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No Solicitations by the Company .............................................. 93Changes in the Company’s Recommendation ..................................... 94Post-Closing Commitments .................................................. 94Indemnification and Insurance ............................................... 95Conditions to the Closing of the Mergers ....................................... 96Transaction Fees and Expenses ............................................... 97Termination of the Merger Agreement .......................................... 97Termination Fee if the Mergers Are Not Completed ................................ 99Specific Performance ...................................................... 99Governing Law ........................................................... 99Amendments, Extensions and Waivers of the Merger Agreement ....................... 99Stockholder Voting Agreement ............................................... 100GOLDEN PARACHUTE COMPENSATION ....................................... 100MARKET PRICE OF THE SHARES OF THE COMPANY’S COMMON STOCK ANDDIVIDEND DATA ........................................................ 101PRINCIPAL STOCKHOLDERS ................................................ 102SHAREHOLDINGS OF DIRECTORS AND MANAGEMENT .......................... 103FUTURE STOCKHOLDER PROPOSALS ......................................... 104OTHER MATTERS ......................................................... 104WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION .......................... 104APPENDIX A — AGREEMENT AND PLAN OF MERGER BY AND AMONG NATIONWIDEMUTUAL INSURANCE COMPANY, HARLEYSVILLE MUTUAL INSURANCECOMPANY, NATIONALS SUB, INC., AND HARLEYSVILLE GROUP INC.DATED AS OF SEPTEMBER 28, 2011APPENDIX B — OPINION OF KEEFE, BRUYETTE & WOODS, INC.APPENDIX C — SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW(APPRAISAL RIGHTS)ii
SUMMARY TERM SHEETExcept as otherwise specifically noted in this proxy statement, the ‘‘Company,’’ ‘‘we,’’ ‘‘our,’’ ‘‘us’’ andsimilar words in this proxy statement refer to Harleysville Group Inc. In addition, we refer to HarleysvilleMutual Insurance Company as ‘‘Harleysville Mutual,’’ to Nationwide Mutual Insurance Company as‘‘Nationwide Mutual,’’ and to Nationals Sub, Inc. as ‘‘Merger Sub.’’ In addition, when we use the term‘‘Harleysville’’ we refer collectively to the Company, Harleysville Mutual and the respective insurancesubsidiaries of each.This summary term sheet highlights only selected information from this proxy statement relating to theMerger (as defined below) of Merger Sub into the Company and may not contain all of the informationabout the Merger and related transactions that is important to you as a Company stockholder. Accordingly,we encourage you to carefully read this entire document, including the appendices and the documents towhich we have referred you, including the Agreement and Plan of Merger, dated September 28, 2011, by andamong the Company, Harleysville Mutual, Nationwide Mutual, and Merger Sub, as it may be amended fromtime to time (which we refer to in this proxy statement as the ‘‘Merger Agreement’’) attached as Appendix A.The information contained in this summary term sheet is qualified by the more detailed informationcontained in this proxy statement. Page references are included in parentheses to direct you in the proxystatement to a more complete discussion of the topics presented in this summary.The Parties to the Merger Agreement (page 23)Harleysville GroupHarleysville Group Inc.355 Maple AvenueHarleysville, Pennsylvania 19438Telephone: (215) 256-5000We are an insurance holding company headquartered in Pennsylvania which, together with oursubsidiaries, engages in the property and casualty insurance business on a regional basis in the UnitedStates. We are a Delaware corporation formed by Harleysville Mutual in 1979 as a wholly ownedsubsidiary. In May 1986, we completed an initial public offering of our common stock, reducing thepercentage of outstanding shares owned by Harleysville Mutual to approximately 70%. In April 1992,Harleysville Mutual completed a secondary public offering of a portion of the Company’s commonstock then owned by it, further reducing the percentage of outstanding shares owned by HarleysvilleMutual. On September 28, 2011, Harleysville Mutual owned approximately 53.5% of the Company’soutstanding shares of common stock.Harleysville MutualHarleysville Mutual Insurance Company355 Maple AvenueHarleysville, Pennsylvania 19438Telephone: (215) 256-5000Harleysville Mutual is a mutual insurance company headquartered in Pennsylvania which, togetherwith its subsidiaries, engages in the property and casualty insurance business on a regional basis in theUnited States. The Company, Harleysville Mutual and their subsidiaries operate together to pursue astrategy of underwriting a broad array of commercial and personal coverages. These insurancecoverages are marketed primarily in the eastern and midwestern United States through approximately1,300 insurance agencies. Regional offices are maintained in Georgia, Illinois, Indiana, Maryland,Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Tennessee,and Virginia.1
Page 2: Harleysville Group Inc. Stockholder
Page 5: TABLE OF CONTENTSSUMMARY TERM SHEET
Page 9 and 10: February 29, 2012, there were 27,27
Page 11 and 12: non-binding advisory basis, the gol
Page 13 and 14: Opinion of Keefe, Bruyette & Woods,
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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