EXHIBIT 4.3
HARLEYSVILLE GROUP INC.
EXCESS STOCK PURCHASE PLAN
ADOPTED BY BOARD OF DIRECTORS: NOVEMBER 17, 1999
APPROVED BY STOCKHOLDERS: APRIL 26, 2000
TABLE OF CONTENTS
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ARTICLE NO. ARTICLE TITLE PAGE NO.
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I. PURPOSE 1
II. ELIGIBLE EMPLOYEES 1
III. ENROLLMENT AND ENROLLMENT PERIODS 1
IV. DURATION OF OFFER AND SUBSCRIPTION PERIODS 2
V. NUMBER OF SHARES TO BE OFFERED 2
VI. SUBSCRIPTION PRICE 2
VII. AMOUNT OF CONTRIBUTION AND METHOD OF PAYMENT 3
VIII. PURCHASE OF SHARES 3
IX. WITHDRAWAL FROM THE PLAN 4
X. TAX WITHHOLDING 4
XI. SEPARATION FROM EMPLOYMENT 4
XII. ASSIGNMENT 4
XIII. ADJUSTMENT OF AND CHANGES IN THE STOCK 4
XIV. AMENDMENT OR DISCONTINUANCE OF THE PLAN 5
XV. ADMINISTRATION 5
XVI. EMPLOYEE'S RIGHTS 5
XVII. TITLES 5
XVIII. APPLICABLE LAW 5
HARLEYSVILLE GROUP INC.
EXCESS STOCK PURCHASE PLAN
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ARTICLE 1 - PURPOSE
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The Harleysville Group Inc. Excess Stock Purchase Plan (the
"Plan") is established by the Harleysville Group Inc. (the "Company")
for the benefit of the Eligible Employees of the Company. The purpose
of the Plan is to provide each Eligible Employee with an opportunity to
acquire or increase a proprietary interest in the Company. The Plan is
available only to those employees who purchase the maximum number of shares
allowable under the Harleysville Group Inc. Employee Stock Purchase Plan
("ESPP"). It will permit them to purchase additional shares, on a non-tax
free basis, under the rules that apply to the ESPP.
ARTICLE II - ELIGIBLE EMPLOYEES
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(a) All regular full-time employees and regular part-time employees
who work at least twenty (20) hours or more a week for the Company and
who, in any year, purchases the $25,000 in fair market value permitted
under the ESPP ("Eligible Employee").
(b) If an Employee obtains a hardship withdrawal under the Extra
Compensation Plan of the Company or any similar plan maintained
by the Company, its parent, or a subsidiary, then said Employee may
not, for the twelve month period following the hardship withdrawal,
make any contributions for purchase of stock under the Plan. In such
case, such Employee will be deemed to have withdrawn his or her
contribution for the current Subscription Period and will have such
contributions returned to him or her. The Employee is further not
entitled to re-subscribe to the Plan until the beginning of the first
Subscription Period following the completion of the twelve month period.
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ARTICLE III - ENROLLMENT AND ENROLLMENT PERIODS
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Separate enrollment for this Plan is not necessary. Enrollment
in the ESPP shall enable an Eligible Employee to participate in this Plan.
Actual participation shall not occur until (a) a Participant has purchased
$25,000 in fair market value of Company stock under the ESPP in any year, and
(b) the Participant has contributed to the ESPP an amount in excess of the
amount required to purchase $25,000 in fair market value under the ESPP.
Any person who is an Eligible Employee and desires to subscribe for the
purchase of stock for the following Subscription Period must file a subscription
agreement during the Enrollment Period or otherwise have a Subscription
Agreement on file. Once enrolled, an Eligible Employee will continue to
participate in the Plan for each succeeding Subscription Period until he or she
terminates his or her participation or ceases to be an Eligible Employee. If a
participant desires to change his or her rate of contribution he or she may do
so effective for the next Subscription Period by filing a new subscription
agreement during the applicable Enrollment Period.
ARTICLE IV - DURATION OF OFFER AND SUBSCRIPTION PERIODS
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This plan shall be in effect from July 1, 2000 through and including
July 31, 2005. During the duration of the Plan there will be ten (10)
"Subscription Periods". Each Subscription Period runs from January 15
through July 14 or from July 15 through January 14.
ARTICLE V - NUMBER OF SHARES TO BE OFFERED
------------------------------------------
The total number of shares to be made available under the Plan is
50,000 shares of common stock of the Company ("Stock"). The shares issued
hereunder may either be authorized but unissued shares or treasury shares
reacquired by the Company. In the event this amount of Stock is subscribed
prior to the expiration of the Plan, the Plan may be terminated in accordance
with Article XII of the Plan.
ARTICLE VI - SUBSCRIPTION PRICE
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The "Subscription Price" for each share of Stock shall be the lesser
of eighty-five percent (85%) of the fair market value of such share on the
last trading day before the first day of the
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Subscription Period or eighty-five percent (85%) of the fair market value
of such share on the last trading day of the Subscription Period, but in
no event less than $1.00 per share, the par value of share of Company Common
Stock. The fair market value of a share shall be the Closing Price as
reported on the NASDAQ National Market System for the applicable date.
