Notice of Dismissal of The National Security Group, Inc. Litigation and Agreement Upon Attorneys' Fees

Rhea-AI Summary

The National Security Group, Inc. has announced the dismissal of a putative class action lawsuit, Cohen v. Wilkerson, related to its merger with VR Insurance SPV, LLC valued at approximately $41.4 million. Plaintiff Cohen alleged fiduciary duty violations concerning undisclosed financial projections. After the Company agreed to disclose these projections, Cohen withdrew his request for an injunction. Defendants agreed to pay $250,000 in attorneys' fees to resolve the claims, though they maintain the Proxy Statement contained all necessary information.

Positive

• Merger with VR Insurance SPV valued at approximately $41.4 million.
• Dismissal of the class action lawsuit alleviates potential legal complications.

Negative

• Allegations of fiduciary duty violations related to financial disclosures.
• Legal expenses of $250,000 may indicate ongoing issues with shareholder relations.

ELBA, Ala., Aug. 25, 2022 (GLOBE NEWSWIRE) -- Notice is hereby provided to all persons who held shares of common stock of The National Security Group, Inc. (the "Company") from and including March 31, 2022 through July 1, 2022.

The purpose of this Notice is to inform you of developments with respect to the putative class action lawsuit captioned Cohen v. Wilkerson, et al., C.A. No. 2022-0333-LWW (the "Action"), including the dismissal of the Action and an agreement by Defendants to pay attorneys' fees and expenses to counsel for Plaintiff.

On January 26, 2022, the Company entered into a merger agreement pursuant to which VR Insurance SPV, LLC would acquire the Company in an all-cash transaction valued at approximately $41.4 million (the "Merger").

On March 31, 2022, the Company filed with the U.S. Securities and Exchange Commission (the "SEC") a preliminary proxy statement (the "Proxy Statement") asking its stockholders of record as of April 26, 2022 to approve of the Merger.

On April 14, 2022, Plaintiff Cohen, a stockholder of the Company, filed the Action, which named then-members of the Company's Board of Directors as defendants. Plaintiff alleged, among other things, that the board's members violated their fiduciary duties under Delaware law by failing to disclose in the Proxy Statement the financial projections received by the Company's financial advisor in connection with the Merger (the "Projections"). As relief, the complaint sought, among other things, an injunction of the Merger, damages, and an award of attorneys' fees.

On April 26, 2022, after the complaint was filed, the Company committed to Plaintiff that it would publicly disclose the Projections to address the allegations in the Action.

On May 9, 2020, the Company issued a revised preliminary proxy statement (the "Revised Proxy Statement"). After the Revised Proxy Statement was issued, Plaintiff withdrew his motion for a preliminary injunction and advised the Court that he intended to confer with Defendants shortly after the Company's stockholder meeting with respect to further proceedings.

Following negotiations after the Company's stockholder meeting, Defendants, while denying any and all liability and maintaining that the Proxy Statement contained all material information required for stockholders to cast an informed vote regarding the Merger prior to the Revised Proxy Statement, agreed to pay or cause to be paid $250,000 to Plaintiff's counsel as attorneys' fees and expenses and in full satisfaction of Plaintiff's claims for attorneys' fees and expenses. The Court has not been asked to review, and will pass no judgment on, the payment of attorneys' fees and expenses or their reasonableness.

Attorneys for Plaintiff and Defendants may be contacted as follows:

ABRAHAM, FRUCHTER & TWERSKY, LLP
Michael J. Klein
450 Seventh Avenue, 38th Floor
New York, New York 10123
(212) 279-5050
mklein@aftlaw.com

Counsel for Plaintiff

TROUTMAN PEPPER HAMILTON SANDERS LLP
Joanna J. Cline
1313 Market Street
Wilmington, DE 19801
(302) 777-6500
joanna.cline@troutman.com

Counsel for Defendants

FAQ

What was the recent lawsuit involving The National Security Group?

The lawsuit, Cohen v. Wilkerson, alleged fiduciary duty violations regarding undisclosed financial projections related to the merger with VR Insurance SPV.

What was the outcome of the class action lawsuit involving NSEC?

The lawsuit was dismissed, and the defendants agreed to pay $250,000 in attorneys' fees to the plaintiff's counsel.

How much is the merger with VR Insurance SPV worth?

The merger is valued at approximately $41.4 million.

What disclosures did The National Security Group make in relation to the lawsuit?

The Company agreed to publicly disclose financial projections to address the allegations in the lawsuit.