<PAGE>
As filed with the Securities and Exchange Commission on April 25,
1997
Registration No. 333-
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HARLEYSVILLE GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0241172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
355 Maple Avenue, Harleysville, Pennsylvania 19438
(Address of principal executive offices) (Zip Code)
--------
HARLEYSVILLE GROUP INC. EQUITY INCENTIVE PLAN
(Full title of the Plan)
Walter R. Bateman, II
President and Chief Executive Officer
Harleysville Group Inc.
355 Maple Avenue
Harleysville, Pennsylvania 19438
(Name and address of agent for service)
(215) 256-5000
(Telephone number, including area code, of agent for service)
-----------
WITH COPIES TO:
Donald A. Scott, Esquire Roger A. Brown, Esquire
Morgan, Lewis & Bockius Harleysville Group Inc.
2000 One Logan Square 355 Maple Avenue
Philadelphia, Harleysville,
Pennsylvania 19103-6993 Pennsylvania 19438-2297
(215) 963-5206 (215) 256-5173
CALCULATION OF REGISTRATION FEE
============================================================================
Proposed
Proposed maximum
Amount offering aggregate Amount of
Title of Securities to be price per offering registration
to be registered registered unit <F1> price <F1> fee <F1>
- ----------------- ---------- --------- ---------- ------------
Common Stock
$1.00 par value 2,000,000 $32.75 $65,500,000 $19,848.48
[FN]
<F1>Pursuant to Rule 457(c), the registration fee has been calculated based
on the average of the high and low prices of Registrant's Common Stock on
April 21, 1997 on the NASDAQ National Market System
============================================================================
<PAGE> Page II-1
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The following documents filed by the Company with the
Securities and Exchange Commission are incorporated herein by
reference:
a. Annual Report on Form 10-K for the year ended December 31,
1996 filed by the Company pursuant to Section 13(a) of the
Securities Exchange Act of 1934 ("Exchange Act").
b. The description of the Company's common stock set forth in
response to Item 1(b) of the Registration Statement on
Form 8-A filed by the Company pursuant to Section 12 of
the Exchange Act and any amendment to such registration
statement filed for the purpose of updating such
description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorpo-
rated by reference herein and to be a part hereof from the date of
the filing of such documents. Any statement contained in this
Registration Statement or in a document incorporated or deemed to
be incorporated by reference shall be deemed to be modified or
superseded to the extent that a statement contained in any other
subsequently filed document which also is deemed to be incorporated
by reference herein or in any subsequently filed appendix to this
Registration Statement modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus.
Item 4. Not applicable.
Item 5. Not applicable.
Item 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS
-----------------------------------------
The Company's Certificate of Incorporation and By-Laws contain
provisions permitted by the Delaware General Corporation Law (under
which the Company is organized) that provide that directors and
officers will be indemnified by the Company to the fullest extent
permitted by law for all losses that may be incurred by them in
connection with any action, suit or proceeding in which they may
become involved by reason of their service as a director or officer
of the Company. In addition, the Company's Certificate of Incorpo-
<PAGE> Page II-2
ration contains provisions permitted by the Delaware General
Corporation Law that limit the monetary liability of directors of
the Company for certain breaches of their fiduciary duty, and its
By-Laws provide for the advancement by the Company to directors and
officers of expenses incurred by them in connection with a
proceeding of a type to which the duty of indemnification applies.
The Company maintains directors' and officers' liability insurance
to insure its directors and officers against certain liabilities
incurred in their capacity as such, including claims based on
breaches of duty, negligence, error and other wrongful acts.
Item 7. Not applicable.
Item 8. EXHIBITS
--------
Reference is made to the Exhibit Index on Page II-6.
Item 9. UNDERTAKINGS
------------
The undersigned registrant hereby undertakes:
(1) To file, during the period in which offers or sales are
being made, a post-effective amendment to this registration state-
ment:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registra-
tion statement (or the most recent post-effective
amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this registration
statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the registration statement or any material
change to such information in the registration
statement.
Provided, however, that paragraphs (1)(i) and
-------- -------
(1)(ii) shallnot apply to this registration
statement on Form S-8 if the information required
to be included in the post-effective amendment by
these paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this
registration statement.
<PAGE> Page II-3
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
-----
fide offering thereof.
- ----
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
---- ----
(5) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE> Page II-4
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has
duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Township of
Lower Salford, Commonwealth of Pennsylvania, on this 25th day of
April, 1997.
HARLEYSVILLE GROUP INC.
