Attached files
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8-K - FORM 8-K - DONEGAL GROUP INC | w82460e8vk.htm |
EX-99.1 - EX-99.1 - DONEGAL GROUP INC | w82460exv99w1.htm |
EX-10.3 - EX-10.3 - DONEGAL GROUP INC | w82460exv10w3.htm |
EX-10.2 - EX-10.2 - DONEGAL GROUP INC | w82460exv10w2.htm |
Exhibit 10.1
DONEGAL
GROUP INC.
2011
EMPLOYEE STOCK PURCHASE PLAN
Section 1. Purpose.
Donegal Group Inc. (the Company) has established
this 2011 Employee Stock Purchase Plan (this Plan)
for the benefit of the eligible employees of the Company, its
parent, Donegal Mutual Insurance Company (Donegal
Mutual), participating subsidiaries of the Company and of
Donegal Mutual and any company from which the Company or Donegal
Mutual assumes 100% quota share reinsurance.
The purpose of this Plan is to provide each eligible employee
with an opportunity to acquire or increase his or her
proprietary interest in the Company through the purchase of
shares of the Companys Class A common stock (the
Class A common stock) at a discount from the
market prices prevailing at the time of purchase. The Company
intends that this Plan meet the requirements of Section 423
of the Internal Revenue Code of 1986, as amended (the
Code).
Section 2. Eligible
Employees.
(a) Employees eligible to participate in this Plan
(Eligible Employees) will consist of all
individuals: (i) who are full-time employees, as defined in
Section 2(b) of this Plan, of the Company, Donegal Mutual,
any subsidiary, as defined in Section 424 of the Code, of
the Company or Donegal Mutual or any company from which the
Company or Donegal Mutual assumes 100% quota share reinsurance
(a Participating Company), and (ii) who have
completed one month of employment on or prior to the date on
which an Enrollment Period, as defined in Section 4 of this
Plan, begins.
(b) A full-time employee is an employee of the
Company, Donegal Mutual or any Participating Company who works
or is scheduled to work at least 1,000 hours during any
calendar year. The Company will consider an employee who is not
scheduled to work at least 1,000 hours during a calendar
year, but who in fact works at least 1,000 hours during a
calendar year, a full-time employee once the
employee is credited with at least 1,000 hours during such
year.
(c) A person who is otherwise an Eligible Employee may not
purchase any shares of Class A common stock under this Plan
to the extent that: (i) immediately after such person
purchases Class A common stock, the person would own shares
of Class A common stock, including shares that would be
owned if all outstanding options to purchase Common Stock such
person holds were exercised, that possess 5% or more of the
total combined voting power or value of all classes of stock of
the Company or any subsidiary of the Company or (ii) such
right would cause such person to have purchase rights under this
Plan and all other stock purchase plans of the Company or any
subsidiary of the Company or Donegal Mutual that meet the
requirements of Section 423 of the Code, that accrue at a
rate that exceeds $25,000 of fair market value of the stock of
the Company, or any subsidiary of the Company, determined at the
time the right to purchase Class A common stock under this
Plan is exercisable, for each calendar year in which a purchase
right under this Plan is outstanding. For this purpose, a right
to purchase Class A common stock accrues when such right
first becomes exercisable during the calendar year, but the rate
of accrual for any calendar year may in no event exceed $25,000
of the fair market value of Class A common stock subject to
the right, and the number of shares of Class A common stock
under one right may not be carried over to any other right.
(d) Notwithstanding other provisions in this Plan to the
contrary, any officer of the Company, Donegal Mutual or any
Participating Company who is subject to Section 16 of the
Securities Exchange Act of 1934 (the Exchange Act)
with respect to his or her ownership of shares of Class A
common stock (a Section 16 officer) will be
subject to the restrictions and conditions set forth in
Sections 7(b) and 9 of this Plan.
Section 3. Duration
of Plan and Subscription Periods.
This Plan is effective as of July 1, 2011 through and
including June 30, 2022. During the term of this Plan, this
Plan will have 20 semi-annual Subscription Periods.
Each Subscription Period will extend from July 1 through
December 31 or from January 1 through June 30,
respectively, with the first Subscription Period beginning on
July 1, 2011 and the last Subscription Period ending on
June 30, 2022.
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Section 4. Enrollment
and Enrollment Period.
