UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
DONEGAL GROUP INC.
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(Name of Issuer)
Common Stock, $1.00 par value
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(Title of Class of Securities)
257701 10 2
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(CUSIP Number)
Ralph G. Spontak, Senior Vice President, Chief Financial Officer and Secretary
Donegal Mutual Insurance Company
1195 River Road, Marietta, Pennsylvania 17547
(717) 426-1931
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 18, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP No. 257701 10 2 Page 2 of 17 Pages
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1 | NAME OF REPORTING PERSON
| S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
| Donegal Mutual Insurance Company
| I.R.S. I.D. No. 23-1336198
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|
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
| (See Instructions) (b) |_|
|
| N/A
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3 | SEC USE ONLY
|
- --------------------------------------------------------------------------------
4 | SOURCE OF FUNDS (See Instructions)
|
| WC
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5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
| TO ITEMS 2(d) OR 2(e) |_|
|
| N/A
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6 | CITIZENSHIP OR PLACE OF ORGANIZATION
|
| Pennsylvania
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| 7 | SOLE VOTING POWER
| |
| | 3,512,356 shares
NUMBER OF SHARES |-----|--------------------------------------
BENEFICIALLY | 8 | SHARED VOTING POWER
OWNED BY EACH | |
REPORTING PERSON | | N/A
WITH |-----|--------------------------------------
| 9 | SOLE DISPOSITIVE POWER
| |
| | 3,512,356 shares
|-----|--------------------------------------
| 10 | SHARED DISPOSITIVE POWER
| |
| | N/A
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11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
| 3,512,356 shares
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12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
| (See Instructions)
|
| N/A
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13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
| 58.2%
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14 | TYPE OF REPORTING PERSON (See Instructions)
|
| IC HC
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-2-
<PAGE>
Item 1. Security and Issuer.
Item 1 is hereby restated in its entirety as follows:
This Amendment No. 7 to Schedule 13D relates to the Common Stock, $1.00 par
value, of Donegal Group Inc. ("DGI"). The principal executive offices of DGI
are located at 1195 River Road, Marietta, Pennsylvania 17547.
Item 2. Identity and Background.
Item 2 is hereby supplemented and restated in its entirety as follows:
The principal place of business and principal office of Donegal Mutual
Insurance Company ("DMIC"), a Pennsylvania mutual insurance company, the entity
filing this Schedule 13D, are located at 1195 River Road, Marietta, Pennsylvania
17547. The names of DMIC's executive officers and directors are as follows:
Donald H. Nikolaus, Ralph G. Spontak, Cyril J. Greenya, James B. Price, Robert
G. Shenk, William H. Shupert, Daniel J. Wagner, Frank J. Wood, Patricia A.
Gilmartin, Philip H. Glatfelter, II, Charles A. Heisterkamp, III, M.D., John E.
Hiestand, C. Edwin Ireland, R. Richard Sherbahn and Frederick W. Dreher. Such
persons can be contacted through DMIC at 1195 River Road, Marietta, Pennsylvania
17547.
Mr. Nikolaus has been President and Chief Executive Officer of DMIC since
1981 and a Director of DMIC since 1972. Mr. Nikolaus has been President of DGI
since 1986. Mr. Nikolaus has also been a partner in the law firm of Nikolaus &
Hohenadel since 1972.
Mr. Spontak has served as Senior Vice President of DMIC and DGI since 1991,
Chief Financial Officer of DMIC and DGI since 1983, Secretary of DMIC and DGI
since 1988 and a director of DMIC since September 1993.
Mr. Greenya has been Senior Vice President, Underwriting of DMIC since
December 1997, was Vice President, Commercial Underwriting of DMIC from 1992
until December 1997 and served as Manager, Commercial Underwriting of DMIC from
1983 to 1992.
Mr. Price has served as Senior Vice President, Claims of DMIC since
December 1997 and was Vice President, Claims of DMIC from 1973 until December
1997.
