Exhibit 10.2


 


DPL INC.


 


2006 EQUITY AND PERFORMANCE
INCENTIVE PLAN


 


ARTICLE I  — PURPOSE


                The purpose of the
2006 Equity and Performance Incentive Plan is to attract and retain directors,
consultants, officers and other employees of DPL Inc. and its Subsidiaries, to
provide to such persons incentives and rewards for superior performance and to
align their interests with those of shareholders.  This 2006 Equity and Performance Incentive
Plan is intended to replace the Existing Plan (as defined below) and, if
adoption of this Plan is approved by the shareholders of the Company, no new
awards will be granted under the Existing Plan, but shares relating to awards
that are forfeited or terminated under the Existing Plan may be granted
hereunder pursuant to Section 3.1. 
Outstanding awards under the Existing Plan will not be affected by
approval of this Plan.


 


ARTICLE II  —
DEFINITIONS


Section 2.1.  “Appreciation
Right” means a right granted pursuant to Section 4.2 or Section 5.1 of this
Plan, and will include both Tandem Appreciation Rights and Free-Standing
Appreciation Rights.


Section 2.2.  “Awards”
means Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units and any other award granted
pursuant to Section 6.1 hereof.


Section 2.3.  “Base
Price” means the price to be used as the basis for determining the Spread
upon the exercise of a Free-Standing Appreciation Right and a Tandem
Appreciation Right.


Section 2.4.  “Board”
means the Board of Directors of the Company and, to the extent of any
delegation by the Board to a committee (or subcommittee thereof) pursuant to
Section 8.1 of this Plan, such committee (or subcommittee).


Section 2.5.  “Change
of Control” has the meaning set forth in Section 10.1 hereof.


Section 2.6.  “Code”
means the Internal Revenue Code of 1986, as amended from time to time.


Section 2.7.  “Common
Shares” means the shares of common stock, par value $0.01 per share, of the
Company or any security into which such Common Shares may be changed by reason
of any transaction or event of the type referred to in Section 7.2 of this
Plan.


 

















Section 2.8.  “Company”
means DPL Inc., an Ohio corporation.


Section 2.9.  “Covered
Employee” means a Participant who is, or is determined by the Board to be likely
to become, a “covered employee” within the meaning of Section 162(m) of the
Code (or any successor provision).


Section 2.10.  “Date
of Grant” means the date specified by the Board on which a grant of Option
Rights, Appreciation Rights, Performance Shares, Performance Units or other
awards contemplated by Section 6.1 of this Plan, or a grant or sale of
Restricted Stock, Restricted Stock Units, or other awards contemplated by
Section 6.1 of this Plan will become effective (which date will not be earlier
than the date on which the Board takes action with respect thereto).


Section 2.11.  “Detrimental
Activity” means:


(a)           Engaging in any activity, as an
employee, principal, agent, or consultant for another entity that competes with
the Company in any actual, researched, or prospective product, service, system,
or business activity for which the Participant has had any direct
responsibility during the last two years of his or her employment with the
Company or a Subsidiary, in any state where the Company or a Subsidiary owns or
operates generation or electric distribution assets.


(b)           Soliciting any employee of the
Company or a Subsidiary to terminate his or her employment with the Company or
a Subsidiary.


(c)           The disclosure to anyone outside the
Company or a Subsidiary, or the use in other than the Company’s or a Subsidiary’s
business, without prior written authorization from the Company, of any
confidential, proprietary or trade secret information or material relating to
the business of the Company and its Subsidiaries, acquired by the Participant
during his or her employment with the Company or its Subsidiaries or while
acting as a consultant for the Company or its Subsidiaries thereafter.


(d)           The failure or refusal to disclose
promptly and to assign to the Company upon request all right, title and
interest in any invention or idea, patentable or not, made or conceived by the
Participant during employment by the Company and any Subsidiary, relating in
any manner to the actual or anticipated business, research or development work
of the Company or any Subsidiary or the failure or refusal to do anything
reasonably necessary to enable the Company or any Subsidiary to secure a patent
where appropriate in the United States and in other countries.


(e)           Activity that results in termination
for Cause.  For the purposes of this
Plan, “Cause” shall mean (i) any willful or negligent material violation of any
applicable securities laws (including the Sarbanes-Oxley Act of 2002); (ii) any
act of fraud, intentional misrepresentation, embezzlement, misappropriation or
conversion of any asset or business opportunity of the Company; (iii) a
conviction of, or entering into a plea of nolo contendere to, a felony; (iv) an
intentional, repeated or continuing violation of any of the Company’s policies
or procedures that occurs or continues after the 


 


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Company has given notice to the Participant that he or
she has materially violated a Company policy or procedure; or (v) any breach of
a written covenant or agreement with the Company, including the terms of this
Plan (other than a failure to perform Participant’s duties with the Company
resulting from the Participant’s incapacity due to physical or mental illness
or from the assignment to the Participant of duties that would constitute Good
Reason (as defined in the DPL Inc. Severance Pay and Change of Control Plan),
which is material and which is not cured within 30 days after written notice
thereof from the Company to the Participant. 
Notwithstanding the foregoing, the Participant shall not be deemed to
have been terminated for Cause unless the Participant receives a written notice
of termination from the Company setting forth in reasonable detail the specific
reason for the termination and the facts and circumstances claimed to provide a
basis for the termination of employment at least 15 calendar days prior to the
specified date of termination of employment.


(f)            Any other conduct or act determined
to be injurious, detrimental or prejudicial to any significant interest of the
Company or any Subsidiary unless the Participant acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Company.


Section 2.12.  “Director”
means a member of the Board of Directors of the Company.


Section 2.13.  “Evidence
of Award” means an agreement, certificate, resolution or other type or form
of writing or other evidence approved by the Board that sets forth the terms
and conditions of the awards granted.  An
Evidence of Award may be in an electronic medium, may be limited to notation on
the books and records of the Company and, with the approval of the Board, need
not be signed by a representative of the Company or a Participant.


Section 2.14.  “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, as such law, rules and regulations may be amended
from time to time.


Section 2.15.  “Existing
Plan” means the DPL Inc. Stock Option Plan.


Section 2.16.  “Free-Standing
Appreciation Right” means an Appreciation Right granted pursuant to Section
4.2 or Section 5.1 of this Plan that is not granted in tandem with an Option
Right.


Section 2.17.  “Incentive
Stock Options” means Option Rights that are intended to qualify as “incentive
stock options” under Section 422 of the Code or any successor provision.