Enrollment for participation in this Plan will take place during
the Enrollment Period that precedes each
Subscription Period. Enrollment Periods are in effect from June
1 through June 30 and from December 1 through December 31 of
each year. In addition, the Company will deem each individual
who participates in the Companys 2001 Employee Stock
Purchase Plan and who is an Eligible Employee as of May 31,
2011 as automatically enrolled in this Plan effective as of the
first Subscription Period. Except as provided regarding
automatic enrollment in this Plan as of the first Subscription
Period, any person who is an Eligible Employee and who would
like to participate in this Plan should file a subscription
agreement during an Enrollment Period, and that eligible
employees participation in this Plan will then commence as
of the commencement of the next Subscription Period. Once
enrolled, an Eligible Employee will continue to participate in
this Plan for each succeeding Subscription Period until such
Eligible Employee terminates his or her participation, the
Eligible Employee ceases to be an Eligible Employee or elects to
withdraw from this Plan, this Plan expires or the Company
terminates this Plan. An Eligible Employee who desires to change
his or her rate of contribution may do so effective as of the
beginning of the next Subscription Period by submitting a
properly completed and executed enrollment form to the Company
during the Enrollment Period for the next Subscription Period.
An Eligible Employee who is not a Section 16 officer may
also change his or her rate of contribution during a
Subscription Period only pursuant to Section 7(b) of this
Plan.
Section 5. Total
Number of Shares Available.
The total number of shares available under this Plan is
300,000 shares of Class A common stock. Such
Class A common stock may be authorized and unissued shares
or previously issued shares that the Company reacquired. In the
event the total number of shares available for purchase under
this Plan have been purchased prior to the expiration of this
Plan, the Company may terminate this Plan in accordance with
Section 13 of this Plan.
Section 6. Subscription
Price.
The Subscription Price for each share of
Class A common stock subscribed for purchase under this
Plan during each Subscription Period will be the lesser of
(i) 85% of the fair market value of such share as
determined as of the last trading day before the first day of
the Enrollment Period with respect to such Subscription Period
or (ii) 85% of the fair market value of such share as
determined on the last trading day of such Subscription Period.
The fair market value of a share will be the closing price the
NASDAQ Stock Market reports for the applicable date.
Section 7. Amount
of Contribution and Method of Payment.
(a) An Eligible Employee must pay the Subscription Price
through a payroll deduction. The maximum payroll deduction may
not be more than 10% of an Eligible Employees Base Pay, as
defined in Section 7(c) of this Plan. An Eligible Employee
must authorize a minimum payroll deduction, based on such
employees Base Pay at the time of such authorization, that
will enable such employee to accumulate by the end of the
Subscription Period an amount sufficient to purchase at least
ten shares of Class A common stock. An Eligible Employee
may not make separate cash deposits toward the payment of the
Subscription Price.
(b) An Eligible Employee who is not a Section 16
officer may at any time during a Subscription Period reduce the
amount the Eligible Employee previously authorized the Company
to deduct from his or her Base Pay, provided the reduction
conforms with the minimum payroll deduction set forth in
Section 7(a) of this Plan. To do so, an Eligible Employee
should forward to the Company a properly completed and executed
written notice setting forth the requested reduction in his or
her payroll deduction. The change in payroll deduction will
become effective on a prospective basis as soon as practicable
after the Company receives the change notice. An Eligible
Employee may change his or her payroll deduction under this
Section 7(b), by forwarding to the Company a properly
completed and executed written notice setting forth such
reduction in his or her payroll deduction only once during any
Subscription Period. Any such reduction will remain in effect
for subsequent Subscription Periods, subject to compliance with
Section 7(a) of this Plan, until such Eligible Employee
terminates his or her participation in this Plan, the Eligible
Employee ceases to be an Eligible Employee, this Plan expires or
the Company terminates this Plan. A Section 16 officer may
not change his or her rate of contribution during a Subscription
Period.
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(c) Base Pay means the straight-time earnings
or regular salary paid to an Eligible Employee. Base Pay will
not include overtime, bonuses or other items that the committee
administering this Plan pursuant to Section 14 of this Plan
does not consider to be regular compensation. Payroll deductions
will commence with the first paycheck issued during the
Subscription Period and, except as set forth in Sections 9
and 10, will continue with each paycheck throughout the entire
Subscription Period, except for pay periods for which the
Eligible Employee receives no compensation (i.e.,
uncompensated personal leave, leave of absence, etc.).
Section 8. Purchase
of Shares.
