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ESPP and the ASPP will be terminated. Shares of common stock acquired under the ESPP andthe ASPP, respectively, are issued and outstanding and entitled to receive the Mergerconsideration of $60.00 per share (without interest and less any applicable withholding taxes).Conditions to the Closing of the Mergers (page 96)Conditions to Each Party’s Obligations to Effect the MergersBefore the Mergers can be completed, a number of conditions must be satisfied or waived. Theseinclude, but are not limited to:• adoption of the Merger Agreement by the holders of a majority of the Company’s issued andoutstanding shares of common stock;• adoption of the Merger Agreement by the requisite votes of the respective members of each ofHarleysville Mutual and Nationwide Mutual;• the absence of any legal prohibitions against the Mergers;• all filings required for the Mergers have been made and all governmental approvals andconsents required for the Mergers have been obtained;• no institution of any action by any governmental authority challenging or seeking to enjoin theconsummation of the Mergers as well as early termination or expiration of the waiting periodunder the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the ‘‘HSRAct’’), which such notice of early termination was received on November 8, 2011;• no enactment, issuance, promulgation, enforcement or entry of any order or law by anygovernmental authority that would prevent or prohibit the consummation of the Mergers, and noinstitution or pendency of any action by any governmental authority seeking to restrain, prevent,materially delay or restructure the Mergers;• the representations and warranties of the Company, Harleysville Mutual, Nationwide Mutual,and Merger Sub shall be true and correct (subject to the applicable materiality standard), andeach of them shall have complied with their covenants and agreements under the MergerAgreement in all material respects;• the Company and Harleysville Mutual having an aggregate statutory surplus in excess of$1,000,000,000 exclusive of any change in net unrealized capital losses since August 31, 2011, andan aggregate statutory surplus in excess of $900,000,000 (inclusive of any change in netunrealized capital losses);• Nationwide Mutual having a statutory surplus in excess of $11,100,000,000;• no Material Adverse Effect (as such term is defined in the Merger Agreement) having occurredwith respect to the Company, Harleysville Mutual or their subsidiaries, taken as a whole, and noHarleysville Material Adverse Change (as such term is defined in the Merger Agreement) havingoccurred with respect to Harleysville Mutual and the Company;• no Material Adverse Effect having occurred with respect to Nationwide Mutual, Merger Sub andtheir subsidiaries, taken as a whole, and no material adverse change having occurred withrespect to Nationwide Mutual; and• Michael L. Browne having entered into a retention bonus agreement with Nationwide Mutual.6
Opinion of Keefe, Bruyette & Woods, Inc. (page 45 and Appendix B)Keefe, Bruyette & Woods, Inc. (‘‘KBW’’), delivered its opinion on September 28, 2011, dated as ofthe same date, to the Company’s board of directors that, as of such date, the consideration to bereceived by the holders of shares of the Company’s common stock (other than Harleysville Mutual orits successors) in the Merger is fair, from a financial point of view, to the holders of such shares.The full text of the KBW opinion is attached to this proxy statement as Appendix B. Stockholdersare urged to read the KBW opinion. KBW provided its opinion for the information and assistance ofthe Company’s board of directors in connection with its consideration of the proposed Merger. TheKBW opinion addresses only the fairness, from a financial point of view, as of the date of such opinion,of the consideration to be received by the holders of shares of the Company’s common stock (otherthan Harleysville Mutual or its successors) in the