Section 2.18.  “Management
Objectives” means the measurable performance objective or objectives
established pursuant to this Plan for Participants who have received grants of
Performance Shares or Performance Units or, when so determined by the Board,
Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units,
dividend credits and other awards pursuant to this Plan.  Management Objectives 


 


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may be described in terms of Company-wide objectives
or objectives that are related to the performance of the individual Participant
or of the Subsidiary, division, department, region or function within the
Company or Subsidiary in which the Participant is employed.  The Management Objectives may be made
relative to the performance of other companies. 
The Management Objectives applicable to any award to a Covered Employee
will be based on specified levels of or growth in one or more of the following
criteria:


(a)           Appreciation in value of shares;


(b)           Total shareholder return;


(c)           Earnings per share;


(d)           Operating income;


(e)           Net income;


(f)            Pretax earnings;


(g)           Earnings before interest, taxes,
depreciation and amortization;


(h)           Pro forma net income;


(i)            Return on equity;


(j)            Return on designated assets;


(k)           Return on capital;


(l)            Economic value added;


(m)          Revenues;


(n)           Expenses;


(o)           Operating cash flow;


(p)           Free cash flow;


(q)           Cash flow return on investment;


(r)            Operating margin or net profit
margin; or


(s)           Any of the above criteria as compared
to the performance of a published or a special index deemed applicable by the
Board, including, but not limited to, the Standard & Poor’s Utility Index.


 


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                                If
the Board determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in which it
conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Board may in its discretion modify such Management
Objectives or the related minimum acceptable level of achievement, in whole or
in part, as the Board deems appropriate and equitable, except in the case of a
Covered Employee where such action would result in the loss of the otherwise
available exemption of the award under Section 162(m) of the Code.  In such case, the Board will not make any
modification of the Management Objectives or minimum acceptable level of
achievement with respect to such Covered Employee.


 


Section 2.19.  “Market
Value per Share” means, as of any particular date, the closing sales price of
the Common Shares as reported on the New York Stock Exchange Composite Tape or,
if not listed on such exchange, on any other national securities exchange on
which the Common Shares are listed.  If
there is no regular trading market for such Common Shares, the Market Value per
Share shall be determined by the Board.


Section 2.20.  “Non-Employee
Director” means a person who is a “non-employee director” of the Company
within the meaning of Rule 16b-3 of the Securities and Exchange Commission
promulgated under the Exchange Act.


Section 2.21.  “Optionee”
means the optionee named in an Evidence of Award evidencing an outstanding
Option Right.


Section 2.22.  “Option
Price” means the purchase price payable on exercise of an Option Right.


Section 2.23.  “Option
Right” means the right to purchase Common Shares upon exercise of an option
granted pursuant to Section 4.1 or Section 5.1 of this Plan.


Section 2.24.  “Original
Directors” has the meaning set forth in Section 10.1 hereof.


Section 2.25.  “Participant”
means a person who (a) is selected by the Board to receive benefits under this
Plan and who is at the time a consultant or an officer, general management
employee or other key employee of the Company or any one or more of its
Subsidiaries, or who has agreed to commence serving in any of such capacities
within 90 days of the Date of Grant, and will also include each Non-Employee
Director who receives Common Shares or an award of Option Rights, Appreciation
Rights, Restricted Stock, Restricted Stock Units or other awards under this
Plan and (b) if requested to do so by the Company, has executed a Participation
Agreement.


Section 2.26.  “Participation
Agreement” means an agreement between the Company and each Employee that
must be executed as a condition of the Participant’s eligibility for this Plan.


 


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Section 2.27.  “Performance
Period” means, in respect of a Performance Share or Performance Unit, a
period of time established pursuant to Section 4.5 of this Plan within which
the Management Objectives relating to such Performance Share or Performance
Unit are to be achieved.


Section 2.28.  “Performance
Share” means a bookkeeping entry that records the equivalent of one Common
Share awarded pursuant to Section 4.5 of this Plan.


Section 2.29.  “Performance
Unit” means a bookkeeping entry awarded pursuant to Section 4.5 of this
Plan that records a unit equivalent to $1.00 or such other value as is
determined by the Board.


Section 2.30.  “Person”
has the meaning set forth in Section 10.1 hereof.


Section 2.31.  “Plan”
means this DPL Inc. 2006 Equity and Performance Incentive Plan, as may be
amended from time to time.


Section 2.32.  “Restricted
Stock” means Common Shares granted or sold pursuant to Section 4.3 or
Section 5.1 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers has expired.


Section 2.33.  “Restriction
Period” means the period of time during which Restricted Stock Units are
subject to restrictions.


Section 2.34.  “Restricted
Stock Unit” means an award made pursuant to Section 4.4 or Section 5.1 of
this Plan of the right to receive Common Shares or cash at the end of a
specified period.


Section 2.35.  “Spread”
means the excess of the Market Value per Share on the date when an Appreciation
Right is exercised over the Option Price or Base Price provided for in the
related Option Right or Free-Standing Appreciation Right, respectively.


Section 2.36.  “Subsidiary”
means a corporation, company or other entity (i) more than 50 percent of whose
outstanding shares or securities (representing the right to vote for the
election of directors or other managing authority) are, or (ii) which does not
have outstanding shares or securities (as may be the case in a partnership,
joint venture or unincorporated association), but more than 50 percent of whose
ownership interest representing the right generally to make decisions for such
other entity is, now or hereafter, owned or controlled, directly or indirectly,
by the Company except that for purposes of determining whether any person may
be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary”
means any corporation in which at the time the Company owns or controls,
directly or indirectly, more than 50 percent of the total combined voting power
represented by all classes of stock issued by such corporation.


Section 2.37.  “Successors”
has the meaning set forth in Section 10.1 hereof.


 


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Section 2.38.  “Tandem
Appreciation Right” means an Appreciation Right granted pursuant to Section
4.2 or Section 5.1 of this Plan that is granted in tandem with an Option Right.


Section 2.39.  “Voting
Stock” means securities entitled to vote generally in the election of
directors.


ARTICLE III  —
SHARES


Section 3.1.  Shares
Available Under the Plan.


