EXHIBIT 10.39
EXCHANGE AGREEMENT
Dated as of May 22, 2002
by and between
Nationwide Financial Services, Inc.
and
Nationwide CORPORATION
TABLE OF CONTENTS
PAGE
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SECTION 1. CERTAIN DEFINITIONS........................................................................2
1.1 Definitions....................................................................................2
SECTION 2. EXCHANGE; NSI CLOSING; CLOSING; EXCHANGE PRICE ADJUSTMENT..................................7
2.1 Exchange.......................................................................................7
2.2 NSI Closing; Closing...........................................................................7
2.3 Exchange Price Adjustment......................................................................8
SECTION 3. REPRESENTATIONS AND WARRANTIES OF NFS......................................................8
3.1 Capacity of NFS................................................................................8
3.2 Authority Relative to this Agreement...........................................................8
3.3 No Violation...................................................................................9
3.4 Organization, Qualification, and Subsidiaries..................................................9
3.5 Investments....................................................................................9
3.6 Capitalization of GGI and NSI; Title to the Shares............................................10
3.7 Employee Benefit Plans........................................................................10
3.8 No Conflict; Government Filings...............................................................10
3.9 Financial Statements..........................................................................11
3.10 Books and Records.............................................................................12
3.11 Compliance with Laws; Permits.................................................................12
3.12 Litigation....................................................................................13
3.13 Labor Relations and Employment................................................................13
3.14 Broker's or Finder's Fees.....................................................................13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF NW CORP.................................................14
4.1 Capacity of NW Corp...........................................................................14
4.2 Validity and Execution of Agreement...........................................................14
4.3 No Conflict...................................................................................14
4.4 Broker's or Finder's Fees.....................................................................15
4.5 Litigation....................................................................................15
4.6 Investment Representation.....................................................................15
4.7 Share Consideration...........................................................................15
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TABLE OF CONTENTS
(continued)
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SECTION 5. NFS' PRE-CLOSING COVENANTS................................................................15
5.1 General.......................................................................................15
5.2 Notices and Consents..........................................................................15
5.3 Conduct of Business...........................................................................15
5.4 Notice of Developments........................................................................16
5.5 Exclusivity...................................................................................16
5.6 Maintenance of Records........................................................................16
5.7 Compliance with Laws..........................................................................16
5.8 Continued Effectiveness of Representations and Warranties.....................................16
5.9 Transfer of NSI Common Shares.................................................................16
5.10 GGI Reorganization............................................................................16
SECTION 6. PRE-CLOSING COVENANTS OF NW CORP..........................................................17
6.1 General.......................................................................................17
6.2 Notice of Developments........................................................................17
6.3 Notices and Consents..........................................................................17
SECTION 7. CONDITIONS TO OBLIGATIONS OF NFS..........................................................17
7.1 Accuracy of Representations and Warranties....................................................17
7.2 Performance by NW Corp........................................................................17
7.3 Legal Challenge...............................................................................17
7.4 Approvals; No Prohibition.....................................................................18
7.5 Marketing Agreement...........................................................................18
7.6 Opinion of Financial Advisor..................................................................18
7.7 Opinion of Tax Advisor........................................................................18
SECTION 8. CONDITIONS TO OBLIGATIONS OF NW CORP......................................................18
8.1 Accuracy of Representations and Warranties....................................................18
8.2 Performance by NFS............................................................................18
8.3 Legal Challenge...............................................................................18
8.4 Approvals; No Prohibition.....................................................................18
8.5 Marketing Agreement...........................................................................19
8.6 Opinion of Financial Advisor..................................................................19
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TABLE OF CONTENTS
(continued)
PAGE
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SECTION 9. ACTIONS AT THE NSI CLOSING AND CLOSING BY NFS.............................................19
SECTION 10. ACTIONS AT THE NSI CLOSING AND CLOSING BY NW CORP.........................................19
SECTION 11. TAX MATTERS...............................................................................20
11.1 Payment of Transaction Taxes..................................................................20
11.2 Cooperation...................................................................................20
11.3 Section 355 of the Code; Further Assurances...................................................20
11.4 Tax Sharing Agreement.........................................................................20
11.5 Allocation....................................................................................20
11.6 Indemnification...............................................................................20
SECTION 12. TERMINATION AND REMEDIES..................................................................21
12.1 Termination of Agreement......................................................................21
SECTION 13. GENERAL SURVIVAL; INDEMNIFICATION.........................................................21
13.1 Survival of Representations...................................................................21
13.2 Indemnification...............................................................................22
SECTION 14. GENERAL PROVISIONS........................................................................24
14.1 Expenses......................................................................................24
14.2 Execution in Counterparts; Binding Effect.....................................................24
14.3 Governing Law.................................................................................24
14.4 Notices.......................................................................................24
14.5 Titles and Headings...........................................................................25
14.6 Successors and Assigns........................................................................25
14.7 No Third Party Beneficiaries..................................................................25
14.8 Entire Agreement..............................................................................25
14.9 Waivers and Amendments........................................................................26
14.10 Severability..................................................................................26
14.11 Confidentiality and Announcements.............................................................26
14.12 Specific Performance..........................................................................26
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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (together with the Disclosure Schedule and
Annexes hereto, the "Agreement") is made and entered into as of this 22nd day of
May, 2002, by and between Nationwide Financial Services, Inc., a Delaware
corporation ("NFS"), and Nationwide Corporation, an Ohio corporation ("NW
Corp.").
WHEREAS, NW Corp. currently owns all of the outstanding shares of the
Class B Common Stock (the "NFS Common Stock") of NFS.
WHEREAS, NFS currently owns: (i) 958,750 shares of common stock (the
"GGI Common Shares") of Gartmore Global Investments, Inc., a Delaware
corporation ("GGI"); and (ii) 500,000 shares of preferred stock (the "GGI
Preferred Shares") of GGI.
WHEREAS, Nationwide Life Insurance Company, a wholly-owned Subsidiary
of NFS ("NW Life"), currently owns 7,676 shares of the common stock (the "NSI
Common Shares") of Nationwide Securities, Inc., an Ohio corporation ("NSI").
WHEREAS, prior to NSI Closing (as defined in Section 1.1 below), NW
Life will distribute the NSI Common Shares to NFS.
WHEREAS, in exchange for the shares of NFS comprising the Share
Consideration (as defined in SECTION 1.1 below), NFS desires to transfer to NW
Corp., and NW Corp. desires to accept from NFS, the GGI Common Shares, the GGI
Preferred Shares, and the NSI Common Shares (collectively, the "Shares"), on the
terms and conditions set forth in this Agreement.
WHEREAS, NFS and NW Corp. intend that the exchange and other
transactions contemplated by this Agreement (collectively, the "Exchange") shall
result in no gain or loss to NFS or NW Corp. for federal income tax purposes
under Section 355 of the Code (as defined in Section 1.1 below).
WHEREAS, the Special Committee of the Board of Directors of NFS has
recommended that the Board of Directors of NFS approve the Exchange.
WHEREAS, the Board of Directors of NFS has determined that the Exchange
is in the best interest of NFS and its stockholders and has approved the
Exchange.
NOW, THEREFORE, in consideration of the premises and the mutual terms,
conditions, and other agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties agree as follows:
SECTION 1.
CERTAIN DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings set forth below (definitions are applicable to both the
singular and plural forms of each term defined in this Section):
"AFFILIATE" means a Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control with
another Person or beneficially that owns or has the power to vote or direct the
vote of ten percent (10%) or more of the voting stock (or any other form of
general partnership, limited partnership, or voting equity interest in the case
of a Person that is not a corporation) of such Person. For purposes of this
definition, "control", including the terms "controlling" and "controlled", means
the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
credit agreement, as trustee, partner, or executor or otherwise.
"AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"APPLICABLE ENTITIES" means each of GGI, its Subsidiaries, and NSI.
"ASSETS" means, as to a Person, all rights, titles, franchises, and
interests in and to every species of property, real, personal, and mixed, and
chooses in action thereunto and all other assets whatsoever, tangible or
intangible, of such Person.
"AVERAGE CLOSING PRICE" means the average closing sales price of a
share of the Class A Common Stock of NFS on the New York Stock Exchange for the
ten (10) consecutive trading days immediately prior to the date of the NSI
Closing.
"BUSINESS" means, as to a Person, the business, operations, activities,
and affairs of such Person.
