Document:

Exhibit 10.23

 

LOCK-UP AGREEMENT

 

THIS LOCK-UP AGREEMENT
(this “Agreement”) is made as of [●], 2020 by and among (i) Meten EdtechX Education Group
Ltd., a Cayman Islands company, (including any successor entity thereto, “Holdco”), and (iii) the
undersigned (“Holder”). Any capitalized term used but not defined in this Agreement shall have the meaning
ascribed to such term in the Merger Agreement (as defined below). Each of Holdco and Holder shall be referred to herein, individually,
as a “Party” and, collectively, as the “Parties”.

 

WHEREAS, on
December 12, 2019, Holdco, EdtechX Holdings Acquisition Corp., a Delaware corporation (“EdtechX”), Meten
Education Inc., a Delaware corporation and wholly owned subsidiary of Holdco (“EdtechX Merger Sub”),
Meten Education Group Ltd., a Cayman Islands exempted company and wholly owned subsidiary of Holdco (“Meten Merger
Sub”), and Meten International Education Group, a Cayman Islands exempted company (“Company”),
entered into that certain Merger Agreement (as amended from time to time in accordance with the terms thereof, the “Merger
Agreement”), pursuant to which (i) Meten Merger Sub will merge with and into the Company, with the Company being
the surviving entity of such merger (the “Meten Merger”); and (ii) EdtechX Merger Sub will merge with
and into EdtechX, with EdtechX being the surviving entity of the merger (the “EdtechX Merger” and together
with the Meten Merger, the “Mergers”) and becoming a wholly-owned subsidiary of Holdco, and as a result
of which, (a) all of the issued and outstanding shares of the Company (the “Company Shares”), immediately
prior to the consummation of the Meten Merger (the “Closing”), shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, in exchange for the Meten Merger Consideration in accordance with the terms
and conditions of the Merger Agreement, and (ii) each outstanding Company option shall be assumed by Holdco and automatically converted
into an option exercisable into Holdco Shares (as equitably adjusted), all upon the terms and subject to the conditions set forth
in the Merger Agreement and in accordance with the applicable laws;

 

WHEREAS, immediately
prior to the Closing, Holder is a holder of Company Shares in such amounts as set forth underneath Holder’s name on the signature
page hereto, and Holder is a Founder Shareholder as defined in the Merger Agreement; and

 

WHEREAS, pursuant
to the Merger Agreement, and in view of the valuable consideration to be received by Holder thereunder, including the rights under
the Registration Rights Agreement by and among Holdco, Holder and the other holders of the Company’s securities immediately
prior to the Closing that are named therein, that is to be entered into on or about the date hereof in connection with the Merger
Agreement (the “Registration Rights Agreement”), Holdco, and Holder desire to enter into this Agreement,
pursuant to which the Holdco Shares to be received under the Merger Agreement as Meten Merger Consideration (including any Contingent
Shares, if issued prior to the end of such period) received by Holder in the Merger (all such securities, together with any securities
paid as dividends or distributions with respect to such securities or into which such securities are exchanged or converted, to
the extent and when they are subject to the restrictions hereunder, the “Restricted Securities”)
shall become subject to limitations on disposition as set forth herein. 

 

 NOW, THEREFORE,
in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending
to be legally bound hereby, the parties hereby agree as follows:

  

    1

     

    

 

1.
Lock-Up Provisions.

 

