PURCHASE AGREEMENT

Exhibit 10.1

EXECUTION VERSION

PURCHASE AGREEMENT

Dated as of February 2, 2007

by and between

NATIONWIDE FINANCIAL SERVICES, INC.

and

NATIONWIDE CORPORATION

 

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PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (together with the Disclosure Schedule and Exhibits hereto, the “ Agreement ”) is made and entered into as of this 2nd day of February, 2007, by and between Nationwide Financial Services, Inc., a Delaware corporation (“ NFS ”), and Nationwide Corporation, an Ohio corporation (“ NW Corp. ”).

WHEREAS, NW Corp. currently owns indirectly (i) all of the outstanding capital stock of NWD Investment Management, Inc. (f/k/a Gartmore Global Investments, Inc.), a Delaware corporation (“ NWD ”), and (ii) all of the outstanding capital stock of Nationwide Asset Management, Inc. (f/k/a Gartmore Global Asset Management, Inc.), a Delaware corporation (“ NW Asset Management ”) (each of NWD and NW Asset Management sometimes being referred to individually as a “ Seller ” and collectively as “ Sellers ”);

WHEREAS, NWD currently owns (i) all of the beneficial interests in Gartmore Mutual Fund Capital Trust, a Delaware statutory trust (“ Gartmore MF Capital Trust ”), and (ii) all of the beneficial interests in Gartmore SA Capital Trust, a Delaware statutory trust (“ Gartmore SA ”);

WHEREAS, NW Asset Management currently owns (i) all of the outstanding capital stock of Gartmore Distribution Services, Inc., a Delaware corporation (“ Gartmore Distribution Services ”), and (ii) all of the outstanding capital stock of Gartmore Investors Services, Inc., an Ohio corporation (“ Gartmore Investors Services ”);

WHEREAS, NW Corp. desires that (i) NWD sell to NFS all of the Gartmore MF Capital Trust Interests (as defined herein) and (ii) NW Asset Management sell to NFS all of the Gartmore Distribution Services LLC Interests (as defined herein) and all of the Gartmore Investors Services LLC Interests (as defined herein), and NFS desires to purchase all of the Gartmore MF Capital Trust Interests, the Gartmore Distribution Services LLC Interests and the Gartmore Investors Services LLC Interests (collectively, the “ Interests ”), all on the terms and subject to the conditions set forth herein;

WHEREAS, a Special Committee of the Board of Directors of NFS has recommended to the NFS Board of Directors, and the NFS Board of Directors has approved as being in the best interests of NFS and its stockholders, the purchase of the Interests and all of the transactions contemplated by this Agreement; and

WHEREAS, a Special Committee of the Board of Directors of NW Corp. has recommended to the NW Corp. Board of Directors, and the NW Corp. Board of Directors has approved as being in the best interests of NW Corp. and its stockholders, the sale of the Interests and all of the transactions contemplated by this Agreement.

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 are acknowledged, the parties agree as follows:

 

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ARTICLE I

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):

“ 2006 Balance Sheet ” means the consolidated unaudited balance sheet of NWD and its Subsidiaries as of December 31, 2006.

“ 2006 Financial Statements ” has the meaning set forth in Section 3.9(a) .

“ 2006 Pro Forma Balance Sheet ” has the meaning set forth in Section 3.9(c) .

“ Accounting Firm ” has the meaning set forth in Section 2.5(d) .

“ Active Management Severance Obligations ” has the meaning set forth in Section 3.7(f) .

“ Affected Employees ” means Employees immediately prior to the Closing Date.

“ 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; provided , however , that for purposes of this definition NW Corp. and NFS shall not be deemed “Affiliates” of one another. 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.

“ After-Tax Basis ” means, with respect to any amount which is to be paid hereunder on an “After-Tax Basis,” an amount which, after subtraction of the amount of all federal, state and non-U.S. Taxes payable by the recipient thereof as a result of the receipt or accrual of such payment, and after taking into account (i) the increase in federal, state and non-U.S. Taxes (including estimated Taxes) payable by such recipient for all affected taxable years as a result of the event or occurrence giving rise to such payment (the “ Indemnified Event ”), and (ii) the reduction in federal, state and non-U.S. Taxes (including estimated Taxes) payable by the recipient for all taxable years ending on or before the end of the taxable year in which such payment is made, shall be sufficient as of the date of payment to compensate the recipient for such Indemnified Event.

“ Agreed Adjustment ” has the meaning set forth in Section 2.5(c) .

“ Agreed Rate ” means the prime rate published by The Wall Street Journal , as that rate may vary from time to time.

“ Agreed Procedures Report ” has the meaning set forth in Section 2.5(a)(i) .

 

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“ Agreement ” has the meaning set forth in the preamble to this Agreement.

“ Allocation Schedule ” has the meaning set forth in Section 11.6(b) .