"BUSINESS DAY" means any day other than Saturday, Sunday, or other day
on which banks are authorized or required to be closed by Law in
Columbus, Ohio.
"CLOSING" has the meaning set forth in SECTION 2.2 of this Agreement.
"CLOSING BALANCE SHEET" has the meaning set forth in SECTION 2.3 of
this Agreement.
"CLOSING BALANCE SHEET DATE" means: (i) the date of the NSI Closing if
such date is the last day of a month; and (ii) the last day of the month in
which the NSI Closing occurs if the date of the NSI Closing is not the last day
of a month.
"CLOSING DATE" has the meaning set forth in SECTION 2.2 of this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMPUTER SOFTWARE" means any and all computer software consisting of
sets of statements or instructions to be used, directly or indirectly, in a
computer, and may include some or all of the following: (i) programs, source
codes, object codes, and natural language codes thereof and component modules
thereof; (ii) versions thereof; (iii) flow charts, screen displays, and designs
thereof; and (iv) user, technical, training, and other documentation relating to
any of the foregoing.
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"CONSENT OR FILING" has the meaning set forth in SECTION 3.8 of this
Agreement.
"CONSTITUTIVE DOCUMENTS" means, with respect to any juridical Person,
such person's articles or certificate of incorporation and its bylaws, or
similar organizational documents.
"CUT-OFF DATE" has the meaning set forth in SECTION 13.1 of this
Agreement.
"DAMAGES" has the meaning set forth in SECTION 13.2 of this Agreement.
"DISCLOSURE SCHEDULE" means the schedules of even date herewith
containing various disclosures by NW Corp. and NFS, as the case may be, and with
respect to the representations and warranties of NW Corp. and NFS, as the case
may be, as set forth in this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE" has the meaning set forth in the preamble to this Agreement.
"EXCHANGE PRICE" means the sum of: (i) with respect to GGI and its
Subsidiaries, $353,200,000 (the "GGI Exchange Price"); and (ii) subject to
SECTION 2.3, with respect to NSI, $9,600,000 (the "NSI Exchange Price").
"FINANCIAL STATEMENTS" means each of the GGI GAAP Financial Statements,
the GGI Interim Financial Statements, the NSI GAAP Financial Statements, and the
NSI Interim Financial Statements.
"FINAL NET BOOK VALUE" means the net book value of NSI as of the
Closing Balance Sheet Date based on the Closing Balance Sheet, as determined by
NW Corp.
"GAAP" means generally accepted accounting principles.
"GGI" has the meaning set forth in the preamble to this Agreement.
"GGI GAAP FINANCIAL STATEMENTS" has the meaning set forth in SECTION
3.9(A) of this Agreement.
"GGI INTERIM FINANCIAL STATEMENTS" has the meaning set forth in SECTION
3.9(A) of this Agreement.
"GGI MATERIAL ADVERSE EFFECT" means any material adverse effect on the
Business, Assets, Liabilities, financial condition, or results of operations of
GGI and any of its Subsidiaries taken as a whole, other than events or
conditions affecting the equity markets in the United States generally.
"GGI REORGANIZATION" means the occurrence of transactions substantially
as follows: GGI will contribute the following assets to Gartmore S.A. Capital
Trust ("GSAC") or a
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subsidiary thereof: (i) any cash in excess of the reasonable business needs of
GGI; (ii) its investment in marketable securities; (iii) its investment in
Gartmore Xxxxxx Financial Services, Inc.; (iv) intercompany receivables from
GSAC to GGI; (v) its investment in Xxxxxxxx Capital Partners, LLC; (vi) its
investment in Investia Holdings, Ltd; (vii) its investment in Advisor Software,
Inc.; (viii) its investment in Northpointe Capital LLC; and (ix) its option to
acquire a portion of the capital stock or trust interests of Gartmore Global
Asset Management Trust.
"GOVERNMENTAL ENTITY" means any court, executive office, legislature,
any governmental agency, commission, or administrative or regulatory authority
or instrumentality, domestic or foreign, or any Self-Regulatory Organization.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 13.2 of this
Agreement.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 13.2 of this
Agreement.
"INTERIM NET BOOK VALUE" means $9,600,000, which is the net book value
of NSI as of March 31, 2002 based on the NSI Interim Balance Sheet.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE OF NW CORP." or words to that effect mean the actual
knowledge of any of the executive officers of NW Corp. and NW Mutual.
"KNOWLEDGE OF NFS" or words to that effect mean the actual knowledge of
any of the officers of NFS.
"LAW" means any law, statute, ordinance, rule, code, or regulation
enacted or promulgated, or Order issued or rendered, by any Governmental Entity.
"LIABILITY" means a liability, obligation, claim, penalty, fine, Lien,
loss, cost, expense, or cause of action (of any kind or nature whatsoever,
whether absolute, accrued, contingent, or otherwise, and whether known or
unknown).
"LICENSE" means a license, certificate of authority, franchise, permit,
or other authorization to transact business or needed to transact business,
whether granted by a Governmental Entity or other Person.
"LIEN" means any lien, pledge, mortgage, deed of trust, warrant,
security interest, lease, charge, option, right of first refusal, easement,
adverse claim, encroachment, servitude, transfer restriction under any
shareholder or similar agreement, or any encumbrance.
"MARKETING AND SUPPORT SERVICES AGREEMENT" means an agreement in a form
to be agreed upon by the parties, which relates to certain post-Closing services
to be provided by NFS to GGI.
"NFS" has the meaning set forth in the preamble to this Agreement.
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"NFS COMMON STOCK" has the meaning set forth in the preamble to this
Agreement.
"NLRB" means the National Labor Relations Board.
"NSI" has the meaning set forth in the preamble to this Agreement.
"NSI CLOSING" has the meaning set forth in SECTION 2.2 of this
Agreement.
"NSI GAAP FINANCIAL STATEMENTS" has the meaning set forth in SECTION
3.9(a) of this Agreement.
"NSI INTERIM BALANCE SHEET" means the interim unaudited balance sheet
of NSI as of March 31, 2002.
"NSI INTERIM FINANCIAL STATEMENTS" has the meaning set forth in SECTION
3.9(a) of this Agreement.
"NSI MATERIAL ADVERSE EFFECT" means any material adverse effect on the
Business, Assets, Liabilities, financial condition, or results of operations of
NSI and any of its Subsidiaries taken as a whole.
"NW CORP." has the meaning set forth in the preamble to this Agreement.
"NW CORP. MATERIAL ADVERSE EFFECT" means any material adverse effect on
the Business, Assets, Liabilities, financial condition, or results of operations
of NW Corp. and its Subsidiaries (excluding the Applicable Entities and NFS)
considered as a whole.
"NW LIFE" has the meaning set forth in the preamble to this Agreement.
"NW MUTUAL" means Nationwide Mutual Insurance Company.
"ORDER" means an order, writ, ruling, judgment, directive, injunction,
or decree of any arbitrator or Governmental Entity.
"PERSON" means an individual, corporation, partnership, association,
joint stock company, limited liability company, Governmental Entity, business
trust, unincorporated organization, or other legal entity.
"RETURNS" means any returns, reports, statements, notices, forms or
other documents or information required to be filed with any Taxing Authority in
connection with the determination, assessment, collection, or payment of any
Taxes or in connection with the administration, implementation, or enforcement
of or compliance with any legal requirement relating to any Taxes.
"SEC" means the Securities and Exchange Commission.
"SELF-REGULATORY ORGANIZATION" means the NASD, the NYSE, the AMEX, the
MSRB, the Chicago Stock Exchange, the Chicago Mercantile Exchange, the Chicago
Board of
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Trade, the Cincinnati Stock Exchange, the Minneapolis Grain Exchange, the New
York Futures Exchange, the Philadelphia Stock Exchange, or any other commission,
board, agency, or body that is not otherwise a governmental authority but is
charged with the supervision or regulation of brokers, dealers, securities
underwriting or trading, stock exchanges, commodities exchanges, insurance
companies or agents, investment companies, or investment advisers, or to the
jurisdiction or supervision of which any of the Applicable Entities are
otherwise subject.
"SHARES" has the meaning set forth in the preamble to this Agreement.
