Form SC 13D/A National Interstate CORP Filed by: Spachman Alan R

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________

SCHEDULE 13D

National Interstate Corporation
(Name of Issuer)

Common Stock, $0.01 par value per share
(Title of Class of Securities)

63654U 10 0
(CUSIP Number)

Alan R. Spachman
285 Grande Way, #1503
Naples, Florida 34110
(843) 757-3838

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

July 25, 2016
(Date of Event Which Requires Filing of Statement on Schedule 13D)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), checking the following box.  /__/

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

---

 

 

CUSIP No. 819047 101

Schedule 13D

Page 2  of 7 Pages

 

(1)       Name of Reporting Persons: I.R.S. Identification No. of Above Persons (entities only):   Alan R. Spachman
(2)        Check the Appropriate Box if a Member of a Group (See Instructions): (a) [  ] (b) [  ]
(3)         SEC Use Only:
(4)        Source of Funds (See Instructions):  PF
(5)        Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e):
(6)        Citizenship or Place of Organization:              United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:	(7)       Sole Voting Power             770,564
	(8)       Shared Voting Power 1,166,666
	(9)       Sole Dispositive Power 770,564
	(10)      Shared Dispositive Power 1,166,666
(11)      Aggregate Amount Beneficially Owned by Each Reporting Person: 1,937,230
(12)      Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): [  ]
(13)     Percent of Class Represented by Amount in Row (11): 9.7%*
(14)     Type of Reporting Person (See Instructions):              IN

 

 

CUSIP No. 819047 101

Schedule 13D

Page 3  of 7 Pages

(1)       Name of Reporting Persons: I.R.S. Identification No. of Above Persons (entities only):   The Hudson Investment Trust (25-6919256)
(2)       Check the Appropriate Box if a Member of a Group (See Instructions): (a) [  ] (b) [  ]
(3)       SEC Use Only:
(4)       Source of Funds (See Instructions):  AF
(5)       Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e):
(6)       Citizenship or Place of Organization:             Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:	(7)       Sole Voting Power             0
	(8)       Shared Voting Power 1,000,000
	(9)       Sole Dispositive Power 0
	(10)     Shared Dispositive Power 1,000,000
(11)     Aggregate Amount Beneficially Owned by Each Reporting Person: 1,000,000
(12)     Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): [  ]
(13)     Percent of Class Represented by Amount in Row (11): 5.0%*
(14)    Type of Reporting Person (See Instructions):            OO

CUSIP No. 819047 101

Schedule 13D

Page 4 of 7 Pages

CUSIP No. 819047 101

Schedule 13D

Page 5 of 7 Pages

The Spachman Trust, the McDermott Trust (each as defined herein) and the Hudson Trust acquired all shares directly and beneficially owned by each of them through transfers from Mr. Spachman and from trusts controlled by Mr. Spachman and/or his immediate family members.

Item 4 of the Schedule 13D is hereby amended by adding thereto the following:

On July 25, 2016, the Company announced that it had reached an agreement with American Financial Group, Inc., an Ohio corporation (“American Financial”), pursuant to which Great American Insurance Company (“Great American”), an Ohio corporation and wholly-owned subsidiary of American Financial, will acquire all of the outstanding Common Shares that are not currently owned by Great American (the “Merger”), pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Great American and GAIC Alloy, Inc., an Ohio corporation and wholly-owned subsidiary of Great American.

In connection with the execution of the Merger Agreement, on July 25, 2016, certain shareholders of the Company (including Mr. Spachman, the Spachman Trust, the McDermott Trust and the Hudson Trust, the “Shareholders”) entered into the Voting Agreement with the Company and Great American (the “Voting Agreement”).  The Voting Agreement provides that the Shareholders will, among other things, vote or cause to be voted their respective shares of Common Stock in favor of any proposal to approve the Merger and the Merger Agreement and against any action, proposal, transaction or agreement that could reasonably be expected to result in a breach of the Voting Agreement or that could reasonably be expected to materially impede, interfere with or adversely affect the timely consummation of the Merger or the fulfillment of conditions to the Merger.  In addition, the Voting Agreement generally prohibits the Shareholders from initiating, joining or participating in litigation that seeks to prohibit, prevent or materially delay the closing of the Merger. 

