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.
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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.
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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
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appropriate and proportionate adjustment shall be made by the Committee or the
Board of Directors to the maximum number and kind of Shares as to which Options
may be granted under this Plan. A corresponding adjustment changing the number
or kind of Shares allocated to unexercised Options or portions thereof, which
shall have been granted prior to any such change, shall likewise be made. Any
such adjustment in the outstanding Options shall be made without change in the
Purchase Price applicable to the unexercised portion of the Option with a
corresponding adjustment in the Exercise Price of the Shares covered by the
Option. Notwithstanding the foregoing, there shall be no adjustment for the
issuance of Shares on conversion of notes, preferred stock or exercise of
warrants or Shares issued by the Board for such consideration as the Board deems
appropriate.
9.2 Reorganization, etc. Notwithstanding any other provision in Article VI
hereof, upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or more than 80% of the then
outstanding Shares of the Company to another corporation, the Company shall give
to each Eligible Director at the time of adoption of the plan or agreement for
liquidation, dissolution, merger or sale either (1) a reasonable time thereafter
within which to exercise the Option in its entirety prior to the effective date
of such liquidation or dissolution, merger or sale, or (2) the right to exercise
the Option in its entirety as to an equivalent number of Shares of stock of the
corporation succeeding the Company or acquiring its business by reason of such
liquidation, dissolution, merger, consolidation or reorganization.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 Amendments. The Board may at any time amend or revise the terms of the
Plan, provided no such amendment or revision shall, unless appropriate
stockholder approval of such amendment or revision is obtained:
(a) increase the maximum number of Shares which may be sold pursuant to
Options granted under the Plan, except as permitted under the provisions of
Article IX;
(b) change the minimum Exercise Price set forth in Article VI; or
(c) permit the granting of Options to any one other than as provided in
Article V.
10.2 Termination. The Board at any time may suspend or terminate this Plan.
This Plan, unless sooner terminated, shall terminate on the tenth anniversary of
its adoption by the Board. No Option may be granted under this Plan while this
Plan is suspended or after it is terminated.
10.3 Consent of Holder. No amendment, suspension or termination of the Plan
shall, without the consent of the holder of Options, alter or impair any rights
or obligations under any Option theretofore granted under the Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Privilege of Stock Ownership. No Eligible Director entitled to exercise
any Option granted under the Plan shall have any of the rights or privileges of
a stockholder of the Company with respect to any Shares issuable upon exercise
of an Option until certificates representing the Shares shall have been issued
and delivered.
11.2 Plan Expenses. Any expenses incurred in the administration of the Plan
shall be borne by the Company.
11.3 Use of Proceeds. Payments received from an Eligible Director upon the
exercise of Options shall be used for general corporate purposes of the Company.
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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.
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