Document:

Exhibit 10(b)

 

THE
DAYTON POWER AND LIGHT COMPANY

1991
AMENDED DIRECTORS’ DEFERRED

COMPENSATION
PLAN

(AS
AMENDED AND RESTATED THROUGH DECEMBER 31, 2007)

 

1.                                       GENERAL.

 

The Dayton Power and Light Company 1991 Amended
Directors’ Deferred Compensation Plan (the “Plan”) is amended and restated in
its entirety as set forth herein.  The
Plan previously provided members of the Board of Directors who are not employed
by the Company (“Directors”) the opportunity to defer payment of all or a
specified portion of Fees payable for services as a Director or otherwise in
accordance with the Standard Deferral Provisions of the Plan.  Effective as of January 1, 2007, no
further deferrals shall be made under this Plan, but amounts previously
deferred under the Plan shall continue to be held and administered under the
terms hereof.  The Plan is being amended
and restated as of December 31, 2007 to conform the terms of the Plan to
the requirements of  Section 409A
of the Code.

 

2.                                       DEFINITIONS.

 

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

 

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

 

B.                                     “CEO” shall mean the Chief Executive
Officer of DPL duly installed, from time to time, prior to a Change of
Control.  However, “Committee” will be
substituted for “CEO” in discussing the CEO’s rights and benefits under the
Plan.

 

C.                                     “Change of Control” means any change in
control of DPL, or its principal subsidiary, 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 of Directors in its
sole discretion; provided that, without limitation, such a Change of Control
shall be deemed to have occurred if (i) any “person” (as such term is
defined in Sections 13(d) and 14(d)(2) of the Exchange Act;
hereafter, a “Person”) other than DPL or DP&L or an entity then directly or
indirectly controlling, controlled by or under common control with DPL or
DP&L is on the date hereof or becomes or commences a tender offer to become
the beneficial owner, directly or indirectly, of securities of DPL or DP&L
representing (A) 15%  or more
of the combined voting power of the then outstanding securities of DPL or
DP&L if the acquisition of such beneficial ownership 

 

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or such tender offer is not approved by the Board of
Directors prior to the acquisition or the commencement of such tender offer or (B) 50%
or more of such combined voting power in all other cases; (ii) DPL or
DP&L enters into an agreement to merge or consolidate itself, or an
agreement to consummate 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 December 31, 1990) and in which
shareholders of DPL 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 DPL or DP&L or any surviving or new corporation,
as the case may be, having less than 50% of the “voting power” of DPL or
DP&L or any surviving or new corporation, as the case may be, including “voting
power” exercisable on a contingent or deferred basis as well as immediately
exercisable “voting power”, excluding any merger of DPL into DP&L or of
DP&L into DPL; (iii) DPL or DP&L enters into an agreement to sell,
lease, exchange or otherwise transfer or dispose of all or substantially all of
its assets to any Person other than to a wholly owned subsidiary or, in the
case of DP&L, to DPL or a wholly owned subsidiar(ies) of DPL; but not
including (A) a mortgage or pledge of assets granted in connection with a
financing or (B) a spin-off or sale of assets if DPL 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; (iv) any transaction referred to
in (ii) or (iii) above is consummated; or (v) those persons
serving as directors of DPL or DP&L on February 1, 2000 (the “Original
Directors”) and/or their Successors do not constitute a majority of the whole
Board of Directors of DPL or DP&L, as the case may be (the term “Successors”
shall mean those directors whose election or nomination for election 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
DPL or DP&L, as the case may be, at the time of such election or nomination
for election).

 

D.                                    “Code” means the Internal Revenue Code of
1986, as amended.

 

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

 

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

 

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

 

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Code as if they were employed by a single
employer.  Each corporation or
unincorporated trade or business that is or was a member of the Controlled
Group shall be referred to herein as a “Controlled Group Member”, but only
during such period as it is or was such a member.

 

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

 

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

 

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

 

K.                                    “Fees” means amounts payable by the
Company to a Director for services as a member of the Board of Directors or a
committee of the Board of Directors and any other amounts (including, without
limitation, consulting fees and the like) payable by the Company to a Director
who is not employed by the Company for services rendered to the Company in any
capacity.

