**Exhibit 10(b)**

 

**THEDAYTON POWER AND LIGHT COMPANY**

**1991AMENDED DIRECTORS’ DEFERRED**

**COMPENSATIONPLAN**

**(ASAMENDED AND RESTATED THROUGH DECEMBER 31, 2007)**

 

1.                                       GENERAL.

 

The Dayton Power and Light Company 1991 AmendedDirectors’ Deferred Compensation Plan (the “Plan”) is amended and restated inits entirety as set forth herein.  ThePlan previously provided members of the Board of Directors who are not employedby the Company (“Directors”) the opportunity to defer payment of all or aspecified portion of Fees payable for services as a Director or otherwise inaccordance with the Standard Deferral Provisions of the Plan.  Effective as of January 1, 2007, nofurther deferrals shall be made under this Plan, but amounts previouslydeferred under the Plan shall continue to be held and administered under theterms hereof.  The Plan is being amendedand restated as of December 31, 2007 to conform the terms of the Plan tothe requirements of****Section 409Aof the Code.

 

2.                                       DEFINITIONS.

 

When used herein, the following terms shall have thefollowing meanings:

 

A.                                   “Board of Directors” means the Board ofDirectors of DPL, in place from time to time prior to a Change of Control.

 

B.                                     “CEO” shall mean the Chief ExecutiveOfficer of DPL duly installed, from time to time, prior to a Change ofControl.  However, “Committee” will besubstituted for “CEO” in discussing the CEO’s rights and benefits under thePlan.

 

C.                                     “Change of Control” means any change incontrol of DPL, or its principal subsidiary, DP&L, of a nature that wouldbe required to be reported in response to Item 6(e) of Schedule 14A ofRegulation 14A promulgated under the Securities Exchange Act of 1934, asamended (the “Exchange Act”) as determined by the Board of Directors in itssole discretion; provided that, without limitation, such a Change of Controlshall be deemed to have occurred if (i) any “person” (as such term isdefined in Sections 13(d) and 14(d)(2) of the Exchange Act;hereafter, a “Person”) other than DPL or DP&L or an entity then directly orindirectly controlling, controlled by or under common control with DPL orDP&L is on the date hereof or becomes or commences a tender offer to becomethe beneficial owner, directly or indirectly, of securities of DPL or DP&Lrepresenting (A) 15%****or moreof the combined voting power of the then outstanding securities of DPL orDP&L if the acquisition of such beneficial ownership 

 

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or such tender offer is not approved by the Board ofDirectors prior to the acquisition or the commencement of such tender offer or (B) 50%or more of such combined voting power in all other cases; (ii) DPL orDP&L enters into an agreement to merge or consolidate itself, or anagreement to consummate a “combination” or “majority share acquisition” inwhich it is the “acquiring corporation” (as such terms are defined in Ohio Rev.Code § 1701.01 as in effect on December 31, 1990) and in whichshareholders of DPL or DP&L, as the case may be, immediately prior toentering into such agreement, will beneficially own, immediately after theeffective time of the merger, consolidation, combination or majority shareacquisition, securities of DPL or DP&L or any surviving or new corporation,as the case may be, having less than 50% of the “voting power” of DPL orDP&L or any surviving or new corporation, as the case may be, including “votingpower” exercisable on a contingent or deferred basis as well as immediatelyexercisable “voting power”, excluding any merger of DPL into DP&L or ofDP&L into DPL; (iii) DPL or DP&L enters into an agreement to sell,lease, exchange or otherwise transfer or dispose of all or substantially all ofits assets to any Person other than to a wholly owned subsidiary or, in thecase of DP&L, to DPL or a wholly owned subsidiar(ies) of DPL; but notincluding (A) a mortgage or pledge of assets granted in connection with afinancing or (B) a spin-off or sale of assets if DPL continues inexistence and its common shares are listed on a national securities exchange,quoted on the automated quotation system of a national securities associationor traded in the over-the-counter market; (iv) any transaction referred toin (ii) or (iii) above is consummated; or (v) those personsserving as directors of DPL or DP&L on February 1, 2000 (the “OriginalDirectors”) and/or their Successors do not constitute a majority of the wholeBoard of Directors of DPL or DP&L, as the case may be (the term “Successors”shall mean those directors whose election or nomination for election byshareholders has been approved by the vote of at least two-thirds of theOriginal Directors and previously qualified Successors serving as directors ofDPL or DP&L, as the case may be, at the time of such election or nominationfor election).

 

D.                                    “Code” means the Internal Revenue Code of1986, as amended.

 

E.                                      “Committee” means the CompensationCommittee of the Board of Directors or such other committee(s) as theBoard of Directors may designate from time to time to administer the Plan.