(a)           Subject to adjustment as provided in
Section 7.2 of this Plan, the number of Common Shares that may be issued or
transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii)
as Restricted Stock and released from substantial risks of forfeiture thereof,
(iii) as Restricted Stock Units, (iv) in payment of Performance Shares or
Performance Units that have been earned, (v) as awards to Non-Employee
Directors, (vi) as awards contemplated by Section 6.1 of this Plan, or (vii) in
payment of dividend equivalents paid with respect to awards made under the Plan
will not exceed in the aggregate 4,500,000 Common Shares, plus any shares
relating to Awards that expire or are forfeited, terminated or cancelled.  In addition to the Common Shares authorized
by the preceding sentence, to the extent any award under the Existing Plan
otherwise terminates without the issuance of some or all of the Common Shares
underlying the award to a participant or if any option under the Existing Plan
terminates without having been exercised in full, the Common Shares underlying
such award, to the extent of any such forfeiture or termination, shall be
available for future grant under the Plan and credited toward the Plan
limit.  Common Shares covered by an award
granted under the Plan shall not be counted as used unless and until they are
actually issued and delivered to a Participant. 
Without limiting the generality of the foregoing, upon payment in cash
of the benefit provided by any award granted under the Plan, any Common Shares
that were covered by that award will be available for issue or transfer
hereunder.  Notwithstanding anything to
the contrary contained herein: (A) shares tendered in payment of the Option
Price of a Option Right shall not be added to the aggregate plan limit
described above; (B) shares withheld by the Company to satisfy the tax
withholding obligation shall not be added to the aggregate plan limit described
above; (C) shares that are repurchased by the Company with Option Right
proceeds shall not be added to the aggregate plan limit described above; and
(D) all shares covered by an Appreciation Right, to the extent that it is
exercised and settled in Common Shares, and whether or not shares are actually
issued to the Participant upon exercise of the right, shall be considered
issued or transferred pursuant to the Plan. 
Such shares may be shares of original issuance or treasury shares or a
combination of the foregoing.


(b)           If, under this Plan, a Participant
has elected to give up the right to receive compensation in exchange for Common
Shares based on fair market value, such Common Shares will not count against
the number of shares available in Section 3.1(a) above.


 


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(c)           Notwithstanding anything in this
Section 3.1, or elsewhere in this Plan, to the contrary and subject to
adjustment as provided in Section 7.2 of this Plan: (i) the aggregate number of
Common Shares actually issued or transferred by the Company upon the exercise
of Incentive Stock Options will not exceed [___________]
Common Shares; (ii) no Participant will be granted Option Rights or
Appreciation Rights, in the aggregate, for more than [___________]
Common Shares during any calendar year; (iii) no Participant will be granted
Restricted Stock or Restricted Stock Units that specify Management Objectives,
Performance Shares or other awards under Section 6.1 of this Plan, in the
aggregate, for more than [___________]
Common Shares during any calendar year; and (iv) awards will not be granted under Section 5.1 or Section 6.1 of the Plan
to the extent they would involve the issuance of more than [___________] shares in
the aggregate.


(d)           Notwithstanding any other provision
of this Plan to the contrary, in no event will any Participant in any calendar
year receive an award of Performance Units having an aggregate maximum value as
of their respective Dates of Grant in excess of $[___________].


ARTICLE IV  —
AUTHORIZED AWARDS


Section 4.1.  Option
Rights.  The Board may, from time to
time and upon such terms and conditions as it may determine, authorize the
granting to Participants of options to purchase Common Shares.  Each such grant may utilize any or all of the
authorizations, and will be subject to all of the requirements contained in the
following provisions:


(a)           Each grant will specify the number of
Common Shares to which it pertains subject to the limitations set forth in
Section 3.1 of this Plan.


(b)           Each grant will specify an Option
Price per share, which may not be less than the Market Value per Share on the
day immediately preceding the Date of Grant.


(c)           Each grant will specify whether the
Option Price will be payable (i) in cash or by check acceptable to the Company
or by wire transfer of immediately available funds, (ii) by the actual or
constructive transfer to the Company of Common Shares owned by the Optionee for
at least 6 months (or other consideration authorized pursuant to Section
4.1(d)) having a value at the time of exercise equal to the total Option Price,
(iii) by a combination of such methods of payment, or (iv) by such other
methods as may be approved by the Board.


(d)           To the extent permitted by law, any
grant may provide for deferred payment of the Option Price from the proceeds of
sale through a bank or broker on a date satisfactory to the Company of some or
all of the Common Shares to which such exercise relates.


(e)           Successive grants may be made to the
same Participant whether or not any Option Rights previously granted to such
Participant remain unexercised.


 


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(f)            Each grant will specify the period
or periods of continuous service by the Optionee with the Company or any
Subsidiary that is necessary before the Option Rights or installments thereof
will become exercisable; provided, however, that, subject to
sub-section (g) below, Option Rights may not become exercisable by the passage
of time sooner than one-third per year over three years.  A grant of Option Rights may provide for the
earlier exercise of such Option Rights in the event of the retirement, death or
disability of a Participant.


(g)           Any grant of Option Rights may
specify Management Objectives that must be achieved as a condition to the
exercise of such rights; provided, however, that, except in the
case of the retirement, death or disability of a Participant, Option Rights
that become exercisable upon the achievement of Management Objectives may not
become exercisable sooner than one year from the Date of Grant.


(h)           Option Rights granted under this Plan
may be (i) options, including, without limitation, Incentive Stock Options,
that are intended to qualify under particular provisions of the Code, (ii)
options that are not intended so to qualify, or (iii) combinations of the
foregoing.  Incentive Stock Options may
only be granted to Participants who meet the definition of “employees” under
Section 3401(c) of the Code.


(i)            The Board may at the Date of Grant
of any Option Rights (other than Incentive Stock Options), provide for the
payment of dividend equivalents to the Optionee on either a current or deferred
or contingent basis, either in cash or in additional Common Shares.


(j)            The exercise of an Option Right will
result in the cancellation on a share- for-share basis of any Tandem
Appreciation Right authorized under Section 4.2 of this Plan.


(k)           No Option Right will be exercisable
more than 10 years from the Date of Grant.


(l)            The Board reserves the discretion at
or after the Date of Grant to provide for (i) the payment of a cash bonus at
the time of exercise; (ii) the availability of a loan at exercise; and (iii)
the right to tender in satisfaction of the Option Price nonforfeitable,
unrestricted Common Shares, which are already owned by the Optionee and have a
value at the time of exercise that is equal to the Option Price.


(m)          Each grant of Option Rights will be
evidenced by an Evidence of Award.  Each
Evidence of Award shall be subject to the Plan and shall contain such terms and
provisions as the Board may approve.


