EX-10.2



 Exhibit 10.2 
 DONEGAL GROUP INC. 
 2013 EQUITY INCENTIVE PLAN FOR DIRECTORS 

1.        Purpose. The purpose of this 2013 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 their 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 interest 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. 

  
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 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 600,000 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)    Adjustments. If any change in the number or kind of shares of Class A common stock outstanding occurs by reason of: 

 

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



 

	 	•	 	 a merger, reorganization or consolidation; 


  

	 	•	 	 a reclassification or change in par value; or 


  

	 	•	 	 any other extraordinary or unusual event affecting the outstanding Class A common stock as a class without the Company’s receipt of
consideration, or if the value of 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. 

  
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 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 ten years from the grant date of the stock option. The Board may accelerate the exercisability of any
or all outstanding stock options at any time for any reason. 
 (d)    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 

  
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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: 
  

	 	•	 	 in cash; 


  

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


  

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


  

	 	•	 	 by any other method the 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 400 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, commencing January 2, 2014, 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. 


  

	 	•	 	 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.



  

	 	•	 	 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. 



 

	 	•	 	 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. 

  
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 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. 

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 Repricings 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. 

  
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 (c)    Termination. This Plan shall terminate on April 17,
2023, 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. 

  
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 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. 
 (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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