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In addition, on September 28, 2011, <strong>the</strong> Boards met jointly for <strong>the</strong> purpose of considering <strong>the</strong> draftmerger agreement and <strong>the</strong> draft voting agreement with Nationwide Mutual. In addition <strong>to</strong> <strong>the</strong> membersof <strong>the</strong> Boards and senior management, in <strong>attend</strong>ance were representatives of Credit Suisse, Griffin,KBW, Ballard Spahr LLP, Fox Rothschild LLP, and Stevens & Lee.Credit Suisse described <strong>the</strong> dividend restriction covenant in <strong>the</strong> draft merger agreement, whichpermits <strong>the</strong> payment of a dividend for <strong>the</strong> third quarter, but provided that no fur<strong>the</strong>r dividends wouldbe payable without <strong>the</strong> consent of Nationwide Mutual. Fox Rothschild LLP and Ballard Spahr LLPhighlighted some of <strong>the</strong> changes <strong>to</strong> <strong>the</strong> draft merger agreement since <strong>the</strong> last discussion with <strong>the</strong>Boards, including in respect of Nationwide Mutual’s post-closing commitments.Mr. Browne reminded <strong>the</strong> Boards of his interest in <strong>the</strong> P<strong>are</strong>nt Merger and <strong>the</strong> Merger by virtue ofhis anticipated retention agreement with Nationwide Mutual. The Boards were also aw<strong>are</strong> of <strong>the</strong>interests of <strong>the</strong> o<strong>the</strong>r direc<strong>to</strong>rs and executive officers in <strong>the</strong> Mergers.The Company’s board of direc<strong>to</strong>rs <strong>the</strong>n commenced its <strong>meeting</strong>. KBW delivered its opinion <strong>to</strong> <strong>the</strong>Company’s board of direc<strong>to</strong>rs that <strong>the</strong> consideration <strong>to</strong> be received in <strong>the</strong> Merger was fair, from afinancial point of view, <strong>to</strong> <strong>the</strong> public s<strong>to</strong>ckholders of <strong>the</strong> Company (o<strong>the</strong>r than Harleysville Mutual orits successors).The Special Transaction Committee of <strong>the</strong> Company’s board of direc<strong>to</strong>rs recommended <strong>to</strong> <strong>the</strong>Company’s board of direc<strong>to</strong>rs that it approve <strong>the</strong> Merger. Following discussion, <strong>the</strong> Company’s board ofdirec<strong>to</strong>rs approved (with Mr. Browne abstaining) <strong>the</strong> Merger, including approving and adopting <strong>the</strong>merger agreement and approval of <strong>the</strong> voting agreement, and resolved <strong>to</strong> recommend <strong>to</strong> itss<strong>to</strong>ckholders that <strong>the</strong>y vote <strong>the</strong>ir sh<strong>are</strong>s of <strong>the</strong> Company in favor of <strong>the</strong> adoption of <strong>the</strong> mergeragreement.Harleysville Mutual’s board of direc<strong>to</strong>rs <strong>the</strong>n commenced a <strong>meeting</strong>. Griffin delivered its fairnessopinion, and Stevens & Lee delivered its legal opinion regarding <strong>the</strong> discharge of fiduciary duties ofHarleysville Mutual’s board of direc<strong>to</strong>rs, both <strong>to</strong> Harleysville Mutual’s board of direc<strong>to</strong>rs. BallardSpahr LLP indicated that it concurred with <strong>the</strong> Stevens & Lee opinion with respect <strong>to</strong> fiduciary duties.Credit Suisse was not requested <strong>to</strong> and did not render a fairness opinion <strong>to</strong> ei<strong>the</strong>r <strong>the</strong> Company orHarleysville Mutual.The Special Committee of Harleysville Mutual’s board of direc<strong>to</strong>rs recommended <strong>to</strong> HarleysvilleMutual’s board of direc<strong>to</strong>rs that it approve <strong>the</strong> P<strong>are</strong>nt Merger. Following discussion, HarleysvilleMutual’s board of direc<strong>to</strong>rs approved (with Mr. Browne abstaining) <strong>the</strong> P<strong>are</strong>nt Merger, includingapproving and adopting <strong>the</strong> merger agreement and <strong>the</strong> voting agreement, and resolved <strong>to</strong> recommend<strong>to</strong> its policyholders that <strong>the</strong>y approve <strong>the</strong> P<strong>are</strong>nt Merger.On <strong>the</strong> evening of September 28, 2011, <strong>the</strong> parties executed <strong>the</strong> Merger Agreement and <strong>the</strong> VotingAgreement, and issued a joint press release on September 29, 2011.Reasons for <strong>the</strong> MergerThe board of direc<strong>to</strong>rs of each of <strong>the</strong> Company and Harleysville Mutual, referred <strong>to</strong> collectively inthis section as <strong>the</strong> Boards, held joint <strong>meeting</strong>s on September 27, 2011 and September 28, 2011, andalso met separately on September 27, 2011. At those <strong>meeting</strong>s, <strong>the</strong> Boards considered <strong>the</strong> terms of <strong>the</strong>Merger Agreement and <strong>the</strong> transactions contemplated <strong>the</strong>reby, including <strong>the</strong> Mergers. HarleysvilleMutual’s board of direc<strong>to</strong>rs also separately considered <strong>the</strong> requirements that would need <strong>to</strong> be met <strong>to</strong>obtain approval of <strong>the</strong> contemplated transactions by <strong>the</strong> Pennsylvania Insurance Department under <strong>the</strong>Pennsylvania Insurance Holding Companies Act, and determined that <strong>the</strong> proposed P<strong>are</strong>nt Merger isnot unfair or unreasonable <strong>to</strong> <strong>the</strong> policyholders of Harleysville Mutual, and did confer benefits <strong>to</strong> <strong>the</strong>policyholders of Harleysville Mutual. Following such determination, Harleysville Mutual’s board ofdirec<strong>to</strong>rs deemed it advisable and in <strong>the</strong> best interests of Harleysville Mutual <strong>to</strong> effect <strong>the</strong> P<strong>are</strong>nt39

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