"SHARE CONSIDERATION" means, subject to SECTION 2.3, the number of
shares of NFS Common Stock equal to: (i) the Exchange Price, divided by (ii) the
Average Closing Price. "SUBSIDIARY" means, with respect to any Person on a given
date, any other Person of which a majority of the voting power of the equity
securities or equity interests is owned directly or indirectly by such Person.
"TAXES" means all taxes, charges, fees, levies or like other
assessments (whether federal, state, local, or foreign) based upon or measured
by income and any other tax whatsoever, including, without limitation, gross
receipts, profits, premium, sales, use, occupation, value added, ad valorem,
transfer, franchise, withholding, payroll, employment, unemployment, excise,
windfall profits, transfer, license, occupation, or property taxes, together
with any interest, penalties or additions to tax resulting from, attributable
to, or incurred in connection with any such taxes or any contest or dispute
thereof.
"TAXING AUTHORITY" means a taxing authority of the United States of
America, any state thereof or the District of Columbia, any local governmental
subdivision thereof, and any foreign government.
"TAX SHARING AGREEMENT" means that certain Tax Sharing Agreement, dated
as of April 12, 2000, by and between NW Mutual and certain of its Subsidiaries.
"TERMINATION DATE" has the meaning set forth in SECTION 12.1 of this
Agreement.
SECTION 2.
EXCHANGE; NSI CLOSING; CLOSING; EXCHANGE PRICE ADJUSTMENT
2.1 EXCHANGE.
(a) On the terms and subject to the conditions set forth in this
Agreement, at the NSI Closing (hereinafter defined): (i) NFS agrees to transfer,
assign, convey, and deliver to NW Corp., and NW Corp. agrees to acquire and
accept from NFS, all of the NSI Common Shares; and (ii) NW Corp. agrees to
transfer, assign, convey, and deliver to NFS, and NFS agrees to acquire and
accept from NW Corp., the Share Consideration relating to the NSI Exchange
Price.
(b) On the terms and subject to the conditions set forth in this
Agreement, at the Closing (hereinafter defined): (i) NFS agrees to transfer,
assign, convey, and deliver to NW Corp., and NW Corp. agrees to acquire and
accept from NFS, all of the GGI Common Shares
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and GGI Preferred Shares; and (ii) NW Corp. agrees to transfer, assign, convey,
and deliver to NFS, and NFS agrees to acquire and accept from NW Corp., the
Share Consideration relating to the GGI Exchange Price.
2.2 NSI CLOSING; CLOSING. The consummation of the Exchange of NSI
Common Shares ("NSI Closing") shall be effective at 12:01 a.m., on the fifth
Business Day after all conditions to the respective obligations of the parties
set forth in SECTIONS 7 and 8 hereof (other than those that are intended to be
satisfied only at the NSI Closing) have been satisfied or waived. The
consummation of the Exchange of GGI Common Shares and GGI Preferred Shares
("Closing") shall be effective at 12:01 a.m., on the first Business Day after
the NSI Closing (with the effective date and time being of the NSI Closing and
the Closing, as the case may be, being referred to herein as the "Closing
Date"). The physical transfer and delivery of the Share Consideration comprising
each of the NSI Exchange Price and the GGI Exchange Price and the Shares will
occur at 10:00 a.m., New York time, on the date of the NSI Closing and the
Closing, respectively, at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 00 Xxxxx
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxx, or at such other time, date, and place
as shall be mutually agreed upon by the parties. Each party hereto agrees to use
commercially reasonable efforts promptly to satisfy the conditions to the NSI
Closing and the Closing, respectively, to be satisfied by it in order to
expedite the NSI Closing and the Closing.
2.3 EXCHANGE PRICE ADJUSTMENT. Within thirty (30) days after the date
of the NSI Closing, NW Corp. will: (i) cause an unaudited balance sheet of NSI
(the "Closing Balance Sheet"), dated as of the Closing Balance Sheet Date, to be
prepared using the same financial and accounting methods and procedures that
were used to prepare the NSI Interim Balance Sheet; and (ii) based on such
Closing Balance Sheet, calculate the Final Net Book Value. The Closing Balance
Sheet and the Final Net Book Value will be conclusively binding upon the parties
hereto, absent manifest error. If the Final Net Book Value is: (A) greater than
the Interim Net Book Value, then the Exchange Price will be increased; and (B)
less than the Interim Net Book Value, then the Exchange Price will be decreased,
in each case, on a pro rata basis (using the allocations set forth in SECTION
11.5 below) to account for such increase or decrease, as the case may be. If the
Exchange Price is increased, then the Share Consideration will be increased
accordingly, and NW Corp. will promptly transfer to NFS such number of shares of
NFS Common Stock (valued on the Average Closing Price) that compensate NFS for
such increase. If the Exchange Price is decreased, then the Share Consideration
will be decreased accordingly, and NFS will promptly issue to NW Corp. such
number of shares of NFS Common Stock (valued on the Average Closing Price) that
compensate NW Corp. for such decrease.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF NFS
NFS represents and warrants to NW Corp., as of the date hereof and as
of the Closing Date, as follows:
3.1 CAPACITY OF NFS. NFS is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Delaware and has
all requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder.
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3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. (a) The execution and
delivery of this Agreement and any other agreements contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, have been (i)
determined to be fair, from a financial point of view, to NFS and recommended
for approval by the Special Committee of the Board of Directors of NFS, and (ii)
duly and validly authorized by the Board of Directors of NFS, and by all
necessary corporate action on the part of NFS. When executed and delivered, the
Marketing and Support Services Agreement and the consummation of the
transactions contemplated thereby will be duly and validly authorized by the
Board of Directors of NFS, and by all necessary corporate action on the part of
NFS.
(b) This Agreement has been duly and validly executed and delivered by
NFS and, assuming this Agreement constitutes a legal, valid and binding
agreement of NW Corp., constitutes a legal, valid, and binding agreement of NFS
enforceable against NFS in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, and similar Laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
3.3 NO VIOLATION. Except as set forth in SECTION 3.3 of the Disclosure
Schedule, the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby will not violate or
conflict with the Constitutive Documents of NFS.
3.4 ORGANIZATION, QUALIFICATION, AND SUBSIDIARIES. (a) Each of the
Applicable Entities (and their respective type of entity) is listed on SECTION
3.4 of the Disclosure Schedule, is duly incorporated or formed, as the case may
be, and is validly existing and in good standing under the Laws of the State set
forth opposite its name on SECTION 3.4 of the Disclosure Schedule. There are no
Subsidiaries of GGI that are not listed on SECTION 3.4 of the Disclosure
Schedule. Each of the Applicable Entities has all requisite power and authority
to conduct its Business as currently being conducted. Each of the Applicable
Entities is duly qualified to do business, and is each in good standing, in the
respective jurisdictions where the nature of their Business or the ownership or
leasing of their properties makes such qualification necessary, except where the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a GGI Material Adverse Effect or an
NSI Material Adverse Effect, as the case may be. NSI has no Subsidiaries.
(b) Copies of the Constitutive Documents of each of the Applicable
Entities have heretofore been delivered to NW Corp. and such copies are true,
accurate, and complete as of the date hereof. GGI and NSI do not have any
Constitutive Documents, other than their certificate of incorporation and
bylaws.
(c) GGI is, directly or indirectly, the record and beneficial owner of
all of the outstanding shares of capital stock or other equity interests of each
of its Subsidiaries, there are no proxies with respect to any such shares, and
no equity securities of any of its Subsidiaries are or may become required to be
issued by reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable or exercisable for, shares of any capital stock
of any of its Subsidiaries.
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3.5 INVESTMENTS. SECTION 3.5 of the Disclosure Schedule sets forth a
true, accurate, and complete description of each outstanding investment made by
any of the Applicable Entities in a Person that is not a Subsidiary of GGI.
3.6 CAPITALIZATION OF GGI AND NSI; TITLE TO THE SHARES. (a) The
authorized capital stock of GGI consists of: (i) 2,000,000 shares of common
stock, $.001 par value, of which 1,016,189 shares are on the date hereof, and
will be on the Closing Date, issued and outstanding; and (ii) 1,000,000 shares
of preferred stock, $1.00 par value, of which 500,000 shares are on the date
hereof, and will be on the Closing Date, issued and outstanding. The authorized
capital stock of NSI consists of 7,676 shares of common stock, $.01 par value,
of which 7,676 shares are on the date hereof, and will be on the Closing Date,
issued and outstanding. The authorized, issued, and outstanding capital stock
(or other comparable equity interests) of each of the Applicable Entities (other
than GGI and NSI), and the owner thereof, in each case, as of the date hereof
and as of the Closing Date, is set forth on SECTION 3.6 of the Disclosure
Statement. Except as set forth in SECTION 3.6 of the Disclosure Statement, NFS
owns all of the issued and outstanding capital stock of GGI and NSI. The Shares
have been duly authorized, validly issued, are fully paid and nonassessable, and
have not been issued in violation of any preemptive rights of any stockholders.
