Stock Purchase Plan (2015)Full Document 

Start of Preview



1. Purpose.

Donegal Group Inc. (the "Company") established this 2015 Agency Stock Purchase Plan (this "Plan") for the benefit of eligible independent insurance agencies of the Company and Donegal Mutual Insurance Company ("Donegal Mutual") and their respective subsidiaries, any insurance company that the Company or Donegal Mutual owns 50% or more of such company’s stock or any company from which the Company or Donegal Mutual assumes 100% quota share reinsurance (collectively, the "Companies"). This Plan provides an Eligible Agency, as defined in Section 2, an opportunity to acquire a long-term proprietary interest in the Company through the purchase of the Company’s Class A common stock (the "Class A common stock") at a discount from current market prices. In offering this Plan, the Company seeks to foster the common interests of the Company and Eligible Agencies in achieving long-term profitable growth for the Company. Accordingly, the Company has created this Plan to facilitate the purchase and long-term investment in shares of the Class A common stock by Eligible Agencies.

2. Eligible Agencies.

An Eligible Agency is an agency that the Company determines, in its discretion, brings value to the Companies and with which the Companies seek a long-term relationship. The Company will consider the following criteria to determine eligibility:

(i) the agency’s premium volume;

(ii) the potential growth of such premium volume;

(iii) the profitability of the agency’s business; and

(iv) whether the Company has placed the agency on rehabilitation or revoked the agency’s binding authority.

The Company, in its discretion, may base eligibility on agency segmentation class or any other factors that indicate value, directly or indirectly, to the Companies. The Company will conduct periodic reviews to determine the continued eligibility of each Eligible Agency. Although an Eligible Agency is legally permitted to sell shares of Class A common stock it purchases pursuant to this Plan in its discretion, a pattern of immediate resale of the Class A common stock acquired under this Plan by an Eligible

Agency will be a factor in the Company’s determination whether an agency should remain eligible for continued participation in this Plan because immediate resales would tend to indicate that an Eligible Agency is not seeking to share in the long-term profitable growth of the Companies. The Company will treat its decision, in its discretion, to discontinue the eligibility of an agency under this Plan, as an automatic withdrawal from this Plan. See Section 9.

3. Methods of Payment and Amount of Contribution.

An Eligible Agency will have three methods of payment, pursuant to subsections (a), (b) and (c) of this Section 3, through which it may purchase shares of Class A common stock under this Plan. Subject to the provisions of Section 11(b), an Eligible Agency may elect any of the payment methods individually or in combination. In each Subscription Period, as defined in Section 4, an Eligible Agency may contribute an aggregate maximum of $12,000 toward the purchase of Class A common stock under all

End of Preview