Exhibit 10.2

DONEGAL GROUP INC.

2019 EQUITY INCENTIVE PLAN FOR DIRECTORS

1.    Purpose. The purpose of this 2019 Equity Incentive Plan for Directors
(this “Plan”) is to enhance the ability of Donegal Group Inc. (the “Company”)
and Donegal Mutual Insurance Company (“Donegal Mutual,” and together with the
respective subsidiaries and affiliates of the Company and Donegal Mutual, the
“Group”) to attract and retain highly qualified directors, to establish a basis
for providing a portion of director compensation in the form of equity and, in
doing so, to strengthen the alignment of the interests of the directors of the
members of the Group with the interests of the Company’s stockholders.

2.    Administration.

(a)    Administration by the Board. The Board of Directors of the Company (the
“Board”) shall administer this Plan.

(b)    Duty and Powers of the Board. The Board shall have the power to interpret
this Plan and the awards granted under this Plan and to adopt rules for the
administration, interpretation and application of this Plan. The Board shall
have the discretion to determine to whom the Company will grant stock options
and to determine the number of stock options the Company will grant to any
director, the timing of the grant and the terms of exercise. The Board shall not
have any discretion to determine to whom the Company will grant restricted stock
awards under this Plan.

(c)    Compensation; Professional Assistance; Good Faith Actions. Members of the
Board shall not receive any compensation for their services in administering
this Plan. The Company shall pay all expenses and liabilities incurred in
connection with the administration of this Plan. The Company may employ
attorneys, consultants, accountants or other experts. The Board, the Company,
Donegal Mutual and the officers and directors of the Company and Donegal Mutual
shall be entitled to rely upon the advice, opinions or valuations of any such
experts. All actions taken and all interpretations and determinations the Board
makes in good faith with respect to this Plan shall be final and binding upon
all grantees, the Group and all other interested persons. No member of the Board
shall be personally liable for any action, determination or interpretation the
Board makes in good faith with respect to this Plan, and the Company shall fully
protect and indemnify all members of the Board in respect to any such action,
determination or interpretation.

3.    Shares Subject to this Plan.

(a)    Shares Authorized. The shares of stock issuable pursuant to awards
granted under this Plan shall be shares of the Company’s Class A common stock.
The total aggregate number of shares of Class A common stock that the Company
may issue under this Plan is 500,000 shares, subject to adjustment as described
below. The shares may be authorized but unissued shares or reacquired shares for
purposes of this Plan.

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

(c)    Individual Limits. All awards under this Plan shall be expressed in
shares of Class A common stock. The maximum number of shares of Class A common
stock with respect to all awards that the Company may issue to any director
under this Plan during any calendar year shall be 15,000 shares, subject to
adjustment as described below.

 

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

 

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a stock dividend, spinoff, recapitalization, stock split or combination or
exchange of shares;

 

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a merger, reorganization or consolidation;

 

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a reclassification or change in par value; or

 

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any other extraordinary or unusual event affecting the outstanding Class A
common stock as a class without the Company’s receipt of consideration, or if
the value of the outstanding shares of Class A common stock is substantially
reduced as a result of a spinoff or the Company’s payment of any extraordinary
dividend or distribution in cash,

the maximum number of shares of Class A common stock available for issuance
under this Plan, the maximum number of shares of Class A common stock for which
any individual may receive grants in any year, the kind and number of shares
covered by outstanding awards, the kind and number of shares to be issued or
issuable under this Plan and the price per share or applicable market value of
such grants shall be automatically and equitably adjusted to reflect any
increase or decrease in the number of, or change in the kind or value of, issued
shares of Class A common stock to preclude, to the extent practicable, the
enlargement or dilution of rights and benefits under this Plan and such
outstanding grants. Any fractional shares resulting from such adjustment shall
be eliminated. Any adjustments to outstanding awards shall be consistent with
Section 409A of the Internal Revenue Code of 1986, as amended, or the Code, to
the extent applicable.

4.    Eligibility for Participation. Each director of the Company and each
director of a member of the Group who is not eligible to receive stock options
under the Company’s Equity Incentive Plan for Employees shall be eligible to
receive stock options under this Plan. Each director of the Company and each
director of the member companies of the Group shall be eligible to receive
restricted stock awards under this Plan.

5.    Awards. Awards under this Plan may consist of stock options as described
in Section 7 and restricted stock awards as described in Section 8. Each award
shall be evidenced by a written agreement between the Company and the grantee.