“ Applicable Entities ” means each of Gartmore MF Capital Trust, Gartmore Distribution Services and Gartmore Investors Services.

“ Appraisal ” has the meaning set forth in Section 11.6(c) .

“ Appraiser ” has the meaning set forth in Section 11.6(c) .

“ Assets ” means, as to a Person, all rights, titles, franchises, and interests in and to every species of property, real, personal, and mixed, and choses in action thereunto and all other assets whatsoever, tangible or intangible, of such Person.

“ AUM Measurement Date ” has the meaning set forth in Section 8.6 .

“ Basket ” has the meaning set forth in Section 13.2(d) .

“ 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.

“ Cap ” has the meaning set forth in Section 13.2(d) .

“ Client ” of a Person means any other Person to which such Person provides investment management or investment advisory services, including any sub-advisory services, relating to securities or other financial instruments, commodities, real estate or any other type of Asset, pursuant to an Investment Advisory Arrangement.

“ Closing ” has the meaning set forth in Section 2.2 .

“ Closing Date ” has the meaning set forth in Section 2.2 .

“ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“ Company Group ” means any “affiliated group” (as defined in Section 1504(a) of the Code without regard to the limitations contained in Section 1504(b) of the Code) that, at any time on or before the Closing Date, includes or has included any of the Applicable Entities or any predecessor of or successor to any of the Applicable Entities (or another such predecessor or successor), or any other group of corporations that, at any time on or before the Closing Date, files or has filed Tax Returns on a combined, consolidated or unitary basis with any of the Applicable Entities or any predecessor of or successor to any of the Applicable Entities (or another such predecessor or successor).

 

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“ Confidentiality Agreement ” means the Confidentiality Agreement dated November 10, 2006 between NFS and NW Corp.

“ Consent or Filing ” has the meaning set forth in Section 3.8 .

“ Constitutive Documents ” means, with respect to any Person that is an entity, such Person’s articles or certificate of incorporation and its bylaws, or similar organizational documents.

“ Covered Expenses ” has the meaning set forth in Section 14.1 .

“ Cut-Off Date ” has the meaning set forth in Section 13.1(a) .

“ Damages ” has the meaning set forth in Section 13.2(a) .

“ 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, or other information provided by, NW Corp. and NFS, as the case may be, as set forth in this Agreement.

“ Employees ” has the meaning set forth in Section 3.7(a) .

“ Employee Plans ” has the meaning set forth in Section 3.7(a) .

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Estimated Purchase Price ” means the Purchase Price, as defined herein, but determined on an estimated basis by Sellers in good faith and as reflected in the certificate referred to in Section 2.4 .

“ Estimated Valuation Date Balance Sheet ” means an estimated, unaudited pro forma combined balance sheet of the Applicable Entities as of the Valuation Date (after giving effect to the elimination of Assets and Liabilities primarily related to the Non-Acquisition Assets and to the sale, transfer, assignment, conveyance and delivery to Gartmore Investors Services of the Gartmore SA Transferred Assets and the assumption by Gartmore Investors Services of the Gartmore SA Assumed Liabilities as contemplated by Section 5.10 ) prepared in good faith using the then most recently available financial information and using (i) the same financial and accounting methods and procedures used to prepare the GAAP Financial Statements, unless such methods and procedures are inconsistent with GAAP, in which case the required GAAP methods and procedures shall be used, and (ii) using such allocations and other methodologies as are necessary to reflect the carve-out of the Applicable Entities from their affiliated entities, which allocations and methodologies shall be reasonably agreed to by the Parties.

“ Final Tangible Stockholders’ Equity ” means the unaudited pro forma combined equity, less goodwill, deferred taxes, deferred commissions and any other asset classified as an intangible Asset on the 2006 Pro Forma Balance Sheet plus any income tax payable, of the Applicable Entities on the Valuation Date based on the Valuation Date Balance Sheet prepared pursuant to Section 2.5 .

 

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“ Fund Board ” means the board of directors or trustees (or Persons performing similar functions) of any NWD Fund.

“ GAAP ” means United States generally accepted accounting principles.

“ GAAP Financial Statements ” has the meaning set forth in Section 3.9(a) .

“ Gartmore Distribution Services ” has the meaning set forth in the third recital to this Agreement; provided , that after the consummation of Gartmore Distribution Services Conversion, Gartmore Distribution Services means Gartmore Distribution Services, LLC.

“ Gartmore Distribution Services Conversion ” has the meaning set forth in Section 5.11(a) .

“ Gartmore Distribution Services LLC Interests ” means all of the limited liability company interests of Gartmore Distribution Services LLC outstanding after giving effect to the Gartmore Distribution Services Conversion.

“ Gartmore Investors Services ” has the meaning set forth in the third recital to this Agreement; provided , that after the consummation of Gartmore Investors Services Merger, Gartmore Investors Services means Gartmore Investors Services, LLC.