The Shares are beneficially owned and held of record by NFS, free and clear of
any Lien.
(b) Except as set forth in SECTION 3.6 of the Disclosure Schedule,
there are no outstanding subscriptions, options, warrants, calls, rights,
convertible securities, obligations to make capital contributions or advances,
or voting trust arrangements, shareholder agreements or other agreements,
commitments or understandings of any character relating to the issued or
unissued capital stock of any of the Applicable Entities or preferred
securities, or securities convertible into, exchangeable for or evidencing the
right to subscribe for any shares of such capital stock.
3.7 EMPLOYEE BENEFIT PLANS. The Applicable Entities have no employee
welfare benefit plans and employee pension benefit plans (as such terms are
defined, respectively in Sections 3(1) and 3(2) of ERISA) other than such plans
provided, administered or maintained by NW Mutual.
3.8 NO CONFLICT; GOVERNMENT FILINGS. Except as set forth in SECTION 3.8
of the Disclosure Schedule, neither the execution and delivery of this
Agreement, nor the performance of the transactions contemplated hereby will: (a)
(i) violate or conflict with the Constitutive Documents of any of the Applicable
Entities; or (ii) result in or constitute a default (or an event that, with
notice or lapse of time or both, would constitute a default), breach or
violation of any Contract or instrument (including options, warrants or
convertible securities) which relates to the voting of, restricts the transfer
of, requires the issuance or sale, or creates rights in any Person with respect
to the Shares; or (b) to the Knowledge of NFS, violate any Law or Order
affecting any of the Applicable Entities except for such violations that would
not, individually or in the aggregate, reasonably be expected to have a GGI
Material Adverse Effect or an NSI Material Adverse Effect. Except as set forth
in SECTION 3.8 of the Disclosure Schedule, no consent, approval, permit, notice,
order, or authorization of, or registration, application, declaration, or filing
(each a "Consent" or "Filing") with any Person is required with respect to any
of the Applicable Entities in connection with the execution and delivery of this
Agreement and the
9
consummation of the transactions contemplated hereby, except for such Consents
or Filings the failure of which to make or obtain would not, individually or in
the aggregate, prevent or be a material impediment to the consummation of the
transactions contemplated hereby or the conduct of the businesses of the
Applicable Entities from and after the Closing Date.
3.9 FINANCIAL STATEMENTS. (a) NFS has previously furnished NW Corp.
with copies of audited consolidated financial statements for: (i) (A) GGI and
its Subsidiaries as of and for the years ended December 31, 2001 and 2000
(including audited balance sheets and related statements of income, changes in
stockholders' equity, and cash flow) (collectively, the "GGI GAAP Financial
Statements"); and (B) interim unaudited consolidated financial statements for
GGI and its Subsidiaries as of and for the quarterly period ended March 31, 2002
(collectively, the "GGI Interim Financial Statements"); and (ii) (A) NSI as of
and for the years ended December 31, 2001 and 2000 (including audited balance
sheets and related statements of income, changes in stockholders' equity, and
cash flow) (collectively, the "NSI GAAP Financial Statements"); and (B) interim
unaudited financial statements for NSI as of and for the quarterly period ended
March 31, 2002 (collectively, the "NSI Interim Financial Statements").
(b) The GGI GAAP Financial Statements fairly present in all material
respects the financial position of GGI and its Subsidiaries as of their
respective dates and the results of operations of GGI and its Subsidiaries for
the periods therein set forth, in each case in accordance with GAAP consistently
applied. The GGI Interim Financial Statements were prepared in the normal and
ordinary course of business and have been prepared in a manner consistent with
that employed in the GGI GAAP Financial Statements. The GGI Interim Financial
Statements do not contain footnote disclosures and are subject to normal
recurring year-end adjustments, but otherwise fairly present in all material
respects the results of operations of GGI and its Subsidiaries for the period
therein set forth. The GGI GAAP Financial Statements and the GGI Interim
Financial Statements were prepared from the books and records of GGI and each of
its Subsidiaries, which books and records are complete and correct in all
material respects.
(c) The NSI GAAP Financial Statements fairly present in all material
respects the financial position of NSI as of their respective dates and the
results of operations of NSI for the periods therein set forth, in each case in
accordance with GAAP consistently applied. The NSI Interim Financial Statements
were prepared in the normal and ordinary course of business and have been
prepared in a manner consistent with that employed in the NSI GAAP Financial
Statements. The NSI Interim Financial Statements do not contain footnote
disclosures and are subject to normal recurring year-end adjustments, but
otherwise fairly present in all material respects the results of operations of
NSI for the period therein set forth. The NSI GAAP Financial Statements and the
NSI Interim Financial Statements were prepared from the books and records of
NSI, which books and records are complete and correct in all material respects.
3.10 BOOKS AND RECORDS. At the NSI Closing and the Closing, as the case
may be, all of the books of account, minute books, stock record books, and other
material records of each of the Applicable Entities will be in the possession or
control of the appropriate Applicable Entity.
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3.11 COMPLIANCE WITH LAWS; PERMITS.
(a) Except as set forth in SECTION 3.11 of the Disclosure Schedule, to
the Knowledge of NFS, neither GGI nor any of its Subsidiaries: (a) since January
1, 2002, has received any notice from any Governmental Entity or any other
person that GGI or any of its Subsidiaries is in violation of, or has violated,
any applicable provisions of any Laws; or (b) has any executive officers or
directors who, since January 1, 2002, have been the subject of any investigation
(excluding routine examinations by Self-Regulatory Organizations), disciplinary
proceeding or enforcement order arising under any applicable provisions of any
Laws, and no such investigation, disciplinary proceeding or proceedings for the
issuance of any enforcement order is pending or threatened, except in the case
of each of clauses (a) and (b) for violations or alleged violations that would
not, individually or in the aggregate, reasonably be expected to result in a GGI
Material Adverse Effect. To the Knowledge of NFS, each of GGI and its
Subsidiaries has made all filings required to be made by it under applicable
regulatory requirements since December 31, 2001, and all such filings have
complied with the applicable regulatory requirements, except for such failures
that would not, individually or in the aggregate, reasonably be expected to
result in a GGI Material Adverse Effect. To the Knowledge of NFS, neither GGI,
any of its Subsidiaries, nor any executive officer or director of GGI is subject
to a statutory disqualification that could be the basis for a suspension,
revocation, or limitation of the license of, or ability to obtain a license for
GGI or any of its Subsidiaries, except for such failures that would not,
individually or in the aggregate, reasonably be expected to result in a GGI
Material Adverse Effect.
(b) To the Knowledge of NFS, each of GGI and its Subsidiaries which are
required to be registered as a broker/dealer, investment advisor, or in a
similar capacity with the SEC or any other Governmental Entity are duly
registered as such and such registrations are in full force and effect, except
where the absence to be so registered would not, individually or in the
aggregate, be expected to result in a GGI Material Adverse Effect.
3.12 LITIGATION. Except as set forth on SECTION 3.12 of the Disclosure
Schedule, there is no action, suit, hearing, arbitration, or proceeding (public
or private) of any Governmental Entity or any other Person, pending, or to the
Knowledge of NFS, threatened against any of the Applicable Entities, which, if
adversely determined or resolved, would be reasonably expected to have a GGI
Material Adverse Effect or an NSI Material Adverse Effect, as the case may be,
and there are no existing or threatened-in-writing orders, judgments, or decrees
involving a specific monetary judgment or penalty (other than those of general
application) of any Governmental Entity affecting any of the Applicable
Entities, which would have a GGI Material Adverse Effect or an NSI Material
Adverse Effect.
