Exhibit 10.3

 

Draft of February 16, 2006

DPL INC.

 

LONG-TERM INCENTIVE PLAN - PERFORMANCE SHARES AGREEMENT

 

(Granted Under the 2006 Equity and Performance Incentive Plan)

 

                This Long-Term Incentive Plan - Performance Shares Agreement
(this “Agreement”) is made as of __________________, 2006 between DPL Inc., an
Ohio corporation (“DPL”) and _________________, an employee of DPL or its
Subsidiaries (the “Grantee”).

 

                WHEREAS, the Board of Directors of DPL has duly adopted the 2006
Equity and Performance Incentive Plan (the “Plan”), which authorizes DPL to
grant to eligible individuals performance shares, each such performance share
being equal in value to one share of DPL’s common stock, par value of $0.01 per
share (the “Common Shares”);

 

                WHEREAS, the Board of Directors plans to submit the Plan to
DPL’s shareholders for their approval and this grant of performance shares is in
all cases subject to the approval of the Plan by the affirmative vote of the
holders of the requisite number of outstanding Common Shares at DPL’s 2006
Annual Meeting of Shareholders (“Shareholder Approval”); and

 

                WHEREAS, the Board of Directors of DPL has determined that it is
desirable and in the best interests of DPL and its shareholders to approve a
long-term incentive program in 2006 and, in connection therewith, to grant the
Grantee a certain number of performance shares, in order to provide the Grantee
with an incentive to advance the interests of DPL, all according to the terms
and conditions set forth herein and in the Plan.

 

                NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereto do hereby agree as follows:

 

ARTICLE I  — GRANT OF PERFORMANCE SHARES

 

SECTION 1.1  PERFORMANCE SHARES GRANTED.  SUBJECT TO THE TERMS OF THE PLAN, DPL
HEREBY GRANTS TO THE GRANTEE A TARGETED NUMBER OF PERFORMANCE SHARES EQUAL TO
______________ (THE “TARGET PERFORMANCE SHARES”), PAYMENT OF WHICH DEPENDS ON
DPL’S PERFORMANCE AS SET FORTH IN THIS AGREEMENT AND IN THE STATEMENT OF
PERFORMANCE GOALS (THE “STATEMENT OF PERFORMANCE GOALS”) APPROVED BY THE
COMPENSATION COMMITTEE OF DPL’S BOARD OF DIRECTORS (THE “COMMITTEE”).

 

SECTION 1.2  PERFORMANCE MEASURE.  THE GRANTEE’S RIGHT TO RECEIVE ALL, ANY
PORTION OF, OR MORE THAN, THE TARGET PERFORMANCE SHARES WILL BE CONTINGENT UPON
THE

 

--------------------------------------------------------------------------------

 

ACHIEVEMENT OF SPECIFIED LEVELS OF TOTAL SHAREHOLDER RETURN RELATIVE TO PEERS
(“TSR RELATIVE TO PEERS”), AS SET FORTH IN THE STATEMENT OF PERFORMANCE GOALS. 
THE ACHIEVEMENT OF THE LEVELS OF TSR RELATIVE TO PEERS WILL BE MEASURED OVER THE
FOLLOWING PERIODS (EACH, A “PERFORMANCE PERIOD” AND, COLLECTIVELY, THE
“PERFORMANCE PERIODS”):

 

(A)  PAYMENT OF __________ OF THE TARGET PERFORMANCE SHARES (THE “FIRST
TRANSITION PERFORMANCE SHARES”) WILL BE CONTINGENT UPON THE ACHIEVEMENT OF
SPECIFIED LEVELS OF TSR RELATIVE TO PEERS DURING THE PERIOD FROM JANUARY 1, 2004
THROUGH DECEMBER 31, 2006 (THE “FIRST TRANSITION PERIOD”);

 

(B)  PAYMENT OF __________ OF THE TARGET PERFORMANCE SHARES (THE “SECOND
TRANSITION PERFORMANCE SHARES”) WILL BE CONTINGENT UPON THE ACHIEVEMENT OF
SPECIFIED LEVELS OF TSR RELATIVE TO PEERS DURING THE PERIOD FROM JANUARY 1, 2005
THROUGH DECEMBER 31, 2007 (THE “SECOND TRANSITION PERIOD”);

 