BY: /s/Walter R. Bateman
--------------------
Walter R. Bateman, II
President and
Chief Executive Officer
POWER OF ATTORNEY
------------------
Each person whose signature appears below constitutes and
appoints each of Walter R. Bateman, II and Roger A. Brown, as such
person's true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for such person and in
such person's name, place and stead, in any and all capacities, to
sign any and all amendments to the Registration Statement, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite
and necessary to be done as fully to all intents and purposes as
such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or a
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
<PAGE> Page II-5
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- -----
/s/B.W. Mitchell Chairman of the Board April 25, 1997
- ----------------- and a Director
Bradford W. Mitchell
/s/Walter R. Bateman President, April 25, 1997
- -------------------- Chief Executive Officer
Walter R. Bateman, II and a Director
/s/Bruce J. Magee Senior Vice President April 25, 1997
- ----------------- and Chief Financial
Bruce J. Magee Officer (principal
financial officer and
principal accounting officer)
/s/Michael L. Browne Director April 25, 1997
- --------------------
Michael L. Browne
/s/Robert D. Buzzell Director April 25, 1997
- --------------------
Robert D. Buzzell
/s/William E. Strasburg Director April 25, 1997
- -----------------------
William E. Strasburg
/s/Frank E. Reed Director April 25, 1997
- -----------------
Frank E. Reed
/s/G. G. Johnson Director April 25, 1997
- ----------------
Gerard G. Johnson
/s/Lowell R. Beck Director April 25, 1997
- -----------------
Lowell R. Beck
<PAGE> Page II-6
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ ------------------------
(4)(A) Amended and Restated Certificate of Incorporation of
Registrant - incorporated by reference to Exhibit (4)(A)
to the Registrant's S-8 Registration Statement No. 333-
03127 filed May 3, 1996.
(4)(B) Amended and Restated By-Laws of Registrant - incorporated
by reference to Exhibit (4)(B) to the Registrant's Post-
Effective Amendment No. 1 to S-3 Registration Statement
No. 33-90810 filed October 10, 1995.
(4)(C)* Equity Incentive Plan of Registrant.
(5)* Opinion of Morgan, Lewis & Bockius re legality of shares
of Common Stock being offered hereby.
(23)(A)* Consent of KPMG Peat Marwick LLP.
(B) Consent of Morgan, Lewis & Bockius (included in Exhibit
(5)).
(24)* Power of Attorney included on Page II-4.
- --------------------------
*Filed herewith.
<PAGE>
EXHIBIT (4)(C)
HARLEYSVILLE GROUP INC.
EQUITY INCENTIVE PLAN
AMENDED AND RESTATED FEBRUARY 26, 1997
APPROVED BY STOCKHOLDERS APRIL 23, 1997
T A B L E O F C O N T E N T S
- ------------------------------------------------------------------
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Purpose of the Plan. . . . . . . . . . . . . . . . . . . . . 1
B. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
II. PLAN ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . 4
A. Administration . . . . . . . . . . . . . . . . . . . . . . . 4
B. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 5
C. Maximum Number of Shares Available . . . . . . . . . . . . 5
D. Maximum Shares Awarded . . . . . . . . . . . . . . . . . . . 6
E. Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . 6
F. Registration Conditions. . . . . . . . . . . . . . . . . . . 6
G. Rights Upon a Change in Control. . . . . . . . . . . . . . . 7
III. STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. Type of Option . . . . . . . . . . . . . . . . . . . . . . . 7
B. Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
C. Exercise Term and Vesting. . . . . . . . . . . . . . . . . . 7
D. Exercise Procedures. . . . . . . . . . . . . . . . . . . . . 8
E. Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
F. Rights Upon Termination of Employment. . . . . . . . . . . . 8
G. Restrictions Upon Transfer . . . . . . . . . . . . . . . . . 9
H. Incentive Stock Options. . . . . . . . . . . . . . . . . . . 9
IV. STOCK APPRECIATION RIGHTS. . . . . . . . . . . . . . . . . . . . . 11
A. Grant of Rights. . . . . . . . . . . . . . . . . . . . . . . 11
B. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
C. Limits on Stock Appreciation Rights. . . . . . . . . . . . . 11
D. Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
E. Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . 12
V. RESTRICTED STOCK AWARDS. . . . . . . . . . . . . . . . . . . . . . 12
A. Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
B. Restriction Period . . . . . . . . . . . . . . . . . . . . . 12
C. Restriction Upon Transfer. . . . . . . . . . . . . . . . . .12
D. Certificates . . . . . . . . . . . . . . . . . . . . . . . . 13
E. Lapse of Restrictions. . . . . . . . . . . . . . . . . . . . 13
F. Termination Prior to Lapse of Restrictions . . . . . . . . . 13
<PAGE>
VI. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . 14
A. Amendment, Suspension and Termination
of the Plan. . . . . . . . . . . . . . . . . . . . . . . . . 14
B. Government and Other Regulations . . . . . . . . . . . . . . 14
C. Other Compensation Plans and Programs. . . . . . . . . . . . 14
D. Withholding Taxes. . . . . . . . . . . . . . . . . . . . . . 14
E. Single or Multiple Documents . . . . . . . . . . . . . . . . 14
F. Non-Uniform Determinations . . . . . . . . . . . . . . . . . 14
G. Construction of Plan . . . . . . . . . . . . . . . . . . . . 14
H. Pronouns, Singular and Plural. . . . . . . . . . . . . . . . 15
I. Limitation of Rights . . . . . . . . . . . . . . . . . . . . 15
J. Duration of the Plan . . . . . . . . . . . . . . . . . . . . 15
K. Stockholder Approval . . . . . . . . . . . . . . . . . . . . 15
<PAGE> Page 1
HARLEYSVILLE GROUP INC.
