Document:

MICROLIN
BIO INC.

NONQUALIFIED
STOCK OPTION AGREEMENT

 

Notice
of Stock Option Grant

 

MicroLin
Bio Inc., a
Delaware corporation (the
"Company"), grants
to the Grantee named below,
in accordance with
the terms of the
Microlin Bio Inc.
Equity Incentive Plan (the "Plan")
and this Nonqualified Stock Option Agreement
(this "Agreement"), an  option (the "Stock Option") to
purchase the number of Shares at the exercise price per share ("Exercise Price")
as follows:

 

	Name
    of Grantee:	John
    N. Bonfiglio
		
	Number
    of Shares:	10,000
		
	Exercise
    Price:	$12.65
    per Share
		
	Date
    of Grant:	December
    31, 2013
		
	Vesting
    Dates:	First
    anniversary of the
    Date of Grant
    and the first day
    of each month
    between the first
    and fourth anniversaries of the Date
    of Grant

 

Terms
of Agreement

 

1.     
Grant of Stock
Option. Subject
to and upon
the terms, conditions  and restrictions
set forth in
this Agreement and
in the Plan, the Company
hereby grants to the Grantee as of the Date
of Grant this Stock Option to purchase
the number of Shares at the Exercise Price as
set forth above. This Stock Option is
intended to be a nonqualified stock option and shall not be treated as an "incentive
stock option" within the meaning of that term under Section 422 of the Code.

 

2.     
Vesting of Stock
Option.

 

(a)               
Unless and until
terminated as hereinafter
provided, the Stock
Option shall vest and
become exercisable as
follows:

 

(i)    
With respect
to twenty-five percent
(25%) of the Shares
subject to the Stock
Option, on the
first anniversary of
the Date of
Grant, provided that
the Grantee shall have
remained in the
continuous employment or other
service of the Company
or a Subsidiary through
such Vesting Date; and

 

(ii)  
With respect
to seventy-five percent
(75%) of the
Shares subject to the
Stock Option, ratably,
on the first
day of each month between the
first anniversary of the Date of
Grant and the fourth anniversary of the Date of Grant, provided that the Grantee shall
have remained in
the continuous employment or other service
of the Company or a Subsidiary through
each such Vesting Date.

 

    	 	 	 

    	 	 	 

    

 

(b)              
Notwithstanding the provisions
of Section 2(a),
the Stock Option
will become immediately vested
and exercisable in
full if, prior
to the applicable Vesting Date: (i) the Grantee's employment
or service with the Company and its Subsidiaries terminates
by reason of the Grantee's death or "Disability"
(defined as permanent and total disability
within the meaning of Section 22(e)(3)
of the Code); or (ii) the Grantee's employment
or service is terminated within two years after a Change
in Control: (A) by the Company and its Subsidiaries without Cause and not as
a result of Disability; or (B) by the Grantee
for Good Reason (defined as in Section 2(c) of this
Agreement).

 

(c)               
For purposes of
this Agreement, "Good
Reason" shall mean
the occurrence of any
of the following
without the Grantee's
consent: (i) a material reduction
of the Grantee's annual base salary; (ii) a material reduction in the Grantee's title, authority, responsibilities or reporting
relationship as in effect immediately prior to
the Change in Control; or (iii) the Company's
requirement that in order to perform his
obligations to the Company,
the Grantee must relocate his residence
to a location more than fifty (50)
miles from the Grantee's principal office location immediately prior to
a Change in Control. A termination of the Grantee's employment or service by the
Grantee shall not be deemed to be for Good Reason unless (x) the Grantee gives notice
to the Company of the existence of the
event or condition constituting Good Reason within 60 calendar days after such event
or condition initially occurs or exists, and (y)
the Company fails to cure such event or condition
within 30 calendar days after receiving such notice.

 

(d)              
For purposes of
this Agreement, the
continuous employment or
service of the Grantee
with the Company
and its Subsidiaries
shall not be deemed
to have been interrupted, and the Grantee
shall not be
deemed to have ceased to be an employee
of, or service provider to, the Company and
its Subsidiaries, by reason
of the transfer of his
employment or service among the Company
and its Subsidiaries or a leave of absence
approved by the Board.

 

3.     
Forfeiture of Stock
Option.

 

(a)               
To the extent
that the Stock
Option has not
yet vested pursuant
to Section 2 above,
it shall be
forfeited automatically without
further action or
notice if the
Grantee ceases to be employed by,
or to provide services to, the Company
and its Subsidiaries prior to the applicable Vesting
Date other than as provided in Section
2(b).

 

(b)              
The provisions of
Section 17 of
the Plan regarding
forfeiture of Awards shall
apply to the
Stock Option and
any Shares delivered
hereunder. This Section 3(b) shall survive
and continue in full force in accordance with its terms notwithstanding
any termination of the Grantee's employment or service or the
exercise of the Stock Option as provided herein.

 

4.     
Exercise of Stock Option.

 

(a)               
To the extent
that the Stock
Option has become
vested and exercisable
in accordance with this
Agreement, it may
be exercised in
whole or in part from time to time by written notice
to the Company stating the number
of whole Shares for which the Stock Option
is being exercised, the intended manner of payment,
and such other provisions as may be required
by the Company. The Stock Option may
be exercised, during the
lifetime of the Grantee, only by
the Grantee, or in the event of his legal incapacity, by his guardian or legal representative
acting on behalf of the
Grantee in a fiduciary capacity under
state law and/or court supervision. If the
Grantee dies before the expiration of the
Stock Option, all or part of this Stock Option may be exercised
(prior to expiration) by the personal
representative of the Grantee or by any person who has acquired this Stock Option directly from the Grantee by will, bequest or
inheritance, but only to the extent that the Stock Option was vested and exercisable upon the Grantee's death.

    	 	2	 

    	 	 	 

    

 

(b)              
The Exercise Price
is payable in
cash or by
certified or cashier's
check or other cash
equivalent acceptable to
the Board payable to the order
of the Company.

 

5.     
Term of Stock Option. 
Subject to Section
3(b) hereof, the Stock Option will terminate on the earliest of
the following dates (the "Expiration Date"):

 

(a)               
Twelve (12) months
after the termination of the
Grantee's employment or
service as a
result of death or Disability;

 

(b)              
Immediately upon termination of the Grantee's
employment or service
by the Company for
Cause;

 

(c)               
Ninety (90) days
after the termination 
of the Grantee
's employment or service
for any other
reason; or

(d)              
Midnight on the
day immediately preceding
the tenth anniversary
of the Date of
Grant.