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

7.    Stock Options.

(a)    Granting of Stock Options. The Board may grant stock options to an
eligible director upon such terms as the Board deems appropriate under this
Section 7.

(b)    Type of Stock Option and Price. The Board may grant stock options to
purchase Class A common stock that the Board does not intend to qualify as
incentive stock options within the meaning of Section 422 of the Code. The Board
shall determine the exercise price of shares of Class A common stock subject to
a stock option, which shall be the closing market price of a share of Class A
common stock on NASDAQ on the day before the date of the grant.

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

 

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(d)    Rights upon Termination of Service. Upon a grantee’s termination of
service as a director, as a result of resignation, retirement, failure to be
re-elected, removal for cause or any reason other than death, the grantee shall
have the right to exercise the stock option during its term within a period of
three years after such termination to the extent that the stock option was
exercisable at the time of termination, or within such other period and subject
to such terms and conditions as the Board may specify. In the event that a
grantee dies prior to the expiration of the grantee’s stock option and without
having fully exercised the grantee’s stock option, the grantee’s representative
or successor shall have the right to exercise the stock option during its term
within a period of one year after the grantee’s death to the extent that the
stock option was exercisable at the time of death, or within such other period,
and subject to such terms and conditions, as the Board may specify.

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

 

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in cash;

 

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by delivery of shares of Class A common stock at fair market value, shares of
Class B common stock at fair market value, or a combination of those shares, as
the Board may determine from time to time and subject to the terms and
conditions as the Board may prescribe;

 

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by payment through a brokerage firm of national standing whereby the grantee
will simultaneously exercise the stock option and sell the shares acquired upon
exercise through the brokerage firm and the brokerage firm shall remit to the
Company from the proceeds of the sale of the shares the exercise price as to
which the option has been exercised in accordance with the procedures permitted
by Regulation T of the Federal Reserve Board; or

 

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by any other method the Board authorizes.

The Company must receive payment for the shares acquired upon exercise of the
stock option, and any required withholding taxes and related amounts, by the
time the Board specifies depending on the type of payment being made, but in all
cases prior to the issuance of the shares issuable upon exercise of the option.

8.    Restricted Stock Awards.

(a)    Granting of Awards. The Company shall grant each director of the Company
and each director of Donegal Mutual an annual restricted stock award consisting
of 500 shares of Class A common stock, except that a person who serves as a
director on both boards shall receive only one annual grant. The Company shall
grant the restricted stock awards on the first business day of January in each
year, provided that the director served as a member of the Board or of the board
of directors of Donegal Mutual during any portion of the preceding calendar
year.

(b)    Terms of Restricted Stock Awards. Each restricted stock award agreement
shall contain such restrictions, terms and conditions as this Plan requires:

 

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The grantee may not sell or otherwise transfer the shares of Class A common
stock comprising the restricted stock award until one year after the date of
grant. Although the Company shall register the shares of Class A common stock
comprising each restricted stock award in the name of the grantee, the Company
reserves the right to place a restrictive legend on the stock certificate. None
of such shares of Class A common stock shall be subject to forfeiture.

 

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Subject to the restrictions on transfer set forth in this Section 8(b), a
grantee shall have all the rights of a stockholder with respect to the shares of
Class A common stock the Company issues pursuant to restricted stock awards made
under this Plan, including the right to vote the shares and to receive all
dividends and other distributions paid or made with respect to the shares.

 

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In the event of changes in the Class A common stock of the Company by reason of
stock dividends, split-ups or combinations of shares, reclassifications,
mergers, consolidations, reorganizations or liquidations while the shares
comprising a restricted stock award shall be subject to restrictions on
transfer, any and all new, substituted or additional securities to which the
grantee shall be entitled by reason of the ownership of a restricted stock award
shall be subject immediately to the terms, conditions and restrictions of this
Plan.

 

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If a grantee receives rights or warrants with respect to any shares comprising a
restricted stock award, the grantee may hold, exercise, sell or otherwise
dispose of such rights or warrants or any shares or other securities acquired by
the exercise of such rights or warrants free and clear of the restrictions and
obligations set forth in this Plan.

9.    Date of Grant. The grant date of a stock option under this Plan shall be
the date of the Board’s approval or such later date as the Board determines at
the time it authorizes the grant. The Board may not make retroactive grants of
stock options under this Plan. The Company shall provide notice of the grant to
the grantee within a commercially reasonable time after the grant date.