 

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

 

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

 

N.                                    “Standard Deferral Account” means the
account established by the Company in the Director’s name to which deferrals
made in accordance with the Standard Deferral Provisions of the Plan are
credited.

 

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

 

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

 

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

 

(3)                                  earnings are credited to the Standard
Deferral Account in accordance with Section 3(C), Section 3(D) or
Section 3(E); and

 

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

 

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

 

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

 

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

 

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

 

3.                                       ELECTION TO DEFER AND ACCOUNT
DESIGNATION.

 

A.            ELECTION TO DEFER.  With respect to Fees paid for services
performed prior to 2007, a Director may elect, on or before December 31 of
any year, to defer payment of all or a specified part of the Director’s Fees
during the succeeding calendar year  until
the Director ceases to be a Director of the Company.  Any person who shall become a Director during
any calendar year prior to 2007, and who was not a Director of the Company on
the preceding December 31, may elect, before the Director’s term begins,
to defer payment of all or a specified part of the Director’s Fees for the
remainder of such calendar year.  Any such elections shall be made
by delivering an Election Form to the Secretary of the Company.

 

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

 

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

 

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

 

C.            STOCK UNITS.  Each Director shall have the option to elect
to have any portion of his/her “Investment Amount” (as hereinafter defined)
deemed invested in Shares as of each such date (on or after January 1,
1996) as the Committee may specify from time to time for such purpose, by
delivering to the Secretary of the Company a Stock Unit Investment Election Form in
the form as the Committee may designate from time to time.  In such event, the Company shall credit to
such Director’s Standard Deferral Account a number of Stock Units equal to the
amount which is deemed invested in Shares pursuant to this Section 3(C) divided
by the Fair Market Value of a Share as of the date of such deemed investment
and shall thereafter credit to such Director’s Standard Deferral Account, on
each dividend payment date with respect to the Shares, a Dividend Equivalent
for each Stock Unit then credited to such Standard Deferral Account.  On any such dividend payment date, to the
extent that the value of the accumulated Dividend Equivalents credited to such
Director’s Standard Deferral Account equals the Fair Market Value of one or
more full Shares on such date, such Dividend Equivalents shall be converted
into, and credited to such Standard Deferral Account as, additional Stock
Units.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.                                       PAYMENTS UNDER THE PLAN.

 

A.            STANDARD DEFERRAL ACCOUNT FOR
AMOUNTS DEFERRED PRIOR TO DECEMBER 31, 2004. 
Amounts deferred prior to December 31, 2004, together with
accumulated earnings, shall be distributed from a Director’s Standard Deferral
Account, as specified in the Election Form, in a lump sum payment or over a
period of years, up to twenty, in such installments as specified in the
Election Form.  Such lump sum payments
shall be made or such installment payments shall commence, unless otherwise
determined by the Committee in its discretion, on or prior to the January 31
immediately following:

 

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

 

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

 

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prior to each January 31 thereafter until all
amounts credited to the Director’s Standard Deferral Account have been paid in
full.

 

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

 

B.            STANDARD DEFERRAL ACCOUNT FOR
AMOUNTS DEFERRED AFTER DECEMBER 31, 2004.

 

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

 

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

 

(ii)           in a specified year, either before or
after the Director’s Termination of Service, as specified by the Director on
the Director’s Election Form; provided, however, that such year must begin at
least one year after the date on which the Election Form becomes
effective.

 

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

 

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

 

(d)           Notwithstanding the foregoing
provisions of this Section 4(B)(1), in the event that a Director is a Key
Employee at the time of his or her Termination of Service, then the payments to
be paid in accordance with the Participant’s election under Section 4(B)(1)(a)(i) or
pursuant to Section 4(B)(1)(c) shall be paid or commence to be paid
on the first day of 

 

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

 

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

 

(b)           In the event that a Director’s
Standard Deferral Account is paid in annual installments, each installment shall
be equal to the value, as of December 31 of the calendar year immediately
prior to the date of the respective installment payment, of the Director’s
Standard Deferral Account divided by the number of installment payments then
remaining in the installment period.

