EXHIBIT 4.2
OFFICERS' CERTIFICATE
OF
HARLEYSVILLE GROUP INC
(PURSUANT TO SECTION 2.02(B) OF THE INDENTURE)
The undersigned officers of Harleysville Group Inc., a Delaware
corporation (the "Company"), acting pursuant to authorization set forth in
resolutions of the Terms and Pricing Committee of the Company's Board of
Directors, duly adopted on July 8, 2003, do hereby certify on behalf of the
Company (and without personal liability) that the terms of the Company's debt
securities to be issued under the Senior Indenture dated as of July 7, 2003 (the
"Indenture") between the Company and J.P. Morgan Trust Company, National
Association as trustee (the "Trustee"), which have been registered for sale with
the Securities and Exchange Commission pursuant to a Registration Statement on
Form S-3 (No. 333-104437) under the Securities Act of 1933, as amended (the
"Notes"), are as set forth on Attachment A hereto.
The capitalized terms used in this Certificate, including those set
forth on Attachment A (unless otherwise defined herein), have the meanings given
to them in the Indenture.
IN WITNESS WHEREOF, we have hereunto set our hands and caused this
Officers' Certificate to be delivered on behalf of the Company as of the 7th day
of July, 2003.
By: /S/ BRUCE J. MAGEE
--------------------------------------------
Name: Bruce J. Magee
Title: Senior Vice President and
Chief Financial Officer
By: /S/ ROGER A. BROWN
--------------------------------------------
Name: Roger A. Brown
Title: Senior Vice President, Secretary,
General Counsel and Chief Governance
Officer
ATTACHMENT A
TERMS OF THE NOTES
HARLEYSVILLE GROUP INC.
(1) The title of the Securities................. 5.75% Senior Notes due
2013 (the "Notes")
(2) The limit upon the aggregate
principal amount of the Notes which may
be authenticated and delivered under the
Indenture (except for Notes that are
authenticated and delivered upon
registration of, transfer of, or in
exchange for, or in lieu of, other Notes
pursuant to Sections 2.08, 2.09, 2.12,
3.06 or 9.05 of the Indenture or any
Notes that, pursuant to Section 2.04 of
the Indenture, are deemed never to have
been authenticated and delivered under
the Indenture) .................................. $100,000,000 in aggregate
principal amount of the
Notes are to be
authenticated and
delivered under the
Indenture.
(3) The date on which the principal of
and premium, if any, on the Notes is
payable (or the method for determining
this date)....................................... The date on which the
principal of the Notes
shall be payable is July
15, 2013, unless such date
is not a Business Day, in
which case such payment
will be postponed to the
next day that is a
Business Day, and no
interest will accrue for
the period from and after
such specified principal
payment date. Any such
payment will have the same
force and effect as if
made on the date the
payment was originally
payable. No premium will
be paid on the Notes at
the time they become so
payable.
(4) With respect to interest on the
Notes:
(a) The rate at which the Notes will
bear interest (or the method for
calculating such rate)........................... The unpaid principal
amount of the Notes shall
bear interest at a rate of
5.75% per annum, until
paid or duly provided for.
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(b) The date from which interest shall
accrue (or the method by which such date
shall be determined)............................. Interest on the Notes will
accrue from the most
recent Interest Payment
Date to which interest has
been paid or duly provided
for or, in the case of the
first interest payment
hereunder, from the date
of issuance; provided that
if there is no existing
Default in the payment of
interest, and if a Note is
authenticated between a
record date referred to on
the face hereof and the
next succeeding Interest
Payment Date, interest
shall accrue from such
next succeeding Interest
Payment Date; provided,
further, that the first
Interest Payment Date
shall be January 15, 2004.
Payments of interest on
the Notes will include
interest accrued to, but
excluding, the respective
Interest Payment Dates.
(c) The Interest Payment Dates on which
interest shall be payable........................ Interest on the Notes will
be payable semiannually in
arrears on January 15 and
July 15 of each year,
beginning January 15,
2004.
