Group Inc. (the "Company") has established the Plan to further its long-term
financial success by providing stock units to Non-Employee Directors of the
Company and of its Parent, Harleysville Mutual Insurance Company, (the “Parent”)
whereby such directors can share in achieving and sustaining such success.
Plan also provides a means to attract and retain the Non-Employee Directors
needed to achieve the Company's and the Parent's long-term growth and
following terms, when used with an initial capital letter, shall have the
the annual shareholders meeting held in April of each year.
the meeting of the Board of Directors held in April of each year.
the Board of Directors of the Company and the Board of Directors of the
the Nominating and Corporate Governance Committee of the Board.
right to receive, without payment to the Company, one (1) Share as further
with respect to a given day, (i) the closing sales price of a Share as reported
on the principal securities exchange on which Shares are then listed or admitted
to trading, or (ii) if not so reported, the closing sales price on the
immediately preceding business day of a Share as published in the NASDAQ
National Market Issues report in the Eastern Edition of The
Wall Street Journal,
(iii) if not so reported, the average of the closing bid and asked prices on
immediately preceding business day as reported on the NASDAQ National Market
System, or (iv) if not so reported, as furnished by any member of the National
Association of Securities Dealers, Inc. selected by the Board.
grant of Deferred Stock Units which are subject to the terms and conditions
the date on which a Deferred Stock Unit is granted.
member of the Company’s Board of Directors or a member of the Parent's Board of
Directors, who is not an employee of the Company or the Parent.
Harleysville Mutual Insurance Company.
share of common stock of the Company, par value $1 per share.
the termination of an individual’s status as a Non-Employee Director for any
reason whatever, whether voluntarily or involuntarily, including disability
death of the Non-Employee Director.
of Shares Subject to Deferred Stock Unit.
maximum number of Shares for which Deferred Stock Units may be granted during
the entire duration of the Plan is 110,000. This number shall be adjusted if
number of outstanding Shares is increased or reduced by split-up,
reclassification, stock dividend or similar event. The number of Shares subject
to outstanding Deferred Stock Units shall also be adjusted whenever the number
of outstanding Shares is so increased or reduced.
of Deferred Stock Units.
individual who was a Non-Employee Director at the time of the April 2005 or
April 2006 Board Meeting received an award of Deferred Stock Units and at each
April Board Meeting thereafter for three consecutive years until and including
the April 2009 Board Meeting, each individual who is a Non-Employee Director
the April Board Meeting, and continuing to serve in such capacity after such
April Board Meeting shall automatically receive a number of Deferred Stock
equal to the result of dividing (i) $30,000 by (ii) the Fair Market Value of
Share as of the day before the date of the April Board Meeting for that
Grant of Deferred Stock Units under the Plan shall be evidenced by a written
document which shall indicate (i) the number of Deferred Stock Units granted
the Non-Employee Director; (ii) the effective date of the Grant; and (iii)
other terms and conditions the Board deems necessary or
Grants shall be subject to the terms of this Plan and the written document
evidencing such Grant.
of Deferred Stock Units.
Stock Units shall be granted on the following terms:
Stock Units shall be fully vested at all times.
Non-Employee Director’s Termination of Service, he, or, upon the Non-Employee’s
Director’s death, the executor or administrator of his estate or the person or
persons who shall have acquired a Deferred Stock Unit directly from the
Non-Employee Director by bequest or inheritance, shall receive a number of
Shares equal to the number of his Deferred Stock Units, unless the Non-Employee
Director has elected in writing to the Company prior to the date of Termination
of Service to defer receipt of the Shares in accordance with the Directors’
Standard Deferred Compensation Plan.
Deferred Stock Unit shall not be transferable otherwise than by will or the
of intestate distribution.
Non-Employee Director granted a Deferred Stock Unit under this Plan shall have
only the rights of a general unsecured creditor of the Company until such
Non-Employee Director receives Shares equal to the number of his Deferred Stock
Units pursuant to Section 4.
Non-Employee Director shall have no voting rights with respect to any Shares
issuable pursuant to Deferred Stock Units until the date on which a certificate
or certificates representing such Shares are issued.
of Dividend Equivalent Rights.
the Company pays cash dividends with respect to Shares, a Non-Employee Director
shall receive an amount equal to all or any portion of the dividends that would
be paid on Shares equal to the number of his Deferred Stock Units (“dividend
equivalents”), unless the Non-Employee Director has elected to defer receipt of
the dividend equivalents pursuant to the Directors’ Standard Deferred
Compensation Plan or has elected to use the dividend equivalents to purchase
Common Stock pursuant to the Harleysville Group Inc. Dividend Reinvestment
Stock Purchase Plan.
