EXCLUSIVITY AGREEMENT
---------------------
EXCLUSIVITY AGREEMENT, dated as of August 16, 1999 (the "Agreement"), by
and among NovaCare Employee Services, Inc. (the "Company"), NovaCare, Inc.
("Company Parent"), Patricof & Co. Ventures, Inc. ("Patricof"), Fidelity
Ventures Limited ("Fidelity") and AFLAC Incorporated ("AFLAC") (Patricof,
Fidelity and AFLAC are referred to collectively as the "Investors").
WHEREAS, the Company, Company Parent and the Investors have entered into
negotiations and discussions regarding the acquisition (the "Acquisition") of
the Company by a company to be formed by the Investors (the "Acquiror") on the
terms and subject to the conditions to be negotiated and incorporated into a
definitive merger agreement (the "Merger Agreement"); and
WHEREAS, Company Parent is, through a wholly owned subsidiary, the
controlling shareholder of the Company; and
WHEREAS, Acquiror desires to acquire all of the outstanding common stock of
the Company, including Company Parent's interest in the Company; and
WHEREAS, the parties have been negotiating to consummate a transaction on
the basis of the Investors acquiring the Company at a price of $2.89 per share
of Company common stock and desire to continue negotiations to expeditiously
execute the Merger Agreement.
NOW THEREFORE, in consideration of the agreements contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
1. TERM. This Agreement shall continue for a period beginning on the date
hereof and ending on the earlier of (i) 9:00 a.m., Philadelphia time, on
Thursday, September 9, 1999 and (ii) the execution and delivery of the Merger
Agreement, unless this Agreement shall be earlier terminated by the written
consent of all of the parties.
2. ACCESS AND INFORMATION. During the term of this Agreement, upon
reasonable notice, the Company shall (and shall cause each of its subsidiaries
to) afford to the officers, employees, accountants, counsel, financing sources
and other representatives of the Investors, access, during normal business
hours, to all of its properties, books, contracts, commitments, records and
personnel, and during such term, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to the Investors (a) a copy of each report,
schedule, registration statement or other document filed or received by it
during such term pursuant to the requirements of the federal securities laws,
and (b) all other information concerning its business, properties and personnel
as the Investors may reasonably request.
3. NON-SOLICITATION. During the term of this Agreement, neither the
Company, Company Parent nor any subsidiary or affiliate of the Company or
Company Parent shall (and neither the Company, Company Parent nor any subsidiary
or affiliate of the Company or
Company Parent shall authorize or permit any of their respective officers,
directors, employees, representatives or agents, including, but not limited to,
investment bankers, attorneys and accountants, to), directly or indirectly,
encourage, solicit or initiate any inquiry, proposal or offer, or participate in
or initiate discussions or negotiations with, or provide any information to, any
person or group (other than the Investors or any of their affiliates or
representatives) concerning any proposal or offer for a merger, share exchange,
consolidation, recapitalization, asset acquisition or other business combination
or similar transaction involving the Company, or any subsidiary of the Company,
or any proposal or offer to acquire any equity interest in, or outside the
ordinary course of business consistent with past practice any of the assets of,
the Company or any subsidiary of the Company other than the Acquisition, or
otherwise cooperate in any way with, participate in, facilitate or encourage any
effort or attempt by, any person or group (other than the Investors or any of
their affiliates or representatives) to do or seek any of the foregoing. Upon
execution of this Agreement, the Company and Company Parent shall immediately
cease any existing activities, discussions or negotiations with any parties
conducted prior to the date of this Agreement with respect to any of the
foregoing. During the terms of this Agreement, the Company and Company Parent
shall immediately notify the Investors of the existence of any proposal,
discussions, negotiation or inquiry received by either of them and shall
immediately communicate to the Investors the terms, of any proposal, discussion,
inquiry or negotiation which either of them may receive (and shall immediately
provide the Investors with copies of any written materials received by either of
them in connection with such proposal, discussions, inquiry or negotiation),
including, but not limited to, the identity of the party making such proposal or
inquiry or engaging in such discussions or negotiation and shall keep the
Investors immediately advised of all developments in such proposal, inquiry,
discussion or negotiation. During the term of this Agreement, neither the
Company nor Company Parent shall release any third party from, or waive any
provisions of, any confidentiality or non- solicitation agreement to which of
them is a party.
4. AMENDMENT AND MODIFICATION. This Agreement may be amended, modified or
supplemented only by a written agreement signed by each of the parties hereto.
5. ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties.
6. EXPENSES. Except as otherwise provided in the Letter Agreement, dated
July 29, 1999, among the Company, Patricof and Fidelity or herein, whether or
not the contemplated transaction is consummated, all fees, charges and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees, charges or expenses.
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO
AGREEMENTS MADE AND TO BE
2
PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CHOICE OF LAW
PRINCIPLES THEREOF.
8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9. INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
10. ENTIRE AGREEMENT. This Agreement, together with the Confidentiality
Agreements between the Company and the Investors, embodies the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both written
and oral, among the parties, or between any of them, with respect to the subject
matter hereof and thereof.
11. NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to, and
does not, create any rights or benefits of any party other than the parties
hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.
NOVACARE EMPLOYEE SERVICES, INC.
By /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: President and CEO
NOVACARE, INC.
By /s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Sr. VP Finance and Administration
and CFO
PATRICOF & CO. VENTURES, INC.
By /s/ X.X. Xxxxxxx
-----------------------------
Name: X.X. Xxxxxxx
Title: Managing Director
FIDELITY VENTURES LIMITED
BY ITS GENERAL PARTNER
FIDELITY CAPITAL ASSOCIATES, INC.
By /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
AFLAC INCORPORATED
By /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
and Chief Investment
Officer
4