3.13 LABOR RELATIONS AND EMPLOYMENT. Except to the extent set forth in
SECTION 3.13 of the Disclosure Schedule: (i) there is no labor strike, material
labor dispute, slowdown, stoppage, or lockout actually pending, or to the
Knowledge of NFS threatened against or affecting any of the Applicable Entities,
and since January 1, 2000, there has not been any such action; (ii) to the
Knowledge of NFS, there are no pending union claims to represent the employees
of any of the Applicable Entities, there are no current union organizing
activities among the employees of any of the Applicable Entities, and no
Applicable Entity has received notice of any unfair labor practice complaint or
charge against it pending before the NLRB; (iii)
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none of the Applicable Entities are a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association,
applicable to employees of any of the Applicable Entities; and (iv) to the
Knowledge of NFS, there are no written personnel policies, rules, or procedures
applicable to employees of the Applicable Entities, other than those of NW
Mutual. Except as set forth in SECTION 3.13 of the Disclosure Schedule, no
employee, officer, director, or independent contractor of any of the Applicable
Entities is entitled to any payment of money or other thing of value or will
receive any rights with respect to the capital stock of any of the Applicable
Entities as a result of this Agreement. Except as set forth in SECTION 3.13 of
the Disclosure Schedule, none of the transactions contemplated by this Agreement
shall constitute a triggering event under any employment, severance, or
termination agreement or other compensation arrangement or any plan currently in
effect which (either alone or upon the occurrence of any additional or
subsequent event) would result in any payment, acceleration, vesting, or
increase in benefits to any current or former officer, employee, director, or
independent contractor of any of the Applicable Entities which would constitute
an "excess parachute payment" (as such term is defined in Section 280G(b)(1) of
the Code).
3.14 BROKER'S OR FINDER'S FEES. No broker, investment banker, financial
advisor or other person, other than UBS Warburg LLC, the fees and expenses of
which will be paid by NFS, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by NFS.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF NW CORP.
NW Corp. represents and warrants to NFS, as of the date hereof and as
of the Closing Date, as follows:
4.1 CAPACITY OF NW CORP. NW Corp. is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Ohio and
has all requisite corporate power and authority to enter into this Agreement and
to perform its obligations hereunder. Complete and correct copies of the
articles of incorporation and code of regulations of NW Corp., each as amended
to the date of delivery, have been delivered to NFS.
4.2 VALIDITY AND EXECUTION OF AGREEMENT. The execution and delivery of
this Agreement and any other agreements contemplated hereby, and the performance
of the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of NW Corp. When
executed and delivered, the Marketing and Support Services Agreement will be
duly and validly authorized by all necessary corporate action on the part of NW
Corp. The Board of Directors of NW Corp. has duly approved this Agreement and no
further corporate action is required for this Agreement to be enforceable
against NW Corp. This Agreement has been duly executed and delivered by NW Corp.
and, assuming this Agreement constitutes a valid and binding agreement of NFS,
constitutes the legal, valid and binding obligation of NW Corp., enforceable
against NW Corp. in accordance with its terms, subject to the qualification that
enforcement of the rights and remedies created hereby is subject to: (a)
bankruptcy, insolvency, reorganization, moratorium and other
12
Laws of general application affecting the rights and remedies of creditors; and
(b) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
4.3 NO CONFLICT. Neither the execution and delivery of this Agreement
nor the performance of the transactions contemplated herein by NW Corp. will:
(a) violate or conflict with any of the provisions of the articles of
incorporation or code of regulations of NW Corp. or (b) subject to the
governmental approvals and other matters referred to in the following sentence,
violate any Law or License to which NW Corp. is subject except for such
violations that would not, individually or in the aggregate, reasonably be
expected to have an NW Corp. Material Adverse Effect. Except as set forth in
SECTION 4.3 of the Disclosure Schedule, no Consent or Filing with any Person is
required with respect to the execution and delivery of this Agreement by NW
Corp. and the consummation of the transactions contemplated hereby, except for
such Consents or Filings the failure of which to make or obtain would not,
individually or in the aggregate, prevent or be a material impediment to the
consummation of the transactions contemplated hereby.
4.4 BROKER'S OR FINDER'S FEES. No broker, investment banker, financial
advisor or other person, other than Bear, Xxxxxxx & Co., Inc., the fees and
expenses of which will be paid by NW Mutual, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by NW Corp. or NW Mutual.
4.5 LITIGATION. There is no lawsuit or legal, administrative or
regulatory proceeding, or investigation pending or, to the Knowledge of NW
Corp., threatened in writing against NW Corp. which has had or would reasonably
be expected to have an NW Corp. Material Adverse Effect on the validity and
enforceability of this Agreement and the consummation of the transactions
contemplated hereby.
4.6 INVESTMENT REPRESENTATION. NW Corp. will acquire the Shares for its
own account, and NW Corp. has no present intention of resale or other
distribution thereof. NW Corp. will refrain from transferring or otherwise
disposing of the Shares, or any interest therein, in such manner as to violate
any registration provision of federal or state securities Laws.
4.7 SHARE CONSIDERATION. At the NSI Closing and the Closing, as the
case may be, NW Corp. will own, free and clear of all Liens, a sufficient number
of shares of NFS Common Stock necessary to consummate the transactions
contemplated hereby and transfer the Share Consideration to NFS in accordance
with the terms of this Agreement.
SECTION 5.
NFS' PRE-CLOSING COVENANTS
NFS covenants and agrees to take (or cause the other Applicable
Entities to take) the following actions between the date hereof and the Closing
Date:
5.1 GENERAL. NFS will use commercially reasonable efforts to take all
actions and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement.
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5.2 NOTICES AND CONSENTS. NFS will give any reasonable notices to third
parties, and NFS will use commercially reasonable efforts to obtain any
third-party consents that are reasonably necessary in order to consummate the
transactions contemplated by this Agreement (including, without limitation, any
Consents and Filings listed on SECTION 3.8 to the Disclosure Schedule). NFS will
give any notices to, make any filings with, and use commercially reasonable
efforts to obtain any authorizations, consents, and approvals of governments and
Governmental Entities in connection with the matters referred to herein. NFS
will use commercially reasonable efforts to assist NW Corp. in obtaining any
necessary approvals or consents.
5.3 CONDUCT OF BUSINESS. Except as otherwise contemplated by this
Agreement or pursuant to agreements entered into prior to the date hereof,
pending the Closing Date, NFS shall use commercially reasonable efforts to cause
each of the Applicable Entities to: (a) conduct their Business in the normal and
ordinary course of business consistent with past practice; (b) preserve their
present business organization and relationships; (c) preserve the rights,
franchises, goodwill, and relations of their customers, suppliers, and others
with whom business relationships exist; (d) not (i) permit any of the Assets to
be subject to a Lien other than a Lien arising or occurring in the normal course
of business that would not, individually or in the aggregate, materially
adversely affect the value of, or materially adversely interfere with the use
of, the property subject thereto; (ii) increase, except as required by
employment agreements existing on the date hereof or consistent with past
practice, the wages, salaries, compensation, pension, or other benefits payable
to any employee of the Applicable Entities; or (iii) change accounting methods
or the maintenance or method of the preparation of books and records; and (e)
not to declare or pay any dividend, distribution, or other similar payment
(except that GGI may make scheduled dividends with respect to its preferred
stock to the extent that such dividends are made pursuant to the Constitutive
Documents of GGI in effect as of the date of this Agreement).
5.4 NOTICE OF DEVELOPMENTS. NFS will give written notice to NW Corp. of
any material development to the Knowledge of NFS causing a breach of any of its
own representations and warranties within five (5) days after becoming aware of
any such development. NW Corp. shall give written notice to NFS within five (5)
days upon learning of any breach of NFS' representations; PROVIDED, HOWEVER, NFS
agrees that this Section shall in no way limit or waive the remedies available
to NW Corp.
5.5 EXCLUSIVITY. NFS will: (a) not solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any portion of the Assets,
of any of the Applicable Entities (including any acquisition structured as a
merger, consolidation, or share exchange); or (b) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. NFS will notify NW Corp. immediately
if any Person makes any proposal, offer, inquiry, or contact with respect to any
of the foregoing.
5.6 MAINTENANCE OF RECORDS. NFS will use commercially reasonable
efforts to cause each of the Applicable Entities to maintain and continue to
keep its books, accounts and records in the usual manner and consistent with
prior practice.
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5.7 COMPLIANCE WITH LAWS. NFS will use commercially reasonable efforts
to cause each of the Applicable Entities to comply in all material respects with
all Laws.