“ Gartmore Investors Services LLC Interests ” means all of the limited liability company interests of Gartmore Investors Services LLC outstanding after giving effect to the Gartmore Investors Services Merger.

“ Gartmore Investors Services Merger ” has the meaning set forth in Section 5.11(b) .

“ Gartmore MF Capital Trust ” has the meaning set forth in the second recital to this Agreement.

“ Gartmore MF Capital Trust Interests ” means all of the outstanding units of beneficial interests in Gartmore MF Capital Trust.

“ Gartmore SA ” has the meaning set forth in the second recital to this Agreement.

“ Gartmore SA Assumed Liabilities ” has the meaning set forth in Section 5.10(b) .

“ Gartmore SA Transferred Assets ” has the meaning set forth in Section 5.10(a) .

“ 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(c) .

“ Indemnifying Party ” has the meaning set forth in Section 13.2(c) .

“ Interests ” has the meaning set forth in the fourth recital to this Agreement.

 

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“ Investment Advisory Arrangement ” means any written or oral contract, agreement, arrangement or understanding (together with all amendments, modifications or supplements thereto) under which a Person acts as an investment adviser or sub-adviser to, or manages any investment or trading account of, any Client.

“ Investment Company Act ” means the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder by the SEC.

“ IRS ” means the United States Internal Revenue Service.

“ Knowledge of NFS ” or words to that effect mean the actual knowledge of any of the following persons: Mark R. Thresher, Timothy G. Frommeyer, Michael C. Butler, Roger A. Craig and Steve Savini.

“ Knowledge of NW Corp. ” or words to that effect mean the actual knowledge of any of the following persons: Robert A. Rosholt, Patricia R. Hatler, John H. Grady, Harry H. Hallowell, Eric E. Miller, Douglas Castagna, Gerald J. Holland, and Gerald T. Nichols.

“ 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.

“ NFS ” has the meaning set forth in the preamble to this Agreement.

“ NFS Material Adverse Effect ” means any material adverse effect on the Business, Assets, Liabilities, financial condition, or results of operations of NFS and its Subsidiaries taken as a whole.

“ NLRB ” means the National Labor Relations Board.

“ Non-Acquisition Asset Sale ” has the meaning set forth in Section 13.4(a) .

“ Non-Acquisition Assets ” means all of the Business, properties, Assets and Liabilities of the Applicable Entities listed on Section 1.1 of the Disclosure Schedule.

“ Non-Acquisition Funds ” means the pooled investment vehicles (including each portfolio or series thereof, if applicable) set forth on Exhibit A hereto.

 

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“ NW Asset Management ” has the meaning set forth in the first recital to this Agreement.

“ NW Corp. ” has the meaning set forth in the preamble to this Agreement.

“ NWD ” has the meaning set forth in the first recital to this Agreement.

“ NWD Fund Consents ” has the meaning set forth in Section 5.8(a) .

“ NWD Funds ” means each of the pooled investment vehicles (including each portfolio or series thereof, if any) for which an Applicable Entity acts as investment adviser, investment sub-adviser, sponsor or manager, all of which pooled investment vehicles are listed on Exhibit B hereto and all of which are registered under the Investment Company Act.

“ NWD Material Adverse Effect ” means any material adverse effect on the Business, Assets, Liabilities, financial condition, or results of operations of the Applicable Entities taken as a whole; provided , however , that in determining whether a NWD Material Adverse Effect has occurred there shall be excluded any effect to the extent attributable to or resulting from (A) any change in Laws or interpretations of Laws, (B) any required change in GAAP or regulatory accounting requirements or application thereof, (C) events, conditions or trends in economic, business or financial conditions generally or affecting the investment management industry (including changes in interest rates and changes in the markets for securities), (D) changes in national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possession or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (E) actions or omissions of NW Corp. and the Applicable Entities taken with the prior written consent of NFS and (F) any change, effect, event or occurrence arising out of the announcement of the execution and delivery of this Agreement or the performance of this Agreement and the transactions contemplated hereby, including any expenses incurred in connection herewith, to the extent, with respect to clauses (C) and (D) only, such effects do not disproportionately impact the Applicable Entities compared to other industry participants.

“ Order ” means an order, writ, ruling, judgment, directive, injunction, or decree of any arbitrator or Governmental Entity.

“ Permitted Dividend ” has the meaning set forth in Section 13.3 .

“ Person ” means an individual, corporation, partnership, association, joint stock company, limited liability company, Governmental Entity, business trust, unincorporated organization, or other legal entity.

“ Preliminary Accounting Report ” has the meaning set forth in Section 2.5(a) .

“ Preliminary Allocation Schedule ” has the meaning set forth in Section 11.6(b) .