The Company will maintain a Plan Account on its
books for recordkeeping purposes only in the name of each
Eligible Employee who authorized a payroll deduction (a
participant). At the close of each pay period, the
Company will credit the amount deducted from the
participants Base Pay to the participants Plan
Account. The Company will pay no interest on any Plan Account
balance in any circumstance. As of the last day of each
Subscription Period, the Company will divide the amount then in
the participants Plan Account by the Subscription Price
for such Subscription Period as determined pursuant to
Section 6 , and credit the participants Plan Account
with the number of whole shares that results. The Company will
not credit fractional shares under this Plan. The Company will
issue and deliver share certificates to each participant within
a reasonable time thereafter. The Company will carry forward any
amount remaining in a participants Plan Account to the
next Subscription Period. However, any amount the Company
carries forward pursuant to this Section 8 will not reduce
the amount a participant may contribute pursuant to
Section 7 of this Plan during the next Subscription Period.
If a participant does not accumulate sufficient funds in his or
her Plan Account to purchase at least ten shares of Class A
common stock during a Subscription Period, the Company will deem
such participant to have withdrawn from this Plan pursuant to
Section 9 of this Plan.
If the number of shares subscribed for purchase during any
Subscription Period exceeds the number of shares available for
purchase under this Plan, the Company will allocate the
remaining shares available for purchase among all participants
in proportion to their Plan Account balances, exclusive of any
amounts carried forward pursuant to the preceding paragraph. If
the number of shares that would be credited to any
participants Plan Account in either or both of the
Subscription Periods occurring during any calendar year exceeds
the limit specified in Section 2(c) of this Plan, the
Company will credit the participants Plan Account with the
maximum number of shares permissible, and refund the remaining
amounts to the participant in cash without interest thereon.
Section 9. Withdrawal
from This Plan.
A participant, other than a Section 16 officer, may
withdraw from this Plan at any time by giving a properly
completed and executed written notice of withdrawal to the
Company. As soon as practicable following the Companys
receipt of a notice of withdrawal, the Company will refund the
amount credited to the participants Plan Account in cash
without interest thereon. The Company will make no further
payroll deductions with respect to such participant except in
accordance with an authorization for a new payroll deduction
filed during a subsequent Enrollment Period in accordance with
Section 4 of this Plan. A participants withdrawal
will not affect the participants eligibility to
participate during any succeeding Subscription Period. A
withdrawal by a Section 16 officer, other than a withdrawal
under Section 10 of this Plan, will not become effective
until the Subscription Period that commences after the date the
Company receives written notice of such withdrawal.
Section 10. Separation
from Employment.
The Company will treat separation from employment for any
reason, including death, disability or retirement, as defined in
this Section 10, as an automatic withdrawal pursuant to
Section 9 of this Plan. However, at the election of a
participant who retires, or in the event of a participants
death at the election of the participants beneficiary, any
cash balance in such participants Plan Account may be used
to purchase the appropriate number of whole shares of
Class A common stock at a Subscription Price determined in
accordance with Section 6 of this Plan using the date of
the participants retirement or death as though it was the
last day of the Subscription Period. The Company will refund in
cash any cash balance in the Plan Account after such purchase to
the participant, or in the event of the participants death
to the participants beneficiary without interest thereon.
As used in this Section 10, retirement means a
termination of
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employment by reason of a participants retirement at or
after the participants earliest permissible retirement
date pursuant to and in accordance with his or her
employers regular retirement plan or practice.
Section 11. Assignment
and Transfer Prohibited.
No participant may assign, pledge, hypothecate or otherwise
dispose of his or her subscription or rights to subscribe under
this Plan to any other person, and any attempted assignment,
pledge, hypothecation or disposition will be void. However, a
participant may acquire shares of Class A common stock
subscribed to under this Plan in the names of the participant
and another person jointly with the right of survivorship upon
appropriate written notice to the Company. No subscription or
right to subscribe granted to a participant under this Plan will
be transferable by the participant otherwise than by will or by
the laws of descent and distribution, and such subscription
rights will be exercisable only by the participant during the
participants lifetime.
Section 12. Adjustment
of and Changes in Class A Common Stock.
In the event that the outstanding shares of Class A common
stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number or kind of
shares or other securities of the Company, or of another
corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock
split-up,
stock dividend, either in shares of Class A common stock or
of another class of the Companys stock, spin-off or
combination of shares, the committee appointed pursuant to
Section 14 of this Plan will make appropriate adjustments
in the aggregate number and kind of shares that are reserved for
sale under this Plan.