 

F.                                      “Company” means The Dayton Power and LightCompany (“DP&L”), DPL Inc. (“DPL”), and any entity which, prior to a Changeof Control, is controlling, controlled by or under common control with DP&Lor DPL Inc.

 

G.                                     “Controlled Group” means the Company andany and all other corporations, trades and/or businesses, the employees ofwhich, together with employees of the Company, are treated under Section 414of the 

 

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Code as if they were employed by a singleemployer.  Each corporation orunincorporated trade or business that is or was a member of the ControlledGroup shall be referred to herein as a “Controlled Group Member”, but onlyduring such period as it is or was such a member.

 

H.                                    “Dividend Equivalent” means theexpression on the Company’s books of a dividend with respect to a Stock Unit,each Dividend Equivalent being equal to the cash dividends paid from time totime on one Share.

 

I.                                         “Election Form” means the form as theCommittee may designate from time to time which shall be used for deferringpayment of Fees in accordance with the provisions of the Plan and shall alsoinclude any prior forms used in connection with the Plan for the purpose ofdeferring payment of Fees.

 

J.                                        “Fair Market Value” means the average ofthe closing sale prices of a Share on the last trading day of each of the fourcalendar months preceding the date the value of a Share is to be determined, asreported on the New York Stock Exchange-Composite Transaction Tape.

 

K.                                    “Fees” means amounts payable by theCompany to a Director for services as a member of the Board of Directors or acommittee of the Board of Directors and any other amounts (including, withoutlimitation, consulting fees and the like) payable by the Company to a Directorwho is not employed by the Company for services rendered to the Company in anycapacity.

 

L.                                      “Key Employee” means a key employee asdefined in Section 409A of the Code and Section 416(i) of theCode (without regard to paragraph (5) thereof) of the Company (or aControlled Group Member).

 

M.                                 “Share” or “Shares” means the CommonShares of DPL.

 

N.                                    “Standard Deferral Account” means theaccount established by the Company in the Director’s name to which deferralsmade in accordance with the Standard Deferral Provisions of the Plan arecredited.

 

O.                                    “Standard Deferral Provisions” meansgenerally those provisions of the Plan under which:

 

(1)                                  a Director may elect annually to deferpayment of Fees;

 

(2)                                  the deferred amounts are credited to theStandard Deferral Account;

 

(3)                                  earnings are credited to the StandardDeferral Account in accordance with Section 3(C), Section 3(D) orSection 3(E); and

 

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(4)                                  amounts credited to the Director’sStandard Deferral Account together with accumulated earnings are paid inaccordance with the Directors’ elections regarding time and form of payment onhis or her Election Form, as may be modified pursuant to the terms of Section 6hereof.

 

P.                                      “Stock Unit” means the expression on theCompany’s books of a unit which is equivalent to one Share.

 

Q.                                    “Termination of Service” means aseparation from service as defined under Section 409A of the Code.

 

R.                                     “Unforeseeable Emergency” means an eventthat results in a severe financial hardship to a Director resulting from (1) anillness or accident of the Director, his or her spouse, dependent (as definedin Section 152(a) of the Code) or beneficiary, (2) loss of theDirector’s property due to casualty, or (3) other similar extraordinarycircumstances arising as a result of events beyond the control of the Director.

 

S.                                      “Unreimbursed Amount” means, at any timeas to any Director who, either directly or through any affiliate, includingthrough a trust established by such Director, has entered into a split-dollarlife insurance arrangement with the Company prior to December 31, 2004 andthe premiums for which were entirely paid prior to that date, the amount ofsuch Director’s or affiliate’s then obligation to reimburse the Company undersuch split-dollar arrangement for life insurance premiums paid by the Company; provided,however, that, for purposes of the Plan, the Unreimbursed Amount of anyDirector shall be reduced to the extent that such Unreimbursed Amount is beingtaken into account for purposes of calculating such Director’s benefits underthe Company’s Key Employees Deferred Compensation Plan.

 

3.                                       ELECTION TO DEFER AND ACCOUNTDESIGNATION.

 

A.            ELECTION TO DEFER.  With respect to Fees paid for servicesperformed prior to 2007, a Director may elect, on or before December 31 ofany year, to defer payment of all or a specified part of the Director’s Feesduring the succeeding calendar year****untilthe Director ceases to be a Director of the Company.  Any person who shall become a Director duringany calendar year prior to 2007, and who was not a Director of the Company onthe preceding December 31, may elect, before the Director’s term begins,to defer payment of all or a specified part of the Director’s Fees for theremainder of such calendar year.** **Any such elections shall be madeby delivering an Election Form to the Secretary of the Company.