EQUITY INCENTIVE PLAN
AMENDED AND RESTATED FEBRUARY 26, 1997
I. INTRODUCTION
-------------
A. PURPOSE OF THE PLAN: Harleysville Group Inc. (the
"Company') has established the Plan to further the growth,
development and success of the Company by providing
additional incentives to those officers and key employees
who are responsible for the management of the Company's
business affairs which enable them to participate directly
in the growth of the capital stock of the Company. The
Company intends that the Plan will facilitate securing,
retaining, and motivating management employees of high
caliber and potential. It is intended that the amended
and restated Plan shall satisfy the requirements for
transactions pursuant hereto to be exempt from Section
16(b) of the Securities Exchange Act of 1934 ("Exchange
Act") and for compensation paid hereunder to be fully
deductible to the Company to the extent permitted under
Section 162(m) of the Internal Revenue Code of 1986.
B. DEFINITIONS: When used in the Plan, the following terms
-----------
shall have the meanings set forth below:
1. "Award(s)" shall mean Incentive Stock Options, Non-
Qualified Stock Options, stock appreciation rights
and restricted stock made under the Plan.
2. "Change in Control" shall mean if any of the
following have occurred: (i) there shall be
consummated (a) any consolidation or merger of the
Company or the Parent in which they are not the
continuing or survivor corporation or pursuant to
which shares of the Company's stock would be
converted in whole or in part into cash, securities
or other property, other than a merger of the Company
in which the holders of the Company's stock
immediately prior to the merger have substantially
the same proportionate ownership of Common Stock of
the surviving corporation immediately after the
merger or (b) any sale, lease, exchange or transfer
(in one transaction or a series of related
transactions) of all or substantially all the assets
of the Company or the Parent or (ii) the stockholders
of the Company or policyholders of the Parent shall
approve any plan or proposal for the liquidation or
<PAGE> Page 2
dissolution of the Company or the Parent or (iii) any
"person" (as such term is used in Sections 13(d) and
14(d) (2) of the Exchange Act, other than the
Company, the Parent, or a subsidiary thereof or any
employee benefit plan sponsored by the Company, the
Parent, or a subsidiary thereof, shall become the
beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company
representing 20% or more of the combined voting power
of the Company's then outstanding securities
ordinarily (and apart from special circumstances)
having the right to vote in the election of
Directors, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases
or otherwise, or (iv) at any time during a period of
two consecutive years, individuals who at the
beginning of such period constituted the Board of the
Company or the Parent shall cease for any reason to
constitute at least a majority thereof, unless the
election or the nomination for election of each new
Director during such two-year period was approved by
a vote of at least two-thirds of the Directors then
still in office who were Directors at the beginning
of such two-year period or (v) any other event shall
occur that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act or (vi) any
other change in the power to direct or cause the
direction of management and policies of the Company
or the Parent, by contract or otherwise.
3. "Company" shall mean Harleysville Group Inc., a
Delaware corporation, and any successor in a
reorganization or similar transaction.
4. "Board" shall mean the Board of Directors of the
Company.
5. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
6. "Committee" shall mean the Compensation & Personnel
Development Committee of the Board of Directors of
Harleysville Group Inc. The Committee shall consist
of two or more directors selected by the Board of
Directors who:
(i) are not current employees of the Company, the
Parent or a subsidiary of the Company;
(ii) are not former employees of the Company who
receive compensation for prior services
<PAGE> Page 3
(other than benefits under a tax-qualified
retirement plan) during the taxable year;
(iii) have not been officers of the Company and
is not currently an officer of the Company,
the Parent or subsidiary of the Company;
(iv) do not receive remuneration from the
Company, the Parent or a subsidiary of the
Company either directly or indirectly for
services rendered in any capacity other
than as a director, except for an amount
that is de minimis remuneration within the
meaning of Treasury Regulation
Section 1.162.27(e)(iii) and does not exceed
the dollar amount for which disclosure would
be required pursuant to Item 404 (a) of
Regulation S-K;
(v) do not possess an interest in any other
transaction for which disclosure would be
required pursuant to Item 404(a) of
Regulation S-K; and
(vi) are not engaged in a business relationship
for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
7. "Common Stock" shall mean the common stock of the
Company, par value of $1.00 per share, and may be
either stock previously authorized but unissued, or
stock reacquired by the Company.
8. "Director" shall mean a member of the Board of
Directors of the Company.
9. "Disability" shall mean the inability of a
Participant to perform the services normally rendered
due to any physical or mental impairment that can be
expected to be of either permanent or indefinite
duration, as determined by the Committee on the basis
of appropriate medical evidence, and that results in
the Participant's cessation of active employment with
the Company.
10. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
11. "Fair Market Value" shall mean the closing price of
Common Stock, as reported by such responsible
reporting service as the Committee may select, or if
there were no transactions in the Common Stock on
<PAGE> Page 4
such day, then the last preceding day on which a
transaction took place. The foregoing
notwithstanding, the Committee may determine the Fair
Market Value in such other manner as it may deem more
appropriate for Plan purposes or as is required by
applicable laws or regulations.
