As filed with the Securities and Exchange Commission on May 19, 2000
Registration No. 333-
==============================================================================
UNITED STATES
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. LONG TERM INCENTIVE PLAN
(Full title of the plan)
Walter R. Bateman
Chairman, 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:
Henry S. Bryans, Esquire Roger A. Brown, Esquire
Drinker Biddle & Reath LLP Harleysville Group Inc.
One Logan Square 355 Maple Avenue
18th & Cherry Streets Harleysville, PA 19438-2297
Philadelphia, PA 19103-6996 (215) 256-5173
(215) 988-2823
CALCULATION OF REGISTRATION FEE
===========================================================================
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of Securities to be price per offering registration
to be registered registered unit price <F1> fee <F1>
- ------------------ ----------- --------- ---------- -------------
Common Stock
$1.00 par value 600,000 <F2> $16.4375 <F1> $9,862,500 $2,603.70
[FN]
<F1>Pursuant to Rule 457(h), the registration fee has been calculated based
on the average of the high and low prices of Registrant's Common Stock on
May 16, 2000 on the Nasdaq National Market System.
<F2>Pursuant to Rule 416, this Registration Statement also covers such
additional shares as may be offered or issued to prevent dilution
resulting from stock splits, stock dividends, recapitalizations or
certain other capital adjustments.
===========================================================================
<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 fiscal year ended
December 31, 1999 filed by the Company pursuant to Section 13(a)
of the Securities Exchange Act of 1934 ("Exchange Act").
b. Quarterly Report on Form 10-Q for the quarter ended March
31, 2000.
c. The description of the Company's common stock contained in
the Registration Statement on Form S-1 filed by the Company on
April 15, 1986 (File No. 33-4885) under the Securities Act of
1933, including all amendments and reports subsequently 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
incorporated 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 Registration Statement.
Item 4. DESCRIPTION OF SECURITIES
--------------------------
Not applicable.
Item 5. INTERESTS OF EXPERTS AND NAMED COUNSEL
---------------------------------------
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
<PAGE> Page II-2
("DGCL") (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. Under Section
145 of the DGCL, a corporation has the power to indemnify
directors and officers under certain prescribed circumstances and
subject to certain limitations against certain costs and
expenses, including attorney's fees actually and reasonably
incurred in connection with any action, suit or proceeding,
whether civil, criminal, administrative or investigative, to
which any of them is a party by reason of being a director or
officer of the corporation if it is determined that the director
or officer acted in accordance with the applicable standard of
conduct set forth in such statutory provision.
In addition, the Company's Certificate of Incorporation
contains provisions permitted by the DGCL 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. EXEMPTION FROM REGISTRATION CLAIMED
-----------------------------------
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
statement:
(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
registration 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.
<PAGE> Page II-3
(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) shall not 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
with or furnished to the Commission 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.
(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
<PAGE> Page II-4
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.
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 18th day of May, 2000.
HARLEYSVILLE GROUP INC.
BY: /s/Walter R. Bateman
--------------------------
Walter R. Bateman
Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
------------------
Each person whose signature appears below constitutes and
appoints each of Walter R. Bateman 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/Walter R. Bateman Chairman, President, May 18, 2000
- -------------------- Chief Executive Officer
Walter R. Bateman and a Director
/s/Bruce J. Magee Senior Vice President, May 18, 2000
- ------------------- Chief Financial Officer
Bruce J. Magee (Principal financial
officer and principal
accounting officer)
/s/Lowell R. Beck Director May 18, 2000
- ------------------
Lowell R. Beck
/s/Michael L. Browne Director May 18, 2000
- --------------------
Michael L. Browne
/s/Robert D. Buzzell Director May 18, 2000
- --------------------
Robert D. Buzzell
/s/Mirian M. Graddick Director May 18, 2000
- ----------------------
Mirian M. Graddick
/s/Joseph E. McMenamin Director May 18, 2000
- -----------------------
Joseph E. McMenamin
/s/Frank E. Reed Director May 18, 2000
- ----------------------
Frank E. Reed
/s/Jerry S. Rosenbloom Director May 18, 2000
- ----------------------
Jerry S. Rosenbloom
<PAGE> Page II-6
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ ------------------------
4.1 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).
4.2 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).
4.3* Long Term Incentive Plan of Registrant.
5.1* Opinion of Drinker Biddle & Reath LLP re
legality of shares of Common Stock being offered
hereby.
23.1 * Consent of KPMG LLP.
