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8-K - FORM 8-K - DONEGAL GROUP INC | w82460e8vk.htm |
EX-99.1 - EX-99.1 - DONEGAL GROUP INC | w82460exv99w1.htm |
EX-10.2 - EX-10.2 - DONEGAL GROUP INC | w82460exv10w2.htm |
EX-10.1 - EX-10.1 - DONEGAL GROUP INC | w82460exv10w1.htm |
Exhibit 10.3
DONEGAL
GROUP INC.
2011
EQUITY INCENTIVE PLAN FOR DIRECTORS
1. Purpose. The purpose of this
2011 equity incentive plan for directors (this Plan)
is to enhance the ability of Donegal Group Inc. (the
Company) and its subsidiaries and the member
companies of the Donegal Insurance Group, including companies
from which the Company or Donegal Mutual assumes 100% quota
share reinsurance (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
directors of the Company and the members of the Group with the
interests of the Companys 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 and the officers and directors
of the Company 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 shall be final and binding upon all grantees, the
Company 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 shall be shares of
Class A common stock. The total aggregate number of shares
of Class A common stock that the Company may issue under
this Plan is 400,000 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 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 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 |
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| any other extraordinary or unusual event affecting the outstanding Class A common stock as a class without the Companys receipt of consideration, or if the value of outstanding shares of Class A common stock is substantially reduced as a result of a spinoff or the Companys payment of any extraordinary dividend or distribution, |
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 automatically be
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 its subsidiaries and each director of a member of the Group
who is not eligible to receive stock options under the
Companys 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.
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 Stock Market, or NASDAQ,
on the day on which the board is determining the fair market
value, as reported by NASDAQ. In the event that there are no
transactions in shares of Class A common stock on NASDAQ on
such day, the Board will determine the fair market value as of
the immediately preceding day on which there were transactions
in shares of Class A common stock on that exchange. 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 outside 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 equal to or greater than the fair
market value of a share of Class A common stock on the date
of 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 grantees termination of
service as an outside director, as a result of resignation,
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 his or her stock option and without having fully
exercised his or her stock option, the grantees
representative or successor shall have the right to exercise the
stock option during its term within a period of one year after
the grantees 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.
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(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 for 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.
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, 2012, provided that the
director served as a member of the Board or of the board of
directors of a member of the Group 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:
| The grantee may not sell or otherwise transfer the shares of Class A common stock comprising the restricted stock awards 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 receive all dividends and other distributions paid or made with respect to the shares. | |
| In the event of changes in the capital 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
Boards 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
reasonable time after the grant date.
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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 satisfaction of the
Board. The Board shall have the right to condition any award
made to any director on the directors undertaking in
writing to comply with the restrictions on his or her 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
will 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 grant during the grantees
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 his or her right to receive the award under the
grantees 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 his or her 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.
(c) Termination. This Plan shall
terminate on April 21, 2021, unless the Board earlier
terminates this Plan or the term is extended 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.
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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
Companys 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 or sell any
shares as to which the requisite authority the Company has not
obtained.
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 Companys 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 grantees 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 members 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 him or her in connection with or
arising out of, any action, suit or proceeding in which he or
she may be involved by reason of being or having been a member
of the Board, whether or not he or she 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 he or she 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 his or
her duty as such 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, he or she
shall have offered the Company in writing the opportunity to
handle 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 grantee satisfy all the applicable
terms, conditions and provisions of this Plan and 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 be automatically
amended so as to bring them into full compliance with that rule.
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(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
inconsistencies 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 interpreted and construed to comply
with any and all provisions 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 his 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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