 

As provided in Sections 6 and 9.B. of The Dayton Powerand Light Company Directors’ Deferred Stock Compensation Plan (the “DDSCP”),upon the Shares ceasing to be listed on the New York Stock Exchange, or upontermination of a Participant’s 

 

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status as a director ofthe Company after a Change of Control, additional amounts may be credited to aParticipant’s Standard Deferral Account from such plan.  In the event such accounts are credited to aParticipant’s Standard Deferral Account hereunder, such amounts will bedistributed at the same time and in the same manner and subject to the samedegree of Committee discretion as would be the case under the DDSCP.

 

B.            STANDARD DEFERRAL ACCOUNT.  All deferred amounts shall be credited toeach Director’s Standard Deferral Account. The Directors’ Standard Deferral Accounts are established only as amechanism for measuring the potential amount of cash or Shares which may bedistributed under the Plan.  The Companyshall retain title to, and beneficial ownership of, all amounts credited toDirectors’ Standard Deferral Accounts and such deferred amounts will be subjectto the claims of the Company’s creditors. No Director or beneficiary has any property interest in deferred amountsor in any specific assets of the Company.

 

C.            STOCK UNITS.  Each Director shall have the option to electto have any portion of his/her “Investment Amount” (as hereinafter defined)deemed invested in Shares as of each such date (on or after January 1,1996) as the Committee may specify from time to time for such purpose, bydelivering to the Secretary of the Company a Stock Unit Investment Election Form inthe form as the Committee may designate from time to time.  In such event, the Company shall credit tosuch Director’s Standard Deferral Account a number of Stock Units equal to theamount which is deemed invested in Shares pursuant to this Section 3(C) dividedby the Fair Market Value of a Share as of the date of such deemed investmentand shall thereafter credit to such Director’s Standard Deferral Account, oneach dividend payment date with respect to the Shares, a Dividend Equivalentfor each Stock Unit then credited to such Standard Deferral Account.  On any such dividend payment date, to theextent that the value of the accumulated Dividend Equivalents credited to suchDirector’s Standard Deferral Account equals the Fair Market Value of one ormore full Shares on such date, such Dividend Equivalents shall be convertedinto, and credited to such Standard Deferral Account as, additional StockUnits.

 

Once a Director has elected to have any amount of suchDirector’s Standard Deferral Account deemed invested in Shares pursuant to thisSection 3(C), such Director may not revoke or otherwise change suchelection with respect to such amount without the prior approval of theCommittee.

 

The Company shall not be required to purchase, hold ordispose of any Shares for purposes of funding benefits which may be payable asa result of this Section 3(C).  Tothe extent that the Company does, in its discretion, purchase or hold anyShares for purposes of funding such benefits or otherwise, the same shallremain the sole and exclusive property of the Company, subject to the claims ofits general creditors, and shall not be deemed to form a part of any Director’sStandard Deferral Account, and no Director shall have any claim in, or rightto, any such Shares (or any Stock Units or Dividend Equivalents).

 

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In the event of a change in the outstanding Shares byreason of a Share dividend, recapitalization, merger, consolidation, split-up,combination or exchange of shares, or the like, the number of Stock Units creditedto an Director’s Standard Deferral Account shall be adjusted by the Committee(whose determination in each case shall be conclusive) to give effect as may beappropriate to any increase or decrease in the number of issued and outstandingShares as a result thereof.

 

In the event that the Shares cease to be listed on theNew York Stock Exchange for any reason, the Standard Deferral Account of eachDirector shall be credited with a cash amount equal to the number of StockUnits then credited to such Director’s Standard Deferral Account multiplied bythe greater of (i) the Fair Market Value of a Share as of the date theShares cease to be so listed or (ii) the closing sales price of a Share onthe New York Stock Exchange-Composite Transaction Tape on the date the Sharescease to be so listed and the cash amount so credited shall thereafter bedeemed to be part of such Director’s “Investment Amount” for all purposes ofthe Plan.  After the Shares cease to beso listed on the New York Stock Exchange, no Director shall have the option tohave any amounts credited to his/her Standard Deferral Account deemed investedin Shares pursuant to this Section 3(C).

 

D.            EARNINGS ON STANDARD DEFERRALACCOUNTS OF DIRECTORS.  For purposes ofmeasuring the amounts which may be distributed under the Plan to Directors,each Director’s “Investment Amount” shall be deemed invested, on and after January 1,1997, in such “Eligible Investment Options” as such Director may designate fromtime to time as provided herein.  Forpurposes of the Plan, “Investment Amount” means, at any time on and after January 1,1997 with respect to each Director, the amount then credited to such Director’sStandard Deferral Account (including any dividends, interest, distributions orother amounts credited to such Standard Deferral Account pursuant to this Section 3(D))less the amount then credited to such Standard Deferral Account which is deemedinvested in Shares pursuant to Section 3(C), and “Eligible InvestmentOptions” means those securities, mutual funds or other investment vehicles setforth on Schedule I hereto, as such Schedule I may be modified from time totime by the Committee upon at least 30 days’ prior written notice to theDirectors.