(C)  PAYMENT OF __________ OF THE TARGET PERFORMANCE SHARES (THE “REGULAR GRANT
PERFORMANCE SHARES”) WILL BE CONTINGENT UPON THE ACHIEVEMENT OF SPECIFIED LEVELS
OF TSR RELATIVE TO PEERS DURING THE PERIOD FROM JANUARY 1, 2006 THROUGH DECEMBER
31, 2008 (THE “REGULAR PERFORMANCE PERIOD”);

 

ARTICLE II  — EARNING OF PERFORMANCE SHARES

 

SECTION 2.1  BELOW THRESHOLD.  IF, UPON THE CONCLUSION OF EACH OF THE
PERFORMANCE PERIODS, TSR RELATIVE TO PEERS FOR THAT PERFORMANCE PERIOD FALLS
BELOW THE THRESHOLD LEVEL, AS SET FORTH IN THE PERFORMANCE MATRIX CONTAINED IN
THE STATEMENT OF PERFORMANCE GOALS, NO PERFORMANCE SHARES FOR THAT PERFORMANCE
PERIOD SHALL BECOME EARNED.

 

SECTION 2.2  BETWEEN THRESHOLD AND TARGET.  IF, UPON THE CONCLUSION OF THE
RELEVANT PERFORMANCE PERIOD, TSR RELATIVE TO PEERS EQUALS OR EXCEEDS THE
THRESHOLD LEVEL, BUT IS LESS THAN THE TARGET LEVEL, AS SET FORTH IN THE
PERFORMANCE MATRIX CONTAINED IN THE STATEMENT OF PERFORMANCE GOALS:

 

(A)  THE FIRST TRANSITION PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE FIRST TRANSITION PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 50% OF THE TARGETED FIRST TRANSITION PERFORMANCE SHARES
AND 100% OF THE TARGETED FIRST TRANSITION PERFORMANCE SHARES AND ROUNDED UP TO
THE NEAREST WHOLE SHARE;

 

(B)  THE SECOND TRANSITION PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE SECOND TRANSITION PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 50% OF THE TARGETED SECOND TRANSITION PERFORMANCE SHARES
AND 100% OF THE TARGETED SECOND TRANSITION PERFORMANCE SHARES AND ROUNDED UP TO
THE NEAREST WHOLE SHARE; AND

 

(C)  THE REGULAR GRANT PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE REGULAR PERFORMANCE PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 50% OF THE TARGETED REGULAR GRANT PERFORMANCE

 

2

--------------------------------------------------------------------------------

 

SHARES AND 100% OF THE TARGETED REGULAR GRANT PERFORMANCE SHARES AND ROUNDED UP
TO THE NEAREST WHOLE SHARE.

 

SECTION 2.3  BETWEEN TARGET AND INTERMEDIATE.  IF, UPON THE CONCLUSION OF THE
RELEVANT PERFORMANCE PERIOD, TSR RELATIVE TO PEERS EQUALS OR EXCEEDS THE TARGET
LEVEL, BUT IS LESS THAN THE INTERMEDIATE LEVEL, AS SET FORTH IN THE PERFORMANCE
MATRIX CONTAINED IN THE STATEMENT OF PERFORMANCE GOALS:

 

(A)  THE FIRST TRANSITION PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE FIRST TRANSITION PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 100% OF THE TARGETED FIRST TRANSITION PERFORMANCE SHARES
AND 150% OF THE TARGETED FIRST TRANSITION PERFORMANCE SHARES AND ROUNDED UP TO
THE NEAREST WHOLE SHARE;

 

(B)  THE SECOND TRANSITION PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE SECOND TRANSITION PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 100% OF THE TARGETED SECOND TRANSITION PERFORMANCE SHARES
AND 150% OF THE TARGETED SECOND TRANSITION PERFORMANCE SHARES AND ROUNDED UP TO
THE NEAREST WHOLE SHARE; AND

 

(C)  THE REGULAR GRANT PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE REGULAR PERFORMANCE PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 100% OF THE TARGETED REGULAR GRANT PERFORMANCE SHARES AND
150% OF THE TARGETED REGULAR GRANT PERFORMANCE SHARES AND ROUNDED UP TO THE
NEAREST WHOLE SHARE.