12. "Incentive Stock Option" or "ISO" shall mean a right
to purchase the Company's Common Stock which is
intended to comply with the terms and conditions for
an incentive stock option, set forth in Section 422
of the Code, or such other sections of the Code as
may be in effect from time to time.
13. "Non-Qualified Stock Option" or "NQSO" shall mean a
right to purchase the Company's Common Stock which is
not intended to comply with the terms and conditions
for an incentive stock option, as set forth in
Section 422 of the Code, or such other sections of
the Code as may be in effect from time to time.
14. "Parent" shall mean Harleysville Mutual Insurance
Company.
15. "Participant" shall mean those eligible officers and
other key employees of the Company who receive Awards
under the Plan.
16. "Plan" shall mean the Company's Equity Incentive Plan
amended February 26, 1997.
17. "1990 Plan" shall mean the Equity Incentive Plan as
amended and restated in 1990.
18. "Stock Option" shall mean Non-Qualified Stock Option
and Incentive Stock Option.
19. "Termination of Employment" shall mean a cessation of
the Participant's employment with the Company for any
reason other than retirement, death or disability.
II. PLAN ADMINISTRATION
-------------------
A. ADMINISTRATION: The Plan shall be administered by the
--------------
Committee. Subject to the express provisions of the Plan,
the Committee shall have full and exclusive authority:
(i) to interpret the Plan;
(ii) to determine the employees to whom awards should
be made under the Plan;
<PAGE> Page 5
(iii) to determine the type of awards to be made and
the amount, size and terms of each such award;
(iv) to determine the time when the awards are
granted and the duration of any applicable
exercise or restriction period, including the
criteria for exercisability and the acceleration
thereof;
(v) to prescribe, amend and rescind rules and
regulations relating to the Plan; and
(vi) to make all other determinations deemed
necessary or advisable in the implementation and
administration of the Plan as permitted by
federal and state laws and regulations,
including those laws and regulations regarding
deductibility from income under the Code and
exemption from Section 16 of the Exchange Act, or
by rules and regulations of a national securities
exchange or the NASDAQ NMS.
The determination of the Committee in the administration
of the Plan, as described herein, shall be final and
conclusive and binding upon all persons including, without
limitation, the Company, its stockholders, Participants,
and any persons having any interest under the Plan. The
Secretary of the Company shall be authorized to implement
the Plan in accordance with its terms and to take such
action of a ministerial nature, including the preparation
of award documents provided to participants, as shall be
necessary to effectuate the intent and purposes hereof.
Notwithstanding the foregoing, no Incentive Stock Options
may be granted after the expiration of ten years from the
Plan's adoption by the Board of Directors.
B. ELIGIBILITY: Persons eligible to receive Awards under the
-----------
Plan shall be to those officers and other key employees of
the Company, its Parent and its subsidiaries (as defined
in Section 424 of the Code, or any amendment or substitute
thereto) who are in positions in which their decisions,
actions and counsel significantly impact upon the
profitability and success of the Company. Directors of
the Company who are not otherwise officers or employees of
the Company, its Parent or its subsidiaries shall not be
eligible to participate in the Plan.
C. MAXIMUM NUMBER OF SHARES AVAILABLE: Subject to adjustment
----------------------------------
as specified in Section II.E. below, the aggregate number
of shares of common stock that may be issued or
transferred under the Plan is 2,130,073 shares, which
<PAGE> Page 6
shall be newly registered subsequent to the adoption and
approval of this Plan, plus such previously registered
shares under the 1990 Plan that have not previously been
granted or, if granted, have again become available for
reissuance. If any previously registered shares again
become available for issuance and are re-issued, they
shall be fully subject to the terms and conditions of this
Amended and Restated Plan. Such shares may be authorized
and unissued shares or treasury shares. Except as
provided herein, any shares subject to an option or right
which for any reason expires or is forfeited or terminated
in accordance with the Plan shall again be available under
the Plan.
D. MAXIMUM SHARES AWARDED: No one Participant shall receive
----------------------
stock options or stock appreciation rights for more than
100,000 shares of Common Stock during any one calendar
year under the Plan.
E. ADJUSTMENTS: In the event of stock dividends, stock
-----------
splits, re-capitalizations, mergers, consolidations,
combinations, exchanges of shares, spin-offs,
liquidations, reclassifications or other similar changes
in the capitalization of the Company, the number of shares
of Common Stock available for grant under this Plan in the
aggregate or to any one individual shall be adjusted
proportionately or otherwise by the Board, and where
deemed appropriate, the number of shares, and the option
price of outstanding Stock Options shall be similarly
adjusted. Also, in instances where another business
entity is acquired by the Company or its Parent, and the
Company or its Parent has assumed outstanding employee
option grants under a prior existing plan of the acquired
entity, similar adjustments are permitted at the
discretion of the Board of the Company. In the event of
any other change affecting the Common Stock reserved under
the Plan, such adjustment, if any, as may be deemed
equitable by the Committee, shall be made to give proper
effect to such event.
