Exhibit 10(u)


 


DPL INC.


STOCK OPTION PLAN


 


Management Stock Option Agreement


 


This Agreement
is made as of December 29, 2004 (the “Grant Date”), by and between DPL Inc., an
Ohio corporation (the “Company”) and John J. Gillen (the “Participant”).


 


WHEREAS, the Committee, pursuant to the Company’s Stock Option Plan (the “Plan”), has made an award to
the Participant and authorized and directed the execution and delivery of this
Agreement;


 


NOW, THEREFORE, in consideration of
the foregoing, the mutual promises hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Participant hereby agree as follows:


 


1.                                     Award.  The Participant is hereby granted a stock
option (an” Option”) to purchase from the Company up to a total of 30,000
Common Shares of the Company at the Fair Market Value, as
defined in the Plan, on the Grant Date, or $25.00 per share (the “Exercise Price”).  The term of such Option shall be ten years, commencing on the Grant Date (the “Term”). This
Option is not intended to qualify as an incentive stock option under Code
Section 422.


 


2.                                     Vesting and Exercise. The Option may be
exercised only in accordance with the Plan, as supplemented by this Agreement,
and not otherwise.


 


a.                                     Vesting. During its Term and prior to its
earlier termination in accordance with Section 3 of this Agreement, and subject
to Section 4 of this Agreement, the Option shall vest in accordance with the
following schedule:


 




	
  Cumulative
  Fraction

  Of Option

  	
   

  	
  Vested as of December 21

  	
   

  
	
  1/3 (10,000 shares)

  	
   

  	
  2005

  	
   

  
	
  2/3 (20,000 shares)

  	
   

  	
  2006

  	
   

  
	
  3/3 (30,000 shares)

  	
   

  	
  2007

  	
   

  






 


b.                                    Exercise.  Each vested portion of the Option shall become
exercisable on the date of its
vesting.  The Option may be exercised for
less than the full number of Shares for which the Option is then exercisable.
To the extent then exercisable, the Option may be exercised by the Participant by giving written notice of
exercise to the Company in such
form as may be 


 

















 


provided by the Committee, specifying the number of Shares with respect
to which the Option is to be exercised and such other


 


information as the Committee may require. Such exercise shall be
effective upon receipt by the Company of such written notice together with the
required payment of the Exercise Price and any applicable withholding taxes.
Notwithstanding the foregoing, in the event a Person acquires beneficial
ownership of securities of the Company representing 15% or more of the combined
voting power of the then outstanding securities of the Company and such
acquisition has been approved by the Board of Directors, the vested portion of
the Option shall be exercisable prior to January 1, 2005 to enable the
Participant to sell Shares to the extent permitted under clause (ii) of Section
5 and for no other purpose.


 


c.                                     Payment of Exercise Price.  Payment of the Exercise Price may be made
by cash, check (subject to collection) or,
provided that the Shares have
been owned by the Participant for at least six months prior to such payment, by
the delivery (or attestation of ownership) of Shares having a Fair Market Value
equal to the aggregate Exercise Price and any applicable withholding taxes.
Alternatively, the Participant may make such payment by authorizing the
simultaneous sale of Shares (or a sufficient portion thereof) acquired upon
exercise through a brokerage or similar arrangement approved in advance by the
Committee. Subject to the foregoing and except as otherwise provided by the
Committee before the Option is exercised, the Company will deliver to the
Participant, within a reasonable period of time thereafter, a certificate or
certificates representing the Shares so acquired, registered in the name of the
Participant or in accordance with other delivery instructions provided by the
Participant and acceptable to the Committee.


 


3.                                     Termination. Except as otherwise provided
in this Section 3, the Option shall terminate upon the expiration of its Term.


 


a.                                     If the Participant’s employment or other service terminates for Cause, the Option, whether or not vested,
shall be forfeited.


 


b.                                    If the Participant’s employment or other service terminates for any
reason other than for Cause, the Participant shall be entitled to the then
vested portion of the Option and the unvested portion shall be forfeited.


 


c.                                     In no event may
the Option be exercised beyond its Term.


 


4.                                     Change of Control. Notwithstanding the
provisions of Sections 2(a) and 2(b) hereof, in the event of a Change of Control, the Option shall immediately
vest and become exercisable in its entirety, provided that the
Participant’s employment or other service has not terminated prior to the date
of such Change of Control.


 

















 


5.                                     Restriction on Sale of Shares. If, after
January 1, 2000, a Person acquires beneficial ownership of securities of the
Company representing 15% or more of the combined voting power of the then
outstanding securities of the Company, such acquisition has been approved by
the Board of Directors, and if the Participant exercises the Option at any time
following such acquisition, the Participant may not sell or dispose of the
Shares acquired upon exercise in any manner, whether pursuant to a cashless
exercise or otherwise, except that the Participant (i) may sell such number of
Shares as are necessary to pay the Participant’s income tax liability arising
from the exercise (calculated using the highest federal and state income tax
rates for ordinary income in effect at the time of exercise), (ii) may sell
additional Shares in proportion to any sale of Shares made by the Person who
made such acquisition (e.g., if
such Person sells 10% of its Shares, the Participant may sell pursuant to this clause (ii) 10% of the Shares acquired on exercise) and (iii)
may sell all the Shares following termination of the Participant’s employment by or other service to the Company or one of its affiliates.  The
restrictions in this Section 5 shall lapse on January 1, 2005.


