingdon Pike Huntingdon Valley, Pennsylvania 19006 [ ] To: [Name of Director] 1. We are pleased to inform you that on [ ] you were granted a non-qualified stock option pursuant to the 1995 Directors' Stock Option Plan (the "Plan") of Healthcare Services Group, Inc. (the "Company") to purchase [ ] shares (the "Shares") of Common Stock, par value $.01 per share, of the Company, at a price of $[ ] per Share. This grant is a separate inducement and agreement in connection with your service as a Director of the Company, and not in lieu of any salary or other remuneration for services. 2. No part of the option is currently exercisable. The option may first be exercised, with respect to 50% of the option one year from the date of grant. This option may first be exercised with respect to the remaining 50% of the option two years from the date of grant. 3. To the extent this option is not exercised, it will expire [five] years from the date of the grant. 4. This option is issued in accordance with and is subject to and conditioned upon all of the terms and conditions of the Plan (a copy of which in its present form is attached hereto), as from time to time amended, provided, however, that no future amendment or termination of the Plan shall, without your consent, alter or impair any of your rights or obligations under this option. Reference is made to the terms and conditions of the Plan, all of which are incorporated by reference in this option agreement as if fully set forth herein. 5. Unless at the time of the exercise of this option a registration statement under the Securities Act of 1933, as amended (the "Act"), is in effect as to such Shares, any Shares purchased by you upon the exercise of this option shall be acquired for investment and not for sale or distribution, and if the Company so requests, upon any exercise of this option, in whole or in part, you will execute and deliver to the Company a certificate to such effect. The Company shall not be obligated to issue any Shares pursuant to this option if, in the opinion of counsel to the Company, the Shares to be so issued are required to be registered or otherwise qualified under the Act or under any other applicable statute, regulation or ordinance affecting the sale of securities, unless and until such Shares have been so registered or otherwise qualified. 6. You understand and acknowledge that, under existing law, unless at the time of the exercise of this option a registration statement under the Act is in effect as to such Shares (i) any Shares purchased by you upon exercise of this option may be required to be held indefinitely unless such Shares are subsequently registered under the Act or an exemption from such registration is available; (ii) any sales of such Shares made in reliance upon Rule 144 promulgated under the Act may be made only in accordance with the terms and conditions of that Rule (which, under certain circumstances, restrict the number of shares which may be sold and the manner in which shares may be sold); (iii) in the case of securities to which Rule 144 is not applicable, compliance with Regulation A promulgated under the Act or some other disclosure exemption will be required; (iv) certificates for Shares to be issued to you hereunder shall bear a legend to the effect that the Shares have not been registered under the Act and that the Shares may not be sold, hypothecated or otherwise transferred in the absence of an effective registration statement under the Act relating thereto or an opinion of counsel satisfactory to the Company that such registration is not required; (v) the Company will place an appropriate "stop transfer" order with its transfer agent with respect to such Shares; and (vi) the Company has undertaken no obligation to register the Shares or to include the Shares in any registration statement which may be filed by it subsequent to the issuance of the shares to you. In addition, you understand and acknowledge that the Company has no obligation to you to furnish information necessary to enable you to make sales under Rule 144. 7. This option (or installment thereof) is to be exercised by delivering to the Company a written notice of exercise in the form attached hereto as Exhibit A, specifying the number of Shares to be purchased, together with payment of the purchase price of the Shares to be purchased. The date the Company receives the written notice shall be the exercise date. The purchase price is to be paid in cash or, by delivering shares of the Company's stock already owned by you and having a fair market value on the date of exercise equal to the exercise price of the option, or a combination of such shares and cash, or otherwise in accordance with the Plan. 8. You acknowledge that: A. The particular needs of the Company's customers are not generally known in the industry; -2- B. The Company has a proprietary interest in the identity of its customers and customer lists; and C. Documents and information regarding the Company's methods of operation, sales, pricing, costs, and the specialized requirements of the Company's customers are highly confidential and constitute trade secrets. 9. During the term of your service as a director, you will have access to and become familiar with various trade secrets and confidential information of the Company, including, but not necessarily limited to, the documents and information referred to in paragraph 8 above. You acknowledge that such confidential information and trade secrets are owned and shall continue to be owned solely by the Company. During the term of your service as a director and for three years after such service to the Company terminates, you agree not to use such information for any purpose whatsoever or to divulge such information to any person other than the Company or persons to whom the Company has given its consent, unless such information has already become common knowledge or unless you are compelled to disclose it by governmental process. 10. You agree that: A. During the term of your service as a director, you will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, carry on or be engaged or interested in the cleaning, housekeeping, janitorial, and/or laundry business, whether commercial, industrial, residential, wholesale, or retail, in any form whatsoever. B. For a period of two (2) years after your directorship has been terminated for any reason, with or without cause, you will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, solicit or accept any customers or accounts that were customers or accounts (or legal successors to customers or accounts) of the Company during any period of time that you were a Director of the Company. C. For a period of three (3) years after your directorship has been terminated for any reason, with or without cause, you will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, partnership, or other business entity, directly or indirectly, solicit or accept any customers or accounts which were customers or accounts (or legal successors to customers or accounts) of the Company, and for whose accounts you were responsible at