F. REGISTRATION CONDITIONS:
-----------------------
1. Unless issued pursuant to a registration statement
under the Securities Act of 1933, as amended, no
shares shall be issued to a Participant under the
Plan unless the Participant represents and agrees
with the Company that such shares are being acquired
for investment and not with a view to the resale or
distribution thereof, or such other documentation as
may be required by the Company, unless in the opinion
of counsel to the Company such representation,
<PAGE> Page 7
agreement or documentation is not necessary to comply
with such Act.
2. Any restriction on the resale of shares shall be
evidenced by an appropriate legend on the stock
certificate.
3. The Company shall not be obligated to deliver any
Common Stock until it has been listed on each
securities exchange on which the Common Stock may
then be listed and until there has been qualification
under or compliance with such federal or state laws,
rules or regulations as the Company may deem
applicable. The Company shall use reasonable efforts
to obtain such listing, qualification and compliance.
G. RIGHTS UPON A CHANGE IN CONTROL: In the event of a Change
-------------------------------
in Control, notwithstanding any other restrictive
provisions herein, all previously granted Stock Options
and stock appreciation rights shall become exercisable
immediately and all previously issued shares of restricted
stock shall be issued free of restrictive legend, except
that no Incentive Stock Option may be exercised prior to
six months following the date of grant thereof.
III. STOCK OPTIONS
-------------
All Stock Options granted to Participants under the Plan
shall be subject to the following terms and conditions which
shall be set forth in an appropriate written document ("Option
Document") and which may provide such other terms, conditions
and provisions, not inconsistent with this Plan, as the
Committee may direct:
A. TYPE OF OPTION: Each Option Document shall identify the
--------------
options presented thereby as Incentive Stock Options or
Non-Qualified Stock Options, as the case may be.
B. PRICE: The option price per share shall not be less than
-----
one hundred percent (100%) of the Fair Market Value of a
share of Common Stock on the date of grant, and in no
event less than the par value of the stock.
C. EXERCISE TERM AND VESTING: Except as provided in
-------------------------
Paragraph F below, 50% of a Stock Option award shall be
exercisable after the first anniversary of the award and
the remaining 50% of the award shall be exercisable after
the second anniversary of the award. Each Stock Option
document shall state the period or periods of time within
which the Stock Option may be exercised, in whole or in
part. The Committee shall have the power to permit an
acceleration of previously established exercise terms,
<PAGE> Page 8
subject to the requirements set forth herein, upon such
circumstances and subject to such terms and conditions as
the Committee deems appropriate. All options shall expire
as of 5:00 p.m. on the tenth anniversary of the grant
unless the Committee provides otherwise.
D. EXERCISE PROCEDURES: A Stock Option, or portion thereof,
-------------------
shall be exercised by delivery of a written notice of
exercise to the Secretary of the Company, and payment of
the full price of the shares being purchased, as well as
payment of all withholding taxes due thereon, if any.
E. PAYMENT: The price of an exercised Stock Option, or
-------
portion thereof, may be paid:
1. by check, bank draft, money order, or electronic
funds transfer payable to the order of the Company,
or
2. through the delivery of shares of the Company's
Common Stock owned by the Participant, having an
aggregate Fair Market Value as determined as of the
date prior to exercise equal to the option price, or
3. by such other method as the Committee may approve,
including payment through a broker in accordance with
procedures permitted by Regulation T of the Federal
Reserve Board, or
4. by a combination of 1, 2 and 3 above.
In the event a Participant delivers already-owned shares
of the Company's Common Stock, at the Participant's
option, the Participant may provide an executed
attestation of ownership in lieu of actual delivery of
shares.
Subject to the approval of the Committee as set forth in
the Option Document or otherwise in accordance with Rule
16b-3 of the Exchange Act, a Participant may surrender
already-owned shares of the Company's Common Stock or
forego delivery of shares due as a result of the exercise
in order to pay any withholding tax required to be
collected upon exercise of a Non-Qualified Stock Option.
Such shares shall be valued at their Fair Market Value
pursuant to subparagraph 2 above.
If payment is made under Section III.E.3. of the Plan, the
written exercise notice may instruct the Company to
deliver shares due upon the exercise of the Stock Option
to a registered broker or dealer designated by the
Company, if any, ("Designated Broker") in lieu of delivery
<PAGE> Page 9
to the optionee. Such instructions must designate the
account into which the shares are to be deposited.
F. RIGHTS UPON TERMINATION OF EMPLOYMENT: In the event that
-------------------------------------
an optionee ceases to be an employee of the Company, its
Parent or its subsidiaries, for any reason other than
retirement, death or disability, all Stock Options awarded
to such optionee shall immediately expire unless the
Committee in the Option Document or otherwise grants an
additional period in which to exercise the Stock Options.