 

Each Director shall have the option, by delivering tothe Secretary of the Company, a completed Investment Option Election Form inthe form as the Committee may designate from time to time****on or prior to each such date as theCommittee may specify from time to time for such purpose (each such date, an “ElectionDate”) to designate or change, in a percentage equal to at least 10%, theportions of his/her Investment Amount which shall be deemed invested in eachEligible Investment Option as of such Election Date.  Any such designation by a Director shallremain in effect until changed in accordance with the preceding sentence.  Any increase in the percentage of an Director’sInvestment Amount deemed invested in an Eligible Investment Option effected onany Election Date shall be deemed to be a purchase of such Eligible InvestmentOption and any decrease in the percentage of a Director’s Investment Amountdeemed invested in an Eligible Investment Option effected on any Election Dateshall be deemed to be a sale of such Eligible Investment Option, and any suchpurchase or sale shall be deemed to have occurred as of the last business day 

 

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immediately prior to suchElection Date at the closing price of such Eligible Investment Option on suchdate.  In the absence of any suchdesignation by an Director with respect to all or any portion of his/herInvestment Amount, the Standard Deferral Account of such Director shall bedeemed invested in the Vanguard Total Bond Market Index Fund (Investor Shares),or a comparable fund designated by the Committee in its sole discretion (the “BondFund”), and the Bond Fund shall be an Eligible Investment Option for suchDirector.  All dividends, interest,distributions and other amounts paid or distributed from time to time withrespect to any Eligible Investment Option in which all or any portion of aDirector’s Investment Amount is deemed invested shall be credited to suchDirector’s Standard Deferral Account and shall be deemed reinvested in suchEligible Investment Option.

 

The Company shall not be required to purchase, hold ordispose of any Eligible Investment Options designated by Directors.  To the extent that the Company does, in itsdiscretion, purchase or hold any of the Eligible Investment Options designatedby Directors, the same shall remain the sole property of the Company, subjectto the claims of its general creditors, and shall not be deemed to form a partof any Director’s Standard Deferral Account, and no Director shall have anyproperty interest therein or claim thereto.

 

E.             UNREIMBURSED AMOUNTS.  Notwithstanding any other provision of thePlan, in the event that there exists an Unreimbursed Amount as to any Director,the Unreimbursed Amount of such Director in effect from time to time shallreduce the amount of such Director’s Standard Deferral Account which wouldotherwise be deemed invested in Eligible Investment Options pursuant to Section 3(D) inthe manner designated by such Director in the Investment Option Form mostrecently delivered to the Secretary of the Company or, failing suchdesignation, shall proportionately reduce the amount which would otherwise bedeemed invested in each Eligible Investment Option pursuant to Section 3(D).

 

4.                                       PAYMENTS UNDER THE PLAN.

 

A.            STANDARD DEFERRAL ACCOUNT FORAMOUNTS DEFERRED PRIOR TO DECEMBER 31, 2004. Amounts deferred prior to December 31, 2004, together withaccumulated earnings, shall be distributed from a Director’s Standard DeferralAccount, as specified in the Election Form, in a lump sum payment or over aperiod of years, up to twenty, in such installments as specified in theElection Form.  Such lump sum paymentsshall be made or such installment payments shall commence, unless otherwisedetermined by the Committee in its discretion, on or prior to the January 31immediately following:

 

(1)                                  the date the Director ceases to be aDirector; or

 

(2)           such other date, either before orafter his termination of service, as specified by the Director on his ElectionForm; and with subsequent annual installments, if payments are to be made inannual installments, to be paid on or 

 

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prior to each January 31 thereafter until allamounts credited to the Director’s Standard Deferral Account have been paid infull.

 

For purposes of the Plan, an amount will be considered to have beendeferred prior to December 31, 2004 if the amount was earned and vested asof December 31, 2004, even if such amount had not been credited to theDirector’s Standard Deferral Account as of that date.

 

B.            STANDARD DEFERRAL ACCOUNT FORAMOUNTS DEFERRED AFTER DECEMBER 31, 2004.

 

(1)           TIME OF PAYMENTS.  (a)  Amounts deferred after December 31,2004, together with accumulated earnings, shall be distributed from a Director’sStandard Deferral Account, as specified on the Director’s Election Form, uponthe occurrence of one of the following events:

 

(i)            thedate upon which the Director incurs a Termination of Service for any reason; or

 

(ii)           in a specified year, either before orafter the Director’s Termination of Service, as specified by the Director onthe Director’s Election Form; provided, however, that such year must begin atleast one year after the date on which the Election Form becomeseffective.