Section 13. Amendment
or Termination of This Plan.
The Board of Directors of the Company (the Board)
will have the right to amend, modify or terminate this Plan at
any time without notice, provided that the amendment,
modification or termination of this Plan does not adversely
affect any participants existing rights and provided
further that, without the approval of the stockholders of the
Company in accordance with applicable law and regulations, no
such amendment will increase the benefits accruing to
participants under this Plan, increase the total number of
shares subject to this Plan, change the formula by which the
price at which the shares will be sold is determined, or change
the class of employees eligible to participate in this Plan.
Section 14. Administration.
A committee of three employees of the Company the Board appoints
from time to time will administer this Plan. The committee may
from time to time adopt rules and regulations for carrying out
this Plan. Any interpretation or construction of any provision
of this Plan by the committee will be final and conclusive on
all persons absent contrary action by the Board. Any
interpretation or construction of any provision of this Plan by
the Board will be final and conclusive on all persons.
Section 15. Designation
of Beneficiary.
A participant may file a written designation of a beneficiary
who is to receive any cash credited to the participant under
this Plan in the event of such participants death prior to
the delivery to the participant of such cash. A participant may
change such designation of a beneficiary at any time upon
written notice to the Company. Upon the death of a participant
and upon the committees receipt of proof of the
participants death and of the identity and existence of a
beneficiary validly designated by the participant under this
Plan, the Company will deliver such cash to such beneficiary. In
the event of the death of a participant and in the absence of a
beneficiary validly designated under this Plan who is living at
the time of such participants death, the Company will
deliver such cash to the executor or administrator of the estate
of the participant, or if, to the knowledge of the Company, the
participant has not appointed such executor or administrator,
the Company, in its sole discretion, may deliver such cash to
the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent, or relative is known to
the Company, then to such other person as the Company may
designate. No designated beneficiary will, prior to the death of
the participant by whom the beneficiary has been designated,
acquire any interest in the shares or cash credited to the
participant under this Plan.
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Section 16. Employees
Rights.
Nothing contained in this Plan will prevent the Company, Donegal
Mutual or any Participating Company from terminating any
employees employment. No employee will have any rights as
a stockholder of the Company by reason of participation in this
Plan unless and until the Company has issued and delivered
certificates to the participant representing shares of
Class A common stock for which the participant has
subscribed.
Section 17. Use
of Funds.
The Company may use all payroll deductions it receives or holds
under this Plan for any corporate purpose, and the Company will
not be obligated to segregate such payroll deductions. Any
account established for a participant will be for recordkeeping
purposes only.
Section 18. Government
Regulations.
The Companys obligation to sell and deliver Class A
common stock under this Plan is subject to any prior approval or
compliance that may be required to be obtained or made from or
with any governmental or regulatory authority in connection with
the authorization, issuance or sale of such Class A common
stock.
Section 19. Titles.
Titles are provided in this Plan for convenience only and are
not to serve as a basis for interpretation or construction of
this Plan.
Section 20. Applicable
Law.
This Plan will be construed, administered and governed in all
respects under the laws of the Commonwealth of Pennsylvania and
the United States of America.
Section 21. Compliance
with
Rule 16b-3.
To the extent that
Rule 16b-3
under the Exchange Act applies to purchases made under this
Plan, it is the Companys intent that this Plan comply in
all respects with the requirements of
Rule 16b-3,
that the Company interpret any ambiguities or inconsistencies in
the construction of this Plan to give effect to such intention
and that if this Plan will not so comply, whether on the date of
adoption or by reason of any later amendment to or
interpretation of
Rule 16b-3,
the provisions of this Plan will be deemed to be automatically
amended so as to bring them into full compliance with such rule.
Section 22. Approval
of Stockholders.
Prior to June 30, 2011, the Company will submit this Plan
to its stockholders for approval in accordance with applicable
law and regulations. Subscriptions for the purchase of shares
under this Plan will be subject to the condition that the
stockholders of the Company approve this Plan prior to such date
in the manner contemplated by Section 423(b)(2) of the
Code. If the Companys stockholders do not approve this
Plan prior to such date, this Plan will terminate, all
subscriptions under this Plan will be terminated and be of no
further force or effect and the Company shall promptly refund in
cash, without interest, of all sums previously deducted from
their compensation pursuant to this Plan.
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