ARTICLE VII - AMOUNT OF CONTRIBUTION AND METHOD OF PAYMENT
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Except as otherwise provided herein, the Subscription Price will be
payable as set forth in the ESPP. The combined maximum deduction under the
ESPP and this Plan shall be no more than fifteen percent (15%) of a
Participant's Base Pay. "Base Pay" means the regular compensation paid to an
Eligible Employee with respect to the Enrollment Period. Base Pay shall not
include overtime, bonuses, or other items which are not considered to be
regular earnings by the committee administering the Plan pursuant to
Article XV. Payroll deductions will commence with the first pay issued
during the Subscription Period and will continue with each pay throughout
the entire Subscription Period except for pay periods for which the Eligible
Employee receives no compensation (i.e., uncompensated personal leave, leave
of absence, etc.).
ARTICLE VIII- PURCHASE OF SHARES
---------------------------------
The Company will maintain on its books an ESPP "Plan Account" in the
name of each participant. At the close of each pay period, the amount
deducted from the participant's Base Pay will be credited to the
participant's Plan Account. As of the last day of each Subscription Period,
the amount then in the participant's Plan Account will be divided by the
Subscription Price for such Subscription Period and the participant's Plan
Account will be credited with the number of whole and fractional shares
which results. If there is an amount in the Plan account remaining after
application of the $25,000 cap sufficient to purchase additional shares, then
the remaining amounts shall be used to purchase additional shares under this
Plan pursuant to the procedures applicable to the ESPP, up to a maximum of
15% of pay under both Plans. Shares will be issued in a book entry form
with the Company's stock transfer agent. A participant will receive a
statement of
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account in a timely fashion from the transfer agent following the end of
each Subscription Period. In the event the number of shares subscribed for
any Subscription Period exceeds the number of shares available for sale under
the Plan for such period, the available shares shall be allocated among the
participants in proportion to their Plan Account balances.
In the event that the number of shares which would be credited to any
participant's Plan Account in any Subscription Period exceeds the limit
specified in Article VII, the participant's account will be credited with
the maximum number of shares permissible, and the remaining amounts will be
refunded in cash without interest.
ARTICLE IX - WITHDRAWAL FROM THE PLAN
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Withdrawal from the ESPP shall constitute withdrawal from this Plan.
At the time of withdrawal the amount credited to the participant's Plan
Account will be refunded in cash without interest.
ARTICLE X - TAX WITHHOLDING
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The Company shall require withholding tax to be collected on the
difference between the purchase price and the fair market value at closing
on the day prior to purchase, in accordance with IRS regulations; provided,
however, that a Participant may satisfy his or her withholding obligation by
having withheld from delivery shares equal in fair market value to the
withholding obligation or deliver shares of Company stock previously owned by
Participant for more than six months 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.
ARTICLE XI - SEPARATION FROM EMPLOYMENT
---------------------------------------
Separation from employment with Company for any reason including death,
disability or retirement shall be treated as an automatic withdrawal as set
forth in Article IX.
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ARTICLE XII - ASSIGNMENT
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No participant may assign his or her subscription or rights to
subscribe to any other person and any attempted assignment shall be void.
ARTICLE XIII - ADJUSTMENT OF AND CHANGES IN THE STOCK
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In the event that the shares of Stock shall be changed into or exchanged
for a different number or kind of shares of Stock or other securities of the
Company or of another corporation (whether by reason of merger, consolidation,
recapitalization, split-up, combination of shares, or otherwise), or if the
number of shares of Stock shall be increased through a Stock split or the
payment of a Stock dividend, then there shall be substituted for or added to
each share of Stock theretofore reserved for sale under the Plan, the number
and kind of shares of Stock or other securities into which each outstanding
share of Stock shall be so changed, or for which each such share shall be
exchanged, or to which each such share shall be entitled, as the case may be.
ARTICLE XIV - AMENDMENT OR DISCONTINUANCE OF THE 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.
ARTICLE XV - ADMINISTRATION
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The Plan shall be administered by a committee to be appointed by the
Board of Directors consisting of three employees of the Company. The
committee may from time to time adopt rules and regulations for carrying out
the Plan. Interpretation or construction of any provision of the Plan by the
committee shall be final and conclusive on all persons absent contrary action by
the Board of Directors.
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ARTICLE XVI - EMPLOYEE'S RIGHTS
-------------------------------
Nothing in the Plan shall prevent the Company, its parent or any
subsidiary from terminating any employee's employment. No employee shall
have any rights as a shareholder until full payment has been made for the shares
for which he has subscribed.
ARTICLE XVII - TITLES
----------------------
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
ARTICLE XVIII - APPLICABLE LAW
------------------------------
The Plan shall be construed, administered and governed in all respects
under the laws of the Commonwealth of Pennsylvania.
TO RECORD THE ADOPTION 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
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Walter R. Bateman, II, Chairman, President & CEO
ATTEST:
/s/ R. A. Brown
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Roger A. Brown, Senior Vice President,
Secretary & General Counsel