(d) The right of the Company to defer or
extend an Interest Payment Date.................. If an Interest Payment
Date falls on a day that
is not a Business Day,
the interest payment will
be postponed to the next
day that is a Business
Day, and no interest on
such payment will accrue
for the period from and
after such Interest
Payment Date. Any such
payment will have the same
force and effect as if
made on the date the
payment was originally
payable.
(e) The record date for interest payable on the
Notes on any Interest Payment Date and the
basis upon which interest shall be calculated.... The record date will be
January 1 or July 1, as
the case may be,
immediately preceding the
applicable Interest
Payment Date. Interest
payments shall be computed
and paid on the basis of
a 360-day year of twelve
30-day months.
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(5) The place where the principal of,
premium, if any, and interest on, the
Notes shall be payable, where Notes may
be surrendered for exchange and notices
and demands to or upon the Company in
respect of the Notes and this Indenture
may be served and notices to holders of
the Notes pursuant to Section 10.02 of
the Indenture will be published ................. The Paying Agent initially
shall be the Trustee.
Payments in respect of the
Notes shall be made at the
office of the Paying
Agent, which is located at
JPMorgan Chase Bank, 4 New
York Plaza, 15th Floor,
New York, NY 10004.
The place where Notes may
be surrendered for
registration of transfer
or for exchange and where
notices and demands to or
upon the Company in
respect of the Notes and
the Indenture may be
served shall be the office
or agency of the Company
maintained for that
purpose in the Borough of
Manhattan, the City of New
York. This office
currently is located at
c/o JPMorgan Chase Bank, 4
New York Plaza, 15th
Floor, New York, New York
10004.
Any notices required to be
given to Holders of the
Notes will be given to the
Depositary of the Notes,
which initially shall be
the Depository Trust
Company ("DTC").
Conveyance of notices and
other communications by
DTC to direct
participants, by direct
participants to indirect
participants, and by
direct participants and
indirect participants to
beneficial owners of the
Notes will be governed by
arrangements among them,
subject to any statutory
requirements as may be in
effect from time to time.
(6) The terms and conditions (including
the periods, price or currency) upon
which the Notes may be redeemed, in
whole or in part, at the option of the
Company (and, if other than as set forth
in Section 3.03 of the Indenture, the
manner in which the Notes shall be
selected for redemption if less than all
of the Notes are to be redeemed)................. The Company may redeem
some or all of the Notes,
in its sole discretion, at
any time or from time to
time at a redemption price
equal to the greater of:
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0 100% of the aggregate
principal amount of the
Notes to be redeemed;
or
o as determined by the
Quotation Agent
(defined below), the
sum of the present
value of the remaining
scheduled payments of
principal on the
Notes, together with
the present value of
all remaining and
scheduled semi-annual
interest payments on
the Notes, discounted
to the redemption date
on a semi-annual basis
(assuming a 360-day
year consisting of
twelve 30-day months)
at the Treasury Rate
(defined below) plus
35 basis points, which
we refer to as the
Make-Whole Amount,
together in each case with
accrued interest payments
to the redemption date.
For purposes of
determining the Make-Whole
Amount, the following
definitions apply:
"Comparable Treasury
Issue" means the United
States Treasury security
selected by the Quotation
Agent as having a maturity
comparable to the
remaining term of the
Notes to be redeemed that
would be utilized at the
time of selection, and in
accordance with customary
financial practice, in
pricing new issues of
corporate debt securities
of comparable maturity to
the remaining term of such
Notes.
"Comparable Treasury
Price" means with respect
to any redemption date (1)
the average of three
Reference Treasury Dealer
Quotations for the
redemption date, after
excluding the highest and
lowest of five Reference
Treasury Dealer
Quotations, or (2) if the
fewer than five Reference
Treasury Dealer Quotations
are obtained, the average
of all Reference Treasury
Dealer Quotations.
"Quotation Agent" means
the Reference Treasury
Dealer appointed by the
Company.