 

SECTION 2.4  BETWEEN INTERMEDIATE AND MAXIMUM.  IF, UPON THE CONCLUSION OF THE
RELEVANT PERFORMANCE PERIOD, TSR RELATIVE TO PEERS EQUALS OR EXCEEDS THE
INTERMEDIATE LEVEL, BUT IS LESS THAN THE MAXIMUM LEVEL, AS SET FORTH IN THE
PERFORMANCE MATRIX CONTAINED IN THE STATEMENT OF PERFORMANCE GOALS:

 

(A)  THE FIRST TRANSITION PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE FIRST TRANSITION PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 150% OF THE TARGETED FIRST TRANSITION PERFORMANCE SHARES
AND 200% OF THE TARGETED FIRST TRANSITION PERFORMANCE SHARES AND ROUNDED UP TO
THE NEAREST WHOLE SHARE;

 

(B)  THE SECOND TRANSITION PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE SECOND TRANSITION PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 150% OF THE TARGETED SECOND TRANSITION PERFORMANCE SHARES
AND 200% OF THE TARGETED SECOND TRANSITION PERFORMANCE SHARES AND ROUNDED UP TO
THE NEAREST WHOLE SHARE; AND

 

(C)  THE REGULAR GRANT PERFORMANCE SHARES SHALL BECOME EARNED BASED ON
PERFORMANCE DURING THE REGULAR PERFORMANCE PERIOD, AS DETERMINED BY MATHEMATICAL
INTERPOLATION BETWEEN 150% OF THE TARGETED REGULAR GRANT PERFORMANCE SHARES AND
200% OF THE TARGETED REGULAR GRANT PERFORMANCE SHARES AND ROUNDED UP TO THE
NEAREST WHOLE SHARE.

 

3

--------------------------------------------------------------------------------

 

SECTION 2.5  EQUALS OR EXCEEDS MAXIMUM.  IF, UPON THE CONCLUSION OF EACH OF THE
PERFORMANCE PERIODS, TSR RELATIVE TO PEERS FOR THAT PERFORMANCE PERIOD EQUALS OR
EXCEEDS THE MAXIMUM LEVEL, AS SET FORTH IN THE PERFORMANCE MATRIX CONTAINED IN
THE STATEMENT OF PERFORMANCE GOALS, 200% OF THE TARGETED PERFORMANCE SHARES FOR
THAT PERFORMANCE PERIOD SHALL BECOME EARNED.

 

SECTION 2.6  CONDITIONS; DETERMINATION OF EARNED AWARD.  EXCEPT AS OTHERWISE
PROVIDED HEREIN, THE GRANTEE’S RIGHT TO RECEIVE ANY PERFORMANCE SHARES IS
CONTINGENT UPON (A) HIS OR HER REMAINING IN THE CONTINUOUS EMPLOY OF DPL OR A
SUBSIDIARY THROUGH THE END OF EACH PERFORMANCE PERIOD AND (B) SHAREHOLDER
APPROVAL OF THE PLAN.  FOR PURPOSES OF THIS AGREEMENT, THE CONTINUOUS EMPLOY OF
THE GRANTEE SHALL NOT BE CONSIDERED INTERRUPTED OR TERMINATED IN THE CASE OF
SICK LEAVE, MILITARY LEAVE OR ANY OTHER LEAVE OF ABSENCE APPROVED BY DPL OR IN
THE CASE OF TRANSFERS BETWEEN LOCATIONS OF DPL AND ITS SUBSIDIARIES.  FOLLOWING
THE PERFORMANCE PERIODS, THE COMMITTEE (OR THE INDEPENDENT MEMBERS OF THE BOARD
OF DIRECTORS) SHALL DETERMINE WHETHER AND TO WHAT EXTENT THE GOALS RELATING TO
TSR RELATIVE TO PEERS HAVE BEEN SATISFIED FOR EACH PERFORMANCE PERIOD AND SHALL
DETERMINE THE NUMBER OF PERFORMANCE SHARES THAT SHALL HAVE BECOME EARNED
HEREUNDER.

 

ARTICLE III  — CHANGE OF CONTROL

                If a Change of Control (as defined in the Plan) occurs following
Shareholder Approval of the Plan and during the Performance Periods, but before
the payment of any performance shares as set forth in Article VII below, DPL
shall pay to the Grantee, as soon as practicable following the Change of
Control, a pro rata number of the Target Performance Shares based on the number
of full months that have elapsed during each Performance Period prior to the
Change of Control and the remaining performance shares will be forfeited.

