Document:

exv10wrr

Exhibit (10)(RR)

DONEGAL GROUP INC.

2011 EQUITY INCENTIVE PLAN FOR EMPLOYEES

     1. Purpose. The purpose of this 2011 equity incentive plan for employees (this
“Plan”) is to encourage the employees of Donegal Group Inc. (the “Company”) and its subsidiaries to
acquire a proprietary interest in the growth and performance of the Company, and to continue to
align the interests of those employees with the interests of the Company’s stockholders to generate
an increased incentive for such person to contribute to the growth, development and financial
success of the Company and the member companies of the Donegal Insurance Group, including companies
from which the Company or Donegal Mutual assumes 100% quota share reinsurance (the “Group”). To
accomplish these purposes, this Plan provides a means whereby employees may receive stock options,
stock awards and other stock-based awards that are based on, or measured by, or payable in shares
of the Company’s Class A common stock.

     2. Administration.

     (a) Administrators. The Board of Directors of the Company (the “Board”) shall
administer this Plan. The Board shall appoint a committee, which initially shall be the
compensation committee to assist in the administration of this Plan. The committee, with the
advice of the Company’s chief executive officer, shall recommend to the Board the employees to whom
the Company should grant awards and the type, size and terms of each grant. The Board has the
authority to make all other determinations necessary or advisable for the administration of this
Plan. All decisions, determinations and interpretations of the Board shall be final and binding on
all grantees and all other holders of awards granted under this Plan.

     (b) The Committee. The committee shall be comprised of two or more members of the
Board, each of whom shall be a “non-employee director” within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the “Exchange Act”). In addition, each member of the committee
shall be an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the “Code”). Subject to the foregoing, from time to time, the Board may increase
or decrease the size of the committee, appoint additional members, remove members, with or without
cause, appoint new members, fill vacancies or remove all members of the committee and thereafter
directly administer this Plan. The committee shall have those duties and responsibilities assigned
to it under this Plan, and the Board may assign to the committee the authority to make certain
other determinations and interpretations under this Plan. All decisions, determinations and
interpretations of the committee in such cases shall be final and binding on all grantees and all
other holders of awards granted under this Plan.

1

 

     3. Shares Subject to this Plan.

     (a) Shares Authorized. The total aggregate number of shares of Class A common stock
that the Company may issue under this Plan is 3,500,000 shares, subject to adjustment as described
below. The Company may issue each of the shares authorized under this Plan pursuant to incentive
stock options awards within the meaning of Section 422 of the Code. The shares may be authorized
but unissued shares or reacquired shares for purposes of this Plan.

     (b) Share Counting. For administrative purposes, when the Board approves an award
payable in shares of Class A common stock, the Board shall reserve, and count against the share
limit, shares equal to the maximum number of shares that the Company may issue under the award. If
and to the extent options granted under this Plan terminate, expire or are canceled, forfeited,
exchanged or surrendered without having been exercised, and if and to the extent that any
restricted stock awards are forfeited or terminated, or otherwise are not paid in full, the Company
shall make the shares reserved for such awards available again for purposes of this Plan.

     (c) Individual Limits. All awards under this Plan shall be expressed in shares of
Class A common stock. The maximum number of shares of Class A common stock with respect to all
awards that the Company may issue to any individual under this Plan during any calendar year shall
be 250,000 shares, subject to adjustment as described below.

     (d) Adjustments. If any change in the number or kind of shares of Class A common
stock outstanding occurs by reason of:

	 	•	 	a stock dividend, spinoff, recapitalization, stock split or combination or exchange
of shares;
	 
	 	•	 	a merger, reorganization or consolidation;
	 
	 	•	 	a reclassification or change in par value; or
	 
	 	•	 	any other extraordinary or unusual event affecting the outstanding Class A common
stock as a class without the Company’s receipt of consideration, or if the value of
outstanding shares of Class A common stock is substantially reduced as a result of a
spinoff or the Company’s payment of any extraordinary dividend or distribution,

the maximum number of shares of Class A common stock available for issuance under this Plan, the
maximum number of shares of Class A common stock for which any individual may receive grants in any
year, the kind and number of shares covered by outstanding awards, the kind and number of shares to
be issued or issuable under this Plan and the price per share or applicable market value of such
grants shall be automatically equitably adjusted

2

 

to reflect any increase or decrease in the number of, or change in the kind or value of, issued
shares of Class A common stock to preclude, to the extent practicable, the enlargement or dilution
of rights and benefits under this Plan and such outstanding grants. The Company shall eliminate
any fractional shares resulting from such adjustment. Any adjustments to outstanding awards shall
be consistent with Section 409A of the Code, to the extent applicable.