In the event that an optionee retires, dies or becomes
disabled prior to the expiration of his Stock Option and
without having fully exercised his Stock Options, all Non-
Qualified Stock Options and Incentive Stock Options that
have been held for six months shall immediately become
exercisable and the optionee or his successor shall have
the right to exercise the Stock Option during its term
within a period of one year after termination of
employment due to retirement, death or disability to the
extent that the Stock Option had not expired at the time
of termination, or within such other period, and subject
to such terms and conditions, as may be specified by the
Committee; provided, however, an optionee who retires
after attaining age 62 may exercise Non-Qualified Stock
Options, if otherwise exercisable, during their term
within two years after retirement; and provided further
that ISO tax treatment shall be available only as
permitted under the Internal Revenue Code.
For purposes herein, retirement shall mean retirement at
normal retirement date, pursuant to and in accordance with
a pension plan or other regular retirement practice of the
Company, or in accordance with the early retirement
provision(s) thereof.
G. RESTRICTIONS UPON TRANSFER: Unless otherwise directed by
--------------------------
the Committee, each Option Document for Non-Qualified
Stock Options shall further provide that no option nor any
interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the optionee or
his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any
other legal or equitable proceedings (including
bankruptcy) and any attempted disposition thereof shall be
null and void and of no effect; provided, however, that
this Paragraph III.G. (with Committee approval) shall not
prevent transfers to the Participant's spouse, children,
grandchildren, parents or a trust established for any of
them or the Participant, or by will or the laws of descent
<PAGE> Page 10
and distribution. If such a transfer is made, the
employee may not receive any consideration therefor, and
the Option will continue to be subject to the same terms
and conditions as were applicable to the Option
immediately before transfer.
H. INCENTIVE STOCK OPTIONS: An Incentive Stock Option shall
----------------------
be subject to the following terms and conditions, which
shall be set forth in the Option Document and which may
provide such other terms, conditions and provisions as the
Committee determines necessary or desirable in order to
qualify such option as an incentive stock option (within
the meaning of Section 422 of the Code, or any amendment
or substitute thereto or regulation thereunder):
(1) The period or periods of time within which the option
may be exercised, in whole or in part, which shall be
such period or periods of time as may be determined
by the Committee, provided that no option shall be
exercisable prior to six months nor after ten years
from the date of grant thereof. The Committee shall
have the power to permit an acceleration of
previously established exercise terms, subject to the
requirements set forth herein, upon such
circumstances and subject to such terms and condi-
tions as the Committee deems appropriate;
(2) The aggregate Fair Market Value (determined as of the
date the option is granted) of the stock with respect
to which Incentive Stock Options are exercisable for
the first time by such individual during a calendar
year (under all plans of the Company) shall not
exceed $100,000;
(3) No Incentive Stock Option shall be granted to any
employee if at the time the option is granted the
individual owns stock possessing more than ten
percent (10%) of the total combined voting power of
all classes of stock of the Company or its Parent or
its subsidiaries unless at the time such option is
granted the option price is at least 110 percent
(110%) of the fair market value of the stock subject
to the option and such option by its terms is not
exercisable after the expiration of five years from
the date of grant; and
(4) No Incentive Stock Option nor any interest or right
therein or part thereof shall be liable for the
debts, contracts or engagements of the optionee or
his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means
<PAGE> Page 11
whether such disposition be voluntary or involuntary
or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted
disposition thereof shall be null and void and of no
effect; provided, however, that this Subparagraph
III. H(4) shall not prevent transfers by will or by
the laws of descent and distribution. During the
lifetime of the optionee, the option is exercisable
only by the optionee.
IV. STOCK APPRECIATION RIGHTS
-------------------------
Stock appreciation rights may be granted in connection with a
contemporaneously granted stock option and shall be subject to the
following terms and conditions which shall be set forth in the
Option Document which may provide such other terms, conditions and
provisions not inconsistent with this Plan as the Committee may
direct.
A. GRANT OF RIGHTS: Stock appreciation rights shall entitle
---------------
the grantee, subject to such terms and conditions
determined by the Committee, to receive upon exercise
thereof all or a portion of the excess of (i) the Fair
Market Value of a specified number of shares of the Common
Stock at the time of exercise, as determined by the
Committee, over (ii) a specified price which shall not be
less than 100 percent (100%) of the Fair Market Value of
the stock on the day the right is granted.
B. TERM: The period or periods of time within which the
----
stock appreciation rights may be exercised, in whole or in
part, is co-extensive with the contemporaneously granted
Stock Option. Fifty percent of an award of stock
appreciation rights shall be exercisable after the first
anniversary of the award and the remaining 50% of the
award shall be exercisable after the second anniversary of
the award. The Committee shall have the power to permit
an acceleration of previously established exercise terms,
subject to the requirements set forth herein, upon such
circumstances and subject to such terms and conditions as
the Committee deems appropriate.
C. LIMITS ON STOCK APPRECIATION RIGHTS:
-----------------------------------
(1) Stock appreciation rights shall be paid only upon
exercise of the Stock Option and then only in respect
to the number of shares then being purchased.
(2) Stock appreciation rights shall be payable only to
the extent the Stock Option may become exercisable
and shall expire or terminate with the Stock Option.