Section 4.2.  Appreciation
Rights.


(a)           The Board may authorize the granting
(i) to any Optionee, of Tandem Appreciation Rights in respect of Option Rights
granted hereunder, and (ii) to any Participant, of Free-Standing Appreciation
Rights.  A Tandem Appreciation Right will
be a right of the Optionee, exercisable by surrender of the related Option
Right, to 


 


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receive from the Company an amount determined by the
Board, which will be expressed as a percentage of the Spread (not exceeding 100
percent) at the time of exercise.  Tandem
Appreciation Rights may be granted at any time prior to the exercise or
termination of the related Option Rights; provided, however, that
a Tandem Appreciation Right awarded in relation to an Incentive Stock Option
must be granted concurrently with such Incentive Stock Option.  A Free-Standing Appreciation Right will be a
right of the Participant to receive from the Company an amount determined by
the Board, which will be expressed as a percentage of the Spread (not exceeding
100 percent) at the time of exercise.


(b)           Each grant of Appreciation Rights may
utilize any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:


(i)                                     Any grant may specify that the amount
payable on exercise of an Appreciation Right may be paid by the Company in
cash, in Common Shares or in any combination thereof and may either grant to
the Participant or retain in the Board the right to elect among those
alternatives.


(ii)                                  Any grant may specify that the amount
payable on exercise of an Appreciation Right may not exceed a maximum specified
by the Board at the Date of Grant.


(iii)                               Any grant may specify waiting periods
before exercise and permissible exercise dates or periods; provided, however,
that Appreciation Rights may not become exercisable by the passage of time
sooner than one-third per year over three years.


(iv)                              Any grant may provide for the payment to the
Participant of dividend equivalents thereon in cash or Common Shares on a
current, deferred or contingent basis.


(v)                                 Any grant of Appreciation Rights may
specify Management Objectives that must be achieved as a condition of the
exercise of such Appreciation Rights; provided, however, that
Appreciation Rights that become exercisable upon the achievement of Management
Objectives may not become exercisable sooner than one year from the Date of
Grant.


(vi)                              Any grant may specify that such
Appreciation Right may be exercised in the event of, or earlier in the event
of, the retirement, death or disability of a Participant.


(vii)                           Each grant of Appreciation Rights will be
evidenced by an Evidence of Award, which Evidence of Award will describe such
Appreciation Rights, identify the related Option Rights (if applicable), and
contain 


 


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such other terms and
provisions, consistent with this Plan, as the Board may approve.


(c)           Any grant of Tandem Appreciation
Rights will provide that such Tandem Appreciation Rights may be exercised only
at a time when the related Option Right is also exercisable and at a time when
the Spread is positive, and by surrender of the related Option Right for
cancellation.


(d)           Regarding Free-Standing Appreciation
Rights only:


(i)                                     Each grant will specify in respect of
each Free-Standing Appreciation Right a Base Price, which will be equal to or
greater than the Market Value per Share on the day immediately preceding the
Date of Grant;


(ii)                                  Successive grants may be made to the same
Participant regardless of whether any Free-Standing Appreciation Rights
previously granted to the Participant remain unexercised; and


(iii)                               No Free-Standing Appreciation Right
granted under this Plan may be exercised more than 10 years from the Date of
Grant.


Section 4.3.  Restricted
Stock.  The Board may also authorize
the grant or sale of Restricted Stock to Participants. Each such grant or sale
may utilize any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:


(a)           Each such grant or sale will
constitute an immediate transfer of the ownership of Common Shares to the
Participant in consideration of the performance of services, entitling such
Participant to voting, dividend and other ownership rights, but subject to the
substantial risk of forfeiture and restrictions on transfer hereinafter
referred to.


(b)           Each such grant or sale may be made
without additional consideration or in consideration of a payment by such
Participant that is less than the Market Value per Share at the Date of Grant.


(c)           Each such grant or sale will provide
that the Restricted Stock covered by such grant or sale that vests solely upon
the passage of time will be subject to a “substantial risk of forfeiture”
within the meaning of Section 83 of the Code for a period of not less than
three years to be determined by the Board at the Date of Grant and may provide
for the earlier lapse of such substantial risk of forfeiture as provided in
Section 4.3(e) below or in the event of the retirement, death or disability of
a Participant.


(d)           Each such grant or sale will provide
that during the period for which such substantial risk of forfeiture is to
continue, the transferability of the Restricted Stock will be prohibited or
restricted in the manner and to the extent prescribed by the Board at the Date
of Grant (which restrictions may include, without limitation, rights of 


 


11

















repurchase or first refusal in the Company or
provisions subjecting the Restricted Stock to a continuing substantial risk of
forfeiture in the hands of any transferee).


(e)           Any grant of Restricted Stock may
specify Management Objectives that, if achieved, will result in termination or
early termination of the restrictions applicable to such Restricted Stock; provided,
however, that, except in the case of the retirement, death or disability
of a Participant, restrictions relating to Restricted Stock that vests upon the
achievement of Management Objectives may not terminate sooner than one year
from the Date of Grant.  Each grant may
specify in respect of such Management Objectives a minimum acceptable level of
achievement and may set forth a formula for determining the number of shares of
Restricted Stock on which restrictions will terminate if performance is at or
above the minimum level, but falls short of full achievement of the specified
Management Objectives.


(f)            Any such grant or sale of Restricted
Stock may require that any or all dividends or other distributions paid thereon
during the period of such restrictions be automatically deferred and reinvested
in additional shares of Restricted Stock, which may be subject to the same
restrictions as the underlying award.


(g)           Each grant or sale of Restricted
Stock will be evidenced by an Evidence of Award and will contain such terms and
provisions, consistent with this Plan, as the Board may approve.  Unless otherwise directed by the Board, all
certificates representing shares of Restricted Stock will be held in custody by
the Company until all restrictions thereon will have lapsed, together with a
stock power or powers executed by the Participant in whose name such
certificates are registered, endorsed in blank and covering such Shares.