The Voting Agreement will automatically terminate at the first to occur of (a) a written agreement among Great American and each Shareholder to terminate the Voting Agreement, (b) the effective time of the Merger, (c) the termination of the Merger Agreement in accordance with its terms, (d) any amendment, waiver or other modification to the Merger Agreement that is materially adverse to the Shareholder, (e) an Adverse Company Recommendation (as defined in the Merger Agreement) and (f) February 15, 2017.

The Voting Agreement contains material terms and conditions in addition to those described in this Schedule 13D.  A copy of the Voting Agreement is filed as Exhibit 99.1 hereto and incorporated herein by reference to such exhibit, and the foregoing description is qualified in its entirety by reference to the Voting Agreement.

 

 

CUSIP No. 819047 101

Schedule 13D

Page 6 of 7 Pages

Items 5(a), 5(b) and 5(d) of the Schedule 13D are hereby amended and restated in their entirety to read as follows:

(a)

As of the date hereof, Mr. Spachman indirectly beneficially owns 1,937,230 Common Shares, which represent 9.7% of the outstanding Common Shares based solely on information set forth in the Company’s most recently filed Quarterly Report on Form 10-Q, which reported that there were 19,925,875 Common Shares issued and outstanding as of the close of business on April 29, 2016.

(b)

Mr. Spachman has sole voting and dispositive power over 770,564 Common Shares directly and beneficially owned by the Alan R. Spachman Revocable Trust Under Deed Dated 5/23/2007 (the “Spachman Trust”), of which Mr. Spachman is the trustee.  Mr. Spachman shares with his spouse, Florence McDermott Spachman, voting and dispositive power over 166,666 Common Shares directly and beneficially owned by the Florence McDermott Spachman Revocable Trust (the “McDermott Trust”), of which Mrs. Spachman is the trustee.  Mr. Spachman shares with Glenmede voting and dispositive power over 1,000,000 Common Shares owned by the Trust.

(d)

Except as otherwise provided herein, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any of the Common Shares beneficially owned by Mr. Spachman.  The McDermott Trust has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares that it directly owns.  The Hudson Trust has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares that it directly owns.

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Item 6 of the Schedule 13D is hereby amended by adding thereto the following:

The information set forth in Item 4 is hereby incorporated herein by reference in response to Item 6.

Item 7.  Material to be filed as Exhibits.

Item 7 is hereby amended by adding thereto the following:

Exhibit 99.1 – Voting Agreement, dated as of the date hereof, by and among Great American Insurance Company, National Interstate Corporation, Alan R. Spachman, The Hudson Investment Trust, the Alan R. Spachman Revocable Trust Under Deed Dated 5/23/2007, and the Florence McDermott Spachman Revocable Trust.

 

CUSIP No. 819047 101

Schedule 13D

Page 7 of  7 Pages

 

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in this Schedule 13D is true, complete, and correct.

VOTING AGREEMENT

This Voting Agreement, dated as of July 25, 2016 (this “Agreement”), is made by and among each of the parties listed on Annex A hereto (each, a “Shareholder” and collectively, the “Shareholders”), Great American Insurance Company, an Ohio corporation (“Parent”) and National Interstate Corporation, an Ohio corporation (the “Company”). Capitalized terms used but not defined herein shall have the meaning set forth in the Merger Agreement (as defined below).

WHEREAS, concurrently with or following the execution and delivery of this Agreement, Parent, GAIC Alloy, Inc., an Ohio corporation and wholly owned subsidiary of Parent (“Merger Sub” and, together with Parent, “Buyers”), and the Company, are entering into an Agreement and Plan of Merger (as the same may be amended from time to time, the “Merger Agreement”), which provides, among other things, for the merger of Merger Sub with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”);

WHEREAS, as of the date hereof, each Shareholder is the beneficial owner of, and has the right to vote and dispose of, that number of common shares, par value $0.01 per share, of the Company (“Common Shares”), set forth opposite such Shareholder’s name on Annex A hereto (collectively, the “Original Shares”, and, together with any additional Common Shares referenced in Section 5 hereof, the “Shares”);

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Parent has required that each of the Shareholders agree, and each of the Shareholders is willing to agree, to the matters set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the agreements set forth below, the parties hereto agree as follows:

