**Exhibit 10(u)**

 

**DPL INC.**

**PARTICIPATION AGREEMENT AND WAIVER**

 

ThisPARTICIPATION AGREEMENT AND WAIVER (“Agreement”) is entered into this 27thday of February 2006 (the “Effective Date”) among DPL Inc., an Ohiocorporation (“DPL”), The Dayton Power and Light Company,an Ohio corporation (“DP&L”), and Gary G. Stephenson (“Executive”).

 

WHEREAS, DPL has implementeda new executive compensation program (the “Program”), generally effective as ofJanuary 1, 2006;

 

WHEREAS, the Programprovides benefits pursuant to the following plans which have been approved bythe Compensation Committee of the Board of Directors of DPL (the “Committee”)and adopted by the Board of Directors ofDPL (the “Board”): the DPL Inc. Severance Pay and Change of Control Plan, the DPL Inc. SupplementalExecutive Defined Contribution Retirement Plan, the DPL Inc. 2006 Equity and Performance Incentive Plan (“EPIP”), and the DPL Inc.Executive Incentive Compensation Plan (collectively, the “Plans”);

 

WHEREAS, Executive’sparticipation in the Plans requires execution of this Agreement in order to be eligible toreceive benefits under such Program; and

 

WHEREAS, Executivepreviously entered into an Employment Agreement and a Change of Control LetterAgreement with DPL and DP&L (collectively, the “Company”), both dated September 17,2004 (the “Prior Agreements”);

 

NOW THEREFORE, inconsideration of the promises and agreements contained herein and other goodand valuable consideration, the sufficiency and receipt of which are herebyacknowledged, and intending to be legally bound, Executive agrees as follows:

 

1.**            **Effective Date.    ThisAgreement is effective on the date hereof and will continue in effect asprovided herein.

 

2.**            **Participationin the Plans.    DPL confirms that Executive (a) has been designatedby the Committee and the Board to participate in each of the Plans pursuant tothe terms thereof, contingent on his execution of this Agreementand, with respect to the EPIP, its approval by the shareholders of the Company attheir annual meeting on April 26, 2006, and (b) is eligible toreceive additional benefits as such are provided to other similarly situatedemployees of the Company from time to time.

 

3.             Termination of Prior Agreements.    Executive,for himself and his dependents, successors, assigns, heirs, executors andadministrators (and his and their legal representativesof every kind),  and the Companyhereby agree that, upon

 

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execution of this Agreement,the Prior Agreements shall terminate and have no further force and effect.

 

4.**            **Remaining Rights.    Notwithstandingthe terms of Section 3 of this Agreement, Executiveand the Company hereby agree that nothing in this Agreement negates ordiminishes Executive’s right under any agreement other than the PriorAgreements, including, but not limited to, the right to receive amounts payableunder the DPL Inc. 2003 Long-Term Incentive Plan that are payableas the amounts vest.

 

5.             Perquisite Allowance.    Byexecuting this Agreement, Executive shall be entitled to receive a perquisiteallowance in the amount of $20,000 per year (the “Perquisite Allowance”), foreach year that (a) Executive remains designated by the Committee aseligible to receive the Perquisite Allowance and (b) DPL continues tomake the Perquisite Allowance available to executive-level employees of the Company. Executive hasbeen designated by the Committee as eligible toreceive the Perquisite Allowance for 2006. The PerquisiteAllowance for 2006 shall be paid as soon as practicableafter the Effective Date. The Perquisite Allowance for years after 2006 shallbe paid to Executive as soon as practicable after the Committee designatesExecutive as eligible to receive the Perquisite Allowance for that year. ThePerquisite Allowance will not be deemed “compensation,” as that term is definedunder any of the Plans, nor under any other plan, practice, program or policyof the Company or any of its affiliates, as in effect from time to time.

 

6.***            ***Non-Solicitation.    As a condition to hiseligibility to participate in the Program, Executive hereby agrees that duringhis employment and for a period of two years following his termination ofemployment with the Company, Executive will not (a) solicit for employmentwith himself or any firm or entity with which he is associated, any employee of DPL, itssubsidiaries or affiliates, or otherwise disrupt, impair, damage or interferewith DPL’s, its subsidiaries’ or affiliates’ relationships with their employeesor (b) solicit for Executive’s own behalf or on behalf of any otherperson(s), any retail customer of DPL, itssubsidiaries or affiliates, that has purchased products or services from theDPL, its subsidiaries or affiliates, at any time (i) with respect tosolicitation during employment, during the Executive’s employment or (ii) withrespect to solicitation after termination of employment, in the twelve monthspreceding the date on which Executive’s employment with DPL, itssubsidiaries or affiliates is terminated or that DPL,its subsidiaries or affiliates are actively soliciting or have knownplans to solicit, for the purpose of marketing or distributing any product,pricing or service competitive with any product, pricing or service thenoffered by DPL, its subsidiaries or affiliates or which DPL, itssubsidiaries or affiliates have known plans to offer.

 

7.             No Inducement.    Executiveagrees and acknowledges that no representations, promises or inducements havebeen made by the Company to induce Executive to enter into this Agreement otherthan as set forth herein.

 

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INWITNESS WHEREOF,the partieshereto have executed this Agreement on the date first written above.

 
|   | DPL  INC.                            |
|--------|--------------------------------------|
|   |                                 |
|   |                                 |
|   | By:                                  | /s/ James V. Mahoney |
|   |                                 | Name: James V. Mahoney |
|   |                                 | Title: President and CEO |
|   |                                 |
|   |                                 |
|   | THE DAYTON POWER  AND LIGHT  COMPANY |
|   |                                 |
|   |                                 |
|   | By:                                  | /s/ James V. Mahoney |
|   |                                 | Name: James V. Mahoney |
|   |                                 | Title: President and CEO |
|   |                                 |
|   |                                 |
|   | /s/ Gary G. Stephenson               |
|   | Gary G. Stephenson                   |

 

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