“ Preliminary Purchase Price ” has the meaning set forth in Section 2.5(a) .

 

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“ Preliminary Valuation Date Balance Sheet ” has the meaning set forth in Section 2.5(a) .

“ Purchase Price ” has the meaning set forth in Section 2.3 .

“ 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.

“ Revised Allocation Schedule ” has the meaning set forth in Section 11.6(d) .

“ River Road Lease ” has the meaning set forth in Section 5.14 .

“ Sale Documents ” has the meaning set forth in Section 13.4(b) .

“ Sale Period ” has the meaning set forth in Section 13.4(b) .

“ SEC ” means the United States 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 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.

“ Seller ” and “ Sellers ” have the meanings specified in the second recital to this Agreement.

“ Seller Ancillary Agreements ” means all agreements, instruments and documents being or to be executed and delivered by NW Corp., Gartmore SA or either Seller or an Affiliate of any of them under this Agreement or in connection herewith.

“ Straddle Period ” means any taxable year or period beginning on or before and ending after the Closing Date.

“ 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 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

 

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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.

“ Termination Date ” has the meaning set forth in Section 12.1(b) .

“ Transition Services Agreement ” has the meaning set forth in Section 5.12 .

“ Valuation Date ” means the close of business on the last day of the month preceding the month in which the Closing Date occurs, unless the Closing Date is the last day of any month, then the Valuation Date shall be the close of business on the Closing Date.

“ Valuation Date Balance Sheet ” has the meaning set forth in Section 2.5(b) .

“ WARN Act ” has the meaning set forth in Section 13.7 .

ARTICLE II

PURCHASE AND SALE; CLOSING; DETERMINATION OF PURCHASE PRICE

2.1 Purchase and Sale . On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, NW Corp. shall cause (i) NWD to sell, transfer, assign, convey and deliver to NFS all of the Gartmore MF Capital Trust Interests and (ii) NW Asset Management to sell, transfer, assign, convey and deliver to NFS all of the Gartmore Distribution Services LLC Interests and all of the Gartmore Investors Services LLC Interests, and NFS shall purchase and accept (x) from NWD, the Gartmore MF Capital Trust Interests and (y) from NW Asset Management, the Gartmore Distribution Services LLC Interests and the Gartmore Investors Services LLC Interests.

2.2 Closing . The consummation of the sale of the Interests (the “ Closin g”) shall be effective at 9:00 a.m., New York time, on the fifth (5th) Business Day after all conditions to the respective obligations of the parties set forth in Articles VII and VIII have been satisfied or waived (with the effective date and time being referred to herein as the “ Closing Date ”). The physical transfer and delivery of the Interests will occur at 8:00 a.m., Chicago time, on the Closing Date, at the offices of Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois 60603, or at such other time, date and place as shall be mutually agreed upon by the parties. Each party hereto agrees to use its reasonable best efforts promptly to satisfy the conditions to the Closing to be satisfied by it in order to expedite the Closing. Subject to fulfillment or waiver (where permissible) of the conditions set forth in Articles VII and VIII , at the Closing and concurrently with the physical transfer and delivery of the Interests, NFS shall pay NW Corp., as agent for Sellers, an amount equal to the Estimated Purchase Price by wire transfer of immediately available funds to the bank account or accounts specified by NW Corp.

2.3 Purchase Price . The purchase price for the Interests (the “ Purchase Price ”) shall be determined in accordance with Section 2.5 and shall be equal to the sum of:

 

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(i)

$225,000,000 (Two Hundred Twenty-Five Million Dollars), plus ,

 

(ii)

the amount by which Final Tangible Stockholders’ Equity exceeds zero, or, minus ,

 

(iii)

the amount by which Final Tangible Stockholders’ Equity is less than zero.

2.4 Determination of Estimated Purchase Price . At least two Business Days prior to the Closing Date, NW Corp. shall deliver to NFS a certificate of Sellers executed on behalf of Sellers by the President or any Vice President of NWD, dated the date of its delivery, (i) stating that there has been conducted under the supervision of such officer a review of all relevant information and data then available, (ii) setting forth Sellers’ good faith reasonable estimate of the Estimated Purchase Price based upon the Estimated Valuation Date Balance Sheet and (iii) attaching the Estimated Valuation Date Balance Sheet thereto. The 2006 Pro Forma Balance Sheet that is contained in Section 3.9 of the Disclosure Schedule is a representative example of the Estimated Valuation Date Balance Sheet assuming a Valuation Date of December 31, 2006; provided , however , that the final Estimated Valuation Date Balance Sheet shall be determined as provided for in the definition thereof.

