exhb4-1_2q08.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit  4.1

    


    


    HARLEYSVILLE
GROUP INC.

    


    AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN

     

    Approved by
the Board of Directors February 21, 2008

    Approved by
Stockholders April 23, 2008

     

     

    I.           PURPOSE

    


    The Harleysville Group Inc. Amended and
Restated Employee Stock Purchase Plan (this "Plan") is established by the
Harleysville Group Inc. (the "Company") for the benefit of the eligible
employees of the Company, its parent and their respective
subsidiaries.  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 intended to meet the requirements of Section
423 of the Internal Revenue Code of 1986, as amended (the "Code").  As
used herein, the terms "parent" and "subsidiary" shall have the same meaning as
in Section 425 of the Code.

    


    
      	
              II.  

            	
              DEFINITIONS

            


    

    


    
      	
              1.  

            	
              "Company"
      means Harleysville Group Inc., a Delaware corpora­tion, and any
      successor in a reorganization or similar
  transaction.

            


    

    


    
      	
              2.  

            	
              “Base
      Pay” means the regular compensation paid to a Participant 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 Company.

            


    

    


    
      	
              3.  

            	
              "Board"
      means the Board of Directors of the
Company.

            


    

    


    
      	
              4.  

            	
              "Code"
      means the Internal Revenue Code of 1986, as
  amended.

            


    

    


    
      	
              5.  

            	
              "Committee"
      means the Committee of at least three officers appointed by the
      Board.

            


    

    


    
      	
              6.  

            	
              “Common
      Stock” means the common stock of the Company, par value of $1.00 per
      share, and may be either stock previously authorized but unissued, or
      stock reacquired by the Company.

            


    

    


    
      	
              7.  

            	
              "Disability"
      means the inability of a Participant to perform the services normally
      rendered due to any physical or mental impairment that can be expected to
      be of either permanent or indefinite duration, as deter­mined by the
      Company on the basis of appropriate medical evidence, and that results in
      the Participant's cessation of active employment with the
      Company.

            


    

    


    
      	
              8.  

            	
              “Enrollment
      Period” means the January 1-14 or July 1-14 immediately preceding a
      subscription period.

            


    

    


    
      	
              9.  

            	
              “Fair
      Market Value" means the closing sale price of a share of Common Stock on a
      given date (as described in this Plan) on the principal securities
      exchange on which the Company’s Common Stock is listed or
      traded.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    
      	
              10.  

            	
              “Participant"
      means an eligible employee of the Company, its parent or any of their
      respective subsidiaries who files an enrollment
  card.

            


    

    


    
      	
              11.  

            	
              "Plan"
      means this Amended and Restated Employee Stock Purchase
    Plan.

            


    

    


    
      	
              12.  

            	
              “Retirement”
      means cessation of a Participant’s employment in accordance with the
      then-current retirement eligibility standards of the Company, its parent
      or the relevant subsidiary, which may include early retirement or normal
      retirement.

            


    

    


    
      	
              13.  

            	
              “Subscription
      Period” means the period from January 15 through July 14 or from July 15
      through January 14.

            


    

    


    
      	
              14.  

            	
              “Subscription
      Price” has the meaning set forth in Article
VI.

            


    

    


    
      	
              15.  

            	
              “Termination
      of Employment" means a cessation of the Participant's employment with the
      Company, its parent or any affiliates for any reason other than
      Retirement, death or disability.

            


    

    


    
      	
              III.

            	
              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
      prescribe, amend and rescind rules and regulations relating to the Plan;
      and

            


    

    


    
      	
               
      

            	
              (iii)

            	
              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, or by rules and regulations of a national
      securities exchange or the Nasdaq Stock
Market.

            


    

    


    
      	
               
      

            	
              All
      determinations of the Commit­tee in the administration of the Plan, as
      described herein, shall be final and conclusive and binding upon all
      persons including, without limitation, the Company, its stockholders,
      Participants, and any persons having any interest under the
      Plan.

            


    

    


    
      	
               
      

            	
              B.

            	
              MAXIMUM NUMBER OF
      SHARES AVAILABLE:  Subject to adjustment as specified in
      Section III.D. below, the aggregate number of shares of common stock that
      may be issued under the Plan is 3,150,000 shares, representing 1,000,000
      shares previously approved in 1995, 650,000 approved in 2003, and
      1,500,000 shares approved in 2008.  Such 1,500,000 shares shall
      be newly registered subsequent to the adoption and approval of this
      Plan.  Such shares that are issued may be 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.

            


    

    


    
      	
               
      

            	
              C.

            	
              ELIGIBILTY:

            


    

    


    (1)              All
regular full-time employees and regular part-time employ­ees who work at
least twenty (20) hours or more a week for the Company, its parent, or any of
their respective subsidiaries which have been designated by the Board as
participat­ing in the Plan (including subsidiaries which are so designated
after the stockholders have approved the Plan) are eligible to partici­pate
in the Plan.