  

6.     
Delivery of Shares. Subject
to the terms
and conditions of
this Agreement and the
Plan, Shares shall be
issuable to the Grantee as soon
as administratively practicable following
the date the Grantee (a) exercises the Stock Option in accordance with Section 4 hereof,
(b) makes full payment to the Company of the
Exercise Price and (c) makes arrangements
satisfactory to the Company (or any Subsidiary,
if applicable) for the
payment of any required withholding taxes related
to the exercise of the Stock Option.
The Grantee shall not possess any incidents
of ownership (including, without limitation, dividend or voting rights) in the Shares
until such Shares have been issued to the Grantee in
accordance with this Section 6.

 

7.     
Transferability. The
Stock Option may not
be sold, exchanged,
assigned, transferred, pledged,
encumbered or otherwise disposed of
by the Grantee; provided that the Grantee's
rights with respect to such Stock Option
may be transferred by will or pursuant to
the laws of descent and
distribution. Any purported transfer or encumbrance in violation of
the provisions of this Section 7 shall
be void, and the
other party to any such purported
transaction shall not obtain any rights to or interest in such Stock Option.

 

8.     
Restrictions on Resale.
Unless and until registered under
the Securities Act of 1933, as amended
(the "Securities Act"),
any Shares purchased pursuant to
the Stock Option will be illiquid and will be deemed to be "restricted securities"
for purposes of the Securities Act. Accordingly,
any such Shares may be sold only
in compliance with the registration requirements
of the Securities Act or an exemption therefrom
and may need to
be held indefinitely. Unless and until the Shares have been registered under
the Securities Act, each certificate evidencing any of the Shares shall bear a restrictive
legend specified by the Company.

 

    	 	3	 

    	 	 	 

    

 

9.     
Company's Right to Repurchase
Shares.

 

(a)               
The Company shall
have the right
(the "Repurchase Right")
to repurchase all, but
not less than
all, of the
Shares purchased by
the Grantee pursuant to the
Stock Option, upon written notice to
the Grantee within ninety (90) days
after the termination of the Grantee's employment
or service with the Company and
its Subsidiaries, voluntarily or involuntarily, for any
reason whatsoever other than by the
Company for Cause, including
as a result of death or Disability.
The Repurchase Right shall be
exercised by the Company
by giving the holder of the Shares written
notice of its intention to exercise the
Repurchase Right, and, together with such notice,
tendering to the holder an amount
equal to the Fair Market
Value of the Shares. Upon timely exercise of
the Repurchase Right in the manner provided in
this Section 9(a), the holder of
the Shares shall deliver to the Company
any stock certificate or certificates representing
the Shares being repurchased, duly endorsed and free and clear of any and all liens,
charges and encumbrances. If Shares are not repurchased
under the Repurchase Right, the
Grantee and his successor in
interest, if any, will continue to hold the
Shares subject to all of
the provisions of this Agreement and the Plan.

 

(b)              
In the event that
the Company or
a Subsidiary terminates
the Grantee's employment or
service for Cause, the
Company's rights with
respect to any
Shares purchased by the Grantee pursuant to the Stock Option
shall be governed by Section 3(b) of this Agreement and Section 17 of the Plan.

 

10. 
No Right to Continued
Employment or Service.
Nothing contained in
this Agreement shall confer
upon the Grantee any right with respect
to continuance of employment by or service with the Company and its Subsidiaries,
nor limit or affect in any manner the right of the Company and its Subsidiaries to
terminate the employment or service of the
Grantee or adjust the Grantee's compensation.

 

11. 
Relation to Other
Benefits. Any economic or
other benefit to the
Grantee under this Agreement
or the Plan
shall not be
taken into account in determining
any benefits to which the Grantee may be
entitled under any profit-sharing, retirement
or other benefit
or compensation plan or arrangement maintained by
the Company or a Subsidiary.

 

12. 
Taxes and Withholding.
The Grantee shall
pay to the
Company, or make arrangements
satisfactory to the Company
for payment of, any
federal, state, local or other
taxes that the Company or any Subsidiary is required to withhold in connection with the delivery of Shares under
this Agreement. The obligation of the Company
to deliver Shares under this Agreement shall be conditioned on such payment
or arrangements, and the Company and its Subsidiaries
shall, to the extent permitted by Applicable Law, have the
right to deduct any such taxes from any
payment otherwise due to the Grantee.

 

13. 
Compliance with Applicable
Law. The
Company shall make reasonable
efforts to comply with
Applicable Law (including
applicable federal and
state securities laws) with respect
to the Stock Option; provided that, notwithstanding
any other provision of this Agreement, and only to the
extent permitted under Section 409A of the Code, the
Company shall not be obligated to
deliver any Shares pursuant to this Agreement
if the delivery thereof would result in
a violation of Applicable Law.

    	 	4	 

    	 	 	 

    

 

14. 
Adjustments.
The Exercise Price
and the number
and kind of
shares of stock covered
by this Agreement
shall be subject to adjustment as provided in Section 13 of the Plan.

 

15. 
Amendments. Subject
to the terms of
the Plan, the
Board may modify
this Agreement upon written
notice to the Grantee.
Any amendment to
the Plan shall be deemed to be an amendment to this Agreement to
the extent that the amendment is applicable hereto. Notwithstanding the foregoing, no amendment
of the Plan or this Agreement shall adversely affect the rights of the Grantee under this Agreement
in a material way without the Grantee's consent, except as otherwise may be
provided in the Plan.

 

16. 
Severability. In
the event that one
or more of
the provisions of
this Agreement shall be
invalidated for any
reason by a
court of competent
jurisdiction, any provision so invalidated shall be
deemed to be separable from the other provisions
hereof, and the remaining provisions hereof shall continue to be valid and
fully enforceable.

 

17. 
Relation to Plan.
This Agreement is
subject to the
terms and conditions
of the Plan, including
the forfeiture provisions
of Section 17 of the Plan. This Agreement
and the Plan contain the entire
agreement and understanding of the parties
with respect to the subject matter contained in this
Agreement, and supersede all prior written or oral communications, representations
and negotiations in respect thereto . In
the event of any inconsistency between the provisions
of this Agreement and the Plan, the Plan
shall govern. Capitalized terms used herein
without definition shall have the meanings assigned to
them in the Plan. The
Board shall have the right to determine any questions which arise in connection
with the grant of the Stock Option.