(a) Holder
hereby agrees not to, during the period commencing from the Closing and ending (i) with respect to 50% of the Restricted Securities,
on the earlier of the date that is six months after the Closing Date and the date on which the closing price of the Holdco Shares
equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period after Closing and (ii) with respect to the remaining 50% of the Restricted
Securities, on the one year anniversary of the Closing Date, or earlier, in either case, if, subsequent to the Closing, Holdco
consummates a liquidation, merger, stock exchange or other similar transaction which results in all holders of Holdco Shares ceasing
to hold more than fifty percent (50%) of the then outstanding Holdco Shares or having the right to exchange their Holdco Shares
for cash or freely tradable securities (the “Lock-Up Period”): (i) lend, offer, pledge, hypothecate,
encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Restricted Securities,
(ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Restricted Securities, or (iii) publicly disclose the intention to do any of the foregoing, whether any
such transaction described in clauses (i), (ii), or (iii) above is to be settled by delivery of Restricted Securities or other
securities, in cash or otherwise (any of the foregoing described in clauses (i), (ii), or (iii), a “Prohibited Transfer”).
The foregoing sentence shall not apply to (a) transactions relating to the securities of the Holdco acquired in open market transactions
after the Closing, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made
in connection with subsequent sales of securities acquired in such open market transactions, (b) transfers of the Restricted Securities
as a bona fide gift or through will or intestacy, (c) distributions of Restricted Securities to limited partners or stockholders
of such Holder; provided that in the case of any transfer or distribution pursuant to clause (b) or (c), (i) each donee or distributee
shall sign and deliver to the Holdco a lock-up agreement substantially in the form of this Agreement; and (ii) no filing under
Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of securities of the Holdco, shall be required
or shall be voluntarily made during the Lock-up Period, (d) the establishment of a trading plan pursuant to Rule 10b5-1 under the
Exchange Act for the transfer of the Restricted Securities, provided that such plan does not provide for the transfer of the Restricted
Securities during the Lock-up Period and to the extent a public announcement or filing under the Exchange Act, if any, is required
of or voluntarily made by or on behalf of the undersigned or the Holdco regarding the establishment of such plan, such announcement
or filing shall include a statement to the effect that no transfer of the Restricted Securities may be made under such plan during
the Lock-up Period, (e) the exercise of any of such Holder’s rights to acquire securities of the Holdco issued pursuant to
any share option or similar equity incentive or compensation plan of the Holdco for the issuance of share options or equity grants,
provided that, in each ease, such plan is in effect as of the date of and disclosed in the final registration statement relating
to the Business Combination (the “Registration Statement”), (f) transfer of Restricted Securities to
any trust for the direct or indirect benefit of such Holder, the immediate family of such Holder or any entity beneficially owned
and controlled by such Holder, provided that (i) the trustee of the trust of the transferred agrees to be bound in writing by the
restrictions set forth herein, (ii) any such transfer shall not involve a disposition for value and (iii) no filing under the Exchange
Act, reporting a reduction or increase in beneficial ownership of any securities of the Holdco, shall be required or shall be voluntarily
made during the Restricted Period, (g) any securities that are used for the primary purpose of satisfying any tax or other governmental
withholding obligation, through cashless surrender or otherwise, or in connection with tax or other obligations as a result of
testate succession or intestate distribution, (h) any pledge of Restricted Securities pursuant to a margin account or as security
for debt financing of such Holder so long as no foreclosure will occur during the Restricted Period, and (i) transfer of Restricted
Securities among the Founder Shareholders and their respective affiliates (as defined in the Merger Agreement), provided, however,
that (i) the transferee shall sign and deliver to the Holdco a lock-up agreement substantially in the form of this Agreement pursuant
to which such transferred Restricted Securities shall be subject to the same restrictions hereunder; and (ii) no filing under Section
16(a) of the Exchange Act, reporting a reduction in beneficial ownership of securities of the Holdco, shall be required or shall
be voluntarily made during the Lock-up Period. Such Holder hereby also agrees and consents to the entry of stop transfer instructions
with the Holdco’s transfer agent and registrar against the transfer of such Holder’s Restricted Securities unless such
transfer is in compliance with the foregoing restrictions.

   

(b) If
any Prohibited Transfer is made or attempted contrary to the provisions of this Agreement, such purported Prohibited Transfer shall
be null and void ab initio, and Holdco shall refuse to recognize any such purported transferee of the Restricted Securities
as one of its equity holders for any purpose. In order to enforce this Section 1, Holdco may impose stop-transfer instructions
with respect to the Restricted Securities of Holder (and permitted transferees and assigns thereof) until the end of the Lock-Up
Period.

 

(c) For
the avoidance of any doubt, Holder shall retain all of its rights as a shareholder of Holdco during the Lock-Up Period, including
the right to vote any Restricted Securities.