"Reference Treasury
Dealer" means a primary
independent United States
government securities
dealer.
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"Reference Treasury Dealer
Quotations" means with
respect to each Reference
Treasury Dealer and any
redemption date, the
average, as determined by
the Quotation Agent, of
the bid and asked prices
for the Comparable
Treasury Issue (expressed,
in each case, as a
percentage of its
principal amount) quoted
in writing to the
Quotation Agent by such
Reference Treasury Dealer
at 3:30 p.m., New York
City time, on the third
business day preceding the
redemption date.
"Treasury Rate" means the
rate per annum equal to
the semi-annual equivalent
or interpolated (on a
day-count basis) yield to
maturity of the Comparable
Treasury Issue, assuming a
price for the Comparable
Treasury Issue (expressed
as a percentage of its
principal amount) equal to
the Comparable Treasury
Price for that redemption
date.
Notice of any redemption
will be mailed at least 30
days but not more than 60
days before the redemption
date to each Holder of the
Notes to be redeemed. If
less than all of the Notes
are to be redeemed, the
Trustee will select which
Notes are to be redeemed
on a pro rata basis, by
lot or by such method as
the Trustee deems fair and
appropriate.
If the redemption date of
the Notes falls on a day
that is not a Business
Day, the payment of
interest and principal may
be made on the next
succeeding Business Day,
and no interest on such
payment will accrue for
the period from and after
the earlier redemption
date. Interest payments
for the Notes will include
accrued interest from and
including the date of
issue or from and
including the last date in
respect of which interest
has been paid, as the case
may be, to, but excluding,
the redemption date.
(7) The obligation of the Company to
redeem or purchase the Notes:
(a) Pursuant to any sinking fund or analogous
provisions....................................... Not Applicable.
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(b) Upon the happening of a specified
event or at the option of a holder of
the Notes (including the applicable terms
and conditions upon which the Notes
shall be redeemed or purchased).................. Not Applicable.
(8) The denominations in which
the Notes shall be issuable...................... The Notes shall be
issuable in denominations
of $1,000 or integral
multiples of $1,000.
(9) The currency in which the principal, of,
premium, if any, and interest on the Notes shall be
payable or in which the Notes shall be denominated
(including any applicable provisions) if other than
U.S. dollars..................................... The premium and interest
on the Notes shall be
payable in such coin or
currency of the United
States of America as at
the time of payment is
legal tender for payment
of public and private
debts.
(10) If principal, premium, if any, or
interest on the Notes is payable, at the
election of the Company or a Holder of
the Notes, in a currency other than that
in which the Notes are denominated or
designated to be paid, the currency in
which such payments are to be made, the
terms and conditions of such payment and
the manner in which the exchange rate
shall be determined.............................. Not Applicable.
(11) If the manner in which payments of
principal, premiums, if any, or interest
on the Notes is to be made shall be
determined with reference to an index,
formula or other method, the index,
formula or other method by which such
amounts shall be determined (including
any special voting or defeasance
provisions)...................................... Not Applicable.
(12) If other than the principal amount,
the portion of the principal amount of
the Notes which shall be payable upon
declaration of acceleration pursuant to
Section 6.02 of the Indenture or the
method by which such portion shall be
determined....................................... Not Applicable.
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(13) The Person to whom any interest on the Notes
shall be payable................................ Interest will be paid to
the Persons in whose names
the Notes are registered
at the close of business
on the regular record date
immediately preceding the
date fixed for payments of
interest on the Notes. The
Company will make any
interest payments due at
maturity or upon prior
redemption of the Notes to
the Persons to whom the
related principal payments
are made. Any interest
that is not punctually
paid or duly provided for
will cease to be payable
to Holders on the record
date immediately preceding
the date fixed for
payments of interest on
the Notes and will be paid
to the Persons who are
Holders on a subsequent
special record date, in
each case at a rate fixed
by the Company and set
forth in the Notes.