 

18. 
Successors and Assigns.
Without limiting Section
7 hereof, the
provisions of this Agreement
shall inure to
the benefit of,
and be binding upon, the successors, administrators, heirs, legal representatives
and assigns of the Grantee, and the successors
and assigns of the Company.

 

19.    
Governing Law. The
interpretation, performance, and
enforcement of this Agreement
shall be governed
by the laws
of the State
of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise
refer interpretation or enforcement of the Agreement to the substantive law
of another jurisdiction.

 

20. 
Use of Grantee's
Information. Information about
the Grantee and
the Grantee's participation in the
Plan may be collected,
recorded and held, used
and disclosed for any purpose related to
the administration of the Plan. The
Grantee understands that such processing of this
information may need to be
carried out by the Company and
its Subsidiaries and by
third party administrators whether such persons
are located within the Grantee's country or elsewhere, including the
United States of America . The Grantee consents
to the processing
of information relating to the Grantee and the Grantee's
participation in the Plan in any
one or more of the ways referred to above.

 

 

 

[SIGNATURE
PAGE FOLLOWS]

    	 	5	 

    	 	 	 

    

 

IN
WITNESS WHEREOF, the Company
has caused this Agreement
to be executed
on its behalf by
its duly authorized officer
and the Grantee has
also executed this Agreement, as
of the Date of Grant.

 

 

MICROLIN
BIO INC.

 

 

By:
/s/ Joseph Hernandez

Joseph
Hernandez

Executive
Chairman

 

 

The
undersigned Grantee hereby acknowledges
receipt of a
copy of the
Plan. The Grantee represents
that he is
familiar with the
terms and provisions of the Plan,
has had an opportunity to obtain the advice
of counsel prior to executing this Agreement, and
hereby accepts the Stock Option on the terms and conditions set forth herein and in
the Plan.

 

GRANTEE

 

 

/s/
John N. Bonfiglio

John
N. Bonfiglio

    	 	6EX-10.1

 Exhibit 10.1 

STOCK PURCHASE AND STANDSTILL AGREEMENT 

Among 
 DONEGAL MUTUAL INSURANCE
COMPANY 
 and 
 DONEGAL GROUP
INC. 
 and 
 GREGORY M. SHEPARD

 Relating to 
 3,675,000
Shares of Class A Common Stock of Donegal Group Inc. 
 and 

400,000 Shares of Class B Common Stock of Donegal Group Inc. 

 TABLE OF CONTENTS 
  

					
	 	  	Page	 
		
	 RECITALS
	  	 	1	  
		
	 ARTICLE I—REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLER
	  	 	1	  
	     1.1     Authority
	  	 	1	  
	     1.2     Title to the Shares
	  	 	2	  
	     1.3     Representations and Warranties to Be True on the Closing Date
	  	 	2	  
		  	 	2	  
		
	 ARTICLE II—REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF DGI
	  	 	3	  
	     2.1     Corporate Authority
	  	 	3	  
	     2.2     Availability of Funds to Consummate the Purchase of the Shares
	  	 	3	  
	     2.3     Representations and Warranties to be True on the Closing Date
	  	 	3	  
		
	 ARTICLE III—REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF DMIC
	  	 	3	  
	     3.1     Corporate Authority
	  	 	3	  
	     3.2     Availability of Funds to Consummate the Purchase of the Shares
	  	 	4	  
	     3.3     Representations and Warranties to be True on the Closing Date
	  	 	4	  
		
	 ARTICLE IV—ACTIONS PENDING THE CLOSING DATE
	  	 	4	  
	     4.1     Preserve Accuracy of Representations and Warranties
	  	 	4	  
	     4.2     No Public Announcement
	  	 	4	  
	     4.3     Receipt of Wire Transfer Instructions from the Seller
	  	 	5	  
		
	 ARTICLE V—CONDITIONS PRECEDENT TO OBLIGATIONS OF DGI
	  	 	5	  
	     5.1     No Misrepresentation or Breach of Covenants and Warranties
	  	 	5	  
	     5.2     Legal Matters
	  	 	5	  
		
	 ARTICLE VI—CONDITIONS PRECEDENT TO OBLIGATIONS OF DMIC
	  	 	5	  
	     6.1     No Misrepresentation or Breach of Covenants and Warranties
	  	 	5	  
	     6.2     Legal Matters
	  	 	6	  
		
	 ARTICLE VII—CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
	  	 	6	  
	     7.1     No Misrepresentation or Breach of Covenants and Warranties
	  	 	6	  
	     7.2     Legal Matters
	  	 	6	  

  
 (i) 

					
		
	 ARTICLE VIII—PURCHASE PRICE AND CLOSING
	  	 	6	  
	     8.1     Closing Date
	  	 	6	  
	     8.2     Purchase and Sale
	  	 	6	  
	     8.3     Deliveries by the Seller
	  	 	7	  
	     8.4     Deliveries by the Purchasers
	  	 	7	  
		
	 ARTICLE IX—TERMINATION
	  	 	7	  
	     9.1     Termination
	  	 	7	  
	     9.2     Effect of Termination
	  	 	8	  
		
	 ARTICLE X—STANDSTILL AGREEMENT OF THE SELLER
	  	 	8	  
	     10.1    Definitions
	  	 	8	  
	     10.2    Standstill Agreement of the Seller
	  	 	9	  
	     10.3    Prompt Filing of Amendment to the Seller’s Schedule 13D
	  	 	11	  
	     10.4    Specific Performance of the Seller’s Standstill Agreement
	  	 	12	  
		
	 ARTICLE XI—AMENDMENT, WAIVER AND INDEMNIFICATION
	  	 	13	  
	     11.1    Amendment
	  	 	13	  
	     11.2    Extension; Waiver
	  	 	13	  
	     11.3    Survival of Obligations
	  	 	13	  
	     11.4    Indemnification
	  	 	14	  
		
	 ARTICLE XII—MISCELLANEOUS
	  	 	14	  
	     12.1    Notices
	  	 	14	  
	     12.2    Expenses
	  	 	15	  
	     12.3    Successors and Assigns
	  	 	16	  
	     12.4    Partial Invalidity
	  	 	16	  
	     12.5    Execution in Counterparts
	  	 	16	  
	     12.6    Entire Agreement
	  	 	16	  
		
	 SIGNATURES
	  	 	17	  

  
 (ii) 

 STOCK PURCHASE AND STANDSTILL AGREEMENT 

THIS STOCK PURCHASE AND STANDSTILL AGREEMENT (this “Agreement”) made and entered into as of this 18th day of December, 2015 among
Donegal Mutual Insurance Company, a Pennsylvania mutual fire insurance company, with its principal offices at 1195 River Road, Marietta, Pennsylvania 17547 (“DMIC”), Donegal Group Inc., a Delaware corporation with its principal offices at
1195 River Road, Marietta, Pennsylvania 17547 (“DGI”, and, together with DMIC, the “Purchasers”), and Gregory M. Shepard, an individual with an address at 7028 Portmarnock Place, Bradenton, Florida 34202 (the “Seller”).

