<PAGE> 1
EXHIBIT 4.1
PHILADELPHIA INSURANCE COMPANIES
STOCK PURCHASE PLAN FOR PREFERRED AGENTS
(As Amended and Restated, Effective as of August 1, 2000)
1. Purpose.
a. The purpose of the Philadelphia Insurance Companies Stock
Purchase Plan for Preferred Agents (the "Plan") is to assist
the Philadelphia Consolidated Holding Corp., a Pennsylvania
corporation (the "Company"), and its Subsidiaries in retaining
its Preferred Agents in a continuing relationship with the
Company by offering them a greater stake in the Company's
success and a closer identity with it. This is to be
accomplished by providing Preferred Agents a continuing
opportunity to purchase Shares (as hereinafter defined) from
the Company through periodic offerings.
b. The Plan is not intended to comply with the provisions of
Section 423 of the Code (as hereinafter defined).
2. Definitions. For purposes of the Plan:
a. "Agent" means the person or persons appointed by the Board in
accordance with Section 3.d.
b. "Board" means the Board of Directors of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Committee" means the committee described in Section 3.
e. "Company" means Philadelphia Consolidated Holding Corp., a
Pennsylvania corporation.
f. "Disability" means a condition such that a Participant ceases
to be a Preferred Agent for the Company on account of his or
her "disability" as determined by the Committee.
g. "Fair Market Value" on any date means the last reported sale
price for Shares as reported on the NASDAQ National Market, or
the closing price reported on such other stock exchange as the
Shares may be listed, on such date as reported in the Wall
Street Journal, or if there is no closing price reported, then
Fair Market
<PAGE> 2
Value of a Share shall mean the average between the closing
bid and asked prices for Shares on such date as reported. If
there are no sales reports or bid or asked quotations, as the
case may be, for a given date, the closest preceding date on
which there were sales reports or bid or asked quotations
shall be used. If the Committee determines, in its discretion,
that such valuation does not accurately reflect the value of
the Shares or if Shares are not publicly traded, the Fair
Market Value of a Share shall be determined by the Committee.
h. "Investment Account" means the account established for a
Participant pursuant to Section 8.b to hold Shares acquired
for a Participant pursuant to the Plan.
i. "NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotations System.
j. "Offering Period" means each any period or periods as may be
designated at the discretion of the Committee as an Offering
Period.
k. "Participant" means a Preferred Agent who is eligible to
participate in the Plan and who makes an election to
participate in the Plan in accordance with Section 5 as well
as any former Participant to the extent such former
Participant has any Shares held for his or her benefit in an
Investment Account.
l. "Plan" means the Philadelphia Insurance Companies Stock
Purchase Plan for Preferred Agents as set forth in this
document, and as may be amended from time to time.
m. "Plan Year" means the 12 month period commencing each
September 1 and ending on the subsequent August 31. The first
Plan Year shall be the period commencing May 15, 1999 and
ending August 31, 1999.
n. "Preferred Agent" shall be each individual or entity that is a
party to a written agency agreement with the Company and is
designated as a "Preferred Agent" by the Company's President.
o. "Purchase Date" means the last business day of each Offering
Period.
p. "Purchase Price" means the lesser of 85% of the Fair Market
Value of a Share on
i. the first business day of the Offering Period or
ii. the Purchase Date.
q. "Restricted Period" means the two year period described in
Section 6.d.
2
<PAGE> 3
r. "Share" or "Shares" means a share or shares of the Company's
common stock, no par value, of the Company.
s. "Subscription Agreement" means the agreement, in a form
established by the Committee, between the Participant and the
Company pursuant to which the Participant agrees to purchase
Shares pursuant to the Plan.