Stock Subject to Deferred Stock Units.
issuable under Deferred Stock Units may be unissued shares or treasury shares.
The Company at all times during the term of this Plan shall reserve for issuance
the number of Shares issuable under Deferred Stock Units.
with Legal Requirements.
Company will not be obligated to issue Shares if, in the opinion of its counsel,
such issuance would violate any applicable federal or state securities laws.
Company will seek to obtain from each regulatory commission or agency having
jurisdiction, such authority as may be required to issue Shares. Inability
the Company to obtain from any such regulatory commission or agency authority
which counsel for the Company deems necessary for the lawful issuance of Shares
shall relieve the Company from any liability for failure to issue such Shares
until the time when such authority is obtained.
of Deferred Stock Units.
otherwise provided in Section 5(b), Deferred Stock Units and the rights and
privileges conferred hereby shall not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of a Deferred Stock
Unit, right or privilege contrary to the provisions hereof, or upon the levy
any attachment or similar process upon the rights and privileges conferred
hereby, such Deferred Stock Unit and the rights and privileges conferred hereby
shall immediately terminate.
of Non-Employee Director in Stock.
the holder of a Deferred Stock Unit, nor the legal representatives, heirs,
legatees or distributees of any holder, shall be deemed to be the holder of,
to have any of the rights of a holder with respect to, any Shares issuable
such Deferred Stock Unit unless and until such Shares are issued to him or
and such person or persons have received a certificate or certificates
therefore, except for dividend equivalent rights as provided in Section
of Applicable Taxes.
Company shall have the right to deduct or withhold, or require a holder of
Deferred Stock Unit to remit to the Company, an amount sufficient to satisfy
Federal, state, and local taxes required by law to be withheld with respect
any grant, exercise, or payment made under or as a result of the Plan.
and Deferred Stock Units Not to Affect Service as a Director.
this Plan nor any Deferred Stock Unit shall confer upon any Non-Employee
Director any right to continue as a director of the Company.
13. Administration and Interpretation.
shall be administered by the Committee. Subject to the express provisions of
Plan, the Committee shall have authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan and to make all
other determinations deemed necessary or advisable in the implementation and
administration of the Plan; provided, however, that the Committee shall have
discretion with respect to the eligibility or selection of Directors to receive
stock units under the Plan, the number of stock units granted under the Plan,
the price thereof, and provided further that the Committee shall not have the
authority to take any action or make any determination that would materially
increase the benefits accruing to Participants under the Plan The determination
of the Committee in the administration of the Plan as described herein, shall
final, conclusive and binding upon all persons including, without limitation,
the Company, its stockholders and the persons granted stock units under the
Plan. The Secretary of the Company shall be authorized to implement the Plan
accordance with its terms and to take such action of a ministerial nature as
shall be necessary to effectuate the intent and purposes thereof.
shall have complete power and authority to amend the Plan, provided, however,
that it shall not without shareholder approval (a) increase the maximum number
of Deferred Stock Units that may be granted or (b) adopt any other amendment
which the Board determines to be required or advisable to be approved by the
shareholders of the Company under regulations of the U. S. Securities and
Exchange Commission, the rules of any stock exchange or stock market on which
the Company’s stock is listed, the Internal Revenue Code of 1986, as amended, or
other applicable law or regulation.
notice required or permitted hereunder shall be sufficiently given only if
by registered or certified mail, postage prepaid, addressed to the Company,
Maple Avenue, Harleysville, PA 19438-2297, and to the holder of a Deferred
Unit at the most recent address on file with the Company.
shall be binding upon and inure to the benefit of any successor or successors
part of this Plan shall be determined to be invalid or void in any respect,
determination shall not affect, impair, invalidate or nullify the remaining
provisions of this Plan which shall continue in full force and
Date and Term of Plan.
first became effective on January 1, 2005, was approved by the stockholders
the Company on April 27, 2005, and was amended and restated by the Board of
Directors effective August 8, 2006 and shall expire on December 31, 2009, unless
sooner terminated by the Board. The Board may terminate this Plan at any time.
clearly indicated by context, the singular shall include the plural and the
masculine shall include the feminine, and vice-versa.