Section 4.4.  Restricted
Stock Units.  The Board may also
authorize the granting or sale of Restricted Stock Units to Participants.  Each such grant or sale may utilize any or
all of the authorizations, and will be subject to all of the requirements
contained in the following provisions:


(a)           Each such grant or sale will
constitute the agreement by the Company to deliver Common Shares or cash to the
Participant in the future in consideration of the performance of services, but
subject to the fulfillment of such conditions (which may include the
achievement of Management Objectives) during the Restriction Period as the
Board may specify.  If a grant of
Restricted Stock Units specifies that the Restriction Period will terminate
only upon the achievement of Management Objectives, such Restriction Period may
not terminate sooner than one year from the Date of Grant, except in the case
of the retirement, death or disability of a Participant.  Each grant may specify in respect of such
Management Objectives a minimum acceptable level of achievement and may set
forth a formula for determining the number of shares of Restricted Stock Units
on which restrictions will terminate if performance is at or above the minimum
level, but falls short of full achievement of the specified Management
Objectives.


 


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(b)           Each such grant or sale may be made
without additional consideration or in consideration of a payment by such
Participant that is less than the Market Value per Share at the Date of Grant.


(c)           If the Restriction Period lapses
solely by the passage of time, each such grant or sale will be subject to a Restriction
Period of not less than three years, as determined by the Board at the Date of
Grant, and may provide for the earlier lapse or other modification of such
Restriction Period in the event of the retirement, death or disability of a
Participant.


(d)           During the Restriction Period, the
Participant will have no right to transfer any rights under his or her award
and will have no rights of ownership in the Restricted Stock Units and will
have no right to vote them, but the Board may at the Date of Grant, authorize
the payment of dividend equivalents on such Restricted Stock Units on either a
current or deferred or contingent basis, either in cash or in additional Common
Shares.


(e)           Each grant or sale of Restricted
Stock Units will be evidenced by an Evidence of Award and will contain such
terms and provisions, consistent with this Plan, as the Board may approve.


Section 4.5.  Performance
Shares and Performance Units.  The
Board may also authorize the granting of Performance Shares and Performance
Units that will become payable to a Participant upon achievement of specified
Management Objectives during the Performance Period.  Each such grant may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in
the following provisions:


(a)           Each grant will specify the number of
Performance Shares or Performance Units to which it pertains, which number may
be subject to adjustment to reflect changes in compensation or other factors; provided,
however, that no such adjustment will be made in the case of a Covered
Employee where such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.


(b)           The Performance Period with respect
to each Performance Share or Performance Unit will be such period of time (not
less than three years) as will be determined by the Board at the time of grant,
which may be subject to earlier lapse or other modification in the event of the
retirement, death or disability of a Participant.


(c)           Any grant of Performance Shares or
Performance Units will specify Management Objectives which, if achieved, will
result in payment or early payment of the award, and each grant may specify in
respect of such specified Management Objectives a minimum acceptable level of
achievement and will set forth a formula for determining the number of
Performance Shares or Performance Units that will be earned if performance is
at or above the minimum level, but falls short of full achievement of the
specified Management Objectives.  The
grant of Performance Shares or Performance Units will specify that, before the
Performance Shares or 


 


13

















Performance Units will be earned and paid, the Board
must certify that the Management Objectives have been satisfied.


(d)           Each grant will specify the time and
manner of payment of Performance Shares or Performance Units that have been
earned.  Any grant may specify that the
amount payable with respect thereto may be paid by the Company in cash, in
Common Shares or in any combination thereof and may either grant to the
Participant or retain in the Board the right to elect among those alternatives.


(e)           Any grant of Performance Shares may
specify that the amount payable with respect thereto may not exceed a maximum
specified by the Board at the Date of Grant. 
Any grant of Performance Units may specify that the amount payable or
the number of Common Shares issued with respect thereto may not exceed maximums
specified by the Board at the Date of Grant.


(f)            The Board may at the Date of Grant of
Performance Shares, provide for the payment of dividend equivalents to the
holder thereof on either a current or deferred or contingent basis, either in
cash or in additional Common Shares.


(g)           Each grant of Performance Shares or
Performance Units will be evidenced by an Evidence of Award and will contain
such other terms and provisions, consistent with this Plan, as the Board may
approve.


ARTICLE V  — AWARDS
TO NON-EMPLOYEE DIRECTORS


Section 5.1.  Awards
to Non-Employee Directors.  The Board
may, from time to time and upon such terms and conditions as it may determine,
authorize the granting to Non-Employee Directors Option Rights, Appreciation
Rights or other awards contemplated by Section 6.1 of this Plan and may also
authorize the grant or sale of Common Shares, Restricted Stock or Restricted
Stock Units to Non-Employee Directors. 
Each grant of an Award to a Non-Employee Director will be upon such
terms and conditions as approved by the Board and will be evidenced by an
Evidence of Award in such form as will be approved by the Board.  Each grant will specify in the case of an
Option Right an Option Price per share, and in the case of a Free-Standing
Appreciation Right, a Base Price per share, which will not be less than the
Market Value per Share on the day immediately preceding the Date of Grant.  Each Option Right and Free-Standing
Appreciation Right granted under the Plan to a Non-Employee Director will
expire not more than 10 years from the Date of Grant and will be subject to
earlier termination as hereinafter provided. 
If a Non-Employee Director subsequently becomes an employee of the
Company or a Subsidiary while remaining a member of the Board, any Award held
under the Plan by such individual at the time of such commencement of
employment will not be affected thereby. 
Non-Employee Directors, pursuant to this Section 5.1, may be awarded, or
may be permitted to elect to receive, pursuant to procedures established by the
Board, all or any portion of their annual retainer, meeting fees or other fees in
Common Shares in lieu of cash.


 


14

















ARTICLE VI  — OTHER AWARDS


Section 6.1.  Other
Awards.


(a)           The
Board may, subject to limitations under applicable law, grant to any
Participant such other awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Common
Shares or factors that may influence the value of such shares, including,
without limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Common Shares, purchase rights for Common
Shares, awards with value and payment contingent upon performance of the
Company or specified Subsidiaries, affiliates or other business units thereof
or any other factors designated by the Board, and awards valued by reference to
the book value of Common Shares or the value of securities of, or the
performance of specified Subsidiaries or affiliates or other business units of
the Company.  The Board may consider
recommendations from the Chief Executive Officer or the Chairman of the Board
relating to such awards and shall determine the terms and conditions of such
awards.  Common Shares delivered pursuant
to an award in the nature of a purchase right granted under this Section 6.1
shall be purchased for such consideration, paid for at such time, by such
methods, and in such forms, including, without limitation, cash, Common Shares,
other awards, notes or other property, as the Board shall determine.


(b)           Cash awards, as an element of or
supplement to any other award granted under this Plan, may also be granted
pursuant to this Section 6.1 of this Plan.