3. Administration of the Plan. The Plan shall be administered by the Board
or by such committee as may be designated by the Board, as determined
from time to time at the discretion of the Board. The committee
designated to administer the Plan by the Board, or the Board itself in
its capacity as administrator of the Plan are referred to herein as the
"Committee." Subject to the express provisions of the Plan, the
Committee shall have full discretionary authority to interpret the
Plan, to issue rules for administering the Plan, to change, alter,
amend or rescind such rules, and to make all other determinations
necessary or appropriate for the administration of the Plan. All
determinations, interpretations and constructions made by the Committee
with respect to the Plan shall be final and conclusive.
a. Meetings. The Committee shall hold meetings at such times and
places as it may determine, shall keep minutes of its
meetings, and shall adopt, amend and revoke such rules or
procedures as it may deem proper; provided, however, that it
may take action only upon the agreement of a majority of the
whole Committee. Any action which the Committee shall take
through a written instrument signed by a majority of its
members shall be as effective as though it had been taken at a
meeting duly called and held. The Committee shall report all
actions taken by it to the Board of Directors.
b. Exculpation. No member of the Committee shall be personally
liable for monetary damages as such for any action taken or
any failure to take any action in connection with the
administration of the Plan unless
i. the member of the Committee has breached or failed to
perform the duties of his office under Subchapter B
of Chapter 17 of the Pennsylvania Business
Corporation Law of 1988, as amended, and
ii. the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness;
provided, however, that the provisions of this
Section 3.b shall not apply to the responsibility or
liability of a member of the Committee pursuant to
any criminal statute or to the liability of a member
of the Committee for the payment of taxes pursuant to
local, state or federal law.
c. Indemnification. Service on the Committee shall constitute,
for purposes of rights to indemnification from the Company,
service as a member of the Board of
3
<PAGE> 4
Directors of the Company. Each member of the Committee shall
be entitled, without further act on his part, to indemnity
from the Company and limitation of liability to the fullest
extent provided by applicable law and by the Company's
Articles of Incorporation and/or bylaws in connection with or
arising out of any action, suit or proceeding with respect to
the administration of the Plan in which he or she may be
involved by reason of his or her being or having been a member
of the Committee, whether or not he or she continues to be
such member of the Committee at the time of the action, suit
or proceeding.
d. Agent. The Committee may engage an Agent to perform custodial
and record-keeping functions for the Plan, such as holding
record title to the Participants' Share certificates,
maintaining an individual Investment Account for each such
Participant and providing annual status reports to such
Participants.
e. Delegation. The Committee shall have full discretionary
authority to delegate ministerial functions to management of
the Company.
4. Eligibility. A Preferred Agent of the Company shall be eligible to
participate in the Plan with respect to an Offering Period provided
such Preferred Agent is designated by the Committee as an eligible
participant with respect to such Offering Period. Such designation as
an eligible participant shall be made at the sole discretion of the
Committee. Notwithstanding the foregoing, no person shall be eligible
to participate in the Plan if such person is an Excluded Individual.
For purposes of this Section 4, an "Excluded Individual" means, as of
the date of determination, any individual who is then serving, or who
has been elected, nominated or appointed by the Board or by the
Company's shareholders to serve, in any of the following capacities:
(i) as a member of the Board, (ii) as Chairman of the Board, Vice
Chairman of the Board, President, a Vice President, Secretary or
Treasurer of the Company, or (iii) in any other position (regardless of
title) obligating such individual to file reports pursuant to Section
16(a) of the Securities Exchange Act of 1934.
5. Election to Participate.
a. Notice of Offering Period. Notice shall be provided to each
Preferred Agent who is eligible to participate in the Plan
setting forth the dates of the Offering Period and any other
terms or conditions which must be met in order for an eligible
Preferred Agent to become a Participant in the Plan. Such
notice shall be delivered to each eligible Preferred Agent as
soon as practicable on or after the first day of the Offering
Period. Notwithstanding the foregoing, the Company shall have
no obligation or liability to any otherwise eligible Preferred
Agent who does not receive a notice for any Offering Period
including, but not limited to, any obligation to allow that
Preferred Agent to participate in the offering for the
Offering Period.
4
<PAGE> 5
b. Initial Subscription Agreements. Each eligible Preferred Agent
may become a Participant by filing with the Committee a
Subscription Agreement electing to purchase Shares during an
Offering Period.
c. Subsequent Subscription Agreements. In order to participate in
the Plan for any subsequent Offering Period, a Preferred Agent
must file with the Committee a new Subscription Agreement
electing to purchase Shares during such Offering Period.