10.    Requirements for Issuance of Shares. The Company will not issue shares of
Class A common stock in connection with any award under this Plan until the
issuance of the shares complies with all of the applicable legal requirements to
the commercially reasonable satisfaction of the Board. The Board shall have the
right to condition any award made to any director on the director’s undertaking
in writing to comply with the restrictions on the director’s subsequent
disposition of shares subject to the award as the Board shall deem necessary or
advisable, and certificates representing those shares may be legended to reflect
any such restrictions. Certificates representing shares of Class A common stock
issued under this Plan will be subject to such stop-transfer orders and other
restrictions as applicable laws, regulations and interpretations may require,
including any requirement that a legend be placed on the certificate.

11.    Withholding. The Company shall have the right to require the grantee to
remit to the Company an amount sufficient to satisfy any federal, state or local
withholding tax requirements prior to the delivery of any certificate for shares
of Class A common stock. If and to the extent the Board authorizes, in its sole
discretion, a grantee may make an election, by means of a form of election the
Board prescribes, to have shares of Class A common stock that are acquired upon
exercise of a stock option withheld by the Company or to tender other shares of
Class A common stock or other securities of the Company owned by the grantee to
the Company at the time of exercise of a stock option to pay the amount of tax
that would otherwise be required by law to be withheld by the Company. Any such
election shall be irrevocable and shall be subject to termination by the Board,
in its sole discretion, at any time. Any securities so withheld or tendered
shall be valued by the Board as of the date of exercise.

12.    Transferability of Awards. Only the grantee of an award may exercise
rights under the award during the grantee’s lifetime, and a grantee may not
transfer those rights except by will or by the laws of descent and distribution.
When a grantee dies, the personal representative or other person entitled to
succeed to the rights of the grantee may exercise those rights. Any successor to
a grantee must furnish proof satisfactory to the Company of the successor’s
right to receive the award under the grantee’s will or under the applicable laws
of descent and distribution. Except as stated in this Section 12, no stock
option or interest therein and, for a period of one year after the date of
grant, no restricted stock award or any interest therein, shall be subject to
the debts, contracts or engagements of the grantee or the grantee’s successors
in interest, nor shall they be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means, whether such
disposition is voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings,
including bankruptcy, and any attempted disposition thereof shall be null and
void and of no effect.

 

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13.     Amendment and Termination of this Plan.

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

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

(c)    Termination. This Plan shall terminate on April 18, 2024, unless the
Board earlier terminates this Plan or the Board extends the term with the
approval of the stockholders of the Company. The termination of this Plan shall
not impair the power and authority of the Board with respect to an outstanding
award.

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

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

16.    Indemnification. With respect to the administration of this Plan, the
Company shall indemnify each present and future member of the Board against, and
each member of the Board shall be entitled without further action on such
member’s part to indemnity from the Company for, all expenses, including the
amount of judgments and the amount of approved settlements made with a view to
the curtailment of costs of litigation, other than amounts paid to the Company
itself, reasonably incurred by such member in connection with or arising out of,
any action, suit or proceeding in which the member may be involved by reason of
being or having been a member of the Board, whether or not the member continues
to be such member at the time of incurring such expenses; provided, however,
that this indemnity shall not include any expenses incurred by any such member
of the Board (i) in respect of matters as to which the member shall be finally
adjudged in any such action, suit or proceeding to have been guilty of gross
negligence or willful misconduct in the performance of the member’s duty as a
member of the Board or (ii) in respect of any matter in which any settlement is
effected for an amount in excess of the amount approved by the Company on the
advice of its legal counsel; and provided further that no right of
indemnification under the provisions set forth in this Section 16 shall be
available to or enforceable by any such member of the Board unless, within 60
days after institution of any such action, suit or proceeding, the member shall
have offered the Company in writing the opportunity to represent the member and
defend same at its own expense. The foregoing right of indemnification shall
inure to the benefit of the heirs, executors or administrators of each such
member of the Board and shall be in addition to all other rights to which such
member may be entitled as a matter of law, contract or otherwise.

17.    Miscellaneous Plan Provisions.

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

 

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

(c)    Compliance with Rule 16b-3. To the extent that Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, applies to awards granted under
this Plan, it is the intention of the Company that this Plan comply in all
respects with the requirements of Rule 16b-3, that any ambiguities or
inconsistencies in construction of this Plan be interpreted to give effect to
such intention and that if this Plan shall not so comply, whether on the date of
adoption or by reason of any later amendment to or interpretation of Rule 16b-3,
the provisions of this Plan shall be deemed to have been automatically amended
so as to bring them into full compliance with that rule.

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

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

 

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