  

    2

     

    

 

2.
Miscellaneous.

 

(a) Termination
of Merger Agreement. Notwithstanding anything to the contrary contained herein, in the event that the Merger Agreement is terminated
in accordance with its terms prior to the Closing, this Agreement and all rights and obligations of the parties hereunder shall
automatically terminate and be of no further force or effect.

 

(b) Entire
Agreement; Third Party Beneficiaries. This Agreement and the documents and instruments and other agreements among the Parties
as contemplated by or referred to herein, including the exhibits and schedules hereto (a) constitute the entire agreement among
the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral,
among the Parties and any of their respective Affiliates with respect to the transactions contemplated hereby; and (b) are not
intended to confer upon any other Person any rights or remedies hereunder. No representations, warranties, covenants, understandings,
agreements, oral or otherwise, relating to the transactions contemplated by this Agreement exist between the Parties except as
expressly set forth or referenced in this Agreement.

 

(c) Severability.
In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application
of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the Parties. The
Parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

 

(d) Other
Remedies; Specific Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a
Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party,
and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. Each
Party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis that the other
parties have an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason at
law or equity. The Parties acknowledge and agree that any Party seeking an injunction to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement in accordance with this Section shall not be required to provide
any bond or other security in connection with any such injunction.

 

(e) Governing
Law. This Agreement shall be governed by and construed in accordance with the internal law of the State of Delaware regardless
of the law that might otherwise govern under applicable principles of conflicts of law thereof.

 

(f) Consent
to Jurisdiction; WAIVER OF TRIAL BY JURY; Service of Process. Each of the Parties irrevocably consents to the exclusive jurisdiction
and venue of the federal and state courts of the [State of Delaware] in connection with any matter based upon or arising out of
this Agreement or the transactions contemplated hereby, agrees that process may be served upon them in any manner authorized by
the laws of the State of Delaware for such Persons and waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and manner of service of process. Each Party hereby agrees not to commence any legal
proceedings relating to or arising out of this Agreement or the transactions contemplated hereby in any jurisdiction or courts
other than as provided herein. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED
UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each of the Parties to this Agreement
hereby (i) consents to service of process in any Action among any of the Parties hereto relating to or arising in whole or in part
under or in connection with this Agreement or the transactions contemplated hereby (in each case, whether in law or in equity,
whether in contract or in tort, by statute or otherwise) in any manner permitted by applicable law, (ii) agrees that service of
process made in accordance with clause (i) or made by registered or certified mail, return receipt requested, at its address specified
pursuant to Section 2 (l), will constitute good and valid service of process in any such Action and (iii) waives and agrees
not to assert (by way of motion, as a defense, or otherwise) in any such Action any claim that service of process made in accordance
with clause (i) or (ii) does not constitute good and valid service of process.

  

    3

     

    

 

(g) Rules
of Construction. The Parties agree that they have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities
in an agreement or other document will be construed against the Party drafting such agreement or document.

 

(h) Assignment.
No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval
of the other Parties. Subject to the first sentence of this Section, this Agreement shall be binding upon and shall inure to the
benefit of the Parties and their respective successors and permitted assigns.

 

(i) Amendment.
This Agreement may be amended by the Parties at any time only by execution of an instrument in writing signed on behalf of each
of the Parties. The approval of this Agreement by the shareholders of any Party shall not restrict the ability of the board of
directors of such Party to terminate this Agreement in accordance with this Agreement or to cause such Party to enter into an amendment
to this Agreement pursuant to this Section.

 

(j) Waiver.
Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such Party. Delay in exercising any right under this Agreement shall not constitute a waiver of such right.

 

(k)  Interpretation.
The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context
shall require, any pronoun shall include the corresponding masculine, feminine and neuter forms. When a reference is made in this
Agreement to an exhibit or schedule, such reference shall be to an exhibit or schedule to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections or subsections, such reference shall be to a Section or subsection of this
Agreement. Unless otherwise indicated the words “include,” “includes” and “including” when
used herein shall be deemed in each case to be followed by the words “without limitation.” The table of contents and
headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Reference to the subsidiaries of an entity shall be deemed to include all direct and indirect subsidiaries of
such entity. References to a document or item of information having been “made available” will be deemed to include
the posting of such document or item of information in an electronic data room accessible by EdtechX or any of its representatives. 