 

(b)           Distributions made in accordance withSection 4(B)(1)(a)(i) shall be made or commence to be made within 90days following the date of the Director’s Termination of Service; provided,however, that the Director does not have the right to designate thetaxable year of such distributions, and distributions made in accordance with Section 4(B)(1)(a)(ii) shallbe made or commence to be made on January 31 of the specified year.

 

(c)           Notwithstanding the foregoingprovisions of this Section 4(B)(1), in the event that payments are to bedistributed in a specified year, and prior to the date such payments are due tobe distributed the Director incurs a Termination of Service, payment of theDirector’s Standard Deferral Account shall commence, in the form electedpursuant to Section 4(B)(2), within 90 days following the date of suchTermination of Service; provided, however, that that the Directordoes not have the right to designate the taxable year of such payments.

 

(d)           Notwithstanding the foregoingprovisions of this Section 4(B)(1), in the event that a Director is a KeyEmployee at the time of his or her Termination of Service, then the payments tobe paid in accordance with the Participant’s election under Section 4(B)(1)(a)(i) orpursuant to Section 4(B)(1)(c) shall be paid or commence to be paidon the first day of 

 

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the seventh month after such Termination of Service(or if earlier, the date of the Director’s death).

 

(2)           FORM OF PAYMENTS.  (a)  Payments made pursuant to Section 4(B)(1) shallbe distributed, as specified on the Election Form, (i) in a lump sum or (ii) overa period of years, up to twenty, in such installments as specified on theElection Form.

 

(b)           In the event that a Director’sStandard Deferral Account is paid in annual installments, each installment shallbe equal to the value, as of December 31 of the calendar year immediatelyprior to the date of the respective installment payment, of the Director’sStandard Deferral Account divided by the number of installment payments thenremaining in the installment period.

 

(i)            The portion of the Director’sStandard Deferral Account subject to such installment payments that remainsunpaid from time to time shall continue to be credited with gains, losses,interest and other earnings.

 

(ii)           The final installment payment shallinclude adjustment for gains, losses, interest and other earnings during theperiod between the beginning of the calendar year in which the finalinstallment payment is made and the date of such final payment.

 

(3)           If a Director has elected, pursuantto Section 4(B)(1)(a)(ii), to commence payment in a specified year, thedeferral election on the Election Form for the year immediately prior tosuch specified year shall contain the Director’s election regarding the time ofthe commencement of distributions of amounts in the Director’s StandardDeferral Account and the form of such distributions (i.e., in a lump sumor in annual installments) for that year and all future years.

 

C.            For purposes of any distributionpursuant to this Section 4, the amount credited to a Director’s StandardDeferral Account on any date shall be equal to (i) in the case of anyStock Units credited to such Director’s Standard Deferral Account, theaggregate Fair Market Value as of such date of a number of Shares equal to thenumber of Stock Units then credited to such Standard Deferral Account and (ii) inthe case of any Eligible Investment Options in which such Director’s StandardDeferral Account is deemed invested, the value (determined on the basis of theclosing prices on the last business day immediately preceding such date) of allEligible Investment Options in which such Director’s Standard Deferral Accountis deemed to be invested on such date pursuant to Section 3(E) and,in the case of a partial distribution from an Director’s Standard DeferralAccount, the amount of such distribution shall proportionately reduce theamount which is deemed invested in Shares pursuant to Section 3(D) andinvested in each Eligible Investment Option pursuant to Section 3(E).

 

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D.            Notwithstanding any other provisionof the Plan, all payments under the Plan with respect to Stock Units creditedto an Director’s Standard Deferral Account shall be made in the form of Sharesand an Director shall be entitled to receive one Share for each Stock Unitcredited to his Standard Deferral Account (with a cash payment being made forany fractional shares).

 

E.             ELECTION TO BE PAID IN SHARES.  At least thirty days before the firstinstallment (or lump sum payment, if the Director so elects) is to be paidpursuant to the Standard Deferral Provisions, the Director or the Director’sbeneficiary shall elect whether the amounts credited to such Director’sStandard Deferral Account (other than the Stock Units credited to such Director’sStandard Deferral Account which, in accordance with Section 4(D) shallbe paid in the form of Shares) shall be paid in cash or in Shares.  At least thirty days before any subsequentinstallment is to be paid, the Director or the Director’s beneficiary maychange such election.  In the case ofpayment in Shares, such Shares shall be valued at their Fair Market Value as ofthe date a cash payment would otherwise have been paid.  As soon as practical thereafter, the Companyshall cause to be issued and delivered that number of Shares (which may beeither authorized and unissued shares or treasury shares or both) which isequal to the amount of the payment divided by the determined price, providedhowever, that the Company shall not be obligated to issue and deliverfractional Shares and in lieu thereof, the Director shall be paid in cash.