proposed Merger, and does not address any otheraspect of the Merger nor any other matter. KBW’s opinion speaks only as of the date thereof.Subsequent developments may affect KBW’s opinion, and KBW does not have any obligation or dutyto update, revise or reaffirm its opinion based on circumstances, developments or events occurring afterthe date of KBW’s opinion. The KBW opinion is not intended to be and does not constitute arecommendation to any stockholder as to how such stockholder should vote with respect to the MergerAgreement or any other matter and should not be relied upon by any stockholder as such.No Solicitations by the Company (page 93)The Merger Agreement restricts our ability to solicit or engage in discussions or negotiations withthird parties regarding specified transactions involving the Company or our subsidiaries.Notwithstanding these restrictions, under certain circumstances and subject to certain conditions, ourboard of directors may, prior to the adoption of the Merger Agreement by our stockholders,(i) respond to a takeover proposal by engaging in discussions and negotiations with a proposing party,(ii) change its recommendation of the Merger to our stockholders, or (iii) terminate the MergerAgreement to enter into an agreement with respect to a Superior Proposal (as such term is defined inthe Merger Agreement) after paying the termination fee specified in the Merger Agreement.Termination of the Merger Agreement (page 97)The Company, Harleysville Mutual, Nationwide Mutual, and Merger Sub may agree in writing toterminate the Merger Agreement at any time without completing the Mergers, even after ourstockholders have adopted it. The Merger Agreement may also be terminated at any time prior to theeffective time of the Merger under specified circumstances, including:• by the mutual written agreement of the parties;• by any of the parties if the Mergers have not been consummated by September 28, 2012,provided that such outside date may be extended by Nationwide Mutual or Merger Sub for upto an additional 180 days if either determines in good faith that additional time is necessary toobtain governmental approvals and each of the other conditions to the consummation of theMerger and the Parent Merger has been satisfied or waived or remains reasonably capable ofsatisfaction provided that the delay was not caused by the terminating party’s breach;• by any of the parties if the Merger Agreement is not adopted by the requisite vote of themembers of Nationwide Mutual;• by any of the parties if the Merger Agreement is not adopted by the requisite vote of themembers of Harleysville Mutual;• by any of the parties if the Merger Agreement is not adopted by the requisite vote of theCompany’s stockholders;7
Page 2: Harleysville Group Inc. Stockholder
Page 5 and 6: TABLE OF CONTENTSSUMMARY TERM SHEET
Page 7 and 8: SUMMARY TERM SHEETExcept as otherwi
Page 9 and 10: February 29, 2012, there were 27,27
Page 11: non-binding advisory basis, the gol
Page 15 and 16: Governmental and Regulatory Approva
Page 17 and 18: QUESTIONS AND ANSWERS ABOUT THE SPE
Page 19 and 20: Q. Is any other vote required befor
Page 21 and 22: not apply to the proposal to approv
Page 23 and 24: Q: What happens if the Merger is no
Page 25 and 26: We undertake no obligation to publi
Page 27 and 28: eturn your proxy card. If you submi
Page 29 and 30: Stockholder Voting AgreementIn conn
Page 31 and 32: Harleysville Mutual and their respe
Page 33 and 34: confidential discussions with other
Page 35 and 36: synergies between the companies and
Page 37 and 38: Mutual. At the end of the call, Cre
Page 39 and 40: advisors. He also indicated that Ha
Page 41 and 42: as to the fairness of the considera
Page 43 and 44: stockholders. Credit Suisse then re
Page 45 and 46: In addition, on September 28, 2011,
Page 47 and 48: closing of the Mergers, including t
Page 49 and 50: The foregoing discussion of factors
Page 51 and 52: Management Financial Projections fo
Page 53 and 54: did not independently verify the ac