<PAGE> Page 12
(3) No stock appreciation rights nor any interest or
right therein or part thereof shall be liable for the
debts, contracts or engagements of the Participant or
his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary
or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted
disposition thereof shall be null and void and of no
effect; provided, however, that this Subparagraph
IV.C.(3) shall not prevent transfers to the
Participant's spouse, children, grandchildren,
parents or trust established for any of them or the
Participant, or by will or the laws of descent and
distribution; provided, however, that stock
appreciation rights granted in connection with an
Incentive Stock Option shall be subject to the same
transferability restrictions as Incentive Stock
Options as provided in Subparagraph III.H(4).
D. PAYMENT: Payments upon exercise of stock appreciation
-------
rights shall be paid in cash, less any withholding tax
required to be withheld, and may be applied to the
contemporaneous Stock Option exercise.
E. OTHER TERMS: Stock appreciation rights shall be granted
-----------
in such manner and such form, and subject to such addi-
tional terms and conditions as the Committee in its sole
discretion deems necessary or desirable, including without
limitation: (i) if in connection with an Incentive Stock
Option, in order to satisfy any requirements set forth
under Section 422 of the Code, or any amendment or
substitute thereto, or regulation thereunder; or, (ii) in
order to avoid any insider-trading liability in connection
with stock appreciation rights under Section 16(b) of the
Exchange Act.
V. RESTRICTED STOCK AWARDS
-----------------------
Restricted stock awards shall be subject to the following terms
and conditions, which shall be set forth in an appropriate written
agreement between the Company and the Participant accompanying the
award and which may provide such other terms, conditions and
provisions not inconsistent with this Plan, as the Committee may
direct.
A. PRICE: Restricted stock may be made available to a
-----
Participant free of any purchase price or for such
purchase price as established by the Committee.
<PAGE> Page 13
B. RESTRICTION PERIOD: Shares awarded pursuant to this Plan
------------------
shall be subject to such terms, conditions and restric-
tions, including without limitation, prohibitions agai-
nst transfer, substantial risks of forfeiture and
attainment of performance objectives for such period or
periods as shall be determined by the Committee and set
forth in the agreement. The Committee shall have the
power to permit, in its discretion, an acceleration of the
expiration of the applicable restriction period with
respect to any part or all of the shares awarded to the
participant.
C. RESTRICTION UPON TRANSFER: During the restriction period
-------------------------
determined by the Committee that is applicable to any
shares of restricted stock under the Plan, no right or
interest of any Participant in such restricted stock nor
any interest or right therein (including the right to vote
such shares and receive dividends thereon) or part thereof
shall be liable for the debts, contracts or engagements of
the Participant or his successors in interest or shall be
subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary
or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings
(including bankruptcy) and any attempted disposition
thereof shall be null and void and of no effect.
Notwithstanding the foregoing and except as otherwise
provided in the Plan, the Participant shall have all the
other rights of a stockholder including, but not limited
to, the right to receive dividends and the right to vote
such shares.
D. CERTIFICATES: Each certificate issued in respect of
------------
shares awarded to a Participant shall be deposited with
the Company or its designee and shall bear the following
legend:
This certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture provisions and restrictions
against transfer) contained in the Harleysville Group
Inc. Amended and Restated Equity Incentive Plan and
an agreement entered into between the Participant and
the Company. Release from such terms and conditions
shall be obtained only in accordance with the
provisions of the Plan and agreement, a copy of each
of which is on file in the office of the Secretary of
Harleysville Group Inc.
E. LAPSE OF RESTRICTIONS: The document shall specify the
---------------------
terms and conditions upon which any restrictions upon
shares awarded under the Plan shall lapse, as determined
<PAGE> Page 14
by the Committee. Upon the lapse of such restrictions,
shares of Common Stock free of the restrictive legend
shall be issued to the Participant or his or her other
legal representative.
F. TERMINATION PRIOR TO LAPSE OF RESTRICTIONS: In the event
------------------------------------------
of a Participant's Termination of Employment prior to the
lapse of restrictions as determined pursuant to the
provisions of preceding subparagraph (E), all shares as to
which there still remains unlapsed restrictions shall be
forfeited by such Participant to the Company without
payment of any consideration by the Company, and neither
the Participant recipient nor any successors, heirs,
assigns, or personal representatives of such recipient
shall thereafter have any further rights or interest in
such shares or certificates. In all other cases of
cessation of employment, shares of Common Stock free of
the restrictive legend shall be issued to the Participant
or his or her legal representative.
VI. MISCELLANEOUS PROVISIONS
------------------------
A. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN: The Board
---------------------------------------------
of Directors may suspend or terminate the Plan or revise
or amend it in any respect whatsoever except where
shareholder approval is required by federal or state laws
or regulations or by rules and regulations of a national
securities exchange or the Nasdaq National Market of The
Nasdaq Stock Market.