23.2 Consent of Drinker Biddle & Reath LLP
(included in Exhibit 5.1).
24.1* Power of Attorney included on Page II-4.
- ----------------
*Filed herewith.
EXHIBIT 4.3
HARLEYSVILLE GROUP INC.
LONG TERM INCENTIVE PLAN
AMENDED AND RESTATED: NOVEMBER 17, 1999
APPROVED BY STOCKHOLDERS: APRIL 26, 2000
T A B L E O F C O N T E N T S
------------------------------------
ARTICLE NO. TITLE OF ARTICLE PAGE NO.
- ---------- ---------------- -------
I. INTRODUCTION 1
A. Purpose of the Plan 1
B. Definitions 1
II. PLAN ADMINISTRATION 4
A. Administration 4
B. Eligibility 4
C. Maximum Number of Shares Available 4
D. Adjustments 5
E. Registration Conditions 5
F. Rights Upon a Change in Control 5
III. TARGET AWARDS 5
A. Performance Measures 5
B. Performance Measure Period 5
C. Target Award Levels 6
D. Performance Standards 6
E. Maximum Compensation Paid 6
F. Committee Certification 6
G. Discretionary Adjustments 6
H. Imputed Dividend Reinvestment 6
Plan Participation
I. Payment of Awards 6
J. Rights upon Termination of Employment 7
K. Rights upon Retirement, Death or Disability 7
IV. MISCELLANEOUS PROVISIONS 7
A. Amendment, Suspension and Termination
of the Plan
B. Government and Other Regulations 7
C. Other Compensation Plans and Programs 7
D. Withholding Taxes 7
E. Single or Multiple Documents 7
F. Non-Uniform Determinations 7
G. Construction of Plan 8
H. Pronouns, Singular and Plural 8
I. Limitation of Rights 8
J. Duration of the Plan 8
K. Stockholder Approval 8
<PAGE> Page 1
HARLEYSVILLE GROUP INC.
LONG TERM INCENTIVE PLAN
AMENDED AND RESTATED: NOVEMBER 17, 1999
APPROVED BY STOCKHOLDERS: APRIL 26, 2000
I. INTRODUCTION
------------
A. PURPOSE OF THE PLAN: Harleysville Group Inc. (the "Company')
-------------------
has established the Long Term Incentive Plan ("Plan") to
further the growth, development and success of the
Company by providing additional incentives to those
senior officers 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 senior
management employees of high caliber and potential. It
is intended that the 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. "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 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
<PAGE> Page 2
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.
2. "Company" shall mean Harleysville Group
Inc., a Delaware corporation, and any successor in
a reorganization or similar transaction.
3. "Board" shall mean the Board of Directors
of the Company.
4. "Code" shall mean the Internal Revenue Code
of 1986, as amended.
5. "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, the Parent or a subsidiary who
receive compensation for prior services (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 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.
<PAGE> Page 3
6. "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.
7. "Director" shall mean a member of the Board
of Directors of the Company.
8. "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.
9. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
10. "Fair Market Value" shall mean the last
existing closing price of Common Stock on the
NASDAQ NMS. 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.
11. "Named Executive Officers" shall be those
persons covered by Item 402(a)(3) of Regulation S-K
pursuant to the Exchange Act.
12. "Parent" shall mean Harleysville Mutual
Insurance Company.
13. "Participant" shall mean those eligible
officers and other key employees of the Company who
receive Awards under the Plan.
14. "Plan" shall mean the Company's Long Term
Incentive Plan.
15. "Retirement" shall mean cessation of a
Participant's employment after age 55 if an
employee is entitled to a benefit under the
Company's qualified defined benefit Pension Plan.
16. "Termination of Employment" shall mean a
cessation of the Participant's employment with the
Company, its parent or any affiliates for any
reason other than retirement, death or disability.
17. "Total Shareholder Return" ("TSR") shall
mean the change in value of a share of Common Stock
during any three year period based on share price
appreciation plus dividends, with the dividends re-
invested as of the day such dividends were ex-
dividend. The Committee may adopt any reasonable
method of calculating total shareholder return that
is consistent with the requirements of Item 402(l)
of Regulation S-K promulgated by the Securities and
Exchange Commission.
<PAGE> Page 4
18. "Withholding Obligation" shall mean the
mandatory federal rate of 28% plus any applicable
state and local withholding tax.