 

ARTICLE IV  — DISABILITY OR DEATH

 

                If the Grantee’s employment with DPL or a Subsidiary terminates
following Shareholder Approval of the Plan and during the Performance Periods,
but before the payment of any performance shares as set forth in Article VII
below due to (a) “disability” (as defined in DPL’s long-term disability plan) or
(b) death, DPL shall pay to the Grantee or his or her executor or administrator,
as the case may be, as soon as practicable following such termination of
employment, a pro rata number of the Target Performance Shares based on the
number of full months during the Performance Period during which the Grantee was
employed by DPL and the remaining performance shares will be forfeited.

 

ARTICLE V  — RETIREMENT

 

                If the Grantee’s employment with DPL or a Subsidiary terminates
following Shareholder Approval of the Plan and during any Performance Period,
but before the payment of any performance shares as set forth in Article VII
below due to the Grantee’s retirement approved by the Committee or the Board,
DPL shall pay to the

 

 

4

--------------------------------------------------------------------------------

 

Grantee, as soon as practicable following the end of each Performance Period,
the performance shares to which the Grantee would have been entitled under
Article II above, had the Grantee remained employed by DPL through the end of
each of the Performance Periods, prorated based on the number of full months
during the Performance Period during which the Grantee was employed by DPL and
the remaining performance shares will be forfeited.

 

ARTICLE VI  — FORFEITING OF PERFORMANCE SHARES

 

                If the Grantee’s employment with DPL or a Subsidiary terminates
before the end of the applicable Performance Period for any reason other than as
set forth in Articles IV and V above or if Shareholder Approval of the Plan is
not obtained, the performance shares will be forfeited.

 

ARTICLE VII  — PAYMENT OF PERFORMANCE SHARES

 

                Payment of any performance shares that become earned as set
forth herein will be made in the form of Common Shares.  Except as otherwise
provided in Articles III, IV and V, payment will be made as soon as practicable
after the last fiscal year of each Performance Period and the determination by
the Committee (or the independent members of the Board of Directors) of the
level of attainment of TSR Relative to Peers, but in no event shall such payment
occur after two and a half months from the end of the applicable Performance
Period.  Performance shares will be forfeited if they are not earned at the end
of the applicable Performance Period and, except as otherwise provided in this
Agreement, if the Grantee ceases to be employed by DPL or a Subsidiary at any
time prior to such shares becoming earned at the end of each Performance
Period.  To the extent that DPL or any Subsidiary is required to withhold any
federal, state, local or foreign tax in connection with the payment of earned
performance shares pursuant to this Agreement, it shall be a condition to the
receipt of such performance shares that the Grantee make arrangements
satisfactory to DPL or such Subsidiary for payment of such taxes required to be
withheld.  This tax withholding obligation shall be satisfied by DPL withholding
performance shares otherwise payable pursuant to this award.

 

ARTICLE VIII  — DIVIDENDS

 

                Except as provided in Section 11.5 below, no dividends shall be
accrued or earned with respect to the performance shares until such performance
shares are earned by the Grantee as provided in Article II hereof.

 

ARTICLE IX  — NON-ASSIGNABILITY

 

                The performance shares and the Common Shares subject to this
grant are personal to the Grantee and may not be sold, exchanged, assigned,
transferred, pledged, encumbered or otherwise disposed of by the Grantee until
they become earned as provided in this Agreement; provided, however, that the
Grantee’s rights with respect to such performance shares and Common Shares may
be transferred by will or pursuant to the laws of descent and distribution.  Any
purported transfer or

 

 

5

--------------------------------------------------------------------------------

 

encumbrance in violation of the provisions of this Article IX shall be void, and
the other party to any such purported transaction shall not obtain any rights to
or interest in such performance shares or Common Shares.

 

ARTICLE X  — ADJUSTMENTS

 

                In the event of any change in the number of Common Shares by
reason of a merger, consolidation, reorganization, recapitalization, or similar
transaction, or in the event of a stock dividend, stock split, or distribution
to shareholders (other than normal cash dividends), the Committee shall adjust
the number and class of shares subject to outstanding Target Performance Shares
and Deferred Units (as defined below) and other value determinations applicable
to outstanding Target Performance Shares and Deferred Units.  No adjustment
provided for in this Article X shall require DPL to issue any fractional share.