Mr. Shenk has been Senior Vice President, Claims of DMIC since December
1997, was Vice President, Claims of DMIC from 1992 until December 1997 and
served as Manager, Casualty Claims of DMIC from 1985 to 1992.
Mr. Shupert has been Senior Vice President, Underwriting of DMIC since 1991
and served as Vice President, Underwriting of DMIC for 18 years prior thereto.
Mr. Shupert has been a director of DMIC since December 1996.
3
<PAGE>
Mr. Wagner has been Treasurer of DMIC since 1993 and served as Controller
of DMIC for five years prior thereto.
Mr. Wood has served as Senior Vice President, Marketing of DMIC since
December 1997 and was Vice President - Marketing of DMIC from 1988 until
December 1997.
Mrs. Gilmartin has been an employee of Donegal Insurance Agency, which is
not affiliated with DMIC or DGI, since 1969. Mrs. Gilmartin has been a Director
of DMIC since 1979.
Mr. Glatfelter retired in 1989 as a Vice President of Meridian Bank, a
position he held for more than five years prior to his retirement. Mr.
Glatfelter has been a Director of DMIC since 1981 and has served as Vice
Chairman of DMIC since 1991.
Dr. Heisterkamp has practiced as a surgeon in Lancaster, Pennsylvania for
more than the past five years and has been a Director of DMIC since 1979.
Mr. Hiestand has served as President of Hiestand Memorials, Inc. since 1977
and has been a Director of DMIC since 1983.
Mr. Ireland is the former Chairman of the Lancaster Industrial Development
Authority. Mr. Ireland retired from Hamilton Watch Company in 1970. Prior
thereto, he was Vice President, Secretary and Treasurer of Hamilton Watch
Company. Mr. Ireland has been a Director of DMIC since 1972 and Chairman of its
Board of Directors since 1985. He has been Chairman of DGI's Board of Directors
since 1986.
Mr. Sherbahn has owned and operated Sherbahn Associates, Inc., a life
insurance and financial planning firm, since 1974. Mr. Sherbahn has been a
Director of DMIC since 1967.
Mr. Dreher has been a partner in the law firm of Duane, Morris & Heckscher
LLP since 1970 and a director of DMIC since December 1996.
In addition to the positions described above, the following individuals
also serve as directors of DGI: Donald H. Nikolaus, Patricia A. Gilmartin,
Philip H. Glatfelter, II, C. Edwin Ireland and R. Richard Sherbahn. The other
directors of DGI are Robert S. Bolinger and Thomas J. Finley, Jr. All of these
individuals have been directors of DGI since DGI's formation in August 1986.
All of the executive officers and directors of DMIC are citizens of the
United States of America. Neither DMIC nor any of its executive officers or
directors has, during the last five years, been convicted in a criminal
proceeding (other than traffic violations and similar misdemeanors). Neither
DMIC nor any of its executive officers or directors has, during the last five
years, been subject to any judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding
4
<PAGE>
any violation with respect to such laws as a result of any civil proceeding of a
judicial or administrative body of competent jurisdiction.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby supplemented and restated in its entirety as follows:
DMIC formed DGI as DMIC's wholly owned subsidiary in August 1986. At that
time, DMIC purchased 2,333,333 shares of DGI's Common Stock for $15,000,000, or
$6.43 per share. In October 1986, DGI sold 600,000 shares of its Common Stock to
the public at $9.00 per share.
In December 1987, DMIC purchased a total of 45,100 shares of DGI's Common
Stock. In January 1988, DMIC purchased a total of 15,600 shares of DGI's Common
Stock. From February 1, 1988 to February 18, 1988, DMIC purchased a total of
1,000 shares of DGI's Common Stock.
In September 1993, DMIC sold 200,000 shares of DGI Common Stock as part of
an underwriting in which DGI sold 1,150,000 shares of its Common Stock.
From December 23, 1994 to December 31, 1994, DMIC purchased a total of
43,000 shares of DGI's Common Stock on the Nasdaq Stock Market for a total cost
of $565,875.