 

F.             DESIGNATION OF BENEFICIARY.  Each Director participating in the Plan shalldesignate on the Election Form one or more beneficiaries to whom paymentsshall be made in the event of the Director’s death.  The Director shall have the right to changethe beneficiary or beneficiaries from time to time, provided, however, nochange shall become effective until received in writing by the Committee (orits delegate).  In the event the Directorhas not designated a beneficiary or a designated beneficiary is not living atthe time of the Director’s death, then payments required to be made by theCompany after the Director’s death to the designated beneficiary shall be madeto the Director’s estate.

 

G.            EARLY DISTRIBUTION and UNFORSEEABLEEMERGENCY.

 

(1)           A Director may in no event receive adistribution of all or a portion of amounts of cash or Shares deferred in hisStandard Deferral Account prior to the time that the Director elected toreceive such amounts pursuant to the Plan.

 

(2)           Notwithstanding Section 4(G)(1), with respect toamounts deferred prior to December 31, 2004: (a) the CEO may, uponreceiving a written request from the Director or the Director’s beneficiary asprovided in Section 4(F) hereof in the event of the death of theDirector, upon determining that a distribution is in the best interest of theCompany and the Director (or his or her beneficiary) taking into account thefinancial condition of each, distribute all or a portion of the deferredamounts in the Director’s Standard Deferral Account, together with the earningsthereon, and (b) upon written request by a Director to receive his entireStandard Deferral Account made at any time after termination of his or herstatus 

 

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as a director of the Company, for any reason, after aChange of Control, the amount deferred in such Participant’s account, togetherwith the earnings thereon, shall be paid to such Director in a lump sum withinten (10) days after the date of such written request, provided that theDirector shall be entitled to only 90% of such account balance and shallirrevocably forfeit 10% of such account balance by making the withdrawal.

 

(3)           Notwithstanding Section 4(G)(1), with respect toamounts deferred after December 31, 2004, in the event of an UnforeseeableEmergency and at the request of a Director, accelerated payment shall be madeto the Director of all or a part of the Director’s Standard Deferral Account,together with the earnings thereon. Payments of amounts as a result of an Unforeseeable Emergency may notexceed the amount necessary to satisfy such Unforeseeable Emergency plusamounts necessary to pay taxes reasonably anticipated as a result of thedistribution(s), after taking into account the extent to which the hardship isor may be relieved through reimbursement or compensation by insurance orotherwise or by liquidation of the Director’s assets (to the extent the liquidationof such assets would not itself cause severe financial hardship).

 

H.            WITHHOLDINGS.  Any taxes required to be withheld by anyFederal, state, or local government will be deducted from all deferred paymentsand paid for the account of the Director.

 

I.              PAYMENTS IN KIND.  Notwithstanding any other provision of thePlan, after a Change of Control, any portion of a distribution to be made froma Director’s Standard Deferral Account may, at the request of such Director atleast 30 days prior to the scheduled date of such distribution, be made by theTrustees of the Master Trust(s) pursuant to which benefits under the Planare being funded, in the sole and absolute discretion of such Trustees, in theform of any Eligible Investment Options actually held by such Master Trust(s) forpurposes of funding such distribution to such Director under the Plan.  For purposes of making any such distribution,any Eligible Investment Option so distributed shall be valued at its closingprice on the last business day immediately preceding the date of suchdistribution and such distribution shall be net of any applicable federal,state or local withholding taxes unless the Director makes a cash payment,concurrently with such distribution, to the Master Trust(s) making suchdistribution for the purpose of paying such withholding taxes.  Nothing contained in this Section 4(I) shallrequire the Company (or any of the Master Trusts) to purchase, hold or disposeof any Eligible Investment Options designated by Directors.  To the extent that any Master Trust holds anyEligible Investment Options, the same shall remain the sole property of theCompany, subject to the claims of its general creditors, and shall not bedeemed to form a part of any Director’s Standard Deferral Account and noDirector shall have any property interest therein or claim thereto.

 

J.             UNREIMBURSED AMOUNTS.  Notwithstanding any other provision of thePlan, in the event that there exists an Unreimbursed Amount as to any Director,then (1) no distribution of the amount credited to such Director’sStandard Deferral Account prior to December 31, 2004 shall be madepursuant to Section 4(A) or otherwise to the extent 

 

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that, after giving effectto any such proposed distribution, the amount then credited to such Director’sStandard Deferral Account would be less than the Unreimbursed Amount of suchDirector and (2) any amounts which are not distributed from such Director’sStandard Deferral Account by reason of the foregoing clause (1) shall bepaid to such Director promptly after the date of, and only to the extent of,any reimbursement of such Unreimbursed Amount.