     4. Eligibility for Participation. All employees of the Company and its subsidiaries
and the member companies of the Group, including employees who are officers or members of the Board
of any of the foregoing companies, shall be eligible to participate in this Plan. The committee
shall recommend to the Board the employees to receive awards and the number of shares of Class A
common stock subject to each award.

     5. Awards. Awards under this Plan may consist of stock options as described in
Section 7, stock awards as described in Section 8 and other stock-based awards as described in
Section 9. The committee shall specify the terms and conditions of the award granted to the
grantee in an agreement. The award shall be conditioned upon the grantee’s signed agreement to
accept the award and to acknowledge that all decisions and determinations of the committee and the
Board shall be final and binding on the grantee, his or her beneficiaries and any other person
having or claiming an interest under the award. Awards under this Plan need not be uniform as
among the grantees. The Board may grant awards that are contingent on, and subject to, stockholder
approval of this Plan or an amendment to this Plan.

     6. Definition of Fair Market Value. For purposes of this Plan, “fair market value”
shall mean the last sales price of a share of Class A common stock on the NASDAQ Global Select
Stock Market, or NASDAQ, on the day on which the Board is determining the fair market value, as
reported by NASDAQ. In the event that there are no transactions in shares of Class A common stock
on NASDAQ on such day, the Board will determine the fair market value as of the immediately
preceding day on which there were transactions in shares of Class A common stock on that exchange.
If shares of common stock are not listed by NASDAQ, the Board shall determine the fair market value
pursuant to Section 422 of the Code.

     7. Stock Options. The committee may recommend to the Board the grant of stock options
to an employee upon such terms and conditions as the committee deems appropriate under this Section
7.

     (a) Number of Shares. The committee shall recommend the number of shares of Class A
common stock that will be subject to each grant of stock options.

     (b) Type of Stock Option, Price and Term. The committee may recommend to the Board the
grant of stock options to purchase Class A common stock that the Company

3

 

intends to qualify as incentive stock options within the meaning of Section 422 of the Code,
or incentive stock options, or stock options that the Company does not intend to so qualify, or
non-qualified stock options. The committee shall recommend the exercise price of shares of Class A
common stock subject to a stock option, which shall be equal to or greater than the fair market
value of a share of Class A common stock on the date of grant.

     (c) Exercisability of Stock Options. Each stock option agreement shall specify the
period or periods of time within which a grantee may exercise a stock option, in whole or in part,
as the Board determines. No grantee may exercise a stock option after ten years from the grant
date of the stock option. The Board may accelerate the exercisability of any or all outstanding
stock options at any time for any reason.

     (d) Termination of Employment. Except as provided in the stock option agreement, a
grantee may exercise a stock option only while the Company, Donegal Mutual or any of their
respective subsidiaries employs the grantee. The Board shall specify in the option agreement under
what circumstances and during what time periods a grantee may exercise a stock option after
employment terminates. If the term of an incentive stock option continues for more than three
months after employment terminates due to retirement or more than one year after termination of
employment due to death or disability, the stock option shall lose its status as an incentive stock
option and the Company shall treat such stock option as a non-qualified stock option.

     (e) Exercise of Stock Options. A grantee may exercise a stock option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the Company. The grantee
shall pay the exercise price for the stock option:

	 	•	 	in cash;
	 
	 	•	 	by delivery of shares of Class A common stock at fair market value, shares of Class
B common stock at fair market value, or a combination of those shares, as the committee
or the Board may determine from time to time and subject to the terms and conditions as
the committee or the Board may prescribe;
	 
	 	•	 	by payment through a brokerage firm of national standing whereby the grantee will
simultaneously exercise the stock option and sell the shares acquired upon exercise
through the brokerage firm and the brokerage firm shall remit to the Company from the
proceeds of the sale of the shares the exercise price as to which the option has been
exercised in accordance with the procedures permitted by Regulation T of the Federal
Reserve Board; or
	 
	 	•	 	by any other method the committee or the Board authorizes.