Page 55 and 56: Selected Publicly Traded Companies
Page 57 and 58: most recent quarter-end prior to th
Page 59 and 60: Historical Premiums Paid AnalysisKB
Page 61 and 62: ordinary income tax rates in effect
Page 63 and 64:
Trade Commission under the HSR Act
Page 65 and 66:
The following table identifies the
Page 67 and 68:
stock, the aggregate number of shar
Page 69 and 70:
directors’ and officers’ liabil
Page 71 and 72:
occurring during the retention peri
Page 73 and 74:
to the extent unvested as of April
Page 75 and 76:
Program for that performance period
Page 77 and 78:
under the Harleysville Mutual Assum
Page 79 and 80:
should be executed by or for all jo
Page 81 and 82:
including a request that the court
Page 83 and 84:
A. Andrew Tignanelli v. W. Thacher
Page 85 and 86:
oard of directors from performing i
Page 87 and 88:
Effect of the MergerAt the effectiv
Page 89 and 90:
No consideration will be paid to st
Page 91 and 92:
• accuracy of information contain
Page 93 and 94:
• receipt by Nationwide Mutual’
Page 95 and 96:
affecting investment assets of us o
Page 97 and 98:
e made pursuant to existing contrac
Page 99 and 100:
No Solicitations by the CompanyUnde
Page 101 and 102:
defined in the Merger Agreement) to
Page 103 and 104:
• between the date of the Merger
Page 105 and 106:
Termination Fee if the Mergers Are
Page 107 and 108:
MARKET PRICE OF THE SHARES OF THE C
Page 109 and 110:
SHAREHOLDINGS OF DIRECTORS AND MANA
Page 111 and 112:
If you have questions about the Spe
Page 113 and 114:
TABLE OF CONTENTSARTICLE I DEFINITI
Page 115 and 116:
Section 7.12 Retention of Executive
Page 117 and 118:
membership interests, by contract,
Page 119 and 120:
‘‘Delaware Certificate of Merge
Page 121 and 122:
avoidance of doubt, Harleysville De
Page 123 and 124:
‘‘IRCA’’ means the Immigrat
Page 125 and 126:
‘‘Order’’ means an order, i
Page 127 and 128:
corporation) of which is beneficial
Page 129 and 130:
Nationwide Mutual and will have the
Page 131 and 132:
Section 3.2 HGI Stock Options and R
Page 133 and 134:
(e) Promptly following the date tha
Page 135 and 136:
have been made available to Nationw
Page 137 and 138:
execution and delivery of this Agre
Page 139 and 140:
Person the right to enjoin or resci
Page 141 and 142:
listing on any list maintained by a
Page 143 and 144:
accordance with their terms. Harley
Page 145 and 146:
facility or assigned risk pool. To
Page 147 and 148:
Section 4.20 Intellectual Property.
Page 149 and 150:
ARTICLE VREPRESENTATIONS AND WARRAN
Page 151 and 152:
are set forth in Section 5.2(b) of
Page 153 and 154:
development involving a prospective
Page 155 and 156:
(b) Except as set forth in Section
Page 157 and 158:
extent that it is a party thereto,
Page 159 and 160:
Section 5.15 Cancellations. Except
Page 161 and 162:
(d) Except as set forth in Section
Page 163 and 164:
agreements, information on the basi
Page 165 and 166:
Section 5.21 Rating Agencies. Excep
Page 167 and 168:
Agreement, the Mergers, the Voting
Page 169 and 170:
Agreement with and the approval of
Page 171 and 172:
Producers wrote, sold or produced s
Page 173 and 174:
(o) Brokers or Finders. No broker,
Page 175 and 176:
ARTICLE VIICOVENANTSSection 7.1 Har
Page 177 and 178:
(i) Except as set forth in Section
Page 179 and 180:
(w) Neither of the Harleysville Par
Page 181 and 182:
Notwithstanding anything to the con
Page 183 and 184:
(c) the receipt by such Party of an
Page 185 and 186:
of any nature whatsoever and, speci
Page 187 and 188:
Section 8.2 Stockholder Meeting and
Page 189 and 190:
Section 9.2 Conditions to Obligatio
Page 191 and 192:
(c) by any of the Harleysville Part
Page 193 and 194:
or related to the authorization, pr
Page 195 and 196:
allow the other Parties a reasonabl
Page 197 and 198:
IN WITNESS WHEREOF, Nationwide Mutu
Page 199 and 200:
In connection with this opinion, we
Page 201 and 202:
APPENDIX CGENERAL CORPORATION LAW O
Page 203 and 204:
either notice that such notice has
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