    



    
      
         


      

      
        2 


        
          

        

      

      
         


      

    


    (2)              A
person who is otherwise eligible to participate shall not be granted any right
to purchase stock under the Plan to the extent (i) it would, if exercised, cause
the person to own shares of stock (including shares which would be owned if all
outstanding options to purchase stock owned by such person were exercised) which
possess five percent (5%) or more of the total combined voting power or value of
all classes of stock of the Company, its parent or any of their respective
subsidiaries, or (ii) it causes such person to have purchase rights under the
Plan and all other stock purchase plans of the Company, its parent or any
subsidiary, which meet the requirements of Section 423 of the Code which accrue
at a rate which exceeds $25,000 of fair market value of stock of the Company,
its parent or any subsidiary (determined at the time the right to purchase stock
under this Plan is granted) for each calendar year in which such right is
outstanding.  For this purpose a right to purchase stock accrues when
it first becomes exercisable during the calendar year (but the rate of accrual
for any calendar year can in no event exceed $25,000 of the fair market value of
the stock subject to the right) and the number of shares of stock under one
right may not be carried over to any other right.

    


    (3)              If
an employee obtains a hardship withdrawal under the Company’s Retirement Savings
Plus Plan or any similar plan main­tained by the Company, its parent, or a
subsidiary, then said employee may not, for the six (6) 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 six (6) month
period.

    


    
      	
               
      

            	
              D.

            	
              ADJUSTMENTS:  In
      the event of stock dividends, stock splits, re capitalizations, mergers,
      consolidations, combinations, exchanges of shares, spin-offs,
      liquidations, reclassifications or other similar changes in the
      capitalization of the Company, such automatic substitution or adjustment
      shall be made in the maximum aggregate number of shares which may be
      issued under this Plan, the maximum number of shares that can be purchased
      in any calendar year and the purchase price for such shares, as the Board
      determines shall cause an equitable adjustment under this Plan, in
      proportion to the effect of such change to the Common Stock
      generally.  In the event of a change in the Common Stock as
      presently constituted, which change is limited to a change of all of the
      authorized shares with par value into the same number of shares with a
      different par value or without par value, the shares resulting from any
      such change shall be deemed to be the Common Stock within the meaning of
      this Plan.

            


    

    


    IV.           ENROLLMENT AND ENROLLMENT
PERIODS

    


    Enrollment will take place in the
Enrollment Periods.  Any employee who is eligible to participate and
desires to subscribe for the purchase of shares of Common Stock for the
following Subscription Period must file a subscrip­tion agreement with the
Company’s Payroll unit during the applicable Enrollment Period.  Once
enrolled, a Participant 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.


    
      
         


      

      
        3 


        
          

        

      

      
         


      

    


    


    
      	
              V.  

            	
              DURATION OF OFFER AND
      SUBSCRIPTION PERIODS

            


    

    


    The Effective Date of this Plan shall
be the first day of the Subscription Period following approval of this Plan by
the Company’s stockholders; provided, that the applicable Enrollment Period may
occur prior to such date in accordance with this Plan.  No
Subscription Period shall commence on or after the tenth anniversary of the
Effective Date, but a Subscription Period started prior to such date may extend
until completion of such final Subscription Period.  Thereafter, this
Plan shall terminate.

    


    
      	
              VI.  

            	
              SUBSCRIPTION
      PRICE

            


    

    


    The "Subscription Price" for each share
of Common Stock shall be the lesser of eighty-five percent (85%) of the Fair
Market Value of such Common Stock on the last trading day before the first day
of the 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 a share of Common
Stock.

    


    
      	
              VII.  

            	
              AMOUNT OF CONTRIBUTION
      AND METHOD OF PAYMENT

            


    

    


    Except as otherwise provided herein,
the Subscription Price shall be paid by a Participant by means of the use of
funds credited to such Participant’s Plan account during the Subscription Period
through payroll deductions.  The minimum deduction shall be no less
than the lesser of one percent (1%) of the Participant’s Base Pay or $3.00
bi-weekly and the maximum deduction shall be no more than fifteen percent (15%)
of such Base Pay.  Payroll deductions shall commence with the first
pay issued during the Subscription Period and shall continue with each pay
throughout the entire Subscription Period except for pay periods for which the
Participant receives no compensa­tion (i.e., uncompensated personal leave,
leave of absence, etc.).

    


    
      	
              VIII.  

            	
              PURCHASE OF
      SHARES

            


    

    


    The Company will maintain on its books
a "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 of Common Stock that results, subject to the limitations set
forth in Section III.C(3).  Shares will be issued in a book entry form
with the Company's stock transfer agent.   A Participant will
receive a statement of 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.