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 additional employees, if
any, to whom awards should be made under the Plan;
(iii) to determine the nature, size and
terms of each such award;
(iv) to determine the time when the awards
are granted and the duration of any applicable
restriction period, including the criteria for
acceleration thereof;
(v) to certify that the TSR goals were met prior to
payment;
(vi) to prescribe, amend and rescind rules
and regulations relating to the Plan; and
(vii) 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 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.
B. ELIGIBILITY: Persons eligible to receive
-----------
Awards under the Plan shall be the Chief Executive Officer
and the Senior Vice Presidents and Executive Vice Presidents
that report to the Chief Executive Officer, and such others
as are determined by the Committee. The 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 under the
Plan is 600,000 shares, which shall be newly registered
subsequent to the adoption and approval of this Plan.
Such shares that are issued may be
<PAGE> Page 5
authorized and unissued shares or treasury shares.
Except as provided herein, any shares subject to an
award which for any reason are not issued shall again be
available under the Plan.
D. ADJUSTMENTS: In the event of stock dividends, stock splits,
------------
recapitalizations, 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 award under this Plan in the
aggregate or to any one individual shall be adjusted
proportionately. 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.
E. 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, 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.
F. RIGHTS UPON A CHANGE IN CONTROL: In the event of a Change
-------------------------------
in Control, notwithstanding any other provisions herein,
the Plan shall terminate and all target awards shall be
paid out immediately on a month completed pro-rata
basis.
III. TARGET AWARDS
-------------
A. PERFORMANCE MEASURES: Determination of payouts shall be
--------------------
based on Company's Total Shareholder Return ("TSR") relative
to a peer group of no less than 50 companies that are
primarily or wholly in the property/casualty insurance
industry as selected from time to time by the Committee.
B. PERFORMANCE MEASURE PERIOD: The period for determining
--------------------------
performance shall be a three year period that will commence each
January 1st and terminate on the third December 31st
thereafter.
<PAGE> Page 6
C. TARGET AWARD LEVELS: Subject to Paragraph III. D. below,
-------------------
the target levels for the Participants shall be determined by the
Committee for each three-year period no later than March
30th of the first year of the plan period.
D. PERFORMANCE STANDARDS: Prior to each three-year period, the
---------------------
Committee shall determine a target award and award
range for each Participant which target award and award
range may have both a cash component and a stock
component as determined by the Committee. The award
range shall provide that: no award shall be paid if the
TSR is lower than the 35th percentile; 50% of the target
award shall be paid if the TSR is at the 35th
percentile; 100% of the target award shall be paid if
the TSR is at the 50th percentile; and 150% of the
target award shall be made if the TSR is at the 80th
percentile or above. If the TSR falls between the 35th
and 50th percentiles and the 50th or 80th percentiles,
the percent of the target award paid shall be
interpolated.
E. MAXIMUM COMPENSATION PAID: The maximum paid in cash to any
-------------------------
Participant for any performance period shall not be
more than $750,000, and the maximum shares of stock
issued to any Participant for any performance period
shall not be more than 100,000.
F. COMMITTEE CERTIFICATION: Prior to payment of the Awards,
-----------------------
the Committee shall review the TSR for the three-year
period just completed and certify, in writing or as
reflected in the minutes of the Committee Meeting, that
the Company has attained the TSR levels entitling
Participants to a payout.
G. DISCRETIONARY ADJUSTMENTS: At the end of each three-year
-------------------------
period, the Committee may, in its discretion, but for good reason,
prior to payment, except as to the President and/or
Chief Executive Officer, or any other officer to the
extent it would adversely affect the operation of the
plan, or the deduction for the Company (I) increase or
decrease the awards determined by Paragraph III. D. by
10% of the target award, provided that the maximum award
paid shall never exceed 150% of the target award, or
(ii) make an award of 10% of the target award if no
award is otherwise payable.
H. IMPUTED DIVIDEND REINVESTMENT PLAN PARTICIPATION: After the
------------------------------------------------
amount of stock to be issued is determined pursuant to
Paragraph III. G. and any discretionary adjustment
thereof made pursuant to Paragraph III. E., then the
amount so determined and delivered to a Participant
shall be increased by imputing dividends paid by the
Company during the period to such number of shares and
the immediate reinvestment thereof for each quarter
throughout the full three-year period.
I. PAYMENT OF AWARDS: The payment of the cash element of the
------------------
award shall be made as soon as practicable after the
completion of the three-year period; provided, however,
that a Participant may elect to defer receipt of the
award pursuant to the Company's Non-Qualified Deferred
Compensation Plan. Such election shall be made by
December 31st of the second year of the performance
period. Payment of shares of stock shall also be made
as soon as practicable; provided, however, that a
Participant may satisfy his or her tax withholding
obligation by having shares withheld equal in Fair
Market Value to the Withholding Obligation or deliver
already owned shares of Company stock equal in Fair
Market Value to the amount sought to be
<PAGE> Page 7
withheld, or any combination thereof, so long as there
is no accounting charge to earnings resulting therefrom.