From January 1, 1995 to June 15, 1995, DMIC purchased a total of 34,500
shares of DGI's Common Stock on the Nasdaq Stock Market for a total cost of
$534,437.
On June 8, 1995, pursuant to an agreement among DGI, DMIC and Harry E.
Newman, DMIC purchased 32,000 shares of DGI's Common Stock directly from Mr.
Newman in a private transaction at $17.00 per share, representing the closing
bid price per share of DGI Common Stock on the Nasdaq Stock Market on June 8,
1995, for a total cost of $544,000. A copy of this agreement was filed as
Exhibit K to Amendment No. 4 to DMIC's Schedule 13D.
On June 15, 1995, pursuant to an agreement among DGI, DMIC and Donald H.
Nikolaus, DMIC purchased 10,000 shares of DGI's Common Stock directly from Mr.
Nikolaus in a private transaction at $16.50 per share, representing the closing
bid price per share of DGI Common Stock on the Nasdaq Stock Market on June 15,
1995, for a total cost of $165,000. A copy of this agreement was filed as
Exhibit L to Amendment No. 4 to DMIC's Schedule 13D.
On September 29, 1995, pursuant to an agreement among DGI, DMIC and Donald
H. Nikolaus, DMIC purchased 25,000 shares of DGI's Common Stock directly from
Mr. Nikolaus in a private transaction at a price of $17.00 per share,
representing the closing bid price per share of DGI Common Stock on the Nasdaq
Stock Market on September 29, 1995, for a total cost of $425,000. A copy of this
agreement was filed as Exhibit M to Amendment No. 5 to DMIC's Schedule 13D.
5
<PAGE>
On November 6, 1995, pursuant to an agreement among DGI, DMIC and William
H. Shupert, DMIC purchased 32,000 shares of DGI's Common Stock directly from Mr.
Shupert in a private transaction at a price of $18.00 per share, representing
the closing bid price per share of DGI Common Stock on the Nasdaq Stock Market
on November 6, 1995, for a total cost of $576,000. A copy of this agreement was
filed as Exhibit N to Amendment No. 5 to DMIC's Schedule 13D.
On May 6, 1996, pursuant to an agreement among DGI, DMIC and Ralph G.
Spontak, DMIC purchased 50,000 shares of DGI's Common Stock directly from Mr.
Spontak in a private transaction at a price of $17.50 per share, representing
the closing bid price per share of DGI Common Stock on the Nasdaq Stock Market
on May 6, 1996, for a total cost of $875,000. On May 6, 1996, pursuant to an
agreement among DGI, DMIC and Donald H. Nikolaus, DMIC purchased 25,000 shares
of DGI's Common Stock directly from Mr. Nikolaus in a private transaction at a
price of $17.50 per share, representing the closing bid price per share of DGI
Common Stock on the Nasdaq Stock Market on May 6, 1996 for a total cost of
$437,500. On May 8, 1996, pursuant to an agreement among DGI, DMIC and Donald H.
Nikolaus, DMIC purchased 30,000 shares of DGI's Common Stock directly from Mr.
Nikolaus in a private transaction at a price of $17.50 per share, representing
the closing bid price per share of DGI Common Stock on the Nasdaq Stock Market
on May 8, 1996, for a total cost of $525,000. Copies of these agreements were
filed as Exhibit O, Exhibit P and Exhibit Q respectively, to Amendment No. 6 to
DMIC's Schedule 13D.
On August 12, 1996, pursuant to an agreement among DGI, DMIC and Donald H.
Nikolaus, DMIC purchased 5,000 shares of DGI's Common Stock directly from Mr.
Nikolaus in a private transaction at a price of $17.75 per share, representing
the closing bid price per share of DGI Common Stock on the Nasdaq Stock Market
on August 12, 1996, for a total cost of $88,750. A copy of this agreement is
filed as Exhibit R to this Amendment No. 7 to DMIC's Schedule 13D.