The Company must receive payment for the shares acquired upon exercise of the stock option, and any
required withholding taxes and related amounts, by the time the committee

4

 

specifies depending on the type of payment being made, but in all cases prior to the issuance of
the shares.

     (f) Incentive Stock Options. The committee shall recommend other terms and conditions
of an incentive stock option as the committee deems necessary or desirable in order to qualify such
stock option as an incentive stock option under Section 422 of the Code, including the following
provisions, which the committee may omit or modify if no longer required under that section:

	 	•	 	As determined as of the grant date, the aggregate fair market value of shares
subject to incentive stock options that first become exercisable by a grantee during
any calendar year, under all plans of the Company, shall not exceed $100,000;
	 
	 	•	 	The exercise price of any incentive stock option granted to an individual who owns
stock having more than 10% of the total combined voting power of all classes of stock
of the Company must be at least 110% of the fair market value of the shares subject to
the incentive stock option on the grant date, and the individual may not exercise the
incentive stock option after the expiration of five years from the date of grant; and
	 
	 	•	 	The grantee may not exercise the incentive stock option more than three months, or
one year in the case of death or disability within the meaning of the applicable Code
provisions, after termination of employment.

     8. Stock Awards. The committee may recommend to the Board the issuance of shares of
Class A common stock to an employee upon such terms and conditions as the committee deems
appropriate under this Section 8. The committee may recommend to the Board the issuance of shares
of Class A common stock for cash consideration or for no cash consideration, and subject to
restrictions or no restrictions. The committee may recommend conditions under which restrictions
on stock awards shall lapse over a period of time or according to other criteria as the committee
deems appropriate, including restrictions based upon the achievement of specific performance goals.

     (a) Number of Shares. The committee shall recommend the number of shares of Class A
common stock to be issued pursuant to a stock award and any restrictions applicable to the stock
award.

     (b) Requirement of Employment. The Board shall specify in the stock award agreement
under what circumstances a grantee may retain stock awards after termination of the grantee’s
employment and under what circumstances the grantee may forfeit the stock awards.

5

 

     (c) Restrictions on Transfer. During the period that the stock award is subject to
restrictions, a grantee may not sell, assign, transfer, pledge or otherwise dispose of the shares
of the stock award except upon death as described in Section 13. Each certificate representing a
share of Class A common stock issued under the stock award shall contain a legend giving
appropriate notice of the restrictions on the stock award. The grantee shall be entitled to have
the legend removed when all restrictions on the shares subject to the stock award have lapsed. The
Company may maintain possession of any certificates representing shares subject to the stock award
until all restrictions on the shares subject to the stock award have lapsed.

     (d) Right To Vote and To Receive Dividends. The committee shall recommend to what
extent, and under what conditions, the grantee shall have the right to vote the shares subject to
the stock award and to receive any dividends or other distributions paid on the shares during the
restriction period.

     9. Other Stock-Based Awards. The committee may recommend to the Board the grant of
other awards that are based on, measured by or payable in Class A common stock to an employee on
such terms and conditions as the committee deems appropriate under this Section 9. The committee
may recommend to the Board the grant of other stock-based awards subject to achievement of
performance goals or other conditions and may be payable in shares of Class A common stock or cash,
or a combination of cash and shares, as recommended by the committee in the stock-based award
agreement.

     10. Grant Date. The grant date of an award under this Plan shall be the date of the
Board of Director’s approval or such later date as may be determined by the Board at the time it
authorizes the award. The Board may not make retroactive grants of awards under this Plan. The
Company shall provide notice of the award to the grantee within a reasonable time after the grant
date.

     11. Withholding. All grants under this Plan shall be subject to applicable federal,
including FICA, state and local tax withholding requirements. The Company may require that the
grantee or other person receiving or exercising a grant pay to the Company the amount of any
federal, state or local taxes that the Company is required to withhold with respect to the grant,
or the Company may deduct from other wages paid to the grantee the amount of any withholding taxes
due with respect to the grants. The Board or the committee may permit a grantee to elect to
satisfy the Company’s tax withholding obligations with respect to grants paid in shares of Class A
common stock by having shares of Class A common stock withheld, at the time such grants become
taxable, up to an amount that does not exceed the minimum applicable withholding tax rate for
federal, including FICA, state and local tax liabilities. The Board or committee will value any
shares so withheld as of the date the grants become taxable.