 


6.                                     Withholding. The Company shall withhold all
applicable taxes required by law from all amounts paid in respect of the
Option. A Participant may satisfy the withholding obligation (i) by paying the
amount of any such taxes in cash or check (subject to collection), (ii) by the
delivery (or attestation of ownership) of Shares or (iii) with the approval of
the Committee, by having Shares deducted from the payment. Alternatively, the
Participant may satisfy such obligation by authorizing the simultaneous sale of
Shares (or a sufficient portion thereof) acquired upon exercise through a
brokerage or similar arrangement approved in advance by the Committee. The
amount of the withholding and, if applicable, the number of Shares to be
delivered or deducted, as the case may be, shall be determined by the Committee
as of when the withholding is required to be made, provided that the number of
Shares so delivered or withheld shall not exceed the minimum required amount of
such withholding.


 


7.                                     Non-Assignability.  Except as otherwise provided in this Section,
the Option is not assignable or transferable other than by will or by the laws
of descent and distribution and, during the Participant’s life, may be
exercised only by the Participant.  The Participant, with the approval of the Committee, which
approval may be withheld in its sale discretion, may transfer the Option for no
consideration to or for the benefit of any member or members of
the Participant’s Immediate Family (including, without limitation, to a trust
for the benefit of any member or members of the
Participant’s Immediate Family or to a partnership or limited liability company
for one or more members of the Participant’s Immediate Family) subject to such
limits as the Committee may establish, and the transferee shall remain subject
to all the terms and conditions applicable to the Option prior to such
transfer. The foregoing right to transfer the Option shall apply to the right
to consent to amendments to this Agreement


 

















 


and, in the discretion of the Committee, shall also apply to the right
to transfer ancillary rights associated with the Option.


 


8.                                     Rights as a Shareholder. A Participant
shall have no rights as a shareholder with respect to any Shares subject to
this award until the date the Participant becomes the holder of record of the
Shares.


 


9.                                     No Right to Continued Service. Nothing
herein shall obligate the Company or any Subsidiary to continue the Participant’s
employment or other service for any particular period or on any particular
basis of compensation.


 


10.                               Burden and Benefit. The terms and
provisions of this Agreement shall be binding upon, and shall inure to the
benefit of, the Participant and his or her executors or administrators, heirs,
and personal and legal representatives.


 


11.                               Execution. This Option is not enforceable
until this Agreement has been signed by the Participant and the Company. By executing
this Agreement, the Participant shall be deemed to have accepted and consented
to any action taken or to be taken under the Plan by the Committee, the Board
of Directors or their delegates.


 


12.                               Governing Law. This Agreement shall be
construed and enforced in accordance with the laws of the State of Ohio,
without regard to the conflict of laws principles thereof.


 


13.                               Modifications. Except for alterations and
amendments permitted under the Plan without the consent of the Participant, no
change or modification of this Agreement shall be valid unless it is in writing
and signed by the parties hereto.


 


14.                               Entire Agreement. This Agreement, together
with the Plan, sets forth all of the promises, agreements, conditions,
understandings, warranties and representations between the parties hereto with
respect to the Option, and there are no promises, agreements, conditions,
understandings, warranties or representations, oral or written, express or
implied, between them with respect to the Option other than as set forth herein
or therein. The terms and conditions of the Plan, a copy of which has been
furnished to the Participant, are incorporated by reference herein, and to the
extent that any conflict may exist


between any term or provision of this Agreement and any term or
provision of the Plan, the term or provision of the Plan shall control.


 


15.                               Additional Definitions. Any capitalized
term to the extent not defined below or elsewhere in this Agreement shall have
the same meaning as set forth in the Plan.


 


a.                                     “Cause” means (i) the commission of a
felony, (ii) embezzlement, (iii) the illegal use of drugs or (iv) if no Change
of Control has occurred other than the entering into of an agreement referred
to in items (ii) or


 

















 


(iii) of the
definition of Change of Control, the failure by the Participant to
substantially perform his duties with the Company or any Subsidiary (other than
any such failure resulting from his Disability) as determined by the Committee.
Notwithstanding the foregoing, “Cause” shall not be deemed to exist unless and
until there shall have been delivered to the Participant a copy of a resolution
duly adopted by the written consent of not less than three-fourths of the
number of directors of the Company then in office (after reasonable notice to
the Participant and an opportunity for the Participant, together with his
counsel, to be heard at a meeting of the Board of Directors called and held for
that purpose), finding that in the good faith opinion of such directors the
Participant was guilty of conduct set forth in clauses (i), (ii), (Hi) or (iv)
of the preceding sentence and specifying the particulars thereof in detail.


 


b.                                    “Immediate Family” means the Participant’s
spouse, parents, parents-in-law, children, stepchildren, adoptive relationships,
sisters, brothers and grandchildren (and, for this purpose, shall also include
the Participant) .


 


16.                             Construction. The use of any gender herein shall be deemed to
include the other gender and the use of the singular herein shall be deemed to
include the plural and vice versa, wherever appropriate.


 


17.                               Notices. Any and all notices required
herein shall be addressed: (i) if to the Company, to the principal executive
offices of the Company; and (ii) if to the Participant, to his or her address
as reflected in the records of the Company.


 


18.                               Invalid or Unenforceable Provisions. The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if the invalid or unenforceable provisions were
omitted.


 


IN WITNESS
WHEREOF, the Company and the Participant have executed this Agreement as of the
date first above written.


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  DPL INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  James V.
  Mahoney

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  John J.
  Gillen

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Participant