2.5 Determination of Purchase Price .

 

(a)

Within thirty (30) days after the Closing Date, NW Corp. shall:

 

(i)

prepare, using the same financial and accounting methods and procedures that were used to prepare the Estimated Valuation Date Balance Sheet, a balance sheet of the Applicable Entities as of the Valuation Date (after giving effect to the elimination of Assets and Liabilities primarily related to the Non-Acquisition Assets and to the sale, transfer, assignment, conveyance and delivery to Gartmore Investors Services of the Gartmore SA Transferred Assets and the assumption by Gartmore Investors Services of the Gartmore SA Assumed Liabilities as contemplated by Section 5.10 ) (the “ Preliminary Valuation Date Balance Sheet ”); the Preliminary Valuation Date Balance Sheet shall be subject to a review by KPMG LLP, NW Corp.’s independent accounting firm, based upon agreed upon procedures (the scope of which shall be as reasonably agreed to by the Parties) and such accounting firm will render a report based upon such agreed upon procedures (the “ Agreed Procedures Report ”)

 

(ii)

determine the Purchase Price in accordance with the provisions of this Agreement (such Purchase Price as determined by NW Corp. being referred to as the “ Preliminary Purchase Price ”); and

 

(iii)

deliver to NFS the Preliminary Valuation Date Balance Sheet, the Agreed Procedures Report and a certificate setting forth the Preliminary Purchase Price (collectively, the “ Preliminary Accounting Report ”).

 

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(b) Promptly following receipt of the Preliminary Accounting Report, NFS may review the same and, within thirty (30) days after the date of such receipt, may deliver to NW Corp. a certificate (signed by the President or any Vice President of NFS) setting forth its objections to the Preliminary Valuation Date Balance Sheet and the Preliminary Purchase Price as set forth in the Preliminary Accounting Report, together with a summary of the reasons therefor and calculations which, in its view, are necessary to eliminate such objections. If NFS does not so object within such 30-day period, the Preliminary Valuation Date Balance Sheet and the Preliminary Purchase Price set forth in the Preliminary Accounting Report shall be final and binding as the “ Valuation Date Balance Sheet ” and the Purchase Price, respectively, for purposes of this Agreement but shall not limit the representations, warranties, covenants and agreements of the parties set forth elsewhere in this Agreement.

(c) If NFS so objects within such 30-day period, NFS and NW Corp. shall use their reasonable best efforts to resolve by written agreement (the “ Agreed Adjustments ”) any differences as to the Preliminary Valuation Date Balance Sheet and the Preliminary Purchase Price and, if NFS and NW Corp. so resolve any such differences, the Preliminary Valuation Date Balance Sheet and the Preliminary Purchase Price set forth in the Preliminary Accounting Report as adjusted by the Agreed Adjustments shall be final and binding as the Valuation Date Balance Sheet and the Purchase Price, respectively, for purposes of this Agreement but shall not limit the representations, warranties, covenants and agreements of the parties set forth elsewhere in this Agreement.

(d) If any objections raised by NFS are not resolved by Agreed Adjustments within the 30-day period next following such 30-day period, then NFS and NW Corp. shall submit the objections that are then unresolved to a national accounting firm reasonably acceptable to both NFS and NW Corp. and such firm (the “ Accounting Firm ”) shall be directed by NFS and NW Corp. to resolve the unresolved objections (based solely on the presentations by NFS and NW Corp. as to whether any disputed matter had been determined in a manner consistent with this Agreement) as promptly as reasonably practicable and to deliver written notice to each of NFS and NW Corp. setting forth its resolution of the disputed matters. The Preliminary Valuation Date Balance Sheet and the Preliminary Purchase Price, after giving effect to any Agreed Adjustments and to the resolution of disputed matters by the Accounting Firm, shall be final and binding as the Valuation Date Balance Sheet and the Purchase Price, respectively, for purposes of this Agreement but shall not limit the representations, warranties, covenants and agreements of the parties set forth elsewhere in this Agreement.

(e) The parties hereto shall make available to NFS, NW Corp. and, if applicable, the Accounting Firm, such books, records and other information (including work papers) as any of the foregoing may reasonably request to prepare or review the Preliminary Accounting Report or any matters submitted to the Accounting Firm. The fees and expenses of the Accounting Firm shall be paid proportionately by NFS and NW Corp. based on the determination of the Accounting Firm of the unresolved objections submitted to it pursuant to Section 2.5(d) . The calculation of such proportionate payments shall be based on the relative position of the determination of the Accounting Firm in comparison to the positions submitted to it by NFS and NW Corp. pursuant to Section 2.5(d) .