6

 

     12. Transferability of Grants. Only the grantee of an award may exercise rights under
the award grant during the grantee’s lifetime, and a grantee may not transfer those rights except
by will or by the laws of descent and distribution. When a grantee dies, the personal
representative or other person entitled to succeed to the rights of the grantee may exercise those
rights. Any successor to a grantee must furnish proof satisfactory to the Company of his or her
right to receive the award under the grantee’s will or under the applicable laws of descent and
distribution.

     13. Requirements for Issuance of Shares. The Company will not issue shares of Class A
common stock in connection with any award under this Plan until the issuance of the shares complies
with all applicable legal requirements to the satisfaction of the Board. The Board shall have the
right to condition any award made to any employee under this Plan on the employee’s undertaking in
writing to comply with the restrictions on his or her subsequent disposition of shares subject to
the award as the Board shall deem necessary or advisable, and the Company may legend certificates
representing those shares to reflect any such restrictions. Certificates representing shares of
Class A common stock issued under this Plan will be subject to such stop-transfer orders and other
restrictions as applicable laws, regulations and interpretations may require, including any
requirement that a legend be placed thereon. No grantee shall have any right as a stockholder with
respect to shares of Class A common stock covered by an award until shares have been issued to the
grantee.

     14. Amendment and Termination of this Plan.

     (a) Amendments. The Board may amend or terminate this Plan at any time, except that
the Board shall not amend this Plan without approval of the stockholders of the Company if such
approval is required in order to comply with the Code or applicable laws, or to comply with
applicable stock exchange requirements. The Board may not, without the consent of the grantee,
negatively affect the rights of a grantee under any award previously granted under this Plan.

     (b) No Repricing Without Stockholder Approval. The Board may not reprice stock
options nor may the Board amend this Plan to permit repricing of options unless the stockholders of
the Company provide prior approval for the repricing.

     (c) Termination. This Plan shall terminate on April 20, 2021, unless the Board
terminates this Plan earlier or the term is extended with the approval of the stockholders of the
Company. The termination of this Plan shall not impair the power and authority of the Board or the
committee with respect to an outstanding award.

     15. Grants in Connection with Corporate Transactions and Otherwise. Nothing contained
in this Plan shall be construed to:

7

 

	 	•	 	limit the right of the Board to grant awards under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or
assets of any corporation, firm or association, including awards to employees of those
entities who become employees, or for other proper corporate purposes; or
	 
	 	•	 	limit the right of the Company to grant stock options or make other stock-based
awards outside of this Plan.

Without limiting the foregoing, the Board may grant an award to an employee of another corporation
or other entity who becomes an employee by reason of a corporate merger, consolidation, acquisition
of stock or property, reorganization or liquidation involving the Company in substitution for a
grant made by that corporation or other entity. The terms and conditions of the awards may vary
from the terms and conditions this Plan requires and from those of the substituted stock awards, as
the Board determines.

     16. Right to Terminate Employment. Nothing contained in this Plan or in any award
agreement entered into pursuant to this Plan shall confer upon any grantee the right to continue in
the employment of the Company or any of its subsidiaries or the Group or affect any right that the
Company or any of its subsidiaries or the Group may have to terminate the employment of the
grantee.

     17. Reservation of Shares. The Company, during the term of this Plan, shall at all
times reserve and keep available the number of shares of Class A common stock needed to satisfy the
requirements of this Plan. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which the Company’s counsel has deemed such authority to be necessary to
the lawful issuance and sale of any shares under this Plan, shall relieve the Company of any
liability for the failure to issue or sell any shares as to which the Company has not obtained such
requisite authority.

     18. Effect on Other Plans. Participation in this Plan shall not affect an employee’s
eligibility to participate in any other benefit or incentive plan of the Company or any of its
subsidiaries or the Group. The Company shall not use any awards granted pursuant to this Plan in
determining the benefits provided under any other plan unless specifically provided.