On September 1, 1996, Donegal purchased 4,000 shares of DGI Common Stock
directly from the estate of a deceased employee at a price of $17.25 per share,
representing the closing bid price per share of DGI Common Stock on the Nasdaq
Stock Market on September 1, 1996, for a total cost of $69,000.
Effective July 15, 1997, DGI effected a 4-for-3 split of its outstanding
Common Stock. DMIC received 873,877 additional shares of DGI Common Stock as a
result of this stock split.
On November 14, 1997, pursuant to the DGI Dividend Reinvestment Plan, which
was adopted in July 1997, DMIC purchased 16,846 shares of DGI Common Stock at a
price of $20.75 per share, representing the average of the closing prices per
share of DGI Common Stock on November 7, 10, 11, 12 and 13, 1997, for a total
cost of $349,551. For information regarding the DGI Dividend Reinvestment Plan
reference is made to DGI's Form S-3 Registration Statement (Commission File No.
333-36585) which became effective on October 16, 1997.
6
<PAGE>
All of the purchases by DMIC described herein were made with funds derived
from DMIC's working capital.
Item 4. Purpose of Transaction.
Item 4 is hereby supplemented and restated in its entirety as follows:
The shares purchased by DMIC in December 1987 and in January and February
1988 were purchased to increase DMIC's investment in DGI because the Board of
Directors of DMIC believed the shares of DGI, in the price range in which those
shares were trading, were an attractive and prudent investment for DMIC.
On December 15, 1994, DMIC's Board of Directors authorized DMIC, once all
necessary regulatory approval was received, to purchase up to 300,000 shares of
DGI's Common Stock over the next 12 months in transactions that, to the extent
shares are purchased in open market transactions, meet the conditions set forth
in Rule 10b-18 as promulgated by the Securities and Exchange Commission. On
December 22, 1994, the Pennsylvania Insurance Commissioner issued an order which
exempted DMIC's purchases of up to 300,000 shares of Common Stock of DGI from
the notice and approval provisions of Section 1402(a)(1) of the Pennsylvania
Insurance Company Law of 1921, as amended. A copy of this order was attached as
Exhibit I to Amendment No. 3 to DMIC's Schedule 13D filed with the Securities
and Exchange Commission on January 6, 1995. On December 22, 1994, DMIC issued a
press release to announce its plan to initiate such purchases of DGI stock. A
copy of this press release was attached as Exhibit J to Amendment No. 3 to
DMIC's Schedule 13D. On December 21, 1995, as reported in Amendment No. 5 to
DMIC's Schedule 13D, DMIC's Board of Directors extended the authority to
purchase up to 300,000 shares of DGI Common Stock to December 31, 1996 and, on
December 16, 1996, further extended such authority to December 31, 1997.
On December 18, 1997, DMIC's Board of Directors authorized DMIC, once all
necessary regulatory approval was received, to purchase up to 300,000 additional
shares of DGI Common Stock in open market transactions pursuant to Rule 10b-18,
in private transactions with employees of DGI and pursuant to DGI's Dividend
Reinvestment Plan, in all cases at market prices prevailing from time to time.
On January 6, 1998, Donegal submitted a request that the Pennsylvania Insurance
Commissioner issue an order exempting any such purchases from the notice and
approval provisions of Section 1402(a)(1) of the Pennsylvania Insurance Company
Law.
The shares of DGI Common Stock purchased by DMIC from December 23, 1994
through November 14, 1997 pursuant to the authorization and approval described
in this Item 4 were purchased to maintain or increase DMIC's investment in DGI
because the DMIC Board of Directors believes the purchase of the shares
represented an attractive investment opportunity and, by maintaining and
increasing DMIC's percentage ownership of DGI, will provide greater financial
flexibility to DMIC in the future. DMIC reserves the right in the future to
purchase additional shares of DGI Common Stock for the same reasons, subject to
the
7
<PAGE>
aggregate limit of the 300,000 shares noted above unless further authorization
is obtained from Donegal's Board of Directors, in open market transactions that
meet the requirements of Rule 10b-18, in private transactions with employees of
DGI and pursuant to DGI's Dividend Reinvestment Plan, in all cases at market
prices prevailing from time to time.