 WITNESSETH: 
 WHEREAS, the
Seller owns beneficially 3,675,000 shares of Class A common stock of DGI (the “Class A Shares”) and 400,000 shares of Class B common stock of DGI (the “Class B Shares,” and, together with the Class A Shares, the
“Shares”); 
 WHEREAS, the Seller desires to sell the Shares to the Purchasers pursuant to the terms and conditions set forth in
this Agreement; and 
 WHEREAS, the Purchasers desire to purchase the Shares from the Seller on the terms and conditions set forth in this
Agreement; 
 NOW, THEREFORE, the Purchasers and the Seller, in consideration of the agreements, covenants and conditions contained in this
Agreement, and intending to be legally bound hereby, make the following representations and warranties, give the following covenants and agree as follows: 

ARTICLE I 
 REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF THE SELLER 
 As an inducement to the Purchasers to enter into this Agreement and to consummate the
purchase of the Shares this Agreement contemplates, the Seller represents and warrants to the Purchasers and agrees as follows: 
 1.1
Authority. This Agreement and the sale and purchase of the Shares this Agreement contemplates have been duly approved by all necessary action on the part of the Seller. This Agreement, when executed and delivered by the Seller and assuming
the due execution of this Agreement by the Purchasers, will constitute the valid, legal and binding agreement of the Seller enforceable in accordance with its terms, subject to bankruptcy, 

  
 -1- 

 
insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity. Neither the execution nor the
delivery of this Agreement nor the consummation of the sale and purchase of the Shares this Agreement contemplates, nor compliance with nor fulfillment of the terms and provisions of this Agreement, will (i) conflict with or result in a breach
of the terms, conditions or provisions of or constitute a default under any instrument, agreement, mortgage, judgment, order, award, decree or other restriction to which the Seller is a party or by provisions affecting the Seller; (ii) give any
party to or with rights under any such instrument, agreement, mortgage, judgment, order, award, decree or other restriction the right to terminate, modify or otherwise change the rights or obligations of the Seller under such instrument, agreement,
mortgage, judgment, order, award, decree or other restriction or (iii) require the approval, consent or authorization of or any filing with or notification to any federal, state or local court or Governmental Authority. 

1.2 Title to the Shares. The Seller owns the Shares beneficially and, as of the Closing Date, the Seller will own the Shares, free and
clear of any liens, claims, encumbrances and restrictions of any kind, and the transfer and delivery of the Shares to the Purchasers as this Agreement contemplates will be sufficient to transfer good and marketable record and beneficial title to all
of the Shares to the Purchasers, free and clear of liens, claims, encumbrances and restrictions of any kind and, at the Closing, the Seller will have good and marketable record and beneficial title to the Shares, free and clear of liens, claims,
encumbrances and restrictions of any kind. The Seller shall have taken any necessary action not later than two business days prior to the Closing Date to cause any pledgee who holds the Shares (the “Pledgee”) to notify the Purchasers that
the Pledgee agrees to release the Shares effective as of the Closing Date to the Purchasers upon the Seller’s simultaneous repayment to the Pledgee of the principal amount of any indebtedness of the Seller to the Pledgee in full plus any
accrued interest on any such indebtedness and any other fees in respect of any such indebtedness, simultaneously with the Seller’s receipt of the Purchase Price (as defined in Section 8.2 of this Agreement) for the Shares and the
Seller’s repayment to the Pledgee in full of the principal amount of any such indebtedness and all accrued interest and fees in respect of any such indebtedness. 

1.3 Representations and Warranties to Be True on the Closing Date. All of the representations and warranties of the Seller set forth in
this Article I shall be true and correct on the Closing Date. 

  
 -2- 

 ARTICLE II 

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF DGI 

As an inducement to the Seller to enter into this Agreement and to consummate the sale of the Shares this Agreement contemplates, DGI
represents and warrants to the Seller and agrees as follows: 
 2.1 Corporate Authority. This Agreement and the purchase of the Shares
this Agreement contemplates have been duly approved by all necessary corporate action on the part of DGI. This Agreement, when duly executed and delivered by the Seller, DGI and DMIC, will constitute the valid and binding agreement of DGI
enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity. Neither the
execution nor the delivery of this Agreement, nor the consummation of the purchase of the Shares this Agreement contemplates, nor compliance with nor fulfillment of the terms and provisions of this Agreement, will (i) conflict with or result in
a breach of the terms, conditions or provisions of or constitute a default under the Certificate of Incorporation or By-laws of DGI, any instrument, agreement, mortgage, judgment, order, award, decree or other restriction to which DGI is a party or
by which DGI is bound or any statute or regulatory provisions affecting DGI or (ii) require the approval, consent or authorization of or any filing with or notification to any federal, state or local court or Governmental Authority. 

2.2 Availability of Funds to Consummate the Purchase of the Shares. DGI, in conjunction with DMIC, has sufficient available financial
resources to pay, in conjunction with DMIC, the Purchase Price for the Shares. 
 2.3 Representations and Warranties to Be True on the
Closing Date. All of the representations and warranties of DGI set forth in this Article II shall be true and correct on the Closing Date. 

ARTICLE III 
 REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF DMIC 
 As an inducement to the Seller to enter into this Agreement and to consummate the sale of the Shares
this Agreement contemplates, DMIC represents and warrants to the Seller and agrees as follows: 
 3.1 Corporate Authority. This
Agreement and the purchase of the Shares this Agreement contemplates have been duly approved by all necessary corporate action on the part of DMIC. This Agreement, when duly executed and delivered by the Seller, DMIC and DGI, will constitute the
valid and binding agreement of DMIC enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general
principles 

  
 -3- 

 
of equity. Neither the execution nor the delivery of this Agreement, nor the consummation of the purchase of the Shares this Agreement contemplates, nor compliance with nor fulfillment of the
terms and provisions of this Agreement, will (i) conflict with or result in a breach of the terms, conditions or provisions of or constitute a default under the Articles of Incorporation or By-laws of DMIC, any instrument, agreement, mortgage,
judgment, order, award, decree or other restriction to which DMIC is a party or by which DMIC is bound or any statute or regulatory provisions affecting DMIC or (ii) require the approval, consent or authorization of or any filing with or
notification to any federal, state or local court or Governmental Authority. 
 3.2 Availability of Funds to Consummate the Purchase of
the Shares. DMIC, in conjunction with DGI, has sufficient available financial resources to pay, in conjunction with DGI, the Purchase Price for the Shares. 