(14) Any provisions granting special rights
to Holders of the Notes upon the occurrence
of a specified event............................. None, other than as set
forth in the Indenture.
(15) Any deletions from, modifications of or
additions to the Events of Default set forth
in Section 6.01 of the Indenture or Covenants
of the Company set forth in Article 4 of the
Indenture. ...................................... The following covenants
shall be added to Article
4 of the Indenture:
LIMITATION ON
LIENS ON STOCK OF
RESTRICTED SUBSIDIARIES.
The Company covenants that
it and its Restricted
Subsidiaries shall not
incur any indebtedness
secured by a lien on the
capital stock of a
Restricted Subsidiary
unless the Securities are
secured equally and
ratably with such other
indebtedness. For purposes
hereof, (i) the term
"lien" includes any
mortgage, deed of trust,
pledge, lien, security
interest or other
encumbrance (including,
without limitation, any
conditional sale or other
title retention agreement
or lease in the nature
thereof, any filing or
agreement to give a lien
or file a financing
statement as a debtor
under the Uniform
Commercial Code or any
similar statute other than
to reflect ownership by a
third party of property
leased to the Restricted
Subsidiary under a lease
which is not in the nature
of a conditional sale or
title retention
agreement); and (ii) the
term "Restricted
Subsidiary" means any
subsidiary which is
incorporated under the
laws of any state of the
United States or of the
District of Columbia,
except a subsidiary (a)
that has total assets
which are less than 10% of
the total assets of the
Company and its
consolidated subsidiaries
(including that
subsidiary) on the most
recent fiscal year-end
balance sheets of the
subsidiary and the Company
and its consolidated
subsidiaries or (b) that,
in the judgment of the
Board of Directors, is not
material to the financial
condition of the Company
and its consolidated
subsidiaries taken as a
whole.
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LIMITATION ON DISPOSITION
AND ISSUANCE OF STOCK OF
RESTRICTED SUBSIDIARIES.
The Company covenants that
it shall not (i) sell,
transfer or otherwise
dispose of any shares of,
securities convertible
into, or warrants, rights
or options to subscribe
for or purchase shares of,
the capital stock (other
than preferred stock
having no voting rights)
of its Restricted
Subsidiaries, except to
one of the Company's
wholly-owned subsidiaries,
or (ii) permit its
Restricted Subsidiaries to
issue (other than to the
Company or to one of the
Company's wholly-owned
subsidiaries) any shares
(other than director's
qualifying shares) of, or
securities convertible
into, or warrants, rights
or options to subscribe
for or purchase shares of,
capital stock (other than
as indicated above);
PROVIDED HOWEVER, in
either case, the Company
or its Restricted
Subsidiaries may issue,
sell, transfer or
otherwise dispose of any
such securities or rights
if such issuance, sale,
transfer or other
disposition is made for at
least a fair market value
consideration as
determined by the Board of
Directors in good faith or
is required by any law or
regulation or the order of
any court or governmental
or insurance regulatory
authority.
(16) With respect to Notes held by non-U.S.
Persons:
(a) Circumstances under which the Company
will pay additional amounts on the
Notes in respect of taxes, assessments and
similar charges withheld or deducted
(including applicable procedures and
documentation)................................... Not Applicable.
(b) Whether the Company will have the
option to redeem the Notes rather than
pay such additional amounts (and the terms of
any such option)................................. Not Applicable.
(17) The form of the Notes..................... The Notes shall be in
substantially the form
set forth in Exhibit A-1
to this Officers'
Certificate.
(18) The applicability to the Notes of
Sections 8.02 (Legal Defeasance and
Discharge) and 8.03 (Covenant
Defeasance) of the Indenture or such
other means of legal or covenant
defeasance as may be specified for the
Notes............................................ Sections 8.02 and 8.03 of
the Indenture shall apply
to the Notes.
(19) The identity of the Registrar and any Paying
Agent, if other than the Trustee ................ The Trustee initially will
serve as the Registrar and
Paying Agent with respect
to the Notes.