Whether DMIC purchases any additional shares of DGI, and the amount and
timing of any such purchases, will depend on DMIC's continuing assessment of
relevant factors, including, without limitation, the following: the availability
of shares of DGI Common Stock at particular price levels, DGI's business and
prospects, other investment opportunities available to DMIC, DMIC's business and
prospects, general economic conditions, stock market conditions, conditions and
prospects in the property/casualty insurance industry generally and other plans
and capital requirements of DMIC. Since DMIC already has control of DGI and has
had such control since DGI's formation, none of DMIC's purchases to date or
possible future purchases, in the opinion of DMIC, has had or will have any
effect on the control of DGI.
Except as stated herein, neither DMIC nor, to the best knowledge of DMIC,
any of the executive officers or directors of DMIC, has any plans or proposals
that relate to or would result in: (a) the acquisition by any person of
additional securities of DGI, or the disposition of securities of DGI; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving DGI or any of its subsidiaries; (c) a sale or transfer of
a material amount of assets of DGI or any of its subsidiaries; (d) any change in
the present Board of Directors or management of DGI, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on DGI's Board of Directors; (e) any material change in the present
capitalization or dividend policy of DGI; (f) any other material change in DGI's
business or corporate structure; (g) changes in DGI's charter, by-laws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of DGI by any person; (h) causing a class of securities
of DGI to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an interdealer quotation system of a registered
national securities association; (i) a class of equity securities of DGI
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended or (j) any action similar to
any of those enumerated herein. However, DMIC and the other persons identified
in Item 2 hereof reserve the right to formulate plans or proposals with respect
to one or more of the foregoing matters in the future.
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby supplemented and restated in its entirety as follows:
(a) As of the date of this Amendment No. 7 to DMIC's Schedule 13D, the
following persons and entity beneficially owned the number of shares of Common
Stock of DGI set forth opposite their respective names:
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<PAGE>
Shares Percent of
Name of Individual Beneficially Outstanding
or Identity of Group Owned(1) Common Stock(2)
-------------------- ------------ ---------------
5% Holders:
Donegal Mutual Insurance Company ...... 3,512,356 58.2%
1195 River Road
Marietta, Pennsylvania 17547
Directors of DGI:
C. Edwin Ireland ...................... 10,488(4) --
Donald H. Nikolaus .................... 73,341(5) 1.2%
Patricia A. Gilmartin ................. 4,087(4) --
Philip H. Glatfelter, II .............. 4,353(4) --
R. Richard Sherbahn ................... 2,621(4) --
Robert S. Bolinger .................... 3,288(4) --
Thomas J. Finley, Jr .................. 3,088(4) --
Executive Officers of DMIC and DGI (3):
Ralph G. Spontak ...................... 27,287(6) --
William H. Shupert .................... 13,832(7) --
Frank J. Wood ......................... 8,268(8) --
Robert G. Shenk ....................... 9,921(9) --
Cyril J. Greenya ...................... 7,515(10) --
James B. Price ........................ 11,270(11) --
Daniel J. Wagner ...................... 4,657(12) --
Directors of DMIC (13):
Frederick W. Dreher ................... 9,255(4) --
Charles A. Heisterkamp, III, M.D ...... 2,488(4) --
John E. Hiestand ...................... 3,421(4) --
- ----------------
(1) Information furnished by each individual named. This table includes shares
that are owned jointly, in whole or in part, with the person's spouse, or
individually by his spouse.
(2) Less than 1% unless otherwise indicated.
(3) Excludes Executive Officers listed under "Directors" of DGI.
(4) Includes 2,222 shares of DGI Common Stock the director has the option to
purchase under DGI's 1996 Equity Incentive Plan for Directors, but excludes
2,222 shares of DGI Common Stock the director will have the option to
purchase after each of April 30, 1998 and April 30, 1999, assuming the
director's continued service in that capacity.