 

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2.6 Adjustment . Promptly (but not later than five (5) Business Days) after the determination of the Purchase Price pursuant to Section 2.5 that is final and binding as set forth therein:

(a) if the Purchase Price exceeds the Estimated Purchase Price, NFS shall pay to NW Corp., as agent for Sellers, by wire transfer of immediately available funds to such bank account of NW Corp. as NW Corp. shall designate in writing to NFS, an amount equal to the excess of the Purchase Price over the Estimated Purchase Price, plus interest on such excess from the Closing Date to the date of payment thereof at the Agreed Rate; or

(b) if the Estimated Purchase Price exceeds the Purchase Price, NW Corp., as agent for Sellers, shall pay to NFS, by wire transfer of immediately available funds to such bank account of NFS as NFS shall designate in writing to NW Corp., an amount equal to the excess of the Estimated Purchase Price over the Purchase Price, plus interest on such excess from the Closing Date to the date of payment thereof at the Agreed Rate.

ARTICLE III

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:

3.1 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, and to cause its Subsidiaries to perform, each of their respective obligations hereunder.

3.2 Authority Relative to this Agreement . (a) The execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby, (i) have been determined to be fair, from a financial point of view, to NW Corp. and recommended for approval by the Special Committee of the Board of Directors of NW Corp., (ii) have been duly and validly authorized by the Board of Directors of NW Corp., and by all necessary corporate action on the part of NW Corp. and (iii) have been, or prior to the Closing will be, duly and validly authorized by all necessary corporate action on the part of each of NW Corp.’s applicable Subsidiaries.

(b) This Agreement has been duly and validly executed and delivered by NW Corp. and, assuming this Agreement constitutes a legal, valid and binding agreement of NFS, constitutes a legal, valid, and binding agreement of NW Corp., enforceable against NW Corp. in accordance with its respective 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. Each of the Seller Ancillary Agreements to which NW Corp. is a party has been duly authorized by NW Corp. and, upon execution and delivery by NW Corp. and, assuming each such Seller Ancillary Agreement constitutes a legal, valid and binding agreement of the other parties thereto, will constitute a legal, valid, and binding agreement of NW Corp., enforceable against NW Corp. in accordance with its respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and

 

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similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(c) Each of the Seller Ancillary Agreements to which Gartmore SA or either Seller will be a party has been duly authorized by Gartmore SA or such Seller and, upon execution and delivery by Gartmore SA or such Seller and, assuming each such Seller Ancillary Agreement constitutes a legal, valid and binding agreement of the other parties thereto, will constitute a legal, valid, and binding agreement of Gartmore SA or such Seller, as applicable, enforceable against Gartmore SA or such Seller in accordance with its respective 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 any Seller Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby will not violate or conflict with the Constitutive Documents of NW Corp. or of any of its applicable Subsidiaries, including any such Subsidiaries having an ownership interest in the Interests.

3.4 Organization, Qualification of the Applicable Entities . (a) Each of Gartmore Distribution Services and Gartmore Investors Services has been duly incorporated and is validly existing and in good standing under the Laws of the State of Delaware and Ohio, respectively, and Gartmore MF Capital Trust has been duly created as a statutory trust and is validly existing and in good standing under the Laws of the State of Delaware. Each of the Applicable Entities has all requisite power and authority to conduct its Business as currently being conducted and, in the case of Gartmore Investors Services, as to be conducted immediately after the transfer of the Gartmore SA Transferred Assets and the assumption of the Gartmore SA Assumed Liabilities contemplated by Section 5.10 . Each of the Applicable Entities is duly qualified to do business, and each is in good standing (to the extent such concept is applicable to such entity), in the jurisdictions where the nature of its Business or the ownership or leasing of its 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 NWD Material Adverse Effect.

(b) Copies of the Constitutive Documents of each of the Applicable Entities have heretofore been delivered to NFS and such copies are true, accurate, and complete as of the date hereof.

3.5 No Subsidiaries of Applicable Entities; Investments . None of the Applicable Entities has any Subsidiaries. Except as set forth in Section 3.5 of the Disclosure Schedule, none of the Applicable Entities, directly or indirectly, owns, of record or beneficially, any outstanding voting securities or other equity interests in any corporation, partnership, joint venture or other entity.

3.6 Capitalization of Applicable Entities; Title to the Interests . (a) As of the date hereof, the authorized capital stock of each of Gartmore Distribution Services and Gartmore Investors Services and the number of shares of each class of capital stock of each of Gartmore Distribution Services and Gartmore Investors Services that are issued and outstanding are set

 

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forth in Section 3.6 of the Disclosure Schedule. As of the date hereof, all of the issued and outstanding shares of capital stock of each of Gartmore Distribution Services and Gartmore Investors Services have been duly authorized and validly issued, are fully paid and nonassessable, and have not been issued in violation of any preemptive rights of any stockholders and all of such shares are beneficially owned and held of record by NW Asset Management, an indirect wholly owned Subsidiary of NW Corp., free and clear of any Lien. Upon consummation of the Gartmore Distribution Services Conversion and the Gartmore Investors Services Merger contemplated by Section 5.11 , all of the issued and outstanding limited liability company interests of Gartmore Distribution Services and Gartmore Investors Services will be beneficially owned and held of record by NW Asset Management, free and clear of any Lien.