  

    4

     

    

 

(l) Notices.
All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (i) when
delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail
return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service
or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

 

	
        If to Holdco, to:

        Meten International Education Group

        3rd Floor, Tower A, Tagen Knowledge & Innovation Center

        2nd Shenyun West Road, Nanshan District

        Shenzhen, Guangdong Province 518045

        The People’s Republic of China

        Attention: Yupeng Guo

        Email: richard@meten.com
	
        With copies to (which shall not constitute notice):

        Luk & Partners

        In association with Morgan, Lewis & Bockius

        Suites 1902-09, 19th Floor

        Edinburgh Tower, The Landmark

        15 Queen’s Road Central

        Hong Kong

        Attention: Ning Zhang / Edwin Luk

        Email: ning.zhang@morganlewis.com

        / edwin.luk@morganlewis.com

	
         

        If to Holder, to: the address set forth under Holder’s
        name on the signature page hereto.

         

  

(m) Further
Assurances. From time to time, at another Party’s request and without further consideration (but at the requesting party’s
reasonable cost and expense), each Party shall execute and deliver such additional documents and take all such further action as
may be reasonably necessary to consummate the transactions contemplated by this Agreement.

 

(n) Counterparts;
Facsimile.  This Agreement may also be executed and delivered by facsimile signature or by email in portable document
format in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

[Remainder of Page Intentionally Left
Blank; Signature Pages Follow]

  

    5

     

    

 

IN WITNESS WHEREOF,
the parties have executed this Lock-Up Agreement as of the date first written above.

  

	Holdco:	 
	 	 
	Meten EdtechX Education Group Ltd.	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 

  

[Signature Page to Lock-Up Agreement]

  

     

     

    

  

IN WITNESS WHEREOF, the parties have
executed this Lock-Up Agreement as of the date first written above. 

 

	Holder:
	 
	Name of Holder: [_______________________________]
	 

 

	By:	 	 
	Name:	 	 
	Title:	 	 

 

Number and Type of Company Shares:

 

Company Shares:__________________________________________________

  

Address for Notice: Address: _______________________________________

______________________________________________________________ 

______________________________________________________________

Facsimile No.: ___________________________________________________

Telephone No.: __________________________________________________

Email: _________________________________________________________:
 

  

[Signature Page to Lock-Up Agreement]EX-4.1

 Exhibit 4.1 

DESCRIPTION OF SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 

The following description of the capital stock of Donegal Group Inc. (“us,” “our” or “we”) is a summary of the
rights of the holders of our Class A common stock and our Class B common stock and certain provisions of our certificate of incorporation and bylaws, as currently in effect. This summary does not purport to be complete and is qualified in
its entirety by the provisions of our certificate of incorporation and bylaws, copies of which are filed as exhibits to this Annual Report on Form 10-K and are incorporated by reference herein, and to the
applicable provisions of Delaware and U.S. federal law. We encourage you to read our certificate of incorporation and bylaws and the applicable provisions of Delaware and U.S. federal law for additional information. 

General 
 Our certificate of
incorporation authorizes us to issue (i) 2,000,000 shares of preferred stock, par value $.01 per share, (ii) 50,000,000 shares of Class A common stock, par value $.01 per share and (iii) 10,000,000 shares of Class B common
stock, par value $.01 per share. Our Class A common stock and our Class B common stock trade on the NASDAQ Global Select Market under the symbols “DGICA” and “DGICB,” respectively. The transfer agent and registrar for
our Class A common stock and Class B common stock is Computershare Trust Company. Except as described below with respect to dividends and voting rights, shares of our Class A common stock and our Class B common stock are
identical in all respects. 
 Class A Common Stock and Class B Common Stock 