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<PAGE>
(5) Includes 33,333 shares of DGI Common Stock Mr. Nikolaus has the option to
purchase under DGI's Amended and Restated 1996 Equity Incentive Plan (the
"1996 Equity Incentive Plan").
(6) Includes 16,666 shares of DGI Common Stock Mr. Spontak has the option to
purchase under DGI's 1996 Equity Incentive Plan.
(7) Includes 9,333 shares of DGI Common Stock Mr. Shupert has the option to
purchase under DGI's 1996 Equity Incentive Plan.
(8) Includes 6,666 shares of DGI Common Stock Mr. Wood has the option to
purchase under DGI's 1996 Equity Incentive Plan.
(9) Includes 6,666 shares of DGI Common Stock Mr. Shenk has the option to
purchase under DGI's 1996 Equity Incentive Plan.
(10) Includes 6,666 shares of DGI Common Stock Mr. Greenya has the option to
purchase under DGI's 1996 Equity Incentive Plan.
(11) Includes 6,666 shares of DGI Common Stock Mr. Price has the option to
purchase under DGI's 1996 Equity Incentive Plan.
(12) Includes 4,444 shares of DGI Common Stock Mr. Wagner has the option to
purchase under DGI's 1996 Equity Incentive Plan.
(13) Excludes Directors listed under "Directors of DGI" and "Executive Officers
of DMIC and DGI."
(b) All of the persons together with his or her spouse and the entity
described in Item 5(a) have sole voting power and sole dispositive power over
all of the shares described in Item 5(a).
(c) From December 23, 1994 through December 31, 1997, DMIC has made the
following purchases of DGI Common Stock in the open market through a broker:
Date Number of Shares Price Per Share
---- ---------------- ---------------
12/23/94 5,000 $11 7/8
12/23/94 10,000 12
12/27/94 5,000 12 3/4
12/28/94 2,000 13
12/29/94 7,000 13 3/4
12/30/94 9,000 14 1/2
12/30/94 5,000 14
01/04/95 2,000 14 3/4
01/23/95 2,000 14 1/2
10
<PAGE>
01/30/95 6,000 14 1/2
03/06/95 5,000 14 1/2
03/21/95 5,000 14 1/2
05/16/95 1,000 16 7/8
05/17/95 2,000 16 3/4
05/30/95 1,500 17
06/08/95 5,000 17
06/09/95 5,000 17
------
Total 77,500
======
In addition, as noted in Item 3, between June 8, 1995 and September 1, 1996
DMIC purchased 213,000 shares of DGI Common Stock from five stockholders in
private transactions, and on November 14, 1997 DMIC purchased 16,846 shares of
DGI Common Stock pursuant to the DGI Dividend Reinvestment Plan.
To the best knowledge of DMIC, none of the other persons named in Item 5(a)
has purchased or disposed of any shares of DGI Common Stock during the 60 days
preceding the date of the filing of this Amendment No. 7, except purchases
pursuant to the DGI Dividend Reinvestment Plan, the DGI Employee Stock Purchase
Plan and restricted stock awards of January 2, 1998.
Item 6. Contracts, Arrangements Understandings or Relationships with
Respect to Securities of the Issuer.
Item 6 is hereby restated in its entirety as follows:
None, except (1) DMIC has the power to direct the voting and disposition of
the shares owned by DMIC, (2) the directors and executive officers of DMIC named
in Item 2 hereof have the power to direct the voting and disposition of the
shares of DGI Common Stock respectively owned by such individuals as indicated
in Item 5(a) hereof and (3) the individuals listed in Item 5(a) hereof have the
power to exercise the options to purchase DGI Common Stock disclosed in
footnotes (4) through (12) thereto.
Item 7. Materials to be filed as Exhibits.
