Exhibit
10.3


 


DPL INC.


STOCK OPTION PLAN


 


Management Stock Option
Agreement


 


This Agreement is made as of October 5, 2004 (the
“Grant Date”), by and between DPL Inc., an Ohio corporation (the “Company”) and
Robert Biggs (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 200,000
Common Shares of the Company at the Fair Market Value, as defined in the Plan,
on the Grant Date, or $20.94, per share (the “Exercise Price”).  The term of such Option shall be seven years
from May 16, 2004 (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 Percent

  of Option

  	
   

  	
  Vested as
  of May 16

  	
   

  
	
  50%

  	
   

  	
  2005

  	
   

  
	
  100%

  	
   

  	
  2006

  	
   

  



 


b.                                      Exercise.  Each vested portion of the Option shall
become exercisable on the date of its vesting, and shall remain exercisable for
a period of five years from the date it becomes vested.  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


 


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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 sole 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.


 


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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


 


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good faith opinion of such directors the Participant
was guilty of conduct set forth in clauses (i), (ii), (iii) 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:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  W
  August Hillenbrand

  	
   

  
	
   

  	
   

  	
   

  	
  Vice
  Chairman

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Robert
  Biggs

  	
   

  
	
   

  	
   

  	
   

  	
  Participant

  	
   

  



 


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