3.3 Representations and Warranties to Be True on the Closing Date. All of the representations and warranties of DMIC set forth in this
Article III shall be true and correct on the Closing Date. 
 ARTICLE IV 

ACTIONS PENDING THE CLOSING DATE 

The parties covenant and agree as follows: 

4.1 Preserve Accuracy of Representations and Warranties. Each of the Seller, DGI and DMIC shall neither take nor permit any action or
fail to take any action that would cause any of their respective representations or warranties in this Agreement not to be accurate as of the Closing Date. 

4.2 No Public Announcement. Except for filings with the SEC to report the sale and purchase of the Shares this Agreement contemplates
required by provisions of the federal securities laws applicable to the Seller and to the Purchasers and, except as Section 10.3 of this Agreement otherwise provides, neither the Seller nor the Purchasers shall, without the prior written
approval of the other, make any press release or other public announcement or filing concerning the sale and purchase of the Shares this Agreement contemplates, except as and to the extent that any such party shall so determine is required by
applicable federal securities laws, in which case the other parties to this Agreement shall be advised in advance of such proposed disclosure and be given a reasonable opportunity to comment on such proposed disclosure. 

  
 -4- 

 4.3 Receipt of Wire Transfer Instructions from the Seller. Not later than two business
days prior to the Closing Date, the Seller shall have delivered to each of the Purchasers instructions sufficient to enable the Purchasers to wire transfer funds constituting the Purchase Price to a bank account of the Seller upon the Closing Date.
Such information shall include the name of the bank, the ABA number of the bank, the name of the bank account of the Seller and the number of the bank account of the Seller. 

ARTICLE V 
 CONDITIONS PRECEDENT
TO OBLIGATIONS OF DGI 
 The obligations of DGI under this Agreement to purchase and pay, in conjunction with DMIC, for the Shares
shall, at the option of DGI, be subject to the satisfaction, on or prior to the Closing Date, of the following conditions: 
 5.1 No
Misrepresentations or Breach of Covenants and Warranties. There shall have been no material breach by the Seller in the performance of any of the Seller’s covenants in this Agreement, each of the representations and warranties of the Seller
contained or referred to in this Agreement shall be true and correct on the Closing Date as though made on the Closing Date and the Seller shall deliver to DGI on the Closing Date a certificate or certificates to that effect, dated the Closing Date,
and signed by the Seller. 
 5.2 Legal Matters. No Order entered or Law promulgated or enacted by any Governmental Authority shall be
in effect that would prevent the consummation of the sale and purchase of the Shares this Agreement contemplates and no Proceeding brought by a Governmental Authority shall have been commenced and be pending which seeks to restrain, prevent or
materially delay or restructure the sale and purchase of the Shares this Agreement contemplates or which otherwise questions the validity or legality of the sale and purchase of the Shares in accordance with the provisions of this Agreement. 

ARTICLE VI 
 CONDITIONS
PRECEDENT TO OBLIGATIONS OF DMIC 
 The obligations of DMIC under this Agreement to purchase and pay, in conjunction with DGI, for the
Shares shall, at the option of DMIC, be subject to the satisfaction, on or prior to the Closing Date, of the following conditions: 
 6.1
No Misrepresentations or Breach of Covenants and Warranties. There shall have been no material breach by the Seller in the performance of any of his covenants in this Agreement, each of the representations and warranties of the Seller
contained or referred to in this Agreement shall be true and correct on the Closing Date as though made on the Closing Date and the Seller shall deliver to DMIC on the Closing Date a certificate or certificates to that effect, dated the Closing
Date, and signed by the Seller. 

  
 -5- 

 6.2 Legal Matters. No Order entered or Law promulgated or enacted by any Governmental
Authority shall be in effect that would prevent the consummation of the sale and purchase of the Shares this Agreement contemplates and no Proceeding brought by a Governmental Authority shall have been commenced and be pending which seeks to
restrain, prevent or materially delay or restructure the sale and purchase of the Shares this Agreement contemplates or which otherwise questions the validity or legality of the sale and purchase of the Shares in accordance with the provisions of
this Agreement. 
 ARTICLE VII 

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER 

The obligations of the Seller under this Agreement to sell and receive payment for the Shares shall, at the option of the Seller, be subject
to the satisfaction, on or prior to the Closing Date, of the following conditions: 
 7.1 No Misrepresentations or Breach of Covenants and
Warranties. There shall have been no material breach by DMIC or DGI in the performance of any of their respective representations, warranties or covenants in this Agreement and each of the Purchasers shall deliver to the Seller, a certificate or
certificates to that effect, dated the Closing Date, and signed on behalf of each of the Purchasers. 
 7.2 Legal Matters. No Order
entered or Law promulgated or enacted by any Governmental Authority shall be in effect which would prevent the consummation of the purchase and sale of the Shares this Agreement contemplates and no Proceeding brought by a Governmental Authority
shall have been commenced and be pending which seeks to restrain, prevent or materially delay or restructure the purchase and sale of the Shares this Agreement contemplates or which otherwise questions the validity or legality of the sale and
purchase of the Shares in accordance with the provisions of this Agreement. 
 ARTICLE VIII 

PURCHASE PRICE AND CLOSING 

8.1 Closing Date. Subject to the fulfillment of the conditions precedent specified in Articles V, VI, and VII, the purchase and sale of
the Shares this Agreement contemplates shall be consummated (the “Closing”) at 10:00 a.m., on December 21, 2015 (the “Closing Date”) at the offices of Duane Morris LLP, 30 South
17th Street, Philadelphia, Pennsylvania 19103 or at such other place or such other time as the Purchasers and the Seller shall mutually agree. 