Exhibit R Agreement dated as of August 12, 1996 among Donegal Group Inc.,
Donegal Mutual Insurance Company and Donald H. Nikolaus.
11
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
DONEGAL MUTUAL INSURANCE COMPANY
By: /s/ Ralph G. Spontak
----------------------------------------
Ralph G. Spontak, Senior Vice President,
Chief Financial Officer and Secretary
Dated: January 6, 1998
12
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit Exhibit Name Page Number
- --------------- ------------------------------------------- -----------
<S> <C> <C>
Exhibit A (1) Non-qualified Stock Option Agreement
dated December 31, 1986 between Donald
H. Nikolaus and Donegal Group Inc. and
Incentive Stock Option Agreement dated
December 31, 1986 between Donald H.
Nikolaus and Donegal Group Inc.
Exhibit B (1) Non-qualified Stock Option Agreement
dated December 31, 1986 between Ralph
G. Spontak and Donegal Group Inc. and
Incentive Stock Option Agreement dated
December 31, 1986 between Ralph G.
Spontak and Donegal Group Inc.
Exhibit C (2) Non-qualified Stock Option Agreement
dated September 1, 1991 between
Donald H. Nikolaus and Donegal Group Inc.
Exhibit D (2) Non-qualified Stock Option Agreement
dated September 1, 1991 between
Ralph G. Spontak and Donegal Group Inc.
Exhibit E (2) Incentive Stock Option Agreement dated
December 31, 1986 and Non-qualified
Stock Option Agreement dated December 31,
1986 and September 1, 1993 between
Harry E. Newman and Donegal Group Inc.
Exhibit F (2) Incentive Stock Option Agreement dated
December 31, 1986 and Non-qualified
Stock Option Agreements dated December 31,
1986 and September 1, 1993 between
William H. Shupert and Donegal Group Inc.
Exhibit G (2) Non-qualified Stock Option Agreement
dated September 1, 1991 between Frank J.
Wood and Donegal Group Inc.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Exhibit Exhibit Name Page Number
- --------------- ------------------------------------------- -----------
<S> <C> <C>
Exhibit H (3) Non-qualified Stock Option Agreement
dated September 1, 1991 between
Daniel J. Wagner and Donegal Group Inc.
Exhibit I (3) Order of Pennsylvania Insurance
Department, dated December 22, 1994,
granting an exemption from Section
1402(a)(1) of the Pennsylvania Insurance
Company Law for the share purchases
described therein.
Exhibit J (3) Press release dated December 22, 1994.
Exhibit K (4) Agreement dated as of June 8, 1995,
among Donegal Group Inc., Donegal
Mutual Insurance Company and Harry
E. Newman.
Exhibit L (4) Agreement dated as of June 15, 1995
among Donegal Group Inc., Donegal Mutual
Insurance Company and Donald H. Nikolaus.
Exhibit M (5) Agreement dated as of September 29, 1995
among Donegal Group, Inc., Donegal Mutual
Insurance Company and Donald H. Nikolaus.
Exhibit N (5) Agreement dated as of November 6, 1995
among Donegal Group, Inc., Donegal Mutual
Insurance Company and William H. Shupert.
Exhibit O (6) Agreement dated as of May 6, 1996 among
Donegal Group, Inc., Donegal Mutual
Insurance Company and Ralph G. Spontak.
Exhibit P (6) Agreement dated as of May 6, 1996 among
Donegal Group, Inc., Donegal Mutual
Insurance Company and Donald H. Nikolaus.
Exhibit Q (6) Agreement dated as of May 8, 1996 among
Donegal Group, Inc., Donegal Mutual
Insurance Company and Donald H. Nikolaus.
</TABLE>
14
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<TABLE>
<CAPTION>
Exhibit Exhibit Name Page Number
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<S> <C> <C>
Exhibit R (7) Agreement dated as of August 12, 1996
among Donegal Group Inc., Donegal Mutual
Insurance Company and Donald H. Nikolaus.