Payment by shares may be made by attestation.
Alternatively, prior to December 31st of the second year
of the three-year period, the Participant may elect to
defer delivery of shares of stock for (I) five years,
(ii) ten years, or (iii) until Termination of
Employment. If receipt of the share of stock is
deferred, there shall be no imputed dividends during the
period of deferral; nor shall a Participant exercise any
other rights of ownership
J. RIGHTS UPON TERMINATION OF EMPLOYMENT: Upon the Termination
-------------------------------------
of Employment of a Participant for any reason other
than retirement, death or disability, all awards to such
Participant shall immediately expire.
K. RIGHTS UPON RETIREMENT, DEATH OR DISABILITY: If a
------------------------------------------
Participant ceases to be an employee because of retirement,
death or disability, the award shall be payable at the end
of the performance period on a pro-rata month completed basis.
In the event of death, the award shall be made to the
beneficiary designated by the Participant.
IV. 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; provided, however,
that if 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, the amendment will
not be effective until such stockholder approval.
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 in such other
Plan.
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.
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.
<PAGE> Page 8
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: A Participant shall have no rights
-----------------------
as a shareholder with respect to the shares covered by
awards 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
--------------------
indefinitely, but, in any event, at least until all awards
have been issued or paid.
K. STOCKHOLDER APPROVAL: The initial adoption of this Plan
-------------------
shall be subject to stockholder approval.
TO RECORD THE AMENDMENT AND RESTATEMENT OF THIS PLAN, THE
COMPANY HAS CAUSED ITS AUTHORIZED OFFICERS TO AFFIX THE CORPORATE
NAME AND SEAL HERETO THIS 17TH DAY OF NOVEMBER, 1999.
HARLEYSVILLE GROUP INC.
BY: /s/ Walter R. Bateman
--------------------------------
Walter R. Bateman, II, Chairman,
ATTEST: President & CEO
/s/ R.A. Brown
- --------------------------------------
Roger A. Brown, Senior Vice President,
Secretary & General Counsel
Exhibit 5.1
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103-6996
May 18, 2000
Harleysville Group Inc.
355 Maple Avenue
Harleysville, Pennsylvania 19438
Ladies and Gentlemen:
We have acted as counsel to Harleysville Group Inc. (the
"Company") in connection with the preparation and filing with the
Securities and Exchange Commission of the Company's Registration
Statement on Form S-8 under the Securities Act of 1933 (the
"Registration Statement") relating to 600,000 shares of Common
Stock of the Company, par value $1.00 per share (the "Shares"),
issuable pursuant to its Long Term Incentive Plan (the "Plan").
In this capacity, we have reviewed originals or copies,
certified or otherwise identified to our satisfaction, of the
Company's Certificate of Incorporation, its By-laws, resolutions
of its Board of Directors, the Plans, and such other documents
and corporate records as we have deemed appropriate for the
purpose of giving this opinion.
Based upon the foregoing and consideration of such questions
of law as we have deemed relevant, we are of the opinion that the
issuance of the Shares by the Company pursuant to the Plan has
been duly authorized by the necessary corporate action on the
part of the Company and such Shares, when issued in accordance
with the terms of the Plan, will be validly issued, fully paid
and nonassessable by the Company.
The opinions expressed herein are limited to the Delaware
General Corporation Law.
We consent to the use of this opinion as an exhibit to the
Registration Statement. This does not constitute a consent under
Section 7 of the Securities Act of 1933 since we have not
certified any part of the Registration Statement and do not
otherwise come within the categories of persons whose consent is
required under Section 7 or the rules and regulations of the
Securities and Exchange Commission.
Very truly yours,
/s/Drinker Biddle & Reath LLP
DRINKER BIDDLE & REATH LLP
Exhibit 23.1
Independent Auditors' Consent
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 14, 2000, relating to the consolidated balance sheets
of Harleysville Group Inc. as of December 31, 1999 and 1998, 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, 1999, and all related schedules, which reports appear in
or are incorporated by reference in the December 31, 1999
annual report on Form 10-K of Harleysville Group Inc.
/s/KPMG LLP
Philadelphia, Pennsylvania
May 16, 2000