8.2 Purchase and Sale. On the Closing Date, the Purchasers shall purchase from the Seller, and the Seller shall sell to the Purchasers,
all of the Shares for a purchase price of $16.50 per Class A Share, a total of $60,637,500, and $23.50 per Class B Share, a total of $9,400,000. The total purchase price of the Class A Shares and the Class B Shares is $70,037,500, which
amount is referred to in this Agreement as the “Purchase Price”. 

  
 -6- 

 8.3 Deliveries by the Seller. As of the Closing Date, the Seller shall deliver all of the
Shares electronically through book-entry to the Purchasers, free and clear of any liens, claims or encumbrances of any sort. 
 8.4
Deliveries by the Purchasers. On the Closing Date, the Purchasers shall make payment of the Purchase Price to the Seller by wire transfer of immediately available funds to such bank account as the Seller shall specify in writing to the
Purchasers pursuant to Section 4.3 of this Agreement. 
 ARTICLE IX 

TERMINATION 
 9.1
Termination. This Agreement may be terminated and the purchase and sale of the Shares abandoned at any time prior to the Closing Date: 

(a) by mutual consent of the Purchasers and the Seller; 

(b) by either of the Purchasers or by the Seller by one day’s written notice to the Seller or the Purchasers, as the case may be, if the
Closing of the sale and purchase of the Shares this Agreement contemplates shall not have been consummated on or before March 31, 2016; 

(c) by either of the Purchasers or by the Seller by one day’s written notice to the Seller or the Purchasers, as the case may be, if any
of the conditions to such party’s obligations to consummate the sale and purchase of the Shares this Agreement contemplates shall have become impossible to satisfy; 

(d) by either of the Purchasers if (i) the Seller is in breach at any time prior to the Closing Date of any of the representations and
warranties made by the Seller as though made on and as of such date or (ii) the Seller shall not have performed and complied in all material respects with all covenants this Agreement requires the Seller to perform or comply with on and as of
such date, which breach cannot be or has not been cured, in all material respects within 15 days after the giving of written notice thereof by the Purchasers to the Seller; or 

(e) by the Seller if either of the Purchasers shall not have performed and complied in all material respects with all respective covenants this
Agreement requires the respective Purchasers to perform or comply with on and as of such date, which breach cannot be or has not been cured, in all material respects within 15 days after the giving of written notice thereof by the Seller to the
Purchasers. 

  
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 9.2 Effect of Termination. In the event of the termination of this Agreement by either of
the Purchasers or the Seller, as provided in Section 9.1 of this Agreement, this Agreement shall thereafter become void and there shall be no liability on the part of any party to this Agreement to any other party to this Agreement, except that
(i) any such termination shall be without prejudice to the rights of any party to this Agreement arising out of the willful breach by any other party of any covenant or agreement contained in this Agreement and (ii) each of the parties to
this Agreement shall provide the other party to this Agreement with a copy of any proposed public announcement regarding the occurrence of such termination and a reasonable opportunity to comment on such proposed public announcement prior to its
dissemination. 
 ARTICLE X 

STANDSTILL AGREEMENT OF THE SELLER 

10.1 Definitions. For purposes of this Agreement: 

(a) The terms “Affiliate” and “Associate” have the respective meanings set forth in Rule 12b-2 promulgated by the
Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “1934 Act”); the terms “beneficial owner” and “beneficial ownership” shall have the respective meanings
as set forth in Section 13(d) of the 1934 Act and in Rule 13d-3 promulgated by the SEC under the 1934 Act and the terms “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or
limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature. 

(b) “Board” means the Board of Directors of DGI. 

(c) “Common Stock” means the Class A common stock, par value $.01 per share, of DGI and the Class B common stock, par value $.01
per share, of DGI. 
 (d) The “Standstill Period” means the period that commences on the Closing Date and expires on the 25th anniversary of the date of such Closing Date. 

  
 -8- 

 10.2 Standstill Agreement of the Seller. The Seller agrees that, during the Standstill
Period, he will not, and he will cause each of his Affiliates or agents or other persons acting on his behalf not to, and will use commercially reasonable efforts to cause his respective Associates not to: 

(a) own, directly or indirectly purchase or cause to be purchased or otherwise acquire or agree to acquire beneficial ownership of, or
encourage, propose or suggest to any third party that any such person purchase, tender, exchange or otherwise acquire or agree to acquire, directly or indirectly, or through the acquisition of control of another person, any Common Stock or other
securities issued by DGI or any securities convertible into or exchangeable for Common Stock or any other equity securities issued by DGI or acquire or own, directly or indirectly, an insurance policy from DMIC or any insurance subsidiary of DGI;

 (b) acquire, offer to acquire, solicit an offer to sell, agree to acquire, encourage, propose or suggest to any third party that any third
party acquire, offer to acquire or agree to acquire, directly or indirectly, by purchase, tender, exchange or otherwise, any Common Stock or other securities issued by DGI or any subsidiary or division of DGI or of any successor to DGI or any
controlling person or any subsidiary or division of DGI or enter into any agreement or arrangement or otherwise act in concert with any other person for the purpose of acquiring, holding or disposing of any Common Stock; 

(c) submit any stockholder proposal (pursuant to Rule 14a-8 promulgated by the SEC under the 1934 Act or otherwise) or any notice of nomination
or other business for consideration, and will not nominate any candidate for election to the Board or oppose the directors nominated by the Board or induce, or attempt to induce, any other person to initiate any stockholder proposal or participate,
directly or indirectly, alone or in concert with others, any solicitation of proxies to vote any shares of the Common Stock at any meeting of the stockholders of DGI or the policyholders of DMIC or any insurance subsidiary of DGI; 

(d) seek the removal of any director of DGI or DMIC; 

(e) form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” within the
meaning of Section 13(d)(3) of the 1934 Act with respect to the Common Stock or deposit any shares of Common Stock in a voting trust or similar arrangement or subject any shares of Common Stock to any voting agreement or pooling arrangement;

 (f) solicit proxies or written consents of stockholders, or otherwise conduct any nonbinding referendum with respect to the Common Stock,
or make, or in any way participate in, any “solicitation” of any “proxy” within the meaning of Rule 14a-1 promulgated by the SEC under the 1934 Act to vote, or advise, encourage or influence any person with respect to voting, any
shares of Common Stock with respect to any matter, or become a “participant” in any contested “solicitation” for the election of directors with respect to DGI or any controlling person of DGI (as such terms are defined or used
under the 1934 Act); 