 

ARTICLE XI  — DEFERRAL

 

SECTION 11.1  ABILITY TO DEFER.  THE GRANTEE MAY ELECT TO DEFER RECEIPT OF ALL
OR ANY PORTION OF THE EARNED PERFORMANCE SHARES, WHICH WILL BE CREDITED TO A
BOOKKEEPING ACCOUNT IN THE GRANTEE’S NAME.

 

SECTION 11.2  ELECTIONS.  AN ELECTION PURSUANT SECTION 11.1 MUST BE MADE IN
WRITING AND DELIVERED TO DPL WITHIN 30 DAYS OF THE DATE OF GRANT OF SUCH
PERFORMANCE SHARES, PROVIDED THAT THE ELECTION IS MADE AT LEAST ONE YEAR IN
ADVANCE OF THE EARLIEST DATE ON WHICH THE PERFORMANCE SHARES COULD BE EARNED. 
IF THE GRANTEE DOES NOT FILE AN ELECTION FORM BY THE SPECIFIED DATE, HE OR SHE
WILL RECEIVE THE PERFORMANCE SHARES WHEN THEY OTHERWISE WOULD HAVE BEEN PAID
PURSUANT TO ARTICLE VII.

 

SECTION 11.3  CREDITING TO ACCOUNTS.  IF A GRANTEE ELECTS TO DEFER RECEIPT OF
THE EARNED PERFORMANCE SHARES, THERE WILL BE CREDITED TO THE GRANTEE’S ACCOUNT
AS OF THE DAY SUCH COMMON SHARES UNDERLYING THE EARNED PERFORMANCE SHARES WOULD
HAVE BEEN PAID, A NUMBER OF DEFERRED UNITS (THE “DEFERRED UNITS”) EQUAL TO THE
NUMBER OF COMMON SHARES THAT WOULD OTHERWISE HAVE BEEN DELIVERED TO THE GRANTEE
PURSUANT TO ARTICLE VII ON SUCH DATE.  THE DEFERRED UNITS CREDITED TO THE
GRANTEE’S ACCOUNT (PLUS ANY ADDITIONAL SHARES CREDITED PURSUANT TO SECTION 11.5
BELOW) WILL REPRESENT THE NUMBER OF COMMON SHARES THAT DPL WILL ISSUE TO THE
GRANTEE AT THE END OF THE DEFERRAL PERIOD.  ALL DEFERRED UNITS WILL BE 100%
VESTED AT ALL TIMES.

 

SECTION 11.4  DEFERRAL PERIOD.  THE DEFERRED UNITS WILL BE SUBJECT TO A DEFERRAL
PERIOD BEGINNING ON THE DATE OF CREDITING TO THE GRANTEE’S ACCOUNT AND ENDING
UPON SUCH PERIOD AS THE GRANTEE MAY HAVE ELECTED.  THE PERIOD OF DEFERRAL WILL
BE FOR A MINIMUM PERIOD OF ONE YEAR, EXCEPT IN THE CASE WHERE THE GRANTEE ELECTS
A DEFERRAL PERIOD DETERMINED BY REFERENCE TO HIS OR HER TERMINATION OF
EMPLOYMENT.  THE GRANTEE MAY ELECT PAYMENT IN A LUMP SUM OR PAYMENT IN EQUAL
INSTALLMENTS.  THE GRANTEE MAY CHANGE THE PERIOD OF DEFERRAL BY FILING A
SUBSEQUENT ELECTION WITH DPL AT LEAST TWELVE MONTHS BEFORE THE DATE OF THE
PREVIOUSLY ELECTED PAYMENT DATE AND THE NEWLY ELECTED PAYMENT DATE (OR PAYMENT
COMMENCEMENT DATE) MUST BE AT LEAST FIVE YEARS AFTER THE

 

 

6

--------------------------------------------------------------------------------

 

PREVIOUSLY ELECTED PAYMENT DATE (OR THE PREVIOUSLY ELECTED PAYMENT COMMENCEMENT
DATE); PROVIDED, HOWEVER, THAT SUCH MODIFICATION SHALL NOT BE EFFECTIVE UNLESS
THE GRANTEE REMAINS AN EMPLOYEE FOR AT LEAST TWELVE MONTHS AFTER THE DATE ON
WHICH SUCH MODIFICATION WAS MADE.  DURING THE DEFERRAL PERIOD, THE GRANTEE WILL
HAVE NO RIGHT TO TRANSFER ANY RIGHTS UNDER HIS OR HER DEFERRED UNITS AND WILL
HAVE NO OTHER RIGHTS OF OWNERSHIP THEREIN.