5.8 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES. NFS will
use commercially reasonable efforts to cause each of the Applicable Entities to
conduct their respective Businesses in such a manner so that the representations
and warranties made by NFS herein and the Disclosure Schedules that are
qualified by materiality shall continue to be true and correct as stated herein,
and such representations and warranties that are not so qualified shall continue
to be true and correct as stated herein in all material respects.
5.9 TRANSFER OF NSI COMMON SHARES. Prior to the NSI Closing, NFS will
cause the NSI Common Shares to be transferred from NW Life to NFS in accordance
with applicable Laws, and, prior to NSI Closing, NFS will provide NW Corp. with
evidence of the same (in form and substance reasonably satisfactory to NW
Corp.).
5.10 GGI REORGANIZATION. Prior to the NSI Closing, NFS will cause the
GGI Reorganization to be completed in accordance with applicable Laws, and,
prior to the NSI Closing, NFS will provide NW Corp. with evidence of the same
(in form and substance reasonably satisfactory to NW Corp.).
SECTION 6.
PRE-CLOSING COVENANTS OF NW CORP.
NW Corp. covenants and agrees to take the following actions between the
date hereof and the Closing Date:
6.1 GENERAL. NW Corp. will use commercially reasonable efforts to take
all actions and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement.
6.2 NOTICE OF DEVELOPMENTS. NW Corp. will give prompt written notice to
NFS of any material development causing a breach of any of its own
representations and warranties. NW Corp. shall give prompt notice to NFS upon
learning of any basis which causes a breach of any of NW Corp.'s
representations; PROVIDED, HOWEVER, that NW Corp. agrees that this Section shall
in no way limit or waive the remedies available to NFS.
6.3 NOTICES AND CONSENTS. NW Corp. will give any necessary notices to
third parties, and NW Corp. will use commercially reasonable efforts to obtain
any third-party consents that are reasonably necessary in order to consummate
the transactions contemplated by this Agreement. NW Corp. will give any notices
to, make any filings with, and use commercially reasonable efforts to obtain any
authorizations, consents and approvals of Governmental Entities in connection
with the matters referred to herein. NW Corp. will also use commercially
reasonable efforts to assist NFS in obtaining any necessary approvals or
consents.
15
SECTION 7.
CONDITIONS TO OBLIGATIONS OF NFS
The obligations of NFS hereunder are subject to the satisfaction or
waiver of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by NW Corp. herein and the Disclosure Schedules that are
qualified by materiality shall be true and correct, and such representations and
warranties that are not so qualified shall be true and correct in all material
respects, on the Closing Date and shall be confirmed in writing at the NSI
Closing and the Closing by NW Corp.
7.2 PERFORMANCE BY NW CORP. All of the terms and conditions of this
Agreement to be complied with and performed by NW Corp. on or before the Closing
Date shall have been complied with and performed in all material respects.
7.3 LEGAL CHALLENGE. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the transactions contemplated hereby shall be in effect or threatened;
PROVIDED, HOWEVER, that any party invoking this condition shall use commercially
reasonable efforts to have any such order or injunction vacated.
7.4 APPROVALS; NO PROHIBITION. All governmental and regulatory
approvals necessary for the consummation of the transactions contemplated hereby
shall have been obtained, and no statute, rule, regulation or order of any court
or administrative agency shall be in effect which prohibits NW Corp. or NFS from
consummating the transactions contemplated hereby.
7.5 MARKETING AGREEMENT. NW Corp. shall have executed and delivered a
counterpart of the Marketing and Support Services Agreement.
7.6 OPINION OF FINANCIAL ADVISOR. The Special Committee of the Board of
Directors of NFS shall have received the opinion of UBS Warburg LLC, dated on or
prior to the date hereof, to the effect that, as of such date, the consideration
to be received by NFS pursuant to this Agreement is fair, from a financial point
of view to NFS, and such opinion shall not have been withdrawn.
7.7 OPINION OF TAX ADVISOR. The Board of Directors of NFS shall have
received the opinion of KPMG, LLP, in form and substance satisfactory to NFS and
its counsel, to the effect that the Exchange and the distributions by NW Life of
NSI Common Stock to NFS should be tax-free pursuant to Section 355 of the Code
and that any excess loss account with respect to the capital stock of NSI should
not be restored to gross income as a result of the transactions contemplated
hereby.
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SECTION 8.
CONDITIONS TO OBLIGATIONS OF NW CORP.
The obligations of NW Corp. hereunder are subject to the satisfaction
or waiver of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by NFS herein and in the Disclosure Schedules that are qualified
as to materiality shall be true and correct, and such representations and
warranties that are not so qualified shall be true and correct in all material
respects, on the Closing Date and shall be confirmed in writing at the NSI
Closing and the Closing by NFS.
8.2 PERFORMANCE BY NFS. All of the terms and conditions of this
Agreement to be complied with and performed by NFS on or before the Closing Date
shall have been complied with and performed in all material respects.
8.3 LEGAL CHALLENGE. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the transactions contemplated hereby shall be in effect or threatened;
PROVIDED, HOWEVER, that any party invoking this condition shall use commercially
reasonable efforts to have any such order or injunction vacated.
8.4 APPROVALS; NO PROHIBITION. All governmental and regulatory
approvals necessary for the consummation of the transactions contemplated hereby
shall have been obtained, and no statute, rule, regulation or order of any court
or administrative agency shall be in effect which prohibits NW Corp. or NFS from
consummating the transactions contemplated hereby.
8.5 MARKETING AGREEMENT. NFS shall have executed and delivered a
counterpart of the Marketing and Support Services Agreement.
8.6 OPINION OF FINANCIAL ADVISOR. The Boards of Directors of NW Mutual
and NW Corp. shall have received the opinion of Bear, Xxxxxxx & Co., Inc., dated
on or prior to the date hereof, to the effect that, as of such date, the
consideration to be transferred and received by NW Corp. pursuant to this
Agreement is fair, from a financial point of view to NW Corp. and NW Mutual, and
such opinion shall not have been withdrawn.
SECTION 9.
ACTIONS AT THE NSI CLOSING AND CLOSING BY NFS
9.1 At the NSI Closing and the Closing, NFS shall deliver to NW Corp.:
(a) Certificates evidencing all the Shares being exchanged at the NSI
Closing or the Closing, as the case may be, duly endorsed or accompanied by duly
executed stock powers (in blank) and with any required transfer stamps affixed;
(b) A certificate of an officer of NFS: (i) attesting that NFS has
caused a reasonable examination as to the warranties and representations of NFS
set forth herein; (ii)
17
attesting that as of the Closing Date each of the representations and warranties
of NFS contained herein is true; and (iii) attesting that NFS has performed all
of the obligations to be performed by NFS under this Agreement from the date
hereof through the Closing Date; and
(c) Such other documents as may be necessary or appropriate, in the
reasonable opinion of NW Corp. or its counsel, to evidence the authorization of,
and to effect the transactions contemplated by, this Agreement.
SECTION 10.
ACTIONS AT THE NSI CLOSING AND CLOSING BY NW CORP.
10.1 At the NSI Closing and the Closing , NW Corp. shall deliver to
NFS:
(a) Certificates evidencing all the Share Consideration being exchanged
at the NSI Closing or the Closing, as the case may be, duly endorsed or
accompanied by duly executed stock powers (in blank) and with any required
transfer stamps affixed;
(b) A certificate of an officer of NW Corp.: (i) attesting that he has
caused a reasonable examination as to warranties and representations of NW Corp.
set forth herein; (ii) attesting that on and as of the Closing Date each of the
representations and warranties of NW Corp. contained herein is true; and (iii)
attesting that NW Corp. has performed all of the obligations to be performed by
it under this Agreement from the date hereof through the Closing Date; and
(c) Such other documents as may be necessary or appropriate, in the
reasonable opinion of NFS or its counsel, to evidence the authorization of, and
to effect the transactions contemplated by, this Agreement. SECTION 11. TAX
MATTERS
11.1 PAYMENT OF TRANSACTION TAXES. NW Corp. will pay any and all Taxes
payable in connection with or as a result of the transactions contemplated under
this Agreement. NW Corp. and NFS agree to cooperate to determine the amount of
such Taxes. NW Corp. and NFS will cooperate in preparing such forms and will
execute and deliver such affidavits and forms as are reasonably requested by the
other party.