6. Conditions and Terms of Purchases of Shares.
a. The number of Shares that are to be purchased under a
Subscription Agreement shall not exceed the limitations set
forth in Section 7.
b. Any Preferred Agent purchasing Shares under the Plan shall
complete a Subscription Agreement, on a form provided by the
Committee, with respect to an Offering Period. To become a
Participant with respect to a particular Offering, an eligible
Preferred Agent must submit his or her Subscription Agreement
during the enrollment period established by the Committee with
respect to such Offering Period. Under the Subscription
Agreement, the Participant may elect either to have a
specified dollar amount or a portion of amounts otherwise
payable to the Participant as commissions or other
compensation withheld by the Company for the purpose of
purchasing Shares under the terms of the Plan, or to make a
payment in cash on or before the last day of the Offering
Period equal to a amount agreed to be paid by the Participant
for the purchase of Shares under the terms of the Plan.
i. If a Preferred Agent elects to have amounts withheld
from amounts otherwise payable to him or her as
commissions or other compensation, such withheld
amounts shall be held by the Company until used for
the purchase of Shares under the terms of the Plan on
the last day of the Offering Period.
ii. No interest or other earnings shall be paid with
respect to amounts withheld for the purchase of
Shares under the Plan.
iii. The Company shall maintain a bookkeeping account for
the purpose of accounting for amounts withheld under
the Plan; provided, however, that the Company shall
be under no obligation to segregate or to hold any
withheld amounts in a separate account for any
Participant.
c. The purchase of Shares by a Participant shall be made at the
Purchase Price set with respect to the particular Purchase
Date on which the Shares are purchased.
5
<PAGE> 6
d. Any Shares purchased pursuant to the Plan shall be restricted
for a period of two years, measured from the first day of the
relevant Offering Period (the "Restricted Period"). Any
attempt to sell, transfer, make subject to any lien, or
otherwise dispose of such Shares prior to the end of the
Restricted Period shall be null and void, and the Preferred
Agent shall forfeit all rights to such Shares on receipt of
payment from the Company of the lesser of Fair Market Value or
the Purchase Price of such Shares. All certificates for Shares
shall be legended so as to indicate the restrictions on sales
of such Shares under the Plan in the manner and to the extent
required by law.
e. The Committee shall have complete discretion to establish
rules and procedures in connection with the election by
Participants to participate in the Plan, which rules and
procedures may govern all aspects of the participation
election, including, but not limited to the manner in which a
Subscription Agreement is to be completed, and the limits, if
any, on purchases permitted with respect to a particular
Offering Period that may be made applicable in addition to
such limits as are imposed under the terms of the Plan.
7. Limit on Purchase of Shares. No Participant shall be permitted to
purchase Shares under the Plan during any three consecutive calendar
years having an aggregate value in excess of $100,000. For purposes of
the preceding sentence, the value of Shares purchased shall be equal to
their Fair Market Value as of the first day of the Offering Period in
which they are purchased.
8. Method of Purchase, Cash Accounts and Investment Accounts.
a. Method of Purchase of Shares. Except as otherwise provided in
the Plan, each Participant who has elected to participate in
the Plan under the provisions of Section 5 shall be deemed,
without any further action, to have purchased on the Purchase
Date applicable to such Subscription Agreement, the number of
Shares specified in the Subscription Agreement consistent with
the terms for such purchase set forth in the Plan. Each
Participant who has elected to participate in the Plan by
making a cash payment under the provisions of Section 5 shall
be required to make such payment on or before the last day of
the Offering Period. If no such payment is made, the
Participant shall be deemed to have revoked his or her
participation for the Offering Period, and shall have no
further rights to purchase Shares for such Offering Period.
b. Cash Accounts. Any cash contributed by a Participant for the
purpose of making purchases of Shares under the Plan, whether
by direct payment by the Participant or through withholding
from commissions otherwise payable to the Participant, shall
be accumulated in a non-interest bearing bookkeeping account
("Cash Account") for the Participant until used to purchase
Shares. The Company shall be under no obligation to hold any
funds in a separate account for a Participant,
6
<PAGE> 7
and no interest shall be payable with respect to any amounts
allocated to such a Cash Account.
