Document:

Exhibit  10.1
                             HARLEYSVILLE GROUP INC.
                       DIRECTORS' DEFERRED STOCK UNIT PLAN
                      -------------------------------------
              Approved by the Board of Directors on February 23, 2005
                    Approved by Shareholders on April 27, 2005

1.   PURPOSE
     ---------

     Harleysville  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.  The  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
profitability  objectives.

2.   DEFINITIONS
  --------------

     The  following  terms, when used with an initial capital letter, shall have
the  following  meanings:

     "Annual  Meeting"  means  the  annual shareholders meeting held in April of
      ---------------
each  year.

     "April  Board  Meeting"  means  the  meeting of the Board of Directors held
      ---------------------
in  April  of  each  year.

     "Board"  means  the  Board  of  Directors  of  the Company and the Board of
     ------
Directors  of  the  Parent.

     "Committee"  means  the  Nominating  and  Corporate Governance Committee of
--------------------------------------------------------------------------------
the  Board.
-----------

     "Company"  means  Harleysville  Group  Inc.,  a  Pennsylvania  corporation.
      -------

     "Deferred  Stock  Unit"  means  a  right  to  receive,  without
      --------------------
 payment  to  the  Company,  one  (1)  Share  as  further  described  in
Section  4.
<PAGE>

     "Effective  Date"  means  January  1, 2005, contingent upon approval of the
     ---------------
Company's  shareholders  at  the  first  Annual Meeting of the shareholders held
after  the  adoption  of  the  Plan  by  the  Board.

     "Fair  Market  Value"  means,  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,  or  (iii)  if  not  so  reported,  the
-------------------------
average  of  the  closing  bid  and  asked  prices  on the 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"  means  a  grant  of  Deferred Stock Units which are subject to the
     ------
terms  and  conditions  of  this  Plan.

     "Grant  Date"  means  the  date  on which a Deferred Stock Unit is granted.
      -----------

     "Non-Employee  Director"  means  a  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.

     "Parent"  means  Harleysville  Mutual  Insurance  Company.
     --------

     "Plan"  means  the  Harleysville  Group  Inc.  2005  Non-Employee
     -----
Directors  Deferred  Stock  Unit  Plan,  as  set  forth  herein  and  as amended
from  time  to  time.

     "Share"  means  a  share  of  common  stock  of  the  Company,
     ------
par  value  $1  per  share

     "Termination  of  Service"  means  the  termination  of  an  individual's
      -----------------------
status  as  a Non-Employee Director for any reason whatever, whether voluntarily
or  involuntarily,  including  disability or death of the Non-Employee Director.

<PAGE>
3.   AUTHORIZATION  OF  SHARES  SUBJECT  TO  DEFERRED  STOCK  UNIT
     -------------------------------------------------------------

     The  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  the  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.

4.   GRANTING  OF  DEFERRED  STOCK  UNITS
     -------------------------------------

      (a)  At  the  April  Board  Meeting for 2005, and at each April Board
Meeting thereafter  for  four consecutive years until and including the
April 2009 Board Meeting,  each  individual  who  is  a  Non-Employee
Director on such date shall automatically  receive  a  number of Deferred
Stock Units equal to the result of dividing  (i)  $30,000  by
(ii)  the Fair Market Value of a Share as of the day before  the
date  of  the  April  Board  Meeting  for  that  year.

     (b)  Each  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  to the Non-Employee Director; (ii) the effective date of the
Grant; and (iii)  any  other terms and conditions the Board deems necessary
or appropriate.

     (c)  All  Grants  shall  be subject to the terms of this Plan and
the written document  evidencing  such  Grant.

5.   TERM  OF  DEFERRED  STOCK  UNITS
     --------------------------------

      Deferred  Stock  Units  shall  be  granted  on  the  following  terms:

     (a)  Deferred  Stock  Units  shall  be  fully  vested  at  all  times.

     (b)  Upon  a 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.

<PAGE>

     (c)  A  Deferred  Stock Unit shall not be transferable otherwise than
by will or  the  laws  of  intestate  distribution.

     (d)  A  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.

     (e)  A  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.

6.   GRANT  OF  DIVIDEND  EQUIVALENT  RIGHTS
     ----------------------------------------

      Whenever  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.

7.   COMMON  STOCK  SUBJECT  TO  DEFERRED  STOCK  UNITS
     --------------------------------------------------

     Shares  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.

8.  COMPLIANCE  WITH  LEGAL  REQUIREMENTS
    -------------------------------------

     The  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.  The  Company  will  seek  to  obtain  from  each  regulatory
commission  or  agency having jurisdiction, such authority as may be required to
issue  Shares.  Inability  of  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.