any time while you were a Director of the Company. -3- 11. REMEDIES A. You acknowledge that compliance with paragraphs 9 and 10 is necessary to protect the business and good will of the Company and that a breach of those paragraphs will irreparably and continually damage the Company, for which money damages may not be adequate. Consequently, you agree that, in the event that you breach or threaten to breach any of these covenants, the Company shall be entitled to both (a) a preliminary or a permanent injunction in order to prevent the continuation of such harm and (b) money damages insofar as they can be determined. Nothing in this Stock Option Agreement, however, shall be construed to prohibit the Company from also pursuing any other remedy, the parties having agreed that all remedies are cumulative. B. In the event that there is a dispute arising under or related to this Stock Option Agreement or that a party seeks to enforce any of the terms of this Stock Option Agreement, each party agrees that any legal proceeding will be instituted only in the Court of Common Pleas, Montgomery County, Pennsylvania, or in the United States District Court for the Eastern District of Pennsylvania. Each party irrevocably consents to the jurisdiction of each of those courts and agrees that service of the Complaint or other process may be made as provided in the applicable Rules of Court or as provided in Paragraph 7 of this Stock Option Agreement. C. If any provision of the Stock Option Agreement is adjudged by any court to be void or unenforceable, in whole or in part, that adjudication shall not affect the validity of the remainder of this Stock Option Agreement. Each provision, paragraph and subparagraph of this Stock Option Agreement is separate from the others and is a separate and distinct covenant. If a provision is determined to be void or unenforceable because it is too broad, the parties agree that the Court shall have the power to limit the restriction so as to make it enforceable. D. If a party incurs costs or expenses in enforcing this Stock Option Agreement, including attorney's fees and costs, the defaulting party shall pay to the prevailing party, upon demand, those fees and costs. 12. This Stock Option Agreement is made in, and shall be construed under the laws of, the Commonwealth of Pennsylvania. -4- Would you kindly evidence your acceptance of this option and your agreement to comply with the provisions hereof and of the Plan by executing this letter under the words "Agreed To and Accepted." Very truly yours, HEALTHCARE SERVICES GROUP, INC. By:--------------------------------- Daniel P. McCartney Chairman and Chief Executive Officer AGREED TO AND ACCEPTED: - ----------------------- -5- EXHIBIT A Healthcare Services Group, Inc. 2643 Huntington Pike Huntingdon Valley, Pennsylvania 19006 Gentlemen: Notice is hereby given of my election to purchase _____ shares of Common Stock, $.01 par value (the "Shares"), of Healthcare Services Group, Inc. (the "Company"), at a price of $ per Share, pursuant to the provisions of the stock option granted to me on _________________, under the Company's 1995 Directors' Stock Option Plan. Enclosed in payment for the Shares is: ---- /___/ my check in the amount of $________. ---- /___/ ___________ Shares having a total value $________, such value being based on the closing price(s) of the Shares on the date hereof. The following information is supplied for use in issuing and registering the Shares purchased hereby: Number of Certificates and Denominations ___________________ Name ___________________ Address ___________________ ___________________ Social Security Number ___________________ Dated: _______________, ____ Very truly yours, -------------------------- -6- EX-5 7 OPINION OF OLSHAN GRUNDMAN FROME & ROSENZWEIG OLSHAN GRUNDMAN FROME & ROSENZWEIG 505 Park Avenue New York, New York 10022 (212) 753-7200 April 20, 1995 Securities and Exchange Commission 450 Fifth Street, N.W. Judiciary Plaza Washington, DC 20549 Re: Healthcare Services Group, Inc. Registration Statement on Form S-8 ---------------------------------- Gentlemen: Reference is made to the Registration Statement on Form S-8 dated April 20, 1995 (the "Registration Statement"), filed with the Securities and Exchange Commission by Healthcare Services Group, Inc., a Pennsylvania corporation (the "Company"). The Registration Statement relates to an aggregate of 1,397,717 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"). The Shares will be issued and sold by the Company pursuant to and in accordance with the Company's 1995 Incentive and Non-qualified Stock Option Plan (the "Plan"), its 1995 Directors' Stock Option Plan (the "Directors' Plan"), its 1991 Incentive Stock Option Plan (the "Incentive Plan") and certain Non-Qualified Stock Option agreements entered into with certain Directors and/or consultants and the Company (the "Stock Option Agreements"). The Plan and the Directors' Plan are subject to stockholder approval. We advise you that we have examined originals or copies certified or otherwise identified to our satisfaction of the Certificate of Incorporation and By-laws of the Company, minutes of meetings of the Board of Directors and stockholders of the Company, the Plan, the Directors' Plan, the Incentive Plan, the Stock Option Agreements, a Prospectus relating to the resale of Securities and Exchange Commission April 20, 1995 Page -2- Common Stock underlying options held by affiliates of the Company (the "Prospectus"), and such other documents, instruments and certificates of officers and representatives of the Company and public officials, and we have made such examination of the law, as we have deemed appropriate as the basis for the opinion hereinafter expressed. In making such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to original documents of documents submitted to us as certified or photostatic copies. Based upon the foregoing, we are of the opinion that the Shares, when issued and paid for in accordance with the terms and conditions set forth in the Plan, the Directors' Plan, the Incentive Plan and the Stock Option Agreements will be duly and validly issued, fully paid and non-assessable. We consent to the reference to this firm under the caption "Legal Matters" in the Prospectus. Very truly yours, /s/ OLSHAN GRUNDMAN FROME & ROSENZWEIG -------------------------------------- OLSHAN GRUNDMAN FROME & ROSENZWEIG EX-23.(A) 8 CONSENT OF GRANT THORNTON, INDEPENDENT AUDITORS CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated February 24, 1995, accompanying the financial statements of Healthcare Services Group, Inc. appearing in the 1994 Annual Report of the Company to its shareholders included in the Annual Report on Form 10-K for the year ended December 31, 1994 which is incorporated by reference in this Registration Statement and Prospectus. We consent to the incorporation by reference in the Registration Statement and Prospectus of the aforementioned report. GRANT THORNTON LLP /s/ GRANT THORNTON LLP - ---------------------- Parsippany, New Jersey April 18, 1995 -----END PRIVACY-ENHANCED MESSAGE-----