(b) As of the date hereof, the authorized units of beneficial interest of Gartmore MF Capital Trust and the number of units of beneficial interest issued and outstanding are set forth in Section 3.6 of the Disclosure Schedule. As of the date hereof, all of the issued and outstanding units of beneficial interests of Gartmore MF Capital Trust have been duly authorized and validly issued, are fully paid and nonassessable, and have not been issued in violation of any preemptive rights of any unitholders and all of such units are beneficially owned and held of record by NWD, an indirect wholly owned Subsidiary of NW Corp., free and clear of any Lien.

(c) 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, proxies, shareholder agreements or other agreements, commitments or understandings of any character relating to the issued or unissued capital stock of, or beneficial interests in, any of the Applicable Entities or preferred securities, or securities convertible into, exchangeable for or evidencing the right to subscribe for any shares of capital stock, or beneficial interests in, any of the Applicable Entities.

3.7 Employment and Employee Benefits Matters; Severance . (a)  Section 3.7(a) of the Disclosure Schedule sets forth a list of (i) all employee benefit plans (within the meaning of Section 3(3) of ERISA) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree health or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, that are maintained, contributed to or sponsored by NW Corp. or its Affiliates for the benefit of any employee of the Applicable Entities, and (ii) all individual employment, retention, termination, severance or other similar contracts or agreements pursuant to which NW Corp., an Applicable Entity or any of their respective Affiliates currently has any obligation with respect to any employee of the Applicable Entities (collectively, the “ Employees ”) (such plans, programs, arrangements, contracts and agreements, the “ Employee Plans ”). Except as set forth in Section 3.7(a) of the Disclosure Schedule, NW Corp. has previously made available to NFS a true and complete copy of each Employee Plan and all amendments thereto (or in the case of any Employee Plan that is not written, a written description of such plan) and, in the case of any Employee Plan sponsored or maintained by an Applicable Entity, to the extent applicable, a copy of all current summary plan descriptions, summaries of material modifications and the most recent annual report (Form 5500) prepared in connection with any such plan.

 

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(b) Except as set forth in Section 3.7(b) of the Disclosure Schedule, none of the Employee Plans is a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single employer plan (within the meaning of Section 4001(a)(15) of ERISA) for which NW Corp., the Applicable Entities or any of their respective Affiliates would reasonably be expected to incur Liability under Section 4063 or 4064 of ERISA.

(c) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS that it is so qualified, and, to the Knowledge of NW Corp., no fact or event has occurred since the date of such determination or opinion letter that would reasonably be expected to adversely affect such qualification. To the extent applicable, NW Corp. has previously made available to NFS copies of the most recent IRS determination or opinion letters with respect to each Employee Plan sponsored or maintained by an Applicable Entity.

(d) With respect to each Employee Plan, neither NW Corp., the Applicable Entities or any of their respective Affiliates are currently liable for any material Tax arising under Section 4971, 4972, 4975, 4979, 4980 or 4980B of the Code, and, to the Knowledge of NW Corp., no fact or event exists that would give rise to any such material Tax Liability, except as set forth in Section 3.7(d) of the Disclosure Schedule. None of NW Corp., the Applicable Entities or any of their respective Affiliates has incurred any material Liability under or arising out of Title IV of ERISA (other than any Liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course of business), and no fact or event exists that would reasonably be expected to result in such a Liability. None of the Assets of the Applicable Entities is the subject of any Lien arising under Section 302(f) of ERISA or Section 412(n) of the Code and none of NW Corp., the Applicable Entities or any of their respective Affiliates has been required to post any security under Section 307 of ERISA or Section 401(a)(29) of the Code with respect to any Employee Plan, and, to the Knowledge of NW Corp., no fact or event exists that would reasonably be expected to give rise to any such Lien or requirement to post any such security.

(e) To the Knowledge of NFS, each Employee Plan is now and has been operated in all material respects in accordance with the requirements of all applicable laws, including ERISA and the Code.

(f) Section 3.7(f) of the Disclosure Schedule sets forth a list of the Employees who are primarily engaged in the business conducted with respect to the Non-Acquisition Assets and the agreements or policies that could require the payment of severance to them upon a sale of the Non-Acquisition Assets to a third party (the “ Active Management Severance Obligations ”).