<PAGE>

9.   NONASSIGNMENT  OF  DEFERRED  STOCK  UNITS
     -----------------------------------------

     Except  as  otherwise  provided  in Section 5, 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 not 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  of  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.

10.  RIGHTS  OF  NON-EMPLOYEE  DIRECTOR  IN  STOCK
     ---------------------------------------------

      Neither  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, or to have any of the rights of a holder with respect to,
any  Shares issuable under such Deferred Stock Unit unless and until such Shares
are issued to him or them and such person or persons have received a certificate
or  certificates therefore, except for dividend equivalent rights as provided in
Section  6.

11.  WITHHOLDING  OF  APPLICABLE  TAXES
     ----------------------------------

     The  Company  shall  have  the  right  to  deduct or withhold, or require a
holder of a 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  to  any  grant,  exercise,  or payment made under or as a result of the
Plan.

12.  PLAN  AND  DEFERRED  STOCK  UNITS  NOT  TO  AFFECT  SERVICE
AS  A  DIRECTOR
-------------------------------------------------------------------

      Neither  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
     -----------------------------------

      The  Plan  shall be administered by the Committee.  Subject to the express
provisions  of  the  Plan,  the  Committee shall have authority to interpret the
Plan,  to  prescribe,  amend

<PAGE>

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 no
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, or
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 be
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 in
accordance  with  its  terms  and to take such action of a ministerial nature as
shall  be  necessary  to  effectuate  the  intent  and  purposes  thereof.

14.  AMENDMENT  OF  PLAN
     -------------------

     The  Board  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.

15.  NOTICES
     --------

     Any  notice  required  or  permitted  hereunder shall be sufficiently given
only  if sent by registered or certified mail, postage prepaid, addressed to the
Company,  355  Maple Avenue, Harleysville, PA 19438-2297, and to the holder of a
Deferred  Stock  Unit  at  the  most  recent  address  on file with the Company.

<PAGE>

16.  SUCCESSORS
     -----------

     The  Plan  shall  be binding upon and inure to the benefit of any successor
or  successors  of  the  Company.

17.  SEVERABILITY
     -------------

     If  any  part of this Plan shall be determined to be invalid or void in any
respect,  such determination shall not affect, impair, invalidate or nullify the
remaining provisions of this Plan which shall continue in full force and effect.

18.  EFFECTIVE  DATE  AND  TERM  OF  PLAN
     ------------------------------------

     The  Plan  shall become effective on the Effective Date and shall expire on
December  31,  2009,  unless  sooner  terminated  by  the  Board.  The Board may
terminate  this  Plan  at  any  time.  The  Board  shall submit this Plan to the
shareholders  of  the  Company for their approval at the first Annual Meeting of
the shareholders held after the adoption of the Plan by the Board.  Any Deferred
Stock Unit granted before the approval of the Plan by the Company's shareholders
shall  be  expressly  conditioned upon, and shall not be exercisable until, such
approval.  If  such  shareholder  approval  is  not received at the first annual
meeting  held  after  the  adoption of the Plan by the Board, all Shares granted
under  the  Plan  shall  automatically  expire.

19.  GENDER  AND  NUMBER
     -------------------

     Unless  clearly indicated by context, the singular shall include the plural
and  the  masculine  shall  include  the  feminine,  and  vice-versa.Exhibit  10.2

                             HARLEYSVILLE GROUP INC.
                              Amended and Restated
                           LONG TERM INCENTIVE PLAN
                           -------------------------
                   Approved by Board of Directors on February 23, 2005
                        Approved by Shareholders on April 27, 2005

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.  "Board"  shall  mean  the  Board  of  Directors  of  the  Company.

         2.  "Change  in  Control"  shall  mean:

             (a)  if  the  "beneficial  ownership"  (as  defined  in  Rule
13d-3 under the Securities Exchange Act of 1934) of securities representing more
than  twenty  percent  (20%) of the combined voting power of the Employer Voting
Securities (as herein defined) is acquired by any individual, entity or group (a
"Person"),  other  than the Parent, the Employer, any trustee or other fiduciary
holding  securities  under  any  employee  benefit  plan  of  the Employer or an
affiliate  thereof,  or  any  corporation  owned, directly or indirectly, by the
stockholders  of  the  Employer  in  substantially the same proportions as their
ownership  of stock of the Employer ("Employer Voting Securities" shall mean the
then outstanding voting securities of the Employer entitled to vote generally in
the  election  of  directors);  provided,  however, that the following shall not
                                ---------
constitute  a  Change  in  Control  under  this  paragraph  (a)  :  (i)  any
acquisition  pursuant to a transaction which complies with clauses (i), (ii) and
(iii)  of  paragraph (c) of this Section 2; (ii) any acquisition of the Employer
Voting  Securities from the Parent pursuant to a Business Combination (as herein
<PAGE>
               defined)  or  otherwise, if (x) the acquiring or resulting entity
is  organized  in  the  mutual  form,  and  (y)  persons who were members of the
Incumbent  Board  (as  herein  defined)  of the Parent immediately prior to such
acquisition  constitute  at  least  two-thirds  of  the members  of the Board of
Directors  of  the  acquiring  entity immediately following such acquisition and
(iii)  any acquisition of voting securities from the Employer or the Parent by a
person  engaged  in  business  as  an underwriter of securities who acquires the
shares through his participation in good faith in a firm commitment underwriting
registered  under the Securities Act of 1933; and (iv) any acquisition otherwise
within the terms of this paragraph (a) during any period in which Parent owns at
least a majority of the combined voting power of Employer Voting Securities (the
"Parent  Control  Period"),  but  if such an acquisition is made during a Parent
Control  Period by any Person and such Person continues to hold more than 20% of
the  combined  voting  power  of all Employer Voting Securities on the first day
following  the  termination of a Parent Control Period, such acquisition will be
deemed  to  have  been  first  made  on  such  date;  or