(20) If the Notes will be issued, in
whole or in part, in global form:
(a) The Depositary for the Notes.............. The Notes will be issued
in the form of one or more
Global Securities. On the
date of closing of the
sale of the Notes, each
Global Security will be
deposited with DTC and
registered in the name of
Cede & Co., as DTC's
nominee.
9
(b) Whether beneficial owners of
interests in the Notes in global form
may exchange such interests for
certificated Notes (to be registered in
the names of or to be held by such
beneficial owners or their nominees and
to be of like tenor of any authorized
form and denomination); and if other
than as provided in Section 2.08 of the
Indenture, the circumstances under which
an exchange may occur............................ Except under the limited
circumstances described
below, the Notes
represented by the Global
Security or Global
Securities will not be
exchangeable for, and will
not otherwise be issuable
as, Notes in certificated
form and the owners of
beneficial interests in a
Global Security will not
be entitled to receive
physical delivery of
certificated Notes and
will not be considered the
registered holders of the
Notes for any purpose,
including receiving
payments of principal or
interest. The Global
Securities may not be
transferred except by the
Depositary to a nominee of
the Depositary or by a
nominee of the Depositary
to the Depositary or
another nominee of the
Depositary or to a
Successor Depositary or
its nominee.
A Global Security shall be
exchangeable for
certificated Notes
registered in the names of
Persons other than the
Depositary or its nominee
only if: (1) DTC notifies
the Company that it is
unwilling or unable to
continue as Depositary or
if at any time, DTC ceases
to be a clearing agency
registered under the
Securities Exchange Act of
1934, as amended, at a
time when the Depositary
is required to be so
registered in accordance
with applicable law or
regulation and, in either
case, no successor
Depositary shall have been
appointed by the Company
within 60 days; (2) the
Company in its sole
discretion determines that
the Global Securities
shall be so exchangeable;
or (3) if an Event of
Default under the
Indenture occurs.
The certificated Notes
issued in exchange for
Global Securities shall be
in the same minimum
denominations and be of
the same aggregate
principal amount and tenor
as the portion of each
Global Security to be
exchanged.
10
(21) The designation of the Depositary........... Each Global Security will
be registered in the name
of Cede & Co., as DTC's
nominee.
(22) Any restrictions on the registration,
transfer or exchange of the Notes ............... The Notes will be issued
in the form of one or more
Global Securities. DTC
facilitates the settlement
among participants of
securities transactions,
such as transfers and
pledges, in deposited
securities through
electronic computerized
book-entry changes in
participants' accounts.
Transfers of ownership
interests in the Notes are
to be accompanied by
entries made on the books
of participants acting on
behalf of beneficial
owners of the Notes. The
rules applicable to DTC
and its participants are
on file with the SEC.
More information about
DTC can be found at its
Internet Website at
http://www.dtcc.com. The
Company has placed no
additional restrictions on
the registration, transfer
or exchange of the Notes
other than as set forth in
the Indenture.
(23) Any certificates or other documents
that must be received or conditions that
must be satisfied, other than those
specified in the Indenture, before the
Notes may be issued or delivered
(whether upon original issuance or upon
exchange of a temporary Note or
otherwise) or any installment of
principal or interest may be paid ............... None.
(24) The terms and conditions of any
right to convert or exchange the Notes
into or for other securities or property
of the Company................................... The Notes shall not be
convertible into or
exchangeable for any other
securities or property of
the Company.
(25) Whether the Notes are secured or
unsecured (if secured, the security and
related terms) .................................. The Notes shall be the
direct, unsecured
obligations of the Company
and will rank equally with
each other and with all
other existing and future
unsecured and
unsubordinated
indebtedness of the
Company.