Each Shareholder hereby represents and warrants to Parent as follows:

 

(i)

in favor of any proposal to approve the Merger and the Merger Agreement; provided that the parties to the Merger Agreement shall not have agreed to an Excluded Amendment (as defined below);

 

 

(ii)

at the request of Parent, in favor of adoption of any proposal (other than as set forth in clause (i) above) in respect of which the Special Committee has (A) determined is reasonably necessary to facilitate the acquisition of the Company by Parent in accordance with the terms of the Merger Agreement, (B) disclosed the determination described in clause (A) in the Company’s proxy materials or other written materials disseminated to the shareholders of the Company and (C) recommended to be adopted by all of the shareholders of the Company; provided, however, that the foregoing shall not require such Shareholder to vote in favor of any waiver, modification or amendment to the terms of the Merger Agreement that would (x) reduce the Merger Consideration payable pursuant to the Merger Agreement as in effect on the date hereof, (y) reduce the amount of the Special Dividend or (z) impose any materially adverse obligation on such Shareholder (any such waiver, modification or amendment, an “Excluded Amendment”); and

(iii)

against (A) any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of such Shareholder under this Agreement and (B) any action, proposal, transaction or agreement which could reasonably be expected to materially impede, interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Merger or the fulfillment of Parent’s, the Company’s or Merger Sub’s conditions under the Merger Agreement or change in any manner the voting rights of any class of shares of the Company (including any amendments to the Articles of Incorporation or Code of Regulations).

 

Each Shareholder agrees that such Shareholder shall not, and shall not permit any entity under its control to, deposit any of its Shares in a voting trust, grant any proxies with respect to the Shares or subject any of the Shares to any arrangement with respect to the voting of the Shares other than agreements entered into with Parent.

Each Shareholder agrees that during the Voting Period, such Shareholder will not, directly or indirectly, transfer, sell, offer, exchange, assign, pledge or otherwise dispose of or encumber ("Transfer") any of its Shares or enter into any contract, option or other agreement with respect to, or consent to, a Transfer of, any of its Shares or such Shareholder's voting or economic interest therein other than (a) with respect to any Shareholder who is an individual, to any immediate family member of such individual or any trust for the benefit of such immediate family member, in each case for bona fide estate planning purposes, or to any lineal ascendants or descendants of the individual Shareholder pursuant to the laws of descent and distribution or (b) with respect to a Shareholder who is not an individual, to any Affiliate, in each case of clause (a) and (b) provided the applicable transferee executes a joinder hereto that is reasonably satisfactory to Parent.  Any attempted Transfer of Shares or any interest therein in violation of this Section 4 shall be null and void and the Company agrees not to recognize, register or give effect to any such Transfer.

Each Shareholder agrees that all Common Shares that such Shareholder purchases, acquires the right to vote or over which such Shareholder otherwise acquires beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, including Common Shares underlying unexercised options or other convertible or exchangeable instruments or securities or acquired as the result of any share dividend, share distribution, recapitalization, reorganization or other transaction) after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Shares for all purposes of this Agreement.  Upon request of Parent during the Voting Period, each Shareholder shall provide as promptly as reasonably practicable written notice to Parent of the number of Common Shares or other securities of the Company entitling such Shareholder to vote with respect to the matters set forth in Section 2.

The Shareholders hereby waive, and agree not to assert or perfect, any rights of appraisal or rights to dissent (including in accordance with Sections 1701.84 and 1701.85 of the Ohio General Corporation Law) from the Merger that the Shareholders may have by virtue of ownership of the Shares.

During the Voting Period, (i) Spachman (as defined below) shall, and shall cause his Affiliates and Representatives to, comply with the covenants set forth in Sections 5.4(a) and Section 5.4(c) of the Merger Agreement (subject to any exceptions therein) applicable to the Company as if such covenants were applicable to him and (ii) Spachman shall instruct his immediate family members to comply with such covenants as if such covenants were applicable to them.

 

Each Shareholder hereby covenants and agrees not to initiate, join, voluntarily support or otherwise participate in (it being understood that nothing in this Section 8 shall prevent any Shareholder from providing information, documents or testimony, or responding to any subpoena or discovery request, in each case to the extent required by applicable Law or any Governmental Entity) any Actions commenced or threatened against Parent, Merger Sub, the Company, or any of their respective directors or officers which seeks to prohibit, prevent or materially delay consummation of the Merger or the transactions contemplated by the Merger Agreement.