11.2 COOPERATION. NW Corp. and NFS agree to furnish or cause to be
furnished to each other, as promptly as practicable, such information and
assistance relating to the Business as is reasonably necessary for the
preparation and filing of any Return, for the preparation for and proof of facts
during any tax audit, for the preparation for any tax protest, for the
prosecution or defense of any suit or other proceeding relating to Tax matters
and for the answer of any governmental or regulatory inquiry relating to Tax
matters.
11.3 SECTION 355 OF THE CODE; FURTHER ASSURANCES. The Exchange is
intended to qualify as a tax-free distribution of the Shares to NW Corp., as
described in Section 355(a)(1)(A)(i) of the Code, pursuant to which distribution
NW Corp. is surrendering the Share Consideration to NFS, as described in Section
355 (a)(2)(B) of the Code. From and after the
18
date of this Agreement, each party hereto shall use its commercially reasonable
efforts to cause the Exchange to so qualify, and shall not knowingly take any
actions or cause or permit any actions to be taken which could prevent the
Exchange from qualifying as such a tax-free distribution under the provisions of
Section 355 of the Code. Following the Closing Date, none of the parties hereto
or any of their Affiliates shall take any action or cause or permit any action
to be taken which would cause the Exchange to fail to so qualify. Unless
otherwise required by Law, each of the parties hereto shall report the Exchange
as a tax-free distribution under Section 355 of the Code on all relevant Tax
Returns. For example, by way of illustration and not limitation, NW Corp. shall
cause NSI and GGI to continue their respective historic businesses and shall not
dispose of the stock of NSI, GGI, or NFS to the extent such disposition(s)
causes the transactions contemplated hereby to fail to satisfy the requirements
to Treasury Regulation Section 1.355-2(c) or be subject to the provisions of
Section 355(e) of the Code.
11.4 TAX SHARING AGREEMENT. From and after Closing, NFS will retain and
will fully discharge any and all Liabilities of NFS arising under or with
respect to the Tax Sharing Agreement to the extent that such Liabilities
accrued, or relate to periods, prior to Closing.
11.5 ALLOCATION. NW Corp. and NFS agree that for purposes of any
applicable Taxes and Returns, the Exchange Price will be allocated as follows:
(i) $353,200,000 for the GGI Common Shares and the GGI Preferred Shares; and
(ii) subject to SECTION 2.3, $9,600,000 for the NSI Common Shares).
11.6 INDEMNIFICATION. Notwithstanding anything to the contrary herein:
(a) NW Corp. shall indemnify and hold NFS and its Subsidiaries harmless from and
against any Tax Liability resulting from (i) the exchange pursuant to the terms
hereof of GGI Common Shares and GGI Preferred Shares in return for shares of NFS
Common Stock failing to qualify for tax-free treatment pursuant to Section 355
of the Code (including any Tax Liability resulting from the application of
Section 355(e) of the Code); (ii) the restoration to income of any deferred
intercompany gain arising in connection with the formation of GGI; (iii) the
other transactions contemplated hereunder (including, with limitation, the GGI
Reorganization, but excluding the distribution and exchange described in clause
(b) below) not qualifying for tax-free treatment under applicable provisions of
the Code, and no such Liability shall be considered a Liability for purposes of
determining the working capital of any of the Applicable Entities; or (iv) the
breach by NW Corp. or any of its Subsidiaries of the covenants specified in
Section 11.3; and (b) subject to NW Corp.'s adherence to the covenants specified
in Section 11.3, NFS shall indemnify and hold NW Corp. and its Subsidiaries
harmless from and against any Tax Liability resulting from the distribution of
the NSI Common Shares by NW Life to NFS or the exchange pursuant to the terms
hereof of NSI Shares in return for shares of NFS Common Stock failing to qualify
for tax-free treatment pursuant to Section 355 of the Code.
SECTION 12.
TERMINATION AND REMEDIES
12.1 TERMINATION OF AGREEMENT. The parties may terminate this Agreement
as provided below:
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(a) The parties may terminate this Agreement by mutual written consent
at any time prior to the NSI Closing;
(b) NW Corp. may terminate this Agreement by giving written notice to
NFS at any time prior to the NSI Closing: (i) in the event NFS has breached, in
any material respect, any representation, warranty, or covenant contained in
this Agreement, NW Corp. has notified NFS of the breach, and the breach has
continued without cure for a period of 30 days after the notice of breach, or
(ii) if the NSI Closing shall not have occurred on or before August 31, 2002
(the "Termination Date"), by reason of the failure of any condition precedent
hereunder (unless the failure resulted primarily from NW Corp. itself breaching
any representation, warranty, or covenant contained in this Agreement); and
(c) NFS may terminate this Agreement by giving written notice to NW
Corp. at any time prior to the NSI Closing: (i) in the event NW Corp. has
breached, in any material respect, any representation, warranty, or covenant
contained in this Agreement, NFS has notified NW Corp. of the breach, and the
breach has continued without cure for a period of 30 days after the notice of
breach, or (ii) if the NSI Closing shall not have occurred on or before the
Termination Date, by reason of the failure of any condition precedent hereunder
(unless the failure resulted primarily from NFS itself (or any of the Applicable
Entities) breaching any representation, warranty, or covenant contained in this
Agreement).
SECTION 13.
GENERAL SURVIVAL; INDEMNIFICATION
13.1 SURVIVAL OF REPRESENTATIONS. (a) The representations and
warranties made by NFS in SECTION 3 hereof (including the Disclosure Schedules
and the certificate delivered in accordance with SECTION 9.1(B) hereof, insofar
as the Disclosure Schedule and such certificate relate to such representations
and warranties) or elsewhere in this Agreement shall survive one year after the
Closing Date; PROVIDED, HOWEVER, that, notwithstanding the foregoing, the
representations and warranties made in SECTIONS 3.4, 3.5, and 3.6 shall survive
until the expiration of the statute of limitations applicable to each claim or
event as to which a breach of such representation or warranty is based or
asserted (respectively, the "Cut-Off Date").
(b) The representations and warranties made by NW Corp. in SECTION 4
hereof (including the certificates delivered in accordance with SECTION 10.1(b)
hereof insofar as such certificates relate to such representations and
warranties) shall survive until the Cut-Off Date.
13.2 INDEMNIFICATION. (a) NFS shall indemnify and hold NW Corp.
harmless from and against any and all Liabilities whatsoever (including, without
limitation, reasonable fees of legal counsel and related disbursements)
(collectively, "Damages") incurred or suffered by NW Corp. as a result of or
related to any breach of any representation, warranty, covenant (other than with
respect to SECTION 5.3(a)-(d) or SECTION 5.6), or agreement made by NFS in this
Agreement or in any certificate, schedule, or agreement delivered pursuant
hereto.
