Healthcare Services Group, Inc. Announces Settlement of Shareholder Derivative Lawsuits - Seite 2

IF YOU WERE NOT THE BENEFICIAL OWNER OF HCSG COMMON STOCK ON THE RECORD DATE, PLEASE TRANSMIT THIS DOCUMENT TO SUCH BENEFICIAL OWNER.

YOU ARE HEREBY NOTIFIED, pursuant to Federal Rule of Civil Procedure 23.1 and an Order of the U.S. District Court for the Eastern District of Pennsylvania (the “Court”), that a proposed settlement agreement (the “Stipulation” or “Settlement”) has been reached among the Settling Parties¹ in connection with the consolidated shareholder derivative actions entitled McCollum v. Wahl, et al., No. 2:20-cv-03426 (E.D. Pa.) and Batan, et al. v. Wahl, et al., No. 2:21-cv-02810 (E.D. Pa.), pending before the Court, (collectively the “Federal Actions”). In addition, the Settlement resolves related state court consolidated shareholder derivative actions, Reisman, et al. v. Wahl, et al., No. 2021-03255 (Bucks County Ct. Com. Pl.), and Berezin, et al. v. Wahl, et al., No. 2021-03366 (Bucks County Ct. Com. Pl.), pending before the Court of Common Pleas of Bucks County, Pennsylvania (collectively, the “State Court Actions”). The Settlement further resolves a series of pre-suit Demands made by Plaintiffs. The Federal Actions and the State Court Actions are referred to collectively as the Derivative Actions. The Derivative Actions and the Demands are referred to collectively as the Derivative Matters.

I. SUMMARY

Plaintiffs filed the Derivative Actions on behalf of HCSG to remedy the alleged harm caused to the Company by the Individual Defendants’ alleged breach of fiduciary duties, unjust enrichment, abuse of control, and corporate waste. The proposed Settlement, once effective, would fully, finally, and forever resolve the Derivative Matters on the terms set forth in the Stipulation and summarized in this Notice, including the dismissal of the Derivative Actions with prejudice. HCSG’s Board of Directors (the “Board”) has reviewed the allegations in the Derivative Matters and the Settlement and, in a good faith exercise of its independent business judgment, determined that the Settlement is in the best interests of HCSG and Current HCSG Shareholders.

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¹ All capitalized terms used in this notice, unless otherwise defined herein, are defined as set forth in the Stipulation.

II. THE SETTLEMENT

This Notice is a summary only and does not describe all of the details of the Stipulation. For full details of the matters discussed in this summary, please see the Stipulation posted on the “Investors” section of Company’s website, https://investor.hcsgcorp.com/home/default.aspx, contact Plaintiffs’ Counsel at the address listed below, or inspect the Stipulation and its exhibits filed with the Clerk of the Court.