 

5.             PAYMENTS IN THE EVENT OF DEATH.  In the event a Director shall die eitherbefore payments from the Director’s Standard Deferral Account have commenced orafter such payments have commenced, all amounts credited to the Director’sStandard Deferral Account at the time of the Director’s death shall be paid tothe beneficiary designated by the Director on the Director’s Election Form, ina lump sum payment on the first business day of the month following the monthin which the Director died unless the Director has elected on the Election Form thatpayments continue or commence to the Director’s beneficiary in the same methodto be paid to the Director pursuant to Section 4(A) or Section 4(B).

 

6.             MODIFICATION OF ELECTION.  With respect to amounts deferred after December 31,2004, including earnings thereon, a Director may modify his or her deferralelection by written notice delivered to the Secretary of the Company to changethe time of the commencement of payment(s) of the Director’s StandardDeferral Account, the form of payment of the Director’s Standard DeferralAccount, or both, with respect to an amount previously deferred, if all of thefollowing requirements are met:

 

(1)           Such subsequent deferral election maynot take effect until at least twelve months after the date on which thesubsequent deferral election is made;

 

(2)           In the case of a subsequent deferralelection related to a payment not described in Section 4(G)(3) or Section 5,the first payment under such subsequent deferral election shall in all cases bedeferred for a period of not less than five years from the date such paymentwould otherwise have been made (or, in the case of installment payments, whichare treated as a single payment for purposes of this Section 6, five yearsfrom the date the first installment payment was scheduled to be paid); and

 

(3)           Any subsequent deferral election relatedto a distribution that is to be made at a specified time or pursuant to a fixedschedule pursuant to Section 4 must be made not less than twelve monthsprior to the date the payment was scheduled to be made under the prior deferralelection (or, in the case of installment payments, which are treated as asingle payment for purposes of this Section 6, twelve months prior to thedate the first installment payment was scheduled to be paid).

 

7.                                       MASTER TRUSTS.

 

A.            DIRECTOR’S ACCOUNTS.  The Company has established, and may in thefuture establish, one or more trusts (each such trust, as it may be amendedfrom 

 

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time to time, is referredto herein as a “Master Trust”) for the purpose, among others, of securing theperformance by the Company of its obligation to Directors to make thedistributions under the Plan and has funded one or more of the Master Trusts inan aggregate amount of cash and/or Shares as the Company has determined to beequal to the value of all currently vested or earned benefits of the Directorsunder the Plan. Pursuant to one or more of the Master Trusts, each Director hasbeen assigned a separate account as a mechanism for measuring the potentialbenefits which may be distributed in the future.  Subsequent transfers of cash and/or Shareswhich the Company is required to make to the Master Trusts pursuant to Section 7(B) or8(B) hereof or otherwise shall be allocated among the Master Trusts as theCommittee may determine from time to time.

 

B.            SUCCESSIVE TRANSFERS.  On or before the twentieth day following theend of each successive calendar quarter, the Company shall transfer to one ormore of the Master Trusts an aggregate amount of cash and/or Shares as it shalldetermine to be equal to the value of benefits of Directors under the Planwhich benefits have vested or have been earned during such calendar quarter; provided,however, no amount shall be so transferred to a Master Trust if,pursuant to Section 409A(b)(3)(A) of the Code, such amount would, forpurposes of Section 83 of the Code, be treated as property transferred inconnection with the performance of services.

 

C.            TITLE TO FUNDS.  DP&L shall retain beneficial ownership ofall cash or shares transferred to the Master Trusts and such cash or shareswill be subject to the claims of the DP&L’s creditors.  No Director or beneficiary has or will haveany property interest in the cash or shares held in the Master Trusts or in anyother specific asset of the Company.

 

8.                                       CHANGE OF CONTROL.

 

A.            AUTOMATIC TRANSFER OFAUTHORITY.  In the event of a Change ofControl, any and all authority and discretion which is exercisable by theCommittee, or the CEO, as heretofore or hereafter described in the Plan,including, without limitation, the authority to change the Eligible InvestmentOptions as provided in Section 3(E) hereof, shall automatically betransferred to the Trustees of each Master Trust to the extent benefits underthe Plan are being funded under such Master Trust.