As promptly as reasonably practicable following the execution of this Agreement, Alan R. Spachman (“Spachman”) shall file with the U.S. Securities and Exchange Commission (the “SEC”) an amendment to his Schedule 13D/A (the “Amendment”) announcing his entrance into this Agreement and containing a reasonably detailed summary of the material terms hereof; provided, that Parent will have a reasonable opportunity to review the Amendment prior to the time it is filed with the SEC.  During the Voting Period, Spachman shall provide Parent a reasonable opportunity to review the Amendment, or any amendments or supplements thereto, prior to filing the same with the SEC.  During the Voting Period, Spachman shall not make any public announcement or private statement to any Person that is inconsistent with or contrary to the statements set forth in the Amendment; provided, that nothing herein shall prevent Spachman from making statements that have been authorized by the Special Committee or Company Board regarding determinations made by the Special Committee or Company Board in compliance with the terms of the Merger Agreement.

Each Shareholder hereby permits Parent and the Company to publish and disclose publicly (including in any documents and schedules filed with the SEC) such Shareholder’s identity and ownership of Common Shares and the nature of his, her or its commitments, arrangements and understandings pursuant to this Agreement as required under applicable Law or under the rules and regulations of NASDAQ or the New York Stock Exchange.

This Agreement shall automatically terminate, and none of Parent or any Shareholder shall have any rights or obligations hereunder and this Agreement shall become null and void (in the case of clause (d) below, with respect to an affected Shareholder only) and have no effect upon the earliest to occur of: (a) a written agreement among Parent and each Shareholder to terminate this Agreement; (b) the Effective Time; (c) the termination of the Merger Agreement in accordance with its terms; (d) any amendment,

waiver or other modification to the Merger Agreement that is materially adverse to the Shareholder (including for the avoidance of doubt, any Excluded Amendment); (e) an Adverse Company Recommendation; and (f) February 15, 2017.  The termination of this Agreement shall not prevent any party hereunder from seeking any remedies (at law or in equity) against another party hereto or relieve such party from liability, in each case for such party’s willful or intentional breach of any terms of this Agreement.

Spachman does not make any agreement or understanding in this Agreement in his capacity as a director of the Company or any of its Subsidiaries, and nothing in this Agreement shall be construed to prohibit, limit or restrict Spachman (or shall require Spachman to attempt to refrain) from exercising his fiduciary duties under Ohio law as a director of the Company or under applicable law as a director of any of its Subsidiaries.

The parties hereto agree that irreparable damage could occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties hereto shall be entitled to seek (a) an injunction or injunctions to prevent breaches of this Agreement and (b) specific enforcement of the terms and provisions of this Agreement, in each case without posting a bond or undertaking, this being in addition to any other remedy to which they are entitled at law or in equity.  Each of the parties hereto agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that (i) the parties hereto seeking such remedy has an adequate remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason at law or equity.

This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter of this Agreement.  This Agreement may not be amended or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by all of the parties hereto.  No waiver of any provisions hereof by any party shall be deemed a waiver of any other provisions hereof by such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties hereto at the following addresses (or at such other address for a party hereto as shall be specified by like notice):

 

If to Parent, to:

Great American Insurance Company
c/o American Financial Group, Inc.
301 East Fourth Street
Cincinnati, Ohio 45202
Attention:    Vito Peraino
Fax: (513) 369-5631

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention:         Todd E. Freed
 Jon A. Hlafter
 Richard J. Grossman
Fax:                 (212) 735-2000


If to any of the Shareholders, to:

To them at the address and facsimile number set forth opposite such Shareholder’s name on Annex A hereto.

 

 [Signature Pages Follow]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first written above.

 

 

 

 

 

 

 

[Signature Page to Voting Agreement]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS

*  Alan R. Spachman acknowledges that he shall be deemed a Shareholder for all purposes under this Agreement.

 

 

	ALAN R. SPACHMAN
	/s/ Alan R. Spachman

 

 

 

 

 

 

[Annex A to Voting Agreement]