B. GOVERNMENT AND OTHER REGULATIONS: The obligation of the
--------------------------------
Company to issue Awards under the Plan shall be subject to
all applicable laws, rules and regulations, and to such
approvals by any government agencies as may be required.
C. OTHER COMPENSATION PLANS AND PROGRAMS: The Plan shall not
-------------------------------------
be deemed to preclude the implementation by the Company,
Parent or its subsidiaries of other compensation plans or
programs which may be in effect from time to time.
Participation in this Plan shall not affect an employee's
eligibility to participate in any other benefit or
incentive plan of the Company, its Parent or its
subsidiaries. Any awards made pursuant to this Plan shall
not be used in determining the benefits provided under any
other plan of the Company, Parent or its subsidiaries
unless specifically provided.
D. WITHHOLDING TAXES: The Company shall have the right to
-----------------
require a payment from a Participant to cover applicable
withholding for any federal, state or local taxes. The
Company reserves the right to offset such tax payment from
any other funds which may be due the Participant by the
Company.
<PAGE> Page 15
E. SINGLE OR MULTIPLE DOCUMENTS: Multiple forms of awards or
----------------------------
combinations thereof may be evidenced by a single document
or multiple documents, as determined by the Committee.
F. NON-UNIFORM DETERMINATIONS: The Committee's determinations
--------------------------
under the Plan (including without limitation
determinations of the persons to receive awards, the
form, amount and timing of such awards, the terms and
provisions of such awards, and the documents evidencing
same) need not be uniform and may be made selectively
among persons who receive, or are eligible to receive,
awards under the Plan whether or not such persons are
similarly situated.
G. CONSTRUCTION OF PLAN: The interpretation of the Plan and
--------------------
the application of any rules implemented hereunder shall
be determined in accordance with the laws of the
Commonwealth of Pennsylvania.
H. PRONOUNS, SINGULAR AND PLURAL: The masculine may be read
-----------------------------
as feminine, the singular as plural, and the plural as
singular as necessary to give effect to the Plan.
I. LIMITATION OF RIGHTS:
--------------------
1. No Right to Continue as an Employee: Neither the
-----------------------------------
Plan, nor the granting of an option nor any other
action taken pursuant to the Plan, shall constitute
or be evidence of any agreement or understanding,
express or implied, that the Participant has a right
to continue as an employee of the Company for any
period of time, or at any particular rate of
compensation.
2. No Shareholder's Rights for Options: An optionee
-----------------------------------
shall have no rights as a shareholder with respect to
the shares covered by options granted hereunder until
the date of the issuance of a stock certificate
therefor, and no adjustment will be made for
dividends or other rights for which the record date
is prior to the date such certificate is issued.
J. DURATION OF THE PLAN: The Plan shall remain in effect
--------------------
until all Awards under the Plan have been satisfied by the
issuance of shares or the payment of cash, or expire by
their terms, but no Incentive Stock Option Award shall be
granted more than ten years after the Plan is adopted by
the Company' Board of Directors.
K. STOCKHOLDER APPROVAL: The Plan shall be subject to
--------------------
stockholder approval.
EXHIBIT (5)
April 24, 1997
Harleysville Group Inc.
355 Maple Avenue
Harleysville, PA 19438
Re: Registration Statement on Form S-8 Relating to
Harleysville Group Inc.'s Equity Incentive Plan
Ladies and Gentlemen:
We have acted as counsel for Harleysville Group Inc., a Delaware
corporation (the "Company"), in connection with the preparation
of a registration statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the
"Act"), relating to the offering of up to an additional 2,000,000
shares of the Company's Common Stock, par value $1.00 per share
(the "Common Stock"), to be issued pursuant to options granted or
to be granted, stock appreciation rights granted or to be granted
and restricted stock awards granted or to be granted under the
Company's Equity Incentive Plan, as amended and restated April
23, 1997 (the "Plan"). We have examined such records, documents,
statutes and decisions as we have deemed relevant in rendering
this opinion.
Our opinion set forth below is limited to the General Corporation
Law of the State of Delaware.
In our opinion, the shares of the Company's Common Stock to be
issued upon the exercise of options granted in accordance with
the terms of the Plan, the shares of the Company's Common Stock
to be issued upon the exercise of stock appreciation rights
granted or to be granted in accordance with the terms of the
Plan, and the shares of the Company's Common Stock to be issued
pursuant to restricted stock awards granted or to be granted in
accordance with the terms of the Plan will be, when issued in
accordance with the terms of such awards, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. In giving such opinion, we do not
thereby admit that we are acting within the category of persons
whose consent is required under Section 7 of the Act or the rules
or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/MORGAN, LEWIS & BOCKIUS LLP
EXHIBIT (23)(A)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Harleysville Group Inc.:
We consent to incorporation by reference in the registration
statement on Form S-8 of Harleysville Group Inc. of our reports
dated February 17, 1997, relating to the consolidated balance
sheets of Harleysville Group and subsidiaries as of December 31,
1996 and 1995 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1996, and all related
schedules, which reports appear in the December 31, 1996 annual
report on Form 10-K of Harleysville Group Inc.
/s/KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
April 21, 1997