             (b)  if,  during  any  period  of  twenty-four  (24)  consecutive
months,  individuals  who,  as  of  the beginning of such period, constitute the
Board  of  Directors  of  the  Employer  or  the Parent, as the case may be (the
"Applicable  Incumbent  Board"),  cease  for any reason to constitute at least a
majority  of  the  Board of Directors of the Employer or the Parent, as the case
may  be;  provided,  however,  that  (x)  any  individual  becoming  a
                    --------
director  of  the  Employer  or  the  Parent,  as  the  case  may  be,  during
such  period  whose election, or nomination for election, was approved by a vote
of  at  least  a  two-thirds  of  the  directors  then comprising the Applicable
Incumbent  Board  (other  than in connection with the settlement of a threatened
proxy  contest)  shall  be considered as though such individual were a member of
the  Incumbent Board of Directors of the Employer or the Parent, as the case may
be,  and (y) the provisions of this paragraph (b) shall not be applicable to the
composition  of the Board of Directors of Parent if Parent shall cease to own at
least  20%  of  the  combined voting power of all Employer Voting Securities; or

             (c)  upon  consummation  by  the  Employer  of  a  reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of  the  assets of the Employer or the acquisition of assets or stock of another
entity  (a  "Business  Combination"),  unless,  in  any  such case,  immediately
following  such Business Combination the following three conditions are met: (i)
more  than  50%  of  the  combined  voting  power of the then outstanding voting
securities  entitled  to  vote generally in the election of directors of (x) the
corporation  resulting  from  such  Business  Combination  (the  "Surviving
Corporation"),  or  (y)  if  applicable, a corporation which as a result of such
transaction  owns  the  Employer  or  all or substantially all of the Employer's
assets  either  directly  or  through  one or more subsidiaries (the "New Parent
Corporation"),  is  represented, in either such case, directly or indirectly, by
Employer  Voting  Securities  outstanding  immediately  prior  to  such Business
<PAGE>
             Combination  (or,  if  applicable,  is  represented  by  shares
into  which  such  Employer  Voting  Securities  were  converted  pursuant
to  such  Business  Combination),  and  such  voting power is distributed  among
the  holders thereof in  substantially  the same proportions as their ownership,
immediately  prior  to  such  Business  Combination,  of  the  Employer  Voting
Securities,  and  (ii)  no  Person  (excluding  any  employee  benefit  plan
(or  related  trust)  of  the  Employer  or  such  corporation  resulting
from  such  Business  Combination)  beneficially  owns,  directly  or
indirectly,  50%  or  more  of the combined voting power of the then outstanding
voting  securities  eligible  to  elect  directors  of  the  New  Parent
Corporation  (or,  if  there  is  no  New  Parent  Corporation,
the  Surviving  Corporation)  except  to  the  extent  that  such  ownership  of
the  Employer  existed  prior  to  the  Business  Combination,  and  (iii)
at  least  a  majority  of  the  members  of  the  board  of  directors  of  the
New  Parent  Corporation  (or,  if  there  is  no  New  Parent  Corporation,
the  Surviving  Corporation)  were  members  of  the  Board  of  Directors
of  the  Employer  at  the  time  of  the  execution  of  the  initial
agreement,  or  the  action  of  the  Board,  providing  for  such  Business
Combination;  or

             (d)  Parent  affiliates  with,  or  acquires  by  merger,  a  third
party  and,  as a consequence thereof, persons who were members of the Incumbent
Board  of  Parent  immediately  prior to such transaction cease to constitute at
least two-thirds of the directors of Parent following such transaction provided,
                                                           ---------
however,  that  this  paragraph  (d)  shall  not  apply  if  immediately
prior  to  such  affiliation or merger, Parent does not own more than 20% of the
combined  voting  power  of  Employer  Voting  Securities;  or