The following is a materially complete summary of the rights, preferences and limitations of the holders of our Class A common stock and
Class B common stock. 
 Voting and Other Rights. The holders of our Class A common stock are entitled to one-tenth of a vote per share on any matter submitted to a vote of our stockholders, while the holders of our Class B common stock are entitled to one vote per share on any matter submitted to a vote of our
stockholders. Except as required by the Delaware General Corporation Law (the “DGCL”) or our certificate of incorporation, the holders of our Class A common stock and our Class B common stock vote together as a single class on
all matters submitted to a vote of our stockholders. 
 Under our certificate of incorporation and the DGCL, at any election of our
directors, those nominees receiving the highest number of votes cast for the number of directors to be elected will be elected as directors. Because our certificate of incorporation does not authorize cumulative voting in the election of directors,
Donegal Mutual Insurance Company (“Donegal Mutual”), as the holder of approximately 71% of the combined voting power of our Class A common stock and our Class B common stock, has the power to control the election of all of the
members of our board of directors, and the holders of the remainder of the outstanding shares of our Class A common stock and our Class B common stock will not be able to cause the election of any member of our board of directors. 

Under our certificate of incorporation and the DGCL, only the affirmative vote of the holders of a majority in voting power represented by our
Class A common stock and our Class B common stock, voting as a single class, is required to amend our certificate of incorporation, to authorize additional shares of capital stock of any class, to approve any merger or consolidation of us
with or into any other corporation or the sale of all or substantially all of our assets or to approve our dissolution. Under the DGCL, the holders of our Class A common stock or our Class B common stock are entitled to vote as a separate
class on any proposal to change the par value of such class or to alter or change the rights, preference and limitations of such class in a way that would adversely affect any such rights of such class. Donegal Mutual, as the holder of approximately
71% of the combined voting power of our outstanding Class A common stock and our Class B common stock, will be able to control the outcome of the vote on any such matters. 

 Merger and Consolidation. In the event of a merger, consolidation or
liquidation, holders of our Class A common stock and our Class B common stock are entitled to receive pro rata any assets legally available for distribution to our stockholders with respect to shares held by them, subject to any prior
rights of the holders of any of our preferred stock then outstanding. 
 Dividends and Distributions. The holders of our
Class A common stock are entitled to receive such dividends or distributions as our board of directors may declare out of funds legally available for such payments. Each share of our Class A common stock outstanding at the time of any
dividend or distribution payable in cash upon the outstanding shares of our Class B common stock is entitled to a cash dividend or distribution payable at the same time and to our stockholders of record as of the same date in an amount that is
at least 10% greater than any dividend or distribution we declare upon the shares of our Class B common stock. Each share of our Class A common stock and our Class B common stock shall be equal in respect to dividends or other
distributions payable in shares of capital stock, provided that such dividends or distributions may be made (i) in shares of our Class A common stock to the holders of our Class A common stock and in shares of our Class B common
stock to the holders of our Class B common stock, (ii) in shares of our Class A common stock to the holders of both our Class A common stock and our Class B common stock or (iii) in any other authorized class or series
of capital stock to the holders of our Class A common stock and our Class B common stock. Our payment of distributions is subject to the restrictions of Delaware law applicable to the declaration of distributions by a business corporation.
A corporation generally may not authorize and make distributions if, after giving effect thereto, it would be unable to meet its debts as they become due in the usual course of business or if the corporation’s total assets would be less than
the sum of its total liabilities plus the amount that would be needed, if it were to be dissolved at the time of distribution, to satisfy claims upon dissolution of stockholders who have preferential rights superior to the rights of the holders of
its common stock. In addition, the payment of distributions to stockholders is subject to any prior rights of any then outstanding shares of our preferred stock. Stock dividends, if any are declared, may be paid from authorized but unissued shares.

 Our ability to pay distributions is dependent upon the ability of our insurance subsidiaries to pay dividends to us. Regulatory
requirements and capital guidelines may impact our insurance subsidiaries’ ability to pay dividends to us in the future. 