 

B.            FUNDING OF MASTER TRUSTS.  Upon a Change of Control, the Company shallimmediately transfer to one or more of the Master Trusts an aggregate amount ofcash which, when combined with the other assets of the Master Trustscontributed or accruing thereto under or by reason of Section 7 hereof, isequal to all amounts credited to the Directors’ Standard Deferral Account,including accumulated earnings; provided, however, no amountshall be so transferred to a Master Trust if, pursuant to Section 409A(b)(3)(A) ofthe Code, such amount would, for purposes of Section 83 of the Code, betreated as property transferred in connection with the performance of services.

 

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9.                                       NOTICES.

 

Any notice, election orany request required or permitted hereunder, which is to be mailed to orrequested from the Secretary of the Company or the CEO, shall be delivered ormailed, postage prepaid, as follows:

 

(1)                                  Prior to a Change of Control; to theSecretary of DP&L at:

 

The Dayton Power andLight Company

MacGregor Park

1065 Woodman Drive

Dayton, Ohio 45432

Attention:  Corporate Secretary

 

(2)           After a Change of Control; to theTrustees of each Master Trust pursuant to which benefits under the Plan arebeing funded, at the notice address specified by such Trustees in theapplicable trust agreement.

 

The Company or Trustees may from time to time changetheir addresses for receipt of notices by giving notice of such change to theDirectors, but no such change shall be deemed to be effective until noticethereof is actually received by the Director to whom it is directed.

 

10.                                 NONASSIGNABILITY.

 

Neither a Director, nor his beneficiary, nor any otherindividual shall have any right by way of anticipation or otherwise toalienate, sell, transfer, assign, pledge, charge or otherwise dispose of anybenefits which may become payable under this Plan, prior to the time thatpayment of any such benefit is made, and any attempted anticipation,alienation, sale, transfer, assignment, pledge, charge, or other disposition shallbe null and void.  Furthermore, none ofthe benefits payable under this Plan shall be subject to the claim or legalprocess of the creditors of any Director or of the beneficiary, spouse orformer spouse of any Director or of any other person or entity.

 

11.                                 INTERPRETATION AND AMENDMENT.

 

The Plan shall be administered by the Committee.  The decision of the Committee with respect toany questions arising in connection with the administration or interpretationof the Plan shall be final, conclusive and binding.  The Committee reserves the right to amend ormodify the Plan from time to time or to terminate the Plan, provided, however,that no amendment, modification or termination of the Plan shall void anelection to defer payments already in effect for the current calendar year orany preceding calendar year or shall otherwise adversely affect any right orbenefit earned 

 

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or accrued under the Planby any Director prior to any such amendment, modification or terminationwithout the prior written consent of such Director.  Notwithstandingthe preceding sentence, the Committee, in its sole discretion, may terminatethis Plan to the extent and in circumstances described in Treas. Reg. §1.409A-3(j)(4)(ix), or any successor provision. In the event of a Change of Control, the authority and discretiongiven the Committee under this Section 11 shall be exercised as providedin Section 8(A) hereof; provided, however, that the Trustee shallhave no authority to terminate the Plan.

 

12.           SECTION 409A OF THE CODE.  It is intended that the Plan (including allamendments thereto) comply with the provisions of Section 409A of theCode, so as to prevent the inclusion in gross income of any retirement benefitaccrued hereunder in a taxable year that is prior to the taxable year or yearsin which such amount would otherwise be actually distributed or made availableto the Directors.  It is intended thatthe Plan shall be administered in a manner that will comply with Section 409Aof the Code, including regulations or any other formal guidance issued by theSecretary of the Treasury and the Internal Revenue Service with respectthereto.

 

13.                                 GENDER AND NUMBER.

 

Except when indicated by the context, any masculineterminology used herein shall also include the feminine, and the use of anyterm herein in the singular may also include the plural.

 

14.                                 NO RIGHTS AS SHAREHOLDERS.

 

Directors whose accounts are credited with amountsunder the Plan shall have no rights as shareholders of the Company as a resultthereof unless and until the Shares, if any, are distributed to the respectiveDirectors.

 

15.                                 NO RIGHT TO EMPLOYMENT.

 

Nothing in the Plan shall confer upon any Director theright to a continued Directorship with the Company.

 

16.                                 GOVERNING LAW.

 

This Plan shall be construed, rendered and governed bythe laws of the State of Ohio.

 

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SCHEDULE I

 

ELIGIBLEINVESTMENT OPTIONS

 

Vanguard Prime MoneyMarket Fund

 

Vanguard Short-Term TreasuryFund (Admiral Shares)

 

Vanguard Total BondMarket Index Fund (Investor Shares)

 

Vanguard 500 Index Fund(Investor Shares)

 

Vanguard Small-Cap IndexFund (Investor Shares)

 

Vanguard TotalInternational Stock Index Fund

 

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