  
 -9- 

 (g) seek to call, or request the call of, a special meeting of the stockholders of DGI or
policyholders of DMIC or any insurance subsidiary of DGI, or seek to make, or make, a stockholder proposal at any meeting of the stockholders of DGI or a proposal at any meeting of policyholders of DMIC or make a request for a list of DGI’s
stockholders or DMIC’s policyholders or any other books and records of DGI pursuant to Section 220 of the Delaware General Corporation Law or of DMIC pursuant to the Pennsylvania Business Corporation Law or the Pennsylvania Insurance
Holding Companies Act or otherwise or otherwise induce or encourage any other person to initiate such proposal or request or otherwise acting alone, or in concert with others, seek to control or influence the governance or policies of DGI or DMIC;

 (h) effect or seek to effect including, without limitation, by entering into any discussions, negotiations, agreements or understandings
with any third person, offer or propose, whether publicly or otherwise, to effect or cause or participate in, or in any way assist or facilitate any other person to effect or seek, offer or propose, whether publicly or otherwise, to effect or
participate in (i) any acquisition of record or beneficial ownership of any securities of DGI or rights or options to acquire any securities or beneficial ownership of such securities, or any material assets or businesses, of DGI or any of its
subsidiaries, (ii) any tender offer or exchange offer, merger, acquisition or other business combination proposal or transaction involving DGI or any of its subsidiaries or (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to DGI, any subsidiary of DGI or any controlling person of DGI; 
 (i) publicly
disclose, or cause or facilitate the public disclosure, including, without limitation, the filing of any document or report with the SEC or any other Governmental Authority or any disclosure to any journalist, member of the media or securities
analyst, of any intent, purpose, plan or proposal to obtain any waiver or consent under, or any amendment of, any of the provisions of this Section 10.2, or otherwise seek, in any manner that would require public disclosure by the Seller or the
Seller’s Affiliates or Associates, to obtain any waiver or consent under, or any amendment of, any provision of this Agreement, or take any action that could require DGI or DMIC to make any public disclosure with respect to any of the matters
set forth in this Agreement; 
 (j) seek to have DGI waive, amend or modify any provisions of DGI’s Certificate of Incorporation or
By-laws or to have DMIC waive, amend or modify any provisions of DMIC’s Articles of Association or Bylaws; 
 (k) enter into any
arrangements, understandings or agreements (whether written or oral) with, or advise, finance, assist or encourage, any other person that engages, or offers or proposes to engage, in any of the foregoing; 

  
 -10- 

 (l) otherwise act, alone, or in concert with others, to seek to control, advise, change or
influence the management, board of directors, governing instruments, policies or affairs of DGI or DMIC; 
 (m) request DGI, DMIC or their
professional advisors, directly or indirectly, to amend or waive any of the provisions of this Agreement; 
 (n) initiate or participate, by
encouragement or otherwise, in any litigation, arbitration or other proceeding against or involving DMIC or DGI or their respective officers or directors, including but not limited to, any derivative litigation any person brings on behalf of DGI or
any class action litigation brought against DGI or DMIC; 
 (o) advise, assist, encourage or finance, or arrange, assist or facilitate
financing to or for, any other person in connection with any of the matters this Agreement restricts or otherwise seek to circumvent the restrictions or prohibitions set forth in this Section 10.2; 

(p) announce an intention to do, or enter into any arrangement or understanding with others to do, any of the actions this Section 10.2
restricts or prohibits, or publicly announce or disclose any request to be excused from any of this restrictions or prohibitions this Section 10.2 imposes on the Seller and any Affiliate of the Seller; 

(q) disparage DGI, DMIC or any of their respective officers or directors, including nominees for election as members of the Board, in any
public or quasi-public forum; 
 (r) enter into any discussions, negotiations, agreements or understandings with any third party with respect
to any of the matters this Section 10.2 restricts or prohibits, or advise, assist, knowingly encourage or seek to persuade any third party to take any actions or make any statement with respect to any of the foregoing or make any statement
inconsistent with any of the restrictions and prohibitions in this Section 10.2; or 
 (s) take or cause or induce others to take any
action inconsistent with any of the foregoing provisions of this Section 10.2. 
 10.3 Prompt Filing of Amendment to the
Seller’s Schedule 13D. The Seller shall promptly file an amendment to the Seller’s Schedule 13D to report the Seller’s entry into this Agreement and shall file this Agreement as an exhibit to such amendment. The Seller shall
provide to DGI a reasonable opportunity to review and comment on such amendment in advance of its filing, and the Seller shall consider in good faith the reasonable comments of DGI. 

  
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 10.4 Specific Performance of the Seller’s Standstill Agreement. The Seller hereby
acknowledges and agrees, on behalf of himself and his Affiliates, that (a) irreparable harm to DGI and DMIC would occur in the event the Seller did not perform any of the provisions of this Agreement in accordance with their specific terms or
otherwise breach any of the provisions of this Agreement and (b) money damages would not be an adequate remedy for any such breach. Accordingly, the Seller agrees that DMIC and DGI shall be entitled to specific relief under this Agreement,
including, without limitation, an injunction or injunctions to prevent and enjoin any breaches or threatened breaches by the Seller or any Affiliates of the Seller of the provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any state or federal court in the State of Delaware, in addition to any other remedy to which DGI and DMIC may be entitled at law or in equity. In the event that DMIC or DGI shall bring any action in equity to enforce
this Agreement, the Seller agrees the Seller shall not allege, and the Seller hereby waives, the defense that DMIC or DGI has an adequate remedy at law. 

Furthermore, the Seller: 
 (a)
consents to the exclusive personal jurisdiction of the Court of Chancery or other federal or state court of the State of Delaware in the event any dispute between the Seller and the Purchasers arises out of this Agreement and the sale and purchase
of the Shares this Agreement contemplates; 
 (b) agrees that the Seller shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court; 
 (c) agrees that the Seller shall not bring any action relating to this Agreement or
the sale and purchase of the Shares this Agreement contemplates in any court other than the Court of Chancery or other federal or state court of the State of Delaware, and the Seller irrevocably waives the right to trial by jury in any such action;

 (d) agrees to waive any bonding requirement under any applicable law, in the event another party to this Agreement seeks to enforce the
terms of this Agreement by way of equitable relief; and 
 (e) irrevocably consents to service of process by a reputable overnight mail
delivery service, signature requested, to the Seller’s address as set forth in Section 12.1 of this Agreement or as applicable law otherwise provides. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING THE VALIDITY, INTERPRETATION
AND EFFECT OF THIS AGREEMENT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE. 