(c)           The Board may grant Common Shares as
a bonus, or may grant other awards in lieu of obligations of the Company or a
Subsidiary to pay cash or deliver other property under this Plan or under other
plans or compensatory arrangements, subject to such terms as shall be
determined by the Board.


ARTICLE VII  —
GENERAL PROVISIONS


Section 7.1.  Transferability.


(a)           Except as otherwise determined by the
Board, no Option Right, Appreciation Right or other derivative security granted
under the Plan shall be transferable by the Participant except by will or the
laws of descent and distribution or, except with respect to an Incentive Stock
Option, pursuant to a domestic relations order (within the meaning of Rule
16a-12 promulgated under the Exchange Act). 
Except as otherwise determined by the Board, Option Rights and
Appreciation Rights will be exercisable during the Participant’s lifetime only
by him or her or, in the event of the Participant’s legal incapacity to do so,
by his or her guardian or legal representative acting on behalf of the
Participant in a fiduciary capacity under state law and/or court supervision.


(b)           The Board may specify at the Date of
Grant that part or all of the Common Shares that are (i) to be issued or
transferred by the Company upon the exercise of Option Rights or Appreciation
Rights, upon the termination of the Restriction 


 


15

















Period applicable to Restricted Stock Units or upon
payment under any grant of Performance Shares or Performance Units or (ii) no
longer subject to the substantial risk of forfeiture and restrictions on
transfer referred to in Section 6.1 of this Plan, will be subject to further
restrictions on transfer.


Section 7.2.  Adjustments.  The Board may make or provide for such
adjustments in the numbers of Common Shares covered by outstanding Option
Rights, Appreciation Rights, Restricted Stock Units, Performance Shares and
Performance Units granted hereunder and, if applicable, in the number of Common
Shares covered by other awards granted pursuant to Section 6.1 hereof, in the
Option Price and Base Price provided in outstanding Appreciation Rights, and in
the kind of shares covered thereby, as the Board, in its sole discretion, exercised
in good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of Participants or Optionees that otherwise would
result from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(b) any merger, consolidation, spin-off, split- off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of
assets, issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the
foregoing.  Moreover, in the event of any
such transaction or event or in the event of a Change of Control, the Board, in
its discretion, may provide in substitution for any or all outstanding awards
under this Plan such alternative consideration (including cash), if any, as it,
in good faith, may determine to be equitable in the circumstances and may
require in connection therewith the surrender of all awards so replaced.  The Board may also make or provide for such
adjustments in the numbers of shares specified in Section 3.1 of this Plan as
the Board in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this Section 7.2;
provided, however, that any such adjustment to the number specified in Section
3.1(c)(i) will be made only if and to the extent that such adjustment would not
cause any option intended to qualify as an Incentive Stock Option to fail so to
qualify.


Section 7.3.  Fractional
Shares.  The Company will not be
required to issue any fractional Common Shares pursuant to this Plan.  The Board may provide for the elimination of
fractions or for the settlement of fractions in cash.


Section 7.4.  Withholding
Taxes.  To the extent that the
Company is required to withhold federal, state, local or foreign taxes in
connection with any payment made or benefit realized by a Participant or other
person under this Plan, and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such
payment or the realization of such benefit that the Participant or such other
person make arrangements satisfactory to the Company for payment of the balance
of such taxes required to be withheld, which arrangements (in the discretion of
the Board) may include relinquishment of a portion of such benefit.


 


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ARTICLE VIII  — ADMINISTRATION


Section 8.1.  Administration
of the Plan.


(a)           This
Plan will be administered by the Board, which may from time to time delegate
all or any part of its authority under this Plan to the Compensation Committee
of the Board or any other committee of the Board (or a subcommittee thereof),
as constituted from time to time.  To the
extent of any such delegation, references in this Plan to the Board will be
deemed to be references to such committee or subcommittee.  A majority of the committee (or subcommittee)
will constitute a quorum, and the action of the members of the committee (or subcommittee)
present at any meeting at which a quorum is present, or acts unanimously
approved in writing, will be the acts of the committee (or subcommittee).


(b)           The interpretation and construction
by the Board of any provision of this Plan or of any agreement, notification or
document evidencing the grant of Option Rights, Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance Units or other
awards pursuant to Section 6.1 of this Plan and any determination by the Board
pursuant to any provision of this Plan or of any such agreement, notification
or document will be final and conclusive. 
No member of the Board will be liable for any such action or
determination made in good faith.


(c)           The Board or, to the extent of any
delegation as provided in Section 8.1(a), the committee, may delegate to one or
more of its members or to one or more officers of the Company, or to one or
more agents or advisors, such administrative duties or powers as it may deem
advisable, and the Board, the committee, or any person to whom duties or powers
have been delegated as aforesaid, may employ one or more persons to render
advice with respect to any responsibility the Board, the committee or such
person may have under the Plan.  The
Board or the committee may, by resolution, authorize one or more officers of
the Company to do one or both of the following on the same basis as the Board
or the committee: (i) designate employees to be recipients of awards under this
Plan; (ii) determine the size of any such awards; provided, however,
that (A) the Board or the Committee shall not delegate such responsibilities to
any such officer for awards granted to an employee who is an officer, Director,
or more than 10% beneficial owner of any class of the Company’s equity
securities that is registered pursuant to Section 12 of the Exchange Act, as
determined by the Board in accordance with Section 16 of the Exchange Act; (B)
the resolution providing for such authorization sets forth the total number of
Common Shares such officer(s) may grant; and (iii) the officer(s) shall report
periodically to the Board or the committee, as the case may be, regarding the
nature and scope of the awards granted pursuant to the authority delegated.


 


17

















ARTICLE IX  — AMENDMENTS AND TERMINATION


Section 9.1.  Amendments,
Etc.


(a)           The
Board may at any time and from time to time amend the Plan in whole or in part;
provided, however, that if an amendment to the Plan (i) would
materially increase the benefits accruing to participants under the Plan, (ii)
would materially increase the number of securities which may be issued under
the Plan, (iii) would materially modify the requirements for participation in
the Plan or (iv) must otherwise be approved by the shareholders of the Company in
order to comply with applicable law or the rules of the New York Stock Exchange
or, if the Common Shares are not traded on the New York Stock Exchange, the
principal national securities exchange upon which the Common Shares are traded
or quoted, then, such amendment will be subject to shareholder approval and
will not be effective unless and until such approval has been obtained.