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 or any Seller Ancillary Agreement, nor the performance of the transactions contemplated hereby or thereby 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 of, or creates rights in any Person with respect to, the Interests; or (b) to the

 

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Knowledge of NW Corp., violate any Law, License 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 NWD 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 or any of the Seller Ancillary Agreements and the consummation of the transactions contemplated hereby or thereby, 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) NW Corp. (i) has previously furnished NFS with copies of audited consolidated financial statements for NWD and its Subsidiaries as of and for the years ended December 31, 2005 and 2004 (including audited balance sheets and related statements of operations, changes in stockholders’ equity, and cash flow) (collectively, the “ GAAP Financial Statements ”); and (ii) is attaching to Section 3.9(a) of the Disclosure Schedule preliminary unaudited consolidated financial statements for NWD and its Subsidiaries as of and for the year ended December 31, 2006, which financial statements do not include a consolidated statement of cash flow, a consolidated statement of changes in stockholders’ equity or notes (collectively, the “ 2006 Financial Statements ”).

(b) The GAAP Financial Statements fairly present in all material respects the financial position of NWD and its Subsidiaries as of their respective dates and the results of operations of NWD and its Subsidiaries for the periods therein set forth, in each case in accordance with GAAP consistently applied. Except as noted in Section 3.9(b)(i) of the Disclosure Schedule, the 2006 Financial Statements were prepared in the normal and ordinary course of business and have been prepared in a manner consistent with that employed in preparing the GAAP Financial Statements. The 2006 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 NWD and its Subsidiaries for the year ended December 31, 2006. The GAAP Financial Statements and the 2006 Financial Statements were prepared from the books and records of NWD and each of its Subsidiaries, and such books and records are complete and correct in all material respects, except as set forth in Section 3.9(b)(ii) of the Disclosure Schedule.

(c) Section 3.9 of the Disclosure Schedule contains the unaudited pro forma combined balance sheet of the Applicable Entities as of December 31, 2006 (the “ 2006 Pro Forma Balance Sheet ”). The 2006 Pro Forma Balance Sheet has been derived from the consolidated balance sheet as of December 31, 2006 included in the 2006 Financial Statements by making the adjustments set forth in Section 3.9 of the Disclosure Schedule. Except for the limitations described in Sections 3.9(b)(i) and 3.9(b)(ii) of the Disclosure Schedule, which limitations also apply to the 2006 Pro Forma Balance Sheet, the 2006 Pro Forma Balance Sheet has been prepared in accordance with GAAP and presents fairly in all material respects the Assets and Liabilities of the Applicable Entities on a pro forma combined basis (after giving effect to the elimination of Assets and Liabilities primarily related to the Non-Acquisition Assets and to the sale, transfer, assignment, conveyance and delivery to Gartmore Investors Services of

 

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the Gartmore SA Transferred Assets and the assumption by Gartmore Investors Services of the Gartmore SA Assumed Liabilities as contemplated by Section 5.10 ) consistent with the books and records and past practices of the Applicable Entities.

(d) The audited balance sheets for the Applicable Entities as of December 31, 2006 delivered to NFS pursuant to Section 5.13 , shall be prepared in accordance with GAAP and present fairly in all material respects the Assets and Liabilities of the Applicable Entities.

3.10 Sufficiency of Assets . Except with respect to the Non-Acquisition Assets, after giving effect to the sale, transfer, assignment, conveyance and delivery to Gartmore Investors Services of the Gartmore SA Transferred Assets as contemplated by Section 5.10 and the arrangements contemplated by Section 5.12 , the Applicable Entities will own or have the right to use all Assets necessary for them to conduct the business of advising (including via advisory and sub-advisory agreements), administering and otherwise supporting the NWD Funds immediately following the Closing substantially as such activities are being conducted on the date hereof.

3.11 Compliance with Laws; Permits .

(a) Except as set forth in Section 3.11 of the Disclosure Schedule, to the Knowledge of NW Corp.: (i) since January 1, 2006, neither NWD nor any of its Subsidiaries has received any notice from any Governmental Entity or any other person that any of the Applicable Entities is in violation of, or has violated, any applicable provisions of any Laws; and (ii) none of the Applicable Entities has any executive officers or directors who, since January 1, 2006, 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 (i) and (ii) for violations or alleged violations that would not, individually or in the aggregate, reasonably be expected to result in a NWD Material Adverse Effect. To the Knowledge of NW Corp., each of the Applicable Entities has made all filings required to be made by it under applicable regulatory requirements since December 31, 2005, 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 NWD Material Adverse Effect. To the Knowledge of NW Corp., none of the Applicable Entities or any executive officer or director of any Applicable Entity 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 any Applicable Entity, except for such failures that would not, individually or in the aggregate, reasonably be expected to result in a NWD Material Adverse Effect.

(b) To the Knowledge of NW Corp., each of the Applicable Entities which is required to be registered as a broker/dealer, investment advisor, transfer agent or in another capacity with the SEC or any other Governmental Entity is 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 NWD Material Adverse Effect.

(c) To the Knowledge of NW Corp., each NWD Fund is in compliance in all material respects with all applicable Laws, including the Investment Company Act, the Investment

 

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Advisers Act of 1940, as amended, the Securities Act of 1933, as amended, the Securities Exchange