 

SECTION 11.5  DIVIDEND EQUIVALENTS.  THE GRANTEE’S ACCOUNT WILL BE CREDITED AS
OF THE LAST DAY OF EACH CALENDAR QUARTER WITH THAT NUMBER OF ADDITIONAL DEFERRED
UNITS EQUAL TO THE AMOUNT OF CASH DIVIDENDS PAID BY DPL DURING SUCH QUARTER ON
THE NUMBER OF COMMON SHARES EQUIVALENT TO THE NUMBER OF DEFERRED UNITS IN THE
GRANTEE’S ACCOUNT FROM TIME TO TIME DURING SUCH QUARTER DIVIDED BY THE MARKET
VALUE PER SHARE OF ONE COMMON SHARE ON THE DAY IMMEDIATELY PRECEDING THE LAST
BUSINESS DAY OF SUCH CALENDAR QUARTER.  SUCH DIVIDEND EQUIVALENTS, WHICH WILL
LIKEWISE BE CREDITED WITH DIVIDEND EQUIVALENTS, WILL BE DEFERRED UNTIL THE END
OF THE DEFERRAL PERIOD FOR THE DEFERRED UNITS WITH RESPECT TO WHICH THE DIVIDEND
EQUIVALENTS WERE CREDITED.

 

SECTION 11.6  EARLY PAYMENT.  NOTWITHSTANDING THE FOREGOING PROVISIONS, (I) IF,
UPON THE GRANTEE’S TERMINATION OF EMPLOYMENT, THE VALUE OF THE GRANTEE’S ACCOUNT
IS LESS THAN $500, THE AMOUNT OF THE GRANTEE’S ACCOUNT WILL BE IMMEDIATELY PAID
TO THE GRANTEE IN COMMON SHARES, (II) IF A CHANGE OF CONTROL OCCURS, THE AMOUNT
OF THE GRANTEE’S ACCOUNT WILL IMMEDIATELY BE PAID TO THE GRANTEE IN FULL IN
COMMON SHARES AND (III) IN THE EVENT OF AN UNFORESEEABLE EMERGENCY, AS DEFINED
IN SECTION 409A OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),
THAT IS CAUSED BY AN EVENT BEYOND THE CONTROL OF THE GRANTEE AND THAT WOULD
RESULT IN SEVERE FINANCIAL HARDSHIP TO THE GRANTEE IF ACCELERATION WAS NOT
PERMITTED, THE COMMITTEE WILL ACCELERATE THE PAYMENT OF COMMON SHARES TO THE
GRANTEE IN THE GRANTEE’S ACCOUNT, BUT ONLY UP TO THE AMOUNT NECESSARY TO MEET
THE EMERGENCY.

 

ARTICLE XII  — COMPLIANCE WITH SECTION 409A OF THE CODE

 

                To the extent applicable, it is intended that this Agreement and
the Plan comply with the provisions of Section 409A of the Code, so that the
income inclusion provisions of Section 409A(a)(1) of the Code do not apply to
the Grantee.  This Agreement and the Plan shall be administered in a manner
consistent with this intent, and any provision that would cause the Agreement or
the Plan to fail to satisfy Section 409A of the Code shall have no force and
effect unless and until amended to comply with Section 409A of the Code (which
amendment may be retroactive to the extent permitted by Section 409A of the Code
and may be made by DPL without the consent of the Grantee).  In particular, to
the extent the Grantee has a right to receive payment pursuant to Article III or
IV and the event triggering the right to payment does not constitute a permitted
distribution event under Section 409A(a)(2) of the Code, then notwithstanding
anything to the contrary in Article III, IV or VII above, issuance of the Common
Shares will be made, to the extent necessary to comply with Section 409A of the
Code, to the Grantee on the earlier of (a) the Grantee’s “separation from
service” with DPL (determined in accordance with Section 409A); provided,
however, that if the Grantee is a “specified employee” (within the meaning of
Section 409A), the Grantee’s date of issuance of the

 

 

7

--------------------------------------------------------------------------------

 

Common Shares shall be the date that is six months after the date of the
Grantee’s separation of service with DPL; (b) the date the payment would
otherwise occur under this Agreement (to the extent it constitutes a permitted
distribution event); or (c) the Grantee’s death.  References to Section 409A of
the Code will also include any proposed, temporary or final regulations, or any
other guidance, promulgated with respect to such Section by the U.S. Department
of the Treasury or the Internal Revenue Service.