(b)           The Board will not, without the
further approval of the shareholders of the Company, authorize the amendment of
any outstanding Option Right to reduce the Option Price.  Furthermore, no Option Right will be
cancelled and replaced with awards having a lower Option Price without further
approval of the shareholders of the Company. 
This Section 9.1(b) is intended to prohibit the repricing of “underwater”
Option Rights and will not be construed to prohibit the adjustments provided
for in Section 7.2 of this Plan.


(c)           The Board may condition the grant of
any award or combination of awards authorized under this Plan on the surrender
or deferral by the Participant of his or her right to receive a cash bonus or
other compensation otherwise payable by the Company or a Subsidiary to the
Participant.


(d)           If permitted by Section 409A of the
Code, in case of termination of employment by reason of death, disability or
normal or early retirement, or in the case of unforeseeable emergency or other
special circumstances, of a Participant who holds an Option Right or
Appreciation Right not immediately exercisable in full, or any shares of Restricted
Stock as to which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, or any Restricted Stock Units as to
which the Restriction Period has not been completed, or any Performance Shares
or Performance Units which have not been fully earned, or any other awards made
pursuant to Section 6.1 subject to any vesting schedule or transfer
restriction, or who holds Common Shares subject to any transfer restriction
imposed pursuant to Section 7.1(b) of this Plan, the Board may, in its sole
discretion, accelerate the time at which such Option Right, Appreciation Right
or other award may be exercised or the time at which such substantial risk of
forfeiture or prohibition or restriction on transfer will lapse or the time when
such Restriction Period will end or the time at which such Performance Shares
or Performance Units will be deemed to have been fully earned or the time when
such transfer restriction will terminate or may waive any other limitation or
requirement under any such award.


 


18

















(e)           This Plan will not confer upon any
Participant any right with respect to continuance of employment or other
service with the Company or any Subsidiary, nor will it interfere in any way
with any right the Company or any Subsidiary would otherwise have to terminate
such Participant’s employment or other service at any time.


(f)            To the extent that any provision of
this Plan would prevent any Option Right that was intended to qualify as an
Incentive Stock Option from qualifying as such, that provision will be null and
void with respect to such Option Right. 
Such provision, however, will remain in effect for other Option Rights
and there will be no further effect on any provision of this Plan.


(g)           The Board may amend the terms of any award
theretofore granted under this Plan prospectively or retroactively, but subject
to Section 7.2 above, no such amendment shall impair the rights of any
Participant without his or her consent. 
The Board may, in its discretion, terminate this Plan at any time.  Termination of this Plan will not affect the
rights of Participants or their successors under any awards outstanding
hereunder and not exercised in full on the date of termination.


ARTICLE X  — CHANGE
OF CONTROL


Section 10.1.  Change
of Control.  For purposes of this
Plan, except as may be otherwise prescribed by the Board in an Evidence of
Award made under this Plan, a “Change of Control” means the consummation of any
Change of Control of the Company, or its principal subsidiary, DP&L (“DP&L”),
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as determined by the Board in its sole
discretion; provided that, without limitation, such a Change of Control shall
be deemed to have occurred if:


(a)           any “Person” (as such term is defined
in Sections 13(d) or 14(d)(2) of the Exchange Act; hereafter, a “Person”)
is on the date hereof or becomes the beneficial owner, directly or indirectly,
of securities of the Company or DP&L representing (i) 25% or more of the
combined voting power of the then outstanding Voting Stock of the Company or
DP&L if the acquisition of such beneficial ownership is not approved by the
Board prior to the acquisition or (ii) 50% or more of such combined voting
power in all other cases; provided, however, that:


(i)                                     for purposes of this
Section 10.1(a), the following acquisitions shall not constitute a Change
of Control: (A) any acquisition of Voting Stock of the Company or DP&L
directly from the Company or DP&L that is approved by a majority of the
Original Directors or their Successors (as defined below), (B) any
acquisition of Voting Stock of the Company or DP&L by the Company or any
Subsidiary, and (C) any acquisition of Voting Stock of the Company or
DP&L by the trustee or other fiduciary holding securities under any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary;


 


19

















(ii)                                  if any Person is or becomes the
beneficial owner of 25% or more of the combined voting power of the
then-outstanding Voting Stock of the Company or DP&L as a result of a
transaction described in clause (A) of Section 10.1(a)(i) above and such Person
thereafter becomes the beneficial owner of any additional shares of Voting
Stock of the Company or DP&L representing 1% or more of the
then-outstanding Voting Stock of the Company or DP&L, other than in an
acquisition directly from the Company or DP&L that is approved by a majority
of the Original Directors or their Successors or other than as a result of a
stock dividend, stock split or similar transaction effected by the Company or
DP&L in which all holders of Voting Stock of the Company or DP&L are
treated equally, such subsequent acquisition shall be treated as a Change in
Control;


(iii)                               a Change in Control will not be deemed to
have occurred if a Person is or becomes the beneficial owner of 25% or more of
the Voting Stock of the Company or DP&L as a result of a reduction in the
number of shares of Voting Stock of the Company or DP&L outstanding
pursuant to a transaction or series of transactions that is approved by a
majority of the Original Directors or their Successors unless and until such
Person thereafter becomes the beneficial owner of any additional shares of
Voting Stock of the Company or DP&L representing 1% or more of the
then-outstanding Voting Stock of the Company or DP&L, other than as a
result of a stock dividend, stock split or similar transaction effected by the
Company or DP&L in which all holders of Voting Stock are treated equally;
and


(iv)                              if at least a majority of the Original
Directors or their Successors determine in good faith that a Person has
acquired beneficial ownership of 25% or more of the Voting Stock of the Company
or DP&L inadvertently, and such Person divests as promptly as practicable
but no later than the date, if any, set by the Original Directors or their
Successors a sufficient number of shares so that such Person beneficially owns
less than 25% of the Voting Stock of the Company or DP&L, then no Change of
Control shall have occurred as a result of such Person’s acquisition; or


(b)           the Company or DP&L consummates a
merger or consolidation, or consummates a “combination” or “majority share acquisition”
in which it is the “acquiring corporation” (as such terms are defined in Ohio
Rev. Code § 1701.01 as in effect on the Effective Date) and in which
shareholders of the Company or DP&L, as the case may be, immediately prior
to entering into such agreement, will beneficially own, immediately after the
effective time of the merger, consolidation, combination or majority share
acquisition, securities of the Company or DP&L or any surviving or new
corporation, as the case may be, having less than 50% of the “voting power” of
the Company or DP&L or any surviving or new corporation, as the case may
be, including “voting power” 