(b) NW Corp. shall indemnify and hold NFS harmless from and against any
and all Damages incurred by NFS, as a result of or related to: (i) any breach of
any representation, warranty, covenant, and agreement made by NW Corp. in this
Agreement or in
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any certificate, schedule, or agreement delivered pursuant hereto; and (ii) any
Liabilities in connection with or relating to the operation of the Business of
the Applicable Entities that first arise after the Closing Date.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim, or demand shall be brought or asserted against
any party in respect of which indemnity may be sought pursuant to this SECTION
13.2, such party (the "Indemnified Party") shall promptly give written notice
thereof to the party against whom such indemnity may be sought (the
"Indemnifying Party"). The notice shall state the information then available
regarding the amount of the claim or Damages and shall specify the provision or
provisions of this Agreement under which the right to indemnification is being
asserted. If within 30 days after receiving such notice, the Indemnifying Party
gives written notice to the Indemnified Party stating that it intends to defend
against such claim or Damages at its own cost and expense, the defense
(including the right to settle or compromise such action) of such matter,
including selection of counsel (subject to the consent of the Indemnified Party
which consent shall not be unreasonably withheld) and the sole power to direct
and control such defense, shall be by the Indemnifying Party and the Indemnified
Party shall make no payment in respect of such claim or Damages to any third
party as long as the Indemnifying Party is conducting a good faith and diligent
defense. In any such defense, the Indemnifying Party will consult with the
Indemnified Party in connection with the Indemnifying Party's defense. In any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, at its own cost and expense unless: (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the contrary; (ii) the
Indemnifying Party has failed within a reasonable time to retain counsel, in
which event the Indemnified Party shall have the right to retain counsel at the
expense of the Indemnifying Party; or (iii) the named parties in any such
proceeding (including any interpleaded parties) include both the Indemnified
Party and the Indemnifying Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for the Indemnified Party, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm sought
to be retained by the Indemnified Party with respect to which the Indemnified
Party seeks to be indemnified by the Indemnifying Party shall be designated in
writing by the Indemnified Party and any such separate firm for the Indemnifying
Party to be indemnified by the Indemnified Party shall be designated in writing
by the Indemnifying Party. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent (which shall
not be unreasonably withheld), but if settled with such consent or if there be a
final judgment for the plaintiff, the Indemnifying Party agrees to indemnify any
Indemnified Party from and against any Liability by reason of such settlement or
judgment. Notwithstanding the foregoing, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse an Indemnified Party for
fees and expenses of counsel as contemplated herein, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent herein if: (i) such settlement is entered into more
than 45 days after receipt by such Indemnifying
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Party of the aforesaid request; (ii) such Indemnifying Party shall not have
reimbursed the Indemnified Party in accordance with such request (other than due
to a reasonable dispute as to the validity of such request) prior to the date of
settlement; and (iii) such settlement does not impose any obligations on the
Indemnifying Party other than the payment of money. If no such notice of intent
to dispute and defend is given by the Indemnifying Party, or if such diligent
good faith defense is not being or ceases to be conducted, the Indemnified Party
shall, at the expense of the Indemnifying Party, undertake the defense of such
claim or Damages with counsel selected by the Indemnified Party, and shall have
the right to compromise or settle the same exercising reasonable business
judgment. The Indemnified Party shall make available all information and
assistance that the Indemnifying Party may reasonably request and shall
cooperate with the Indemnifying Party in such defense. Notwithstanding anything
herein to the contrary, the Indemnifying Party shall have the right to settle
all claims of third parties for which indemnification is payable hereunder
without the consent of the Indemnified Party so long as such settlement releases
the Indemnified from all Liability for or in connection with such action.
(d) Notwithstanding anything herein to the contrary: (i) no claim by
any Indemnified Party against an Indemnifying Party, which claim relates to a
breach of a representation or warranty made in this Agreement may be made unless
notice of such breach is given in accordance with this SECTION 13 prior to the
expiration of the thirty day period immediately following the Cut-Off Date; (ii)
the Indemnifying Party shall not have any Liability hereunder unless the
aggregate amount of all Damages incurred by the Indemnified Party for which the
Indemnifying Party would, but for this provision, be liable exceeds on a
cumulative basis an amount equal to $10,000,000 (the "Basket") and then only to
the extent of such excess; and (iii) the maximum aggregate Liability of the
Indemnifying Party under this Section shall not exceed the amount of $90,000,000
(the "Cap"); PROVIDED, HOWEVER, that, notwithstanding the foregoing, the Basket
and the Cap shall not apply with respect to SECTIONS 3.4(C), 3.6, and 11.
(e) Notwithstanding anything in this SECTION 13 to the contrary, the
rights and obligations of the parties with respect to Tax matters shall be
subject to the provisions of SECTION 11.
SECTION 14.
GENERAL PROVISIONS
14.1 EXPENSES. Except as otherwise provided herein, all fees,
commissions, and other expenses incurred by NW Corp. or NFS in connection with
the negotiation of this Agreement and in preparing to consummate the
transactions contemplated hereby, including the fees and expenses of their
respective counsel and other advisors, shall be borne by the party incurring
such fee, commission, or expense. Notwithstanding the foregoing, the fees and
costs of KPMG, LLP in connection with the tax opinion referred to in SECTION 7.7
will be borne by equally by NW Corp. and NFS.
14.2 EXECUTION IN COUNTERPARTS; BINDING EFFECT. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
copy and all of which together shall be considered one and the same agreement,
and shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other parties.
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14.3 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Ohio, without giving
effect to the choice of law provisions thereof.
14.4 NOTICES. (a) Service of process, and any other notices or other
communications required or permitted under this Agreement, shall be given in
writing and delivered personally, sent by confirmed facsimile transmission,
mailed first class or sent by overnight courier guaranteeing next-day delivery,
addressed as follows:
(i) If to NW Corp.: Nationwide Corporation
Xxx Xxxxxxxxxx Xxxxx, 0-00-00
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Executive Vice
President & Chief Financial Officer
Facsimile: 000-000-0000
and
Nationwide Mutual Insurance Company
Xxx Xxxxxxxxxx Xxxxx, 0-00-00
Xxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx, Associate Vice President -
Associate General Counsel
Facsimile: 000-000-0000
with a copy to: Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: 614-461-4198
(ii) If to NFS: Nationwide Financial Services, Inc.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Senior Vice President of Finance
Facsimile: 000-000-0000
with a copy to: Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
(b) Notices or communications required or permitted under this
Agreement shall be deemed to have been received by the addressee: (i) on the
date given, if delivered personally or sent by confirmed facsimile transmission;
(ii) five days after the date of deposit, if
23
mailed by first class mail; and (iii) one day after delivery to a courier, if
sent by overnight courier guaranteeing next-day delivery. Either party may
change the person, address or facsimile transmission number for service of
process upon it or delivery of notices or other communications to it under this
Agreement by delivering notice of such change to the other party in accordance
with this SECTION 14.4.
14.5 TITLES AND HEADINGS. Titles and headings to Sections herein, and
the Table of Contents to this Agreement, are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
14.6 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective successors,
heirs, executors, legal representatives and permitted assigns; PROVIDED,
HOWEVER, that no party shall assign any rights or delegate any of the
obligations created under this Agreement without prior written consent of the
other party.
14.7 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall be construed to give any person (including, but not limited
to, the employees of any of the Applicable Entities), other than the parties
hereto, their successors and permitted assigns, any legal or equitable right,
remedy, or claim under or in respect of this Agreement or any provision
contained herein.
14.8 ENTIRE AGREEMENT. This Agreement represents the entire agreement
and understanding of the parties with reference to the transactions set forth
herein, and no representations or warranties have been made in connection with
this Agreement or the transactions contemplated hereby other than those
expressly set forth in this Agreement and the Disclosure Schedule or in the
certificates and other documents delivered in accordance herewith. This
Agreement supersedes all prior negotiations, discussions, correspondence,
communications, and understandings between the parties relating to the subject
matter of this Agreement and all prior drafts of this Agreement, all of which
are merged into this Agreement. No prior drafts of this Agreement and no words
or phrases from any such prior drafts shall be admissible into evidence in any
proceeding involving this Agreement.
14.9 WAIVERS AND AMENDMENTS. Each of NFS and NW Corp. may, but shall
not be obligated to, by written notice to the others: (a) extend the time for
the performance of any of the obligations or other actions of the other; (b)
waive any inaccuracies in the representations or warranties of the other
contained in this Agreement; (c) waive compliance with any of the covenants of
the other created under this Agreement; or (d) waive fulfillment of any of the
conditions to its own obligations under this Agreement. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach, whether or not similar. This
Agreement may be amended, modified or supplemented only by a written instrument
executed by NFS and NW Corp.
14.10 SEVERABILITY. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Agreement or of any other term or
provision hereof.
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14.11 CONFIDENTIALITY AND ANNOUNCEMENTS. (a) Except as provided in
SECTION 14.11(b) below, none of NFS or NW Corp., nor any of their respective
Affiliates, shall publicly disclose the execution, delivery or contents of this
Agreement other than: (i) with the prior written consent of the other parties
hereto; or (ii) as required by any applicable Law or the applicable rules of any
stock exchange upon prior notice to the other party hereto.
(b) NW Corp. and NFS shall agree with each other as to the form,
timing, and substance of any press release related to this Agreement or the
transactions contemplated hereby, and shall consult each other as to the form,
timing and substance of other public disclosures related thereto, PROVIDED,
HOWEVER, that nothing contained herein shall prohibit either party, following
notification to the other party if practicable, from making any disclosure which
its counsel determines to be required by any applicable Law or the applicable
rules of any stock exchange.
14.12 SPECIFIC PERFORMANCE. Each of the parties acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
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IN WITNESS WHEREOF, the parties have executed this Agreement, all as of
the day and year first above written.
NATIONWIDE FINANCIAL SERVICES, INC.
By:
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Name:
--------------------------------------
Title:
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NATIONWIDE CORPORATION
By:
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Name:
--------------------------------------
Title:
-------------------------------------
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