     19. Forfeiture for Dishonesty. Notwithstanding anything to the contrary in this Plan,
if the Board finds, by a majority vote, after full consideration of the facts presented on behalf
of both the Company and any grantee, that the grantee has engaged in fraud, embezzlement, theft,
commission of a felony or dishonest conduct in the course of his employment that damaged the
Company or any of its subsidiaries or the Group or that the grantee has disclosed confidential
information of the Company or any of its subsidiaries or the Group, the grantee shall forfeit all
unexercised or unvested awards and all exercised or vested awards under which the Company has not
yet delivered the certificates or cash

8

 

payments therefor. The decision of the Board in interpreting and applying the provisions of
this Section 19 shall be final. No decision of the Board, however, shall affect the finality of
the discharge or termination of the grantee.

     20. No Prohibition on Corporate Action. No provision of this Plan shall be construed
to prevent the Company or any officer or director of the Company from taking any action the Company
or such officer or director of the Company deems to be appropriate or in the Company’s best
interest, whether or not such action could have an adverse effect on this Plan or any awards
granted under this Plan, and no grantee or grantee’s estate, personal representative or beneficiary
shall have any claim against the Company or any officer or director of the Company as a result of
the taking of the action.

     21. Indemnification. With respect to the administration of this Plan, the Company
shall indemnify each present and future member of the committee and the Board against, and each
member of the committee and the Board shall be entitled without further action on such member’s
part to indemnity from the Company for, all expenses, including the amount of judgments and the
amount of approved settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself, such member reasonably incurs in connection with or
arising out of, any action, suit or proceeding in which he or she may be involved by reason of
being or having been a member of the committee or the Board, whether or not he or she continues to
be such member at the time of incurring such expenses; provided, however, that this indemnity shall
not include any expenses such member incurs (i) in respect of matters as to which he or she shall
be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence
or willful misconduct in the performance of his or her duty as such member of the committee or the
Board; or (ii) in respect of any matter in which any settlement is effected for an amount in excess
of the amount approved by the Company on the advice of its legal counsel; and provided further that
no right of indemnification under the provisions set forth in this Section 21 shall be available to
or enforceable by any such member of the committee or the Board unless, within 60 days after
institution of any such action, suit or proceeding, he or she shall have offered the Company in
writing the opportunity to handle and defend the same at its own expense. The foregoing right of
indemnification shall inure to the benefit of the heirs, executors or administrators of each such
member of the committee or the Board and shall be in addition to all other rights to which such
member may be entitled as a matter of law, contract or otherwise.

     22. Miscellaneous Provisions.

     (a) Compliance with Plan Provisions. No grantee or other person shall have any right
with respect to this Plan, the Class A common stock reserved for issuance under this Plan or in any
award until the Company and the grantee executed a written agreement and all the terms, conditions
and provisions of this Plan and the award applicable to the grantee have been met.

9

 

     (b) Approval of Counsel. In the discretion of the Board, no shares of Class A common
stock, other securities or property of the Company or other forms of payment shall be issued under
this Plan with respect to any award unless counsel for the Company is satisfied that such issuance
will be in compliance with applicable federal, state, local and foreign legal, securities exchange
and other applicable requirements.

     (c) Compliance with Rule 16b-3. To the extent that Rule 16b-3 under the Exchange Act
applies to this Plan or to awards granted under this Plan, it is the intention of the Company that
this Plan comply in all respects with the requirements of Rule 16b-3, that any ambiguities or
inconsistencies in construction of this Plan be interpreted to give effect to such intention and
that, if this Plan shall 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 shall be deemed to be
automatically amended so as to bring them into full compliance with such rule.

     (d) Section 409A Compliance. This Plan is intended to comply with the requirements of
Section 409A of the Code and the regulations issued thereunder. To the extent of any
inconsistencies with the requirements of Section 409A, this Plan shall be interpreted and amended
in order to meet the requirements of Section 409A. Notwithstanding anything contained in this Plan
to the contrary, it is the intent of the Company to have this Plan interpreted and construed to
comply with any and all provisions Section 409A including any subsequent amendments, rulings or
interpretations from appropriate governmental agencies.

     (e) Effects of Acceptance of the Award. By accepting any award or other benefit under
this Plan, each grantee and each person claiming under or through the grantee shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any action taken under
this Plan by the Company, the Board or the committee or its delegates.

     Date of Adoption by Board: March 7, 2011.

10exv10wss

Exhibit (10)(SS)

DONEGAL GROUP INC.