(26) Any other terms applicable to the
Notes (which shall not be inconsistent
with the provisions of the Indenture),
including any terms which may be
required by or advisable under United
States laws or regulations or advisable
(as determined by the Company) in
connection with the marketing of the
Notes. .......................................... UNCLAIMED PRINCIPAL AND
INTEREST. Principal and
interest unclaimed by a
Holder for two years or
more after its payment has
become due shall be
discharged from the
Trustee or paying agent to
the Company. In this case,
the Holder to whom the
unclaimed amount was due
may look only to the
Company as an unsecured
creditor for the payment
of such unclaimed amount.
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EXHIBIT A-1
(Face of Note)
5.75% SENIOR NOTE DUE 2013
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
CUSIP: 412824 AB 0
No: 1 $100,000,000
Dated July 14, 2003
HARLEYSVILLE GROUP INC.
promises to pay to Cede & Co., or registered assigns, the principal sum of ONE
HUNDRED MILLION DOLLARS ($100,000,000) on July 15, 2013.
Interest Payment Dates: July 15 and January 15, commencing January 15, 2004.
Record Dates: July 1 and January 1.
HARLEYSVILLE GROUP INC.
By:
-----------------------------
Name:
Title:
This is one of the Notes referred to in the within-mentioned Indenture:
J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:
--------------------------------
Authorized Officer
(Back of Note)
5.75% Senior Note due 2013
Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. INTEREST. Harleysville Group Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
5.75% per annum from July 14, 2003 until maturity or its earlier redemption. The
Company will pay interest semi-annually on July 15 and January 15 of each year
(each an "Interest Payment Date"). If an Interest Payment Date is not a Business
Day, the interest payment will be postponed to the next day that is a Business
Day and no interest on such payment will accrue for the period from and after
such Interest Payment Date. Interest on the Notes will accrue from the most
recent Interest Payment Date to which interest has been paid or duly provided
for or, in the case of the first interest payment hereunder, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be January 15, 2004. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the July 1 or January 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.14 of the Indenture
with respect to defaulted interest. The Notes will be payable as to principal
and interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, provided that payment by wire
transfer of immediately available funds will be required with respect to
principal of and interest on all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, J.P. Morgan Trust Company, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of July
7, 2003 (the "Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and in resolutions of the Terms and
Pricing Committee of the Company's Board of Directors dated July 8, 2003 as set
forth in an Officers' Certificate provided to the Trustee on July 14, 2003 in
accordance with Section 2.02 of the Indenture, and those terms made part of the
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Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms,
and Holders are referred to the Indenture, the Officers' Certificate and the TIA
for a statement of such terms. The Notes are general obligations of the Company.
"Notes" means this Note and all other Notes of the series of which this Note is
a part. The Notes are "Securities" within the meaning of the Indenture, and
references in the Indenture to "Securities" (including terms such as "Global
Securities") include the Notes (and any "Global Notes" as used herein).
5. OPTIONAL REDEMPTION. The Notes may be redeemed, in whole or in part, at the
option of the Company at any time or from time to time, at a redemption price
equal to the greater of (1) 100% of the aggregate principal amount of the Notes
to be redeemed or (2) as determined by the Quotation Agent (defined below), the
sum of the present value of the remaining scheduled payments of principal on the
Notes, together with the present value of all remaining and scheduled
semi-annual interest payments on the Notes, discounted to the redemption date on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate (defined below) plus 35 basis points, which we refer to as
the Make-Whole Amount, together in each case with accrued and unpaid interest
payments to the redemption date.
For purposes of determining the Make-Whole Amount, the following
definitions apply:
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized at
the time of selection, and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such Notes.
"Comparable Treasury Price" means with respect to any redemption date
(1) the average of three Reference Treasury Dealer Quotations for the
redemption date, after excluding the highest and lowest of five
Reference Treasury Dealer Quotations, or (2) if the fewer than five
Reference Treasury Dealer Quotations are obtained, the average of all
Reference Treasury Dealer Quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by us.
"Reference Treasury Dealer" means a primary independent United States
government securities dealer.
"Reference Treasury Dealer Quotations" means with respect to each
Reference Treasury Dealer and any redemption date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed, in each case, as a percentage of
its principal amount) quoted in writing to the Quotation Agent by such
Reference Treasury Dealer at 3:30 p.m., New York City time, on the
third business day preceding the redemption date.