Convertibility. Neither our Class A common stock nor our Class B common stock is convertible into another class of
common stock or any other security. 
 Other Rights. Neither our Class A common stock nor our Class B common stock has any
preemptive rights, redemption privileges, sinking fund privileges or conversion rights. 
 Preferred Stock 

General. We are authorized to issue 2,000,000 shares of preferred stock, par value $.01 per share. Our board of directors has
the authority to issue preferred stock in one or more series and to fix the dividend rights, dividend rates, liquidation preferences, conversion rights, voting rights, rights and terms of redemption, including sinking fund provisions, and the number
of shares constituting any such series without any further action by our stockholders, unless such action is required by applicable rules or regulations or by the terms of any other outstanding series of our preferred stock. Any shares of our
preferred stock that we may issue may rank prior to shares of our Class A common stock or our Class B common stock as to payment of dividends and any payments upon our liquidation. 

Anti-Takeover Laws and Anti-Takeover Provisions of Our Certificate of Incorporation and Bylaws 

Section 203 of the DGCL contains certain “anti-takeover” provisions that apply to a Delaware corporation, unless the corporation
elects not to be governed by such provisions in its certificate of incorporation or bylaws. Neither our certificate of incorporation nor our bylaws contain such an election. Thus, Section 203 applies to us. Section 203 precludes a
corporation from engaging in any “business combination” with any person that owns 15% 

  
 2 

 
or more of its outstanding voting stock for a period of three years following the time that such stockholder obtained ownership of more than 15% of the outstanding voting stock of the
corporation. A business combination includes any merger, consolidation or sale of substantially all of a corporation’s assets. 
 The
three-year waiting period does not apply, however, if any of the following conditions are met: 
  

	 	•	 	 the board of directors of the corporation approved either the business combination or the transaction that
resulted in such stockholder owning more than 15% of such stock before the stockholder obtained ownership of more than 15% of the corporation’s stock; 

  

	 	•	 	 once the transaction that resulted in the stockholder owning more than 15% of the outstanding voting stock of the
corporation is completed, such stockholder owns at least 85% of the voting stock of the corporation outstanding at the time that the transaction commenced; or 

 

	 	•	 	 at or after the time the stockholder obtains more than 15% of the outstanding voting stock of the corporation,
the board of directors approves the business combination and the stockholders authorized the business combination at an annual or special meeting of stockholders (and not by written consent) by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the acquiring stockholder. 

 In addition, Section 203 does not apply
to any person who became the owner of more than 15% of a corporation’s stock if it was as a result of action taken solely by the corporation. Section 203 also does not apply to the corporation itself or to any of the corporation’s
majority-owned subsidiaries. 
 Donegal Mutual’s majority voting control of us, and certain anti-takeover provisions in our certificate
of incorporation and bylaws, could also (i) delay or prevent the removal of members of our board of directors and (ii) make a merger, tender offer or proxy contest involving us more expensive as well as unlikely to succeed, even if
such events were in the best interests of our stockholders other than Donegal Mutual. These factors could also discourage a third party from attempting to acquire control of us. In particular, our certificate of incorporation
and bylaws include the following anti-takeover provisions: 
  

	 	•	 	 our board of directors is classified into three classes, so that our stockholders elect only one-third of the members of our board of directors each year; 

  

	 	•	 	 our stockholders may remove our directors only for cause; 

 

	 	•	 	 our stockholders may not take stockholder action except at an annual or special meeting of our stockholders;

  

	 	•	 	 the request of stockholders holding at least 20% of the combined voting power of our Class A common stock
and our Class B common stock is required for a stockholder to call a special meeting of our stockholders; 

  

	 	•	 	 our bylaws require that stockholders provide advance notice to us to nominate candidates for election
to our board of directors or to propose any other item of stockholder business at a stockholders’ meeting; 

  

	 	•	 	 we do not permit cumulative voting rights in the election of our directors; 

 

	 	•	 	 our certificate of incorporation does not provide for preemptive rights in connection with any issuance of
securities by us; and 

  

	 	•	 	 our board of directors may issue, without stockholder approval unless otherwise required by law, preferred stock
with such terms as our board of directors may determine. 

  
 3

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