2011 AGENCY STOCK PURCHASE PLAN

1. Purpose.

     Donegal Group Inc. (the “Company”) established this 2011 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. 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 below.

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 the 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 payment methods combined (the “Maximum Amount”), subject to the limitations
set forth below:

     (a) An Eligible Agency may elect to purchase Class A common stock through deductions from its
monthly direct bill commission payments. Under this method, an Eligible Agency will direct the
Company to withhold no less than 1% and no more than 10% of the Eligible Agency’s direct bill
commission payments from the Eligible Agency’s direct bill commission payments; provided, however,
that the Company will withhold no more than $12,000 from direct bill commission payments during
each Subscription Period. Direct bill commission payments will mean the commissions earned and
that are actually available for payment in a monthly period to an Eligible Agency for personal and
commercial direct bill policies after all offsetting debits and credits are applied, as determined
solely from the Company’s records.

     (b) An Eligible Agency may elect to purchase Class A common stock during each July 1 through
December 31 Subscription Period through a deduction from the contingent commission, if any, payable
to the Eligible Agency under the applicable agency contingent plan or its equivalent. Under this
method, an Eligible Agency will direct the Company to withhold a percentage of the contingent
commission subject to the Maximum Amount.

     (c) An Eligible Agency may elect to purchase Class A common stock through lump-sum payments to
the Company. Under this method, the Eligible Agency will pay to the Company a dollar amount in a
lump sum by the last day of the applicable

-2-

 

Subscription Period. The amount of the lump sum payment may not be less than $1,000 nor more
than the Maximum Amount.

     At the end of each Subscription Period, the Company will total each Eligible Agency’s direct
bill commission payments, if any, and add such total to all lump-sum and contingent commission
payments, if any, made by such agency. If at any time during a Subscription Period an Eligible
Agency’s total payments exceed the Maximum Amount for that Subscription Period then, upon the
Eligible Agency’s request, the Company will return such excess amount to the Eligible Agency
without interest within a reasonable period. The Company will apply any such amount not returned
to the Eligible Agency to the purchase of Class A common stock during the next Subscription Period
without reducing the Maximum Amount applicable to such Subscription Period.

4. Duration of This Plan and Subscription Periods.

     This Plan is effective as of July 1, 2011 through and including June 30, 2016. During its
term, this Plan will have ten semi-annual “Subscription Periods.” Each Subscription Period will
extend from July 1 through December 31 or from January 1 through June 30 of each year, with the
first Subscription Period beginning on July 1, 2011.

5. Enrollment and Enrollment Periods.

     “Enrollment Periods” are in effect from June 15 through June 30 and from December 15 through
December 31 of each year commencing with June 15, 2011. The Company will send an Eligible Agency a
Subscription Agreement prior to the beginning of the first Enrollment Period following such
agency’s designation as an Eligible Agency.

	 	(a)	 	An Eligible Agency that desires to subscribe for the purchase of Class A common stock
through withholding from direct bill commissions must return a duly executed and completed
Subscription Agreement during the first applicable Enrollment Period.

-3-

 

	 	(b)	 	An Eligible Agency that wishes to make lump-sum purchases during a Subscription Period
will remit each lump-sum payment to the Company with a supplemental Subscription Agreement by the
last day of the applicable Subscription Period.
	 
	 	(c)	 	An Eligible Agency that wishes to make a purchase during a Subscription Period through
designation of a portion of its contingent commission under the agency contingent plan will file a
Subscription Agreement during the Enrollment Period applicable to that Subscription Period.

     Once enrolled, an Eligible Agency will continue to participate in this Plan for each
succeeding Subscription Period until it ceases to be an Eligible Agency or chooses to withdraw from
this Plan pursuant to Section 9. If an Eligible Agency desires to change its rate of contribution,
it may do so effective for the next Subscription Period by filing a new Subscription Agreement
during the Enrollment Period for the next Subscription Period.

6. Number of Shares To Be Offered.

     The total number of shares available under this Plan is 300,000 shares of the Class A common
stock. In the event all 300,000 shares of the Class A common stock are purchased prior to the
expiration of this Plan, the Company may terminate this Plan in accordance with Section 13.

7. Subscription Price.

     The “Subscription Price” for each share of Class A common stock will be equal to 90% of the
average of the closing prices of the Class A common stock on the Nasdaq Global Select Market for
the last ten trading days of the applicable Subscription Period.