  
 -12- 

 ARTICLE XI 

AMENDMENT, WAIVER AND INDEMNIFICATION 

11.1 Amendment. This Agreement may be amended or modified in whole or in part at any time by an agreement in writing executed in the
same manner as this Agreement, provided, however, that no amendment shall be made that changes the terms of this Agreement in any material respect and that requires the further approval or proceedings of any insurance Governmental Authority without
such approval having first been obtained or such proceedings having first been completed. 
 11.2 Extension; Waiver. At any time prior
to the Closing Date, any party to this Agreement may: 
 (a) extend the time for the performance of any of the obligations or other acts of
the other parties to this Agreement; 
 (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in
any document delivered pursuant to this Agreement; or 
 (c) waive compliance with any of the agreements or conditions contained in this
Agreement. 
 Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach
of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term of this Agreement. 
 11.3 Survival of Obligations.
All certifications, representations and warranties made in this Agreement by the Seller and the performance obligations of the Seller under the terms of this Agreement shall survive the Closing Date under this Agreement, notwithstanding any notice
of any inaccuracy, breach or failure to perform not waived in writing, and notwithstanding the consummation of the sale and purchase of the Shares this Agreement contemplates with knowledge of such inaccuracy, breach or failure. All representations
and warranties this Agreement contains shall terminate one year after the Closing Date; provided that the representations in Section 1.2 of this Agreement relating to the Seller’s title to the Shares shall not expire. 

  
 -13- 

 11.4 Indemnification. 

(a) The Seller agrees to indemnify and hold harmless the Purchasers from and against any liabilities, losses, costs, deficiencies or damages
(“Loss”) and reasonable attorneys’ fees and expenses, court costs and all other reasonable out-of-pocket expenses (“Expense”) the Purchasers incur arising from any claim that the Seller did not convey to the Purchasers good
and marketable title to all of the Shares pursuant to this Agreement, provided that with respect to the representations and warranties contained in Section 1.2 of this Agreement relating to the Seller’s title to the Shares, the liability
of the Seller to the Purchasers shall not be in excess of the Purchase Price. 
 (b) If either Purchaser has suffered or incurred any Loss or
incurred any Expense, it shall so notify the Seller promptly in writing describing such Loss or Expense, the amount of such Loss or Expense, if known, and the method of computation of such Loss or Expense, all with reasonable particularity and
containing a reference to the provision of this Agreement or any certificate delivered pursuant to this Agreement in respect of which such Loss or Expense shall have occurred. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Person intends to claim any liability or expense as Loss or Expense under this Section 11.4, such Indemnified Person shall promptly notify the Indemnifying Person of such action or suit. The
failure of an Indemnified Person to notify the Indemnifying Person promptly of a claim as contemplated by the preceding sentence shall not relieve the Indemnifying Person of its obligations under this Section 11.4 except to the extent that the
Indemnifying Person is prejudiced in its defense of such claim as a result of such failure to give prompt notice. 
 (c) The Indemnified
Persons shall have the right to conduct and control, through counsel of their choosing, any third party claim, action or suit and may compromise or settle the same, provided that any of the Indemnified Persons shall give the Indemnifying Person
advance notice of any proposed compromise or settlement. 
 ARTICLE XII 

MISCELLANEOUS 
 12.1
Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be given by confirmed electronic mail or registered mail, postage prepaid, addressed as follows: 

if to the Purchasers, to: 

Donegal Mutual Insurance Company 

1195 River Road, P.O. Box 302 

Marietta, Pennsylvania 17547 

Attention: Donald H. Nikolaus, President and Chief Executive Officer 

  
 -14- 

 Donegal Group Inc. 

1195 River Road, P.O. Box 302 

Marietta, Pennsylvania 17547 

Attention: Kevin G. Burke, President and Chief Executive Officer 

with copies to: 

Dechert LLP 

Cira Centre 

2929 Arch Street 

Philadelphia, PA 19104-2808 

Attention: Joseph A. Tate, Esq. 

Duane Morris LLP 

30 South 17th Street 

Philadelphia, Pennsylvania 19103 

Attention: Frederick W. Dreher, Esq. 

if to the Seller, to: 

Gregory M. Shepard 

7028 Portmarnock Place 

Bradenton, Florida 34202 

with a copy to: 

Schulte Roth & Zabel LLP 

919 Third Avenue 

New York, New York 10022 

Attention: Christopher S. Harrison, Esq. 

or to such other address as the party to whom notice is given may have previously furnished to the other parties in writing in accordance with this
Section 12.1. 
 12.2 Expenses. Each party to this Agreement shall pay its own expenses including, without limitation, legal and
accounting fees and expenses incident to the negotiation and preparation of this Agreement and to its performance and compliance with the provisions contained in this Agreement. 

  
 -15- 

 12.3 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties to this Agreement and their respective successors and assigns, provided that the rights of the Seller under this Agreement may not be assigned and the rights of the Purchasers may be assigned only (i) to such other business
organization which shall succeed to substantially all the assets, liabilities and business of DMIC or DGI, as the case may be, or (ii) to a wholly owned subsidiary of DMIC or DGI, as the case may be, in which event such assignment shall not
relieve DMIC or DGI, as the case may be, of any of their respective obligations to the Seller under this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any other Person any rights or remedies of any nature
under or by reason of this Agreement. 
 12.4 Partial Invalidity. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been contained in this Agreement unless the deletion of such provision or provisions would result in such a material change as to cause completion of the sale and purchase of the
Shares this Agreement contemplates to be unreasonable or materially and adversely frustrate the objectives of the parties as expressed in this Agreement. 

12.5 Execution in Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the
same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to each of the other parties. 

12.6 Entire Agreement. This Agreement contains the entire understanding of the parties to this Agreement with regard to the purchase and
sale of the Shares and the standstill obligations of the Seller. 

  
 -16- 

 IN WITNESS WHEREOF, each party to this Agreement has caused this Agreement to be executed on its
behalf all as of the date first above written. 
  

			
	DONEGAL MUTUAL INSURANCE COMPANY
		
	By:	 	/s/ Donald H. Nikolaus
		 	 Donald H. Nikolaus, President

    and Chief Executive Officer

  

			
	DONEGAL GROUP INC.
		
	By:	 	/s/ Kevin G. Burke
		 	 Kevin G. Burke, President

    and Chief Executive Officer

 
	
	
	/s/ Gregory M. Shepard
	Gregory M. Shepard

  
 -17-

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