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"Treasury Rate" means the rate per annum equal to the semi-annual
equivalent or interpolated (on a day-count basis) yield to maturity of
the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for that redemption date.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days
but not more than 60 days before the redemption date to each Holder whose Notes
are to be redeemed at its registered address. Notes in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000, unless all
of the Notes held by a Holder are to be redeemed. If less than all of the Notes
are to be redeemed, the Trustee will select which Notes are to be redeemed on a
pro rata basis by lot or by such other method as the Trustee deems fair and
appropriate, the Notes to be redeemed in whole or in part. Unless the Company
defaults in payment of the redemption price, on and after the redemption date,
interest ceases to accrue on Notes or portions thereof called for redemption.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in all appropriate denominations. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not transfer or exchange any Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not transfer or exchange any Note for a period of 15 days before a
selection of Notes to be redeemed.
9. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its
owner for all purposes.
10. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of a majority in principal amount of the then outstanding Notes and
other series of Securities affected (treating the Notes and such other series as
a single class), and any existing Default or Event of Default or compliance with
any provision of the Indenture or the Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes and
other series of Securities affected (treating the Notes and such other series as
a single class). Subject to certain conditions, the Company and the Trustee may
amend the Indenture or the Notes without the consent of any Holder of a Note to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger, sale of assets or consolidation, to add additional
conditions, restrictions or conditions to the covenants of the Company for the
protection of Holders of the Notes, to provide of the issuance of Notes in
coupon form and for the exchangeability of such Notes with the Notes issued
under the Indenture in fully registered form, to cure any ambiguity, defect or
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inconsistency in the Indenture or any supplemental indenture or to make other
provisions in regard to matters or questions arising under the Indenture, to
provide for a successor Trustee with respect to the Notes, to make any change
that would not adversely affect the rights of any Holder, to provide for the
issuance of the Notes, to establish the terms and conditions of the Notes and
the form of the Notes, and to add to the rights of the Holders of the Notes.
11. DEFAULTS AND REMEDIES. Each of the following constitutes an Event of
Default: (i) default by the Company in the payment of interest on the Notes when
the same becomes due and payable and default continues for a period of 5 days;
(ii) default by the Company in the payment of the principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption or otherwise; (iii) failure by the Company to comply with Section
5.01 of the Indenture; (iv) failure by the Company for 30 days after notice to
comply with any of its other covenants, representations, warranties or
agreements in the Indenture or the Notes and (v) certain events of bankruptcy or
insolvency with respect to the Company. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes and other series of Securities affected (treating the
Notes and such other series as a single class) may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes and other series of Securities affected (treating the Notes and such other
series as a single class) may direct the Trustee in its exercise of any trust or
power. The Trustee is required to mail to Holders of the Notes notice of a
Default or Event of Default of which the Trustee has actual knowledge within 90
days, but may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount of
the Notes and other series of Securities affected (treating the Notes and such
other series as a single class) then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture, except a continuing Default or
Event of Default in the payment of principal, interest or premium, if any, on
the Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
12. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
13. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer,
employee, incorporator or stockholder of the Company shall have any liability
for any obligations of the Company under the Notes or the Indenture or for any
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claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
14. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
15. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Harleysville Group Inc.
355 Maple Avenue
Harleysville, PA. 19438-2297
Attention: Bruce J. Magee, Senior Vice President
and Chief Financial Officer
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date: ________________
Your Signature:__________________
(Sign exactly as your name appears
on the face of this Note)
SIGNATURE GUARANTEE.
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
Principal
Amount of
Amount of Amount of this Global Note Signature of
decrease in increase in following such authorized
Principal Principal decrease officer of
Date of Amount of this Amount of this --------------- Trustee or
Exchange Global Note Global Note (or increase) Note Custodian
- -------- -------------- -------------- ---------------- ---------------
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