</TABLE>
- ---------------
(1) Incorporated by reference to the like-numbered exhibit to the original
Schedule 13D filing of Donegal Mutual Insurance Company.
(2) Incorporated by reference to the like-numbered exhibit to Amendment No. 2
to the Schedule 13D filing of Donegal Mutual Insurance Company.
(3) Incorporated by reference to the like-numbered exhibit to Amendment No. 3
to the Schedule 13D filing of Donegal Mutual Insurance Company.
(4) Incorporated by reference to the like-numbered exhibit to Amendment No. 4
to the Schedule 13D filing of Donegal Mutual Insurance Company.
(5) Incorporated by reference to the like-numbered exhibit to Amendment No. 5
to the Schedule 13D filing of Donegal Mutual Insurance Company.
(6) Incorporated by reference to the like-numbered exhibit to Amendment No. 6
to the Schedule 13D filing of Donegal Mutual Insurance Company.
(7) Filed herewith.
15
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EXHIBIT R
AGREEMENT
---------
This Agreement is hereby entered into as of this 12th day of August, 1996,
among Donegal Group Inc. ("DGI"), Donegal Mutual Insurance Company (the "Mutual
Company") and Donald H. Nikolaus (the "Optionholder").
Recitals:
--------
WHEREAS, DGI has granted to the Optionholder the following nonqualified
stock options (the "Options") to purchase common stock ("Common Stock") of DGI:
A. Options to purchase 20,000 shares of Common Stock granted pursuant to a
Nonqualified Stock Option Agreement dated as of September 1, 1991 at an exercise
price of $12.00 per share, or $60,000 in the aggregate; and
WHEREAS, the Optionholder desires to exercise the Options and the Mutual
Company desires to purchase from the Optionholder the 5,000 shares (the
"Shares") to be acquired by the Optionholder upon the exercise of the Options,
all in accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. The Optionholder hereby notifies DGI of his exercise of, and hereby
exercises, the Options for an aggregate exercise price of $60,000 (the "Exercise
Price"). Contemporaneously with such exercise, the Mutual Company is hereby
purchasing the Shares from the Optionholder at a purchase price of $17.75 per
share, representing the closing bid price per share of DGI Common Stock on the
Nasdaq Stock Market on August 12, 1996, for an aggregate purchase price of
$88,750.00 (the "Purchase Price").
2. The Optionholder hereby acknowledges, agrees and directs that the Mutual
Company (a) deduct the Exercise Price from the Purchase Price and (b) pay the
Exercise Price to DGI as set forth in Section 4 hereof.
3. The Optionholder understands that the Mutual Company is obligated to
withhold taxes with respect to the Shares in the aggregate amount of $9,568.00
(the "Withholding Amount"). The Optionholder hereby acknowledges, agrees and
directs that the Mutual Company (a) deduct the Withholding Amount from the
Purchase Price and (b) retain the Withholding Amount as set forth in Section 4
hereof.
4. Upon the execution and delivery of this Agreement, the Mutual Company
agrees to pay the Purchase Price by (a) paying the Exercise Price to DGI, (b)
retaining the Withholding Amount, to be applied in accordance with applicable
law and regulations for
-1-
<PAGE>
the Optionholder's account, and (c) paying the balance of the Purchase Price of
$19,182.00 to the Optionholder.
5. DGI hereby acknowledges the exercise of the Options and the payment of
the Exercise Price and agrees to deliver to the Mutual Company a stock
certificate representing the Shares registered in the name of the Mutual
Company.
6. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, personal representatives
and assigns.
7. This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original Agreement, and all of which shall constitute one
Agreement to be effective as of the date of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
DONEGAL GROUP INC.
By: /s/ Ralph G. Spontak
--------------------------------------
Ralph G. Spontak
Senior Vice President
DONEGAL MUTUAL INSURANCE CO.
By: /s/ Daniel J. Wagner
--------------------------------------
Daniel J. Wagner, Treasurer
/s/ Donald H. Nikolaus
--------------------------------------
Donald H. Nikolaus
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