8. Purchase of Shares.

     The Company will maintain a “Plan Account” on behalf of each enrolled Eligible Agency. As of
the last day of each Subscription Period, the Company will credit the aggregate of (i) the amount
deducted from the Eligible Agency’s direct bill commission payments, (ii) the Eligible Agency’s
contingent commission withholdings and (iii) all of the Elgible Agency’s lump-sum payments, not to
exceed the Maximum Amount

-4-

 

permitted pursuant to Section 3 of this Plan from all three payment methods, to the Eligible
Agency’s Plan Account. At such time, the Company will divide the amount then contained in the
Eligible Agency’s Plan Account by the Subscription Price for such Subscription Period and credit
each Plan Account with the number of whole shares that results. The Company will carry forward any
amount remaining in the Plan Account to the next Subscription Period or, at the option of the
Eligible Agency, return it to the Eligible Agency. Any amount so carried forward will not reduce
the Maximum Amount applicable to such succeeding Subscription Period. If the number of shares
subscribed for during any Subscription Period exceeds the number of shares available for sale under
this Plan, the Company will allocate the remaining shares among all Eligible Agencies in proportion
to their aggregate Plan Account balances, exclusive of any amounts carried forward as provided in
Section 3 and this Section 8 of this Plan. The Company will issue and deliver stock certificates
to each Eligible Agency with respect to the shares it has purchased under this Plan within a
reasonable time thereafter.

9. Withdrawal from This Plan.

     An enrolled Eligible Agency may withdraw from this Plan at any time by giving written notice
of withdrawal signed by an authorized representative of the Eligible Agency to the Company.
Promptly after the time of withdrawal or the discontinuance of an Eligible Agency’s eligibility,
the Company will issue certificates representing any shares held under this Plan in the name of the
Eligible Agency and refund the amount of any cash credited to the Eligible Agency’s Plan Account
for the current Subscription Period without interest. If an Eligible Agency withdraws, such
Eligible Agency may not resubscribe until after the next full Subscription Period has elapsed, and
then only if the Company has redesignated such agency as an Eligible Agency.

10. Termination of Agency Status.

     The Company will treat termination of agency status for any reason as an automatic withdrawal
from this Plan pursuant to Section 9.

11. Assignment and Issuance of Shares.

     Except as expressly permitted by this Section 11, no Eligible Agency may assign its
subscription payments under this Plan or rights to subscribe under this Plan to any other person
(including its shareholders, partners or other principals), and any

-5-

 

attempted assignment will be void. Neither an Eligible Agency’s rights under this Plan nor
shares held in an Eligible Agency’s Plan Account may be transferred, pledged, hypothecated or
assigned. All shares issued under this Plan will be titled in the name of the Eligible Agency;
provided, however, that an Eligible Agency may, upon written request to the Company: (a) designate
that the Company issue such shares to a shareholder, partner, other principal or other licensed
employee of such Eligible Agency, or (b) designate that any retirement plan maintained by or for
the benefit of such Eligible Agency or a shareholder, partner, other principal or other licensed
employee of such Eligible Agency may purchase shares in lieu of such Eligible Agency through
lump-sum payments made by the designee, subject to the $12,000 Maximum Amount limitation set forth
in Section 3, compliance with applicable laws, including the Employee Retirement Income Security
Act of 1974, as amended, and, if applicable, payment by the Eligible Agency or its designee of any
applicable transfer taxes and satisfaction of the Company’s usual requirements for recognition of a
transfer of Class A common stock.

12. Adjustment of and Changes in the Class A Common Stock.

     In the event that the outstanding shares of the Class A common stock 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 the Class A common stock or of another class of the Company’s 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.

13. Amendment or Discontinuance of This Plan.

     The board of directors of the Company 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 participant’s existing rights.

14. Administration.

     A committee (the “Committee”) consisting of three persons the board of directors of the
Company has appointed from time to time will administer this Plan. The

-6-

 

Committee may from time to time adopt rules and regulations for carrying out this Plan. Any
Committee interpretation or construction of any provision of this Plan will be final and conclusive
on all participants absent contrary action by the board of directors. Any board of directors
interpretation or construction of any provision of this Plan will be final and conclusive on all
participants.

15. 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.

16. 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.

-7-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}]]