             (e)  upon  approval  by  the  stockholders  of  the  Employer  and
all necessary regulatory authorities of a complete liquidation or dissolution of
the  Employer;  or

             (f)  any  other  event  shall  occur  that  would  be  required  to
be  reported  by  the  Employer  in  response  to  Item  6(e) of Schedule 14A of
Regulation  14A  promulgated  under the Exchange Act (or any provision successor
thereto);  or

             (g)  the  Employer  or  Parent  has  entered  into  a  management
agreement  or  similar  arrangement  pursuant  to which an entity other than the
Employer  or the Parent or the Boards of Directors or the executive officers and
management  of  the  Employer or the Parent has the power to direct or cause the
direction  of  the  management  and  policies  of  the  Employer  or the Parent;
provided,  however,  that  this  paragraph  (g)  shall
--------
not  apply  to  Parent  if,  immediately  prior  to  entering  into  any  such
management  agreement or similar  arrangement, Parent does not own more than 20%
of  Employer  Voting  Securities.

         3.  "Code"  shall  mean  the Internal Revenue Code of 1986, as amended.

         4.  "Committee"  shall  mean  the  Compensation & Personnel Development
Committee  of  the  Board  of  Directors  of  Harleysville  Group  Inc.

         5.  "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.
<PAGE>
         6.  "Company"  shall  mean  Harleysville  Group  Inc.,  a  Delaware
corporation,  and  any  successor  in  a  reorganization or similar transaction.
Also,  see  definition  of  "Employer".

         7.  "Director"  shall  mean  a  member of the Board of Directors of the
Company  and/or  Parent.

         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
deter-mined  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.  "Employer"  shall  mean  Harleysville  Group  Inc.,  a  Delaware
corporation,  and  any  successor  in  a  reorganization or similar transaction.
Also,  see  definition  of  "Company".

        10.  "Exchange  Act"  shall  mean  the  Securities Exchange Act of 1934,
as  amended.

        11.  "Fair  Market  Value"  shall  mean  the last existing closing price
of  Common  Stock  on  the  Nasdaq  National  Market  System.  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.  "Named  Executive  Officers"  shall  be  those  persons  covered by
Item  402(a)(3)  of  Regulation  S-K  pursuant  to  the  Exchange  Act.

        13.  "Parent"  shall  mean  Harleysville  Mutual  Insurance  Company.

        14.  "Participant"  shall  mean  those  eligible  officers and other key
employees  of  the  Company  who  receive  Awards  under  the  Plan.

        15.  "Plan"  shall  mean  the  Company's  Long  Term  Incentive  Plan.

        16.  "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.

        17.  "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.

        18.  "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
<PAGE>
the  requirements  of  Item  402(l)  of  Regulation  S-K  promulgated  by
the  Securities  and  Exchange  Commission.

        19.  "Withholding  Obligation"  shall  mean  the  prevailing  mandatory
federal  rate  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 National  Market  System.

           The  determination  of  the  Commit-tee  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 accor-dance 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.

<PAGE>

    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 were
registered  subsequent  to  the adoption and approval of the Long Term Incentive
Plan  as amended and restated November 17, 1999 and approved by the Stockholders
April  26,  2000.  Such  shares that are issued may be previously 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 pro-rata
basis  for  each  completed  month.

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  20  companies  that  are  primarily  or  wholly  in  the
property/casualty  insurance  industry  as  selected  from  time  to time by the
Committee.
<PAGE>

    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.

     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 or the 50th and 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:  At  the  end  of  the  three-year period and
         ------------------------
         after  determination  of  the relative peer group ranking, but prior to
payment  of  the  awards,  the Committee shall review the TSR for the three-year
period  just  completed  and  certify  in writing or in minutes of the Committee
meeting  that  the  Company has attained a TSR level entitling participants to a
payout.

    G.   DISCRETIONARY  ADJUSTMENTS:  At  the  end  of  each  three-year period,
          -------------------------
         but  prior  to  payment,  the  Committee  may,  in  its  discretion, if
circumstances  warrant,  decrease  the  awards  determined  by  Paragraph III.D.

     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
<PAGE>
          shares  of  Company  stock  equal  in  Fair Market Value to the amount
sought  to  be  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 basis
for  each  completed  month.

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 bene-fits 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>

    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.

<PAGE>
     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  23rd  DAY  OF  February,  2005.

                                     HARLEYSVILLE GROUP INC.

                                     BY:  /s/Michael L. Browne
                                          ------------------------------
                                          Michael L. Browne,
                                          President & Chief Executive Officer

ATTEST:

/s/Robert A. Kauffman
------------------------------------------
Robert A. Kauffman, Senior Vice President,
Secretary & General Counsel

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