c. Investment Accounts. All Shares purchased under the Plan
shall, until the Restricted Period applicable to such Shares
has passed, be held in a separate Investment Account
established for each Participant.
d. Dividends or Other Distributions on Shares Held in Investment
Accounts. All cash dividends paid with respect to Shares which
are held in an Investment Account of a Participant shall be
paid to the Participant. Any distribution that is in the
nature of a stock split shall be retained in the Investment
Account until such time as the Share or Shares with respect to
which such distribution was made are distributed from the
Investment Account to the Participant.
e. Adjustment of Shares on Application of Aggregate Limits. If
the total number of Shares that would be purchased pursuant to
properly filed Subscription Agreements for a particular
Offering Period exceeds the number of Shares then available
for purchase under the Plan, then the number of available
Shares shall be allocated among the Participants filing
Subscription Agreements for such Offering Period pro-rata on
the basis of the number of Shares set forth in each such
Subscription Agreement. The payment obligation for each such
Subscription Agreement shall be deemed modified to take into
account the purchase of a number of Shares that is less than
the number specified in the Subscription Agreement, and any
amounts withheld in excess of the amount needed to make the
pro-rata purchase shall be distributed to the Participant as
soon as practicable following the Purchase Date.
f. Revocation of Participation. A Participant shall have the
right to revoke his or her election to participate in the Plan
with respect to an Offering Period at any time on or before
the last day of the Offering Period, subject to such
reasonable notification requirements as may be imposed by the
Committee on such revocation rights, by filing with the
Committee a written notice indicating his or her intention to
revoke his or her election to participate. In addition, if a
Participant fails to pay the Purchase Price of Shares for
which he or she has subscribed in full on or before the
Purchase Date, he or she shall be deemed to have revoked his
or her participation for that Offering Period and will have no
further rights to purchase Shares for that Offering Period. If
any amounts have been accumulated in a cash account for a
Participant with respect to an Offering Period and such
Participant revokes or is deemed to have revoked his or her
election to participate in the Plan for such Offering Period,
the Company shall distribute to the Participant the amount
accumulated in his or her cash account for such Offering
Period as soon as practicable following the date of
revocation.
g. Repayment of Amounts in Cash Accounts. In the event there has
been accumulated in a Cash Account with respect to an Offering
Period an amount in
7
<PAGE> 8
excess of the amount required to purchase the number of shares
for which the Participant has subscribed with respect to such
Offering Period, the excess in the Cash Account over the
amount used to purchase the Shares on the last day of the
Offering Period shall be returned to the Participant, without
interest, as soon as practicable following the last day of the
Offering Period.
9. Shares Subject to Plan. The aggregate maximum number of Shares that may
be issued pursuant to the Plan is two hundred thousand (200,000),
subject to adjustment as provided in Section 17 of the Plan. The Shares
delivered pursuant to the Plan shall be Shares held in treasury or
Shares authorized but previously unissued.
10. Distribution of Certificates. Each Participant shall receive a
certificate or certificates for those Shares held in an Investment
Account for the benefit of such Participant as soon as practicable
following the end of the Restricted Period applicable to such Shares,
provided the payment obligation with respect to such Shares has been
fully satisfied.
11. Registration of Certificates. Each certificate withdrawn by a
Participant may be registered only in the name of the Participant, or,
if the Participant so indicated on the Participant's Subscription
Agreement, in the Participant's name jointly with a member of the
Participant's family, with right of survivorship. A Participant who is
a resident of a jurisdiction which does not recognize such a joint
tenancy may have certificates registered in the Participant's name as
tenant in common or as community property with a member of the
Participant's family without right of survivorship.
12. Voting. The Agent or, if there is no Agent, the Committee, shall vote
all Shares held in an Investment Account in accordance with the
Participant's instructions.