    


    
      	
              IX.  

            	
              WITHDRAWAL FROM THE
      PLAN

            


    

    


    A
Participant may withdraw from the Plan at any time.  At the time of
withdrawal the amount credited to the Participant’s Plan Account will be
refunded in cash without interest.


    
      
         


      

      
        4 


        
          

        

      

      
         


      

    


    


    
      	
              X.  

            	
              SEPARATION FROM
      EMPLOYMENT

            


    

    


    Separation
from employment for any reason including death, disability, Retirement or
Termination of Employment shall be treated as an automatic withdrawal as set
forth in Section IX, except that if separation occurs within three months prior
to a purchase date, such Participant may continue to participate during that
Subscription Period although no further contributions may be made.  A
transfer among the Company, its parent or their respective designated
subsidiaries shall not be treated as a separation from employment.

    


    
      	
              XI.  

            	
              ASSIGNMENT

            


    

    


    No
Participant may assign his or her subscription or rights to subscribe to any
other person and any attempted assignment shall be void.

    


    
      	
              XII.  

            	
              AMENDMENT OR
      DISCONTINUANCE OF THE PLAN

            


    

    


    The Board
shall have the right to amend, modify or terminate the Plan at any time without
notice provided that no Participant's existing rights are adversely affected
thereby and provided further that without the approval of the holders of a
majority of the issued and outstanding shares of Common Stock no such amendment
shall increase the total number of shares subject to the Plan, change the
formula by which the price at which the shares shall be purchased is determined,
change the class of employees eligible to participate in the Plan, materially
increase the benefits accruing to Participants under the Plan, or make any other
action effective that requires stockholder approval as required by federal or
state laws or regulations or by rules and regulations of a national securities
exchange or Nasdaq without seeking and receiving such stockholder
approval.

    


    XIII.          TRANSFERABILITY

    


    Neither
payroll deductions credited to a Participant's Plan Account nor any rights with
regard to any rights to purchase shares of Common Stock under this Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than
by the laws of descent and distribution or as provided in Section XIII hereof)
by the Participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect.

    


    XIV.          NOTICE OF DISQUALIFYING
DISPOSITION

    


    If the
Participant makes a disposition, within the meaning of Section 424(c) of the
Code of any shares of Common Stock issued to Participant under this Plan, and
such disposition occurs within the two-year period commencing on the day after
the beginning of a Subscription Period or within the one-year period commencing
on the day after the purchase of such Shares, the Participant shall, within ten
(10) days of such disposition, notify the Company thereof in
writing.

    


    XV.           MISCELLANEOUS
PROVISIONS

    


    
      	
               
      

            	
              A.

            	
              GOVERNMENT AND OTHER
      REGULATIONS:  The obligation of the Company to issue
      stock 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.

            


    

    


    



    
      
         


      

      
        5 


        
          

        

      

      
         


      

    


    


    
      	
               
      

            	
              B.

            	
              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 except as provided in
      such other plan.  Any purchases made pursuant to this Plan shall
      not be used in determining the bene­fits provided under any other plan
      of the Company, Parent or its subsidiaries unless specifically provided in
      such other plan.

            


    

    


    
      	
               
      

            	
              C.

            	
              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.

            


    

    


    
      	
               
      

            	
              D.

            	
              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.

            


    

    


    
      	
               
      

            	
              E.

            	
              LIMITATION OF
      RIGHTS:

            


    

    


    
      	
               
      

            	
              1.

            	
              No Right to Continue
      as an Employee:  Neither the Plan, nor the granting of a
      right to participate 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, its parent or any of their respective subsidiaries for any
      period of time, or at any particular rate of
  compensation.

            


    

    


    
      	
               
      

            	
              2.

            	
              No Stockholder's
      Rights:  A Participant shall have no rights as a
      stockholder with respect to the shares issued hereunder until the end of a
      Subscription Period in which a Participant is enrolled, and no adjustment
      will be made for dividends or other rights for which the record date is
      prior to the date such shares are
issued.

            


    

    


    
      	
               
      

            	
              F.

            	
              STOCKHOLDER
      APPROVAL:  The adoption of this Plan shall be subject to
      stockholder approval.

            


    

     


                     
TO RECORD THE ADOPTION OF THIS PLAN, THE COMPANY HAS CAUSED ITS AUTHORIZED
OFFICERS TO AFFIX THE CORPORATE NAME AND SEAL HERETO THIS  23rd DAY OF
APRIL, 2008.

    


        
     HARLEYSVILLE GROUP INC.

    


    


          
      BY:     /s/ 
Michael
L. Browne            
         

       
     Michael L. Browne, Chairman & CEO

    ATTEST:

           
 /s/  Robert
A. Kauffman         

       Robert
A. Kauffman, Secretary

    



    
      
         


      

      
         
6