 

ARTICLE XIII  — MISCELLANEOUS

 

SECTION 13.1  INTERPRETATION.  THE CONTENTS OF THIS AGREEMENT ARE SUBJECT IN ALL
RESPECTS TO THE TERMS AND CONDITIONS OF THE PLAN AS APPROVED BY THE BOARD OF
DIRECTORS AND THE SHAREHOLDERS OF DPL, WHICH ARE CONTROLLING.  THE
INTERPRETATION AND CONSTRUCTION BY THE BOARD AND/OR THE COMMITTEE OF ANY
PROVISION OF THE PLAN OR THIS AGREEMENT SHALL BE FINAL AND CONCLUSIVE UPON THE
GRANTEE, THE GRANTEE’S ESTATE, EXECUTOR, ADMINISTRATOR, BENEFICIARIES, PERSONAL
REPRESENTATIVE AND GUARDIAN AND DPL AND ITS SUCCESSORS AND ASSIGNS.  UNLESS
OTHERWISE INDICATED, THE CAPITALIZED TERMS USED IN THIS AGREEMENT SHALL HAVE THE
SAME MEANINGS AS SET FORTH IN THE PLAN.

 

SECTION 13.2  FRACTIONAL SHARES.  ANY FRACTIONAL SHARE EARNED UNDER THIS
AGREEMENT WILL BE ROUNDED UP OR DOWN TO THE NEAREST WHOLE SHARE.

 

SECTION 13.3  NO RIGHT TO EMPLOYMENT.  THE GRANT OF THE PERFORMANCE SHARES IS
DISCRETIONARY AND WILL NOT BE CONSIDERED TO BE AN EMPLOYMENT CONTRACT OR A PART
OF THE GRANTEE’S TERMS AND CONDITIONS OF EMPLOYMENT OR OF THE GRANTEE’S SALARY
OR COMPENSATION.

 

SECTION 13.4  SUCCESSORS AND ASSIGNS.  THIS AGREEMENT, AND THE TERMS AND
CONDITIONS OF THE PLAN, SHALL BIND, AND INURE TO THE BENEFIT OF THE GRANTEE, THE
GRANTEE’S ESTATE, EXECUTOR, ADMINISTRATOR, BENEFICIARIES, PERSONAL
REPRESENTATIVE AND GUARDIAN AND DPL AND ITS SUCCESSORS AND ASSIGNS.

 

SECTION 13.5  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF OHIO (BUT NOT INCLUDING THE CHOICE OF LAW RULES THEREOF).

 

SECTION 13.6  AMENDMENT.  ANY AMENDMENT TO THE PLAN SHALL BE DEEMED TO BE AN
AMENDMENT TO THIS AGREEMENT TO THE EXTENT THAT THE AMENDMENT IS APPLICABLE
HERETO.  THE TERMS AND CONDITIONS OF THIS AGREEMENT MAY NOT BE MODIFIED, AMENDED
OR WAIVED, EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY A DULY AUTHORIZED
EXECUTIVE OFFICER AT DPL.  NOTWITHSTANDING THE FOREGOING, NO AMENDMENT SHALL
ADVERSELY AFFECT THE GRANTEE’S RIGHTS UNDER THIS AGREEMENT WITHOUT THE GRANTEE’S
CONSENT.

 

ARTICLE XIV  — NOTICES

                All notices under this Agreement to DPL must be delivered
personally or mailed to DPL at its principal office, addressed to the attention
of the Corporate Secretary.  DPL’s address may be changed at any time by written
notice of such change to the Grantee.  All notices under this Agreement to the
Grantee will be delivered personally or

 

 

8

--------------------------------------------------------------------------------

 

mailed to the Grantee at his or her address as shown from time to time in DPL’s
records.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Long Term
Incentive Plan - Performance Shares Agreement, or caused this Long-Term
Incentive Plan - Performance Shares Agreement to be duly executed on their
behalf, as of the day and year first above written.

 

 

DPL INC.

 

 

 

By:

 

 

Name: James V. Mahoney

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

Grantee

 

 

 

 

9

--------------------------------------------------------------------------------