13. Death or Other Termination of Status as Preferred Agent.
a. In the event of a Participant's termination of his or her
agency agreement on account of death or Disability, the
Participant, or the Participant's beneficiary, if one has been
designated, or the Participant's estate, as the case may be,
shall be entitled to the Shares held in the Participant's
Investment Account. The Restricted Period shall cease to be
applicable to the Shares of a Participant whose termination is
described in this Section 13.a. The Participant, or the
Participant's beneficiary or estate, as the case may be, shall
be issued a certificate or certificates for such Shares as
soon as practicable after the payment obligation is satisfied.
b. In the event a Participant ceases to be a party to any written
agency agreement with the Company for any reason other than a
termination described in Section 13.a, the Participant shall
be entitled to the Shares which have been held beyond the
Restricted Period applicable to such Shares. With respect to
those Shares for which the Restricted Period has not passed,
the Company shall have the right, but not the obligation, to
repurchase any such Shares for the lesser of Fair Market Value
or the Purchase Price of such Shares. If the Company does not
so elect to
8
<PAGE> 9
repurchase such Shares, the Participant shall be entitled to
such Shares. The Participant shall be issued a certificate or
certificates for any Shares to which the Participant is
entitled as soon as practicable he or she ceases to be a party
to any written agency agreement with the Company. The Company
may exercise its right to repurchase by giving written notice
thereof to the Participant at such address for Participant as
the Company has on its books and records within ninety days
after the Company receives notice of a Participant's
termination which would give the Company the right to
repurchase shares pursuant to this Section 13.b. Closing of
the repurchase shall be held within thirty days after the
Company gives such written notice at such time and place as
the Company shall designate to the Participant. As part of the
Closing, the Participant shall execute such stock powers and
other documents as the Company determines are necessary or
appropriate to be signed by the Participant in connection with
the repurchase of the shares, and in addition the Participant
shall grant in the Participation Agreement executed by the
Participant in connection with the granting of the right to
purchase shares under the Plan an irrevocable power of
attorney designating the Company and each of its officers as
Participant's attorney-in-fact to execute and deliver on
behalf of the Participant, and in the Participant's name,
place and stead, such stock powers and other documents.
14. Rights Not Transferable. Except as permitted under Section 13, rights
under the Plan are not transferable by a Participant and are
exercisable during the Participant's lifetime only by the Participant.
15. No Right to Continued Preferred Agent Status. Neither the Plan nor any
right granted under the Plan shall confer upon any Participant any
right to continuance of his or her status as a Preferred Agent with the
Company, or interfere in any way with the right of the Company to
terminate the Preferred Agent status of such Participant.
16. Application of Funds. All funds received or held by the Company under
this Plan may be used for any corporate purpose.
17. Adjustments in Case of Changes Affecting Shares. In the event of a
subdivision or split of outstanding Shares, or the payment of a stock
dividend, the Share limit set forth in Section 9 shall be adjusted
proportionately, and such other adjustments shall be made as may be
deemed equitable by the Committee.
18. Amendment of the Plan. The Board of Directors of the Company may at any
time, or from time to time, amend the Plan in such manner as it may
deem advisable.
19. Termination of the Plan. The Plan and all rights of Preferred Agents
under any offering hereunder shall terminate at such time as the Board
of Directors, at its discretion, determines to terminate the Plan. Upon
termination of this Plan, any Shares held in Investment Accounts for
Participants shall be carried forward into the Participant's Investment
Account under a successor plan, if any, or, if there is no successor
plan,
9
<PAGE> 10
certificates for such Shares shall be forwarded to the Participant upon
satisfaction of all requirements for distribution of such Shares.
20. Governmental Regulations.
a. Anything contained in this Plan to the contrary
notwithstanding, the Company shall not be obligated to sell or
deliver any Shares certificates under this Plan unless and
until the Company is satisfied that such sale or delivery
complies with (i) all applicable requirements of the governing
body of the principal market in which such Shares are traded,
(ii) all applicable provisions of the Securities Act of 1933,
as amended (the "Act"), and the rules and regulations
thereunder and (iii) all other laws or regulations by which
the Company is bound or to which the Company is subject.
b. The Company may make such provisions as it may deem
appropriate for the withholding of any taxes or payment of any
taxes which it determines it may be required to withhold or
pay in connection with any Shares. The obligation of the
Company to deliver certificates under this Plan is conditioned
upon the satisfaction of the provisions set forth in the
preceding sentence.
21. Repurchase of Shares. The Company shall not be required to repurchase
from any Participant any Shares which such Participant acquires under
the Plan.
10