 


20

















exercisable on a contingent or deferred basis as well
as immediately exercisable “voting power”, excluding any merger of DP&L
into the Company or of the Company into DP&L; or


(c)           the Company or DP&L consummates a
sale, lease, exchange or other transfer or disposition of all or substantially
all of its assets to any Person other than to a wholly owned subsidiary or, in
the case of DP&L, to the Company or a wholly owned subsidiary(ies) of the
Company; but not including (i) a mortgage or pledge of assets granted in
connection with a financing or (ii) a spin-off or sale of assets if the Company
continues in existence and its common shares are listed on a national
securities exchange, quoted on the automated quotation system of a national
securities association or traded in the over-the-counter market; or


(d)           those persons serving as directors of
the Company or DP&L on the Effective Date (the “Original Directors”) and/or
their Successors do not constitute a majority of the whole Board of Directors
of the Company or DP&L, as the case may be (the term “Successors” shall
mean those directors whose election or nomination for election by shareholders
has been approved by the vote of at least two-thirds of the Original Directors
and previously qualified Successors serving as directors of the Company or
DP&L, as the case may be, at the time of such election or nomination for
election); or


(e)           approval by the shareholders of the
Company or DP&L of a complete liquidation or dissolution of the Company or
DP&L, as the case may be.


Section 10.2.  Acceleration.  Notwithstanding anything to the contrary
contained in this Plan and except and unless the Board determines otherwise at
the time of grant of an Award under the Plan (and as set forth in the
applicable Evidence of Award), upon the occurrence of a Change of Control: (a)
any Awards that are outstanding as of the date of such Change of Control that
are subject to vesting requirements and that are not then vested, shall become
fully vested; (b) all then-outstanding Option Rights and Appreciation Rights
shall be fully vested and immediately exercisable, provided that in no event
shall any Option Right or Appreciation Right be exercisable beyond its original
expiration date; and (c) all restrictions and other conditions prescribed by
the Board, if any, with respect to grants of Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units, and other awards granted pursuant
to Section 6.1 hereof, shall automatically lapse, expire and terminate and all
such awards shall be deemed to be fully earned.


Section 10.3.  Section
409A.  To the extent an Award shall
be deemed to be vested or restrictions lapse, expire or terminate upon the
occurrence of a Change of Control pursuant to Section 10.2 and such Change of
Control does not constitute a “change in the ownership or effective control” or
a “change in the ownership of a substantial portion of the assets” of the
Company within the meaning of Section 409A(a)(2)(A)(v) of the Code, then
notwithstanding that the award shall be deemed to be vested or restrictions
lapse, expire or terminate upon the occurrence of the Change of Control or any
other provision of this Plan, payment will be made, to the extent 


 


21

















necessary to comply with the provisions of Section
409A of the Code, to the Participant on the earliest of (i) the Participant’s “separation
from service” with the Company (determined in accordance with Section 409A of
the Code); provided, however, that if the Participant is a “specified
employee” (within the meaning of Section 409A of the Code), the payment date
shall be the date that is six months after the date of the Participant’s separation
from service with the Company,  (ii) the
date payment otherwise would have been made in the absence of Section 10.2 (provided such date is a permissible distribution date
under Section 409A of the Code), or (iii) the Participant’s death.


ARTICLE XI  —
MISCELLANEOUS


Section 11.1.  Detrimental
Activity.  Any Evidence of Award may
provide that if a Participant, either during employment by the Company or a
Subsidiary or within a specified period after termination of such employment,
shall engage in any Detrimental Activity, and the Board shall so find,
forthwith upon notice of such finding, the Participant shall:


(a)           Forfeit any Award granted under the
Plan then held by the Participant;


(b)           Return to the Company, in exchange
for payment by the Company of any amount actually paid therefor by the
Participant, all Common Shares that the Participant has not disposed of that
were offered pursuant to this Plan within a specified period prior to the date
of the commencement of such Detrimental Activity, and


(c)           With respect to any Common Shares so
acquired that the Participant has disposed of, pay to the Company in cash the
difference between:


(i)                                     Any amount actually paid therefor by the
Participant pursuant to this Plan, and


(ii)                                  The Market Value per Share of the Common
Shares on the date of such acquisition.


To the extent that such amounts are not paid to the Company, the
Company may set off the amounts so payable to it against any amounts that may
be owing from time to time by the Company or a Subsidiary to the Participant,
whether as wages, deferred compensation or vacation pay or in the form of any
other benefit or for any other reason.


 


Section 11.2.  Compliance
with Section 409A of the Code.  To
the extent applicable, it is intended that this Plan and any grants made
hereunder comply with the provisions of Section 409A of the Code.  The Plan and any grants made hereunder shall
be administered in a manner consistent with this intent, and any provision that
would cause the Plan or any grant made hereunder 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 the Company without
the consent of 


 


22

















Participants). 
Any reference in this Plan 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.


Section 11.3.  Governing
Law.  The Plan and all grants and
awards and actions taken thereunder shall be governed by and construed in
accordance with the internal substantive laws of the State of Ohio.


Section 11.4.  Termination.  No grant will be made under this Plan more
than 10 years after the date on which this Plan is first approved by the
shareholders of the Company, but all grants made on or prior to such date will
continue in effect thereafter subject to the terms thereof and of this Plan.


Section 11.5.  General
Provisions.


(a)           No award under this Plan may be
exercised by the holder thereof if such exercise, and the receipt of cash or
stock thereunder, would be, in the opinion of counsel selected by the Board, contrary
to law or the regulations of any duly constituted authority having jurisdiction
over this Plan.


(b)           Absence on leave approved by a duly
constituted officer of the Company or any of its Subsidiaries shall not be
considered interruption or termination of service of any employee for any
purposes of this Plan or awards granted hereunder, except that no awards may be
granted to an employee while he or she is absent on leave.


(c)           No Participant shall have any rights
as a stockholder with respect to any shares subject to awards granted to him or
her under this Plan prior to the date as of which he or she is actually
recorded as the holder of such shares upon the stock records of the Company.


(d)           If any provision of the Plan is or
becomes invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any award under any law deemed applicable by the Board,
such provision shall be construed or deemed amended or limited in scope to
conform to applicable laws or, in the discretion of the Board, it shall be
stricken and the remainder of the Plan shall remain in full force and effect.


 


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