 

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

 

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

 

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

 

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

 

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

 

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

 

F.             DESIGNATION OF BENEFICIARY.  Each Director participating in the Plan shall
designate on the Election Form one or more beneficiaries to whom payments
shall be made in the event of the Director’s death.  The Director shall have the right to change
the beneficiary or beneficiaries from time to time, provided, however, no
change shall become effective until received in writing by the Committee (or
its delegate).  In the event the Director
has not designated a beneficiary or a designated beneficiary is not living at
the time of the Director’s death, then payments required to be made by the
Company after the Director’s death to the designated beneficiary shall be made
to the Director’s estate.

 

G.            EARLY DISTRIBUTION and UNFORSEEABLE
EMERGENCY.

 

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

 

(2)           Notwithstanding Section 4(G)(1), with respect to
amounts deferred prior to December 31, 2004: (a) the CEO may, upon
receiving a written request from the Director or the Director’s beneficiary as
provided in Section 4(F) hereof in the event of the death of the
Director, upon determining that a distribution is in the best interest of the
Company and the Director (or his or her beneficiary) taking into account the
financial condition of each, distribute all or a portion of the deferred
amounts in the Director’s Standard Deferral Account, together with the earnings
thereon, and (b) upon written request by a Director to receive his entire
Standard Deferral Account made at any time after termination of his or her
status 

 

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

 

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

 

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

 

I.              PAYMENTS IN KIND.  Notwithstanding any other provision of the
Plan, after a Change of Control, any portion of a distribution to be made from
a Director’s Standard Deferral Account may, at the request of such Director at
least 30 days prior to the scheduled date of such distribution, be made by the
Trustees of the Master Trust(s) pursuant to which benefits under the Plan
are being funded, in the sole and absolute discretion of such Trustees, in the
form of any Eligible Investment Options actually held by such Master Trust(s) for
purposes of funding such distribution to such Director under the Plan.  For purposes of making any such distribution,
any Eligible Investment Option so distributed shall be valued at its closing
price on the last business day immediately preceding the date of such
distribution and such distribution shall be net of any applicable federal,
state or local withholding taxes unless the Director makes a cash payment,
concurrently with such distribution, to the Master Trust(s) making such
distribution for the purpose of paying such withholding taxes.  Nothing contained in this Section 4(I) shall
require the Company (or any of the Master Trusts) to purchase, hold or dispose
of any Eligible Investment Options designated by Directors.  To the extent that any Master Trust holds any
Eligible Investment Options, the same shall remain the sole property of the
Company, subject to the claims of its general creditors, and shall not be
deemed to form a part of any Director’s Standard Deferral Account and no
Director shall have any property interest therein or claim thereto.

 

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

 

11

 

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

 

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

 

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

 

(1)           Such subsequent deferral election may
not take effect until at least twelve months after the date on which the
subsequent deferral election is made;

 

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

 

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

 

7.                                       MASTER TRUSTS.

 

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

 

12

 

time to time, is referred
to herein as a “Master Trust”) for the purpose, among others, of securing the
performance by the Company of its obligation to Directors to make the
distributions under the Plan and has funded one or more of the Master Trusts in
an aggregate amount of cash and/or Shares as the Company has determined to be
equal to the value of all currently vested or earned benefits of the Directors
under the Plan. Pursuant to one or more of the Master Trusts, each Director has
been assigned a separate account as a mechanism for measuring the potential
benefits which may be distributed in the future.  Subsequent transfers of cash and/or Shares
which the Company is required to make to the Master Trusts pursuant to Section 7(B) or
8(B) hereof or otherwise shall be allocated among the Master Trusts as the
Committee may determine from time to time.

 

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

 

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

 

8.                                       CHANGE OF CONTROL.

 

A.            AUTOMATIC TRANSFER OF
AUTHORITY.  In the event of a Change of
Control, any and all authority and discretion which is exercisable by the
Committee, or the CEO, as heretofore or hereafter described in the Plan,
including, without limitation, the authority to change the Eligible Investment
Options as provided in Section 3(E) hereof, shall automatically be
transferred to the Trustees of each Master Trust to the extent benefits under
the Plan are being funded under such Master Trust.

 

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

 

13

 

9.                                       NOTICES.

 

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

 

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

 

The Dayton Power and
Light Company

MacGregor Park

1065 Woodman Drive

Dayton, Ohio 45432

Attention:  Corporate Secretary

 

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

 

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

 

10.                                 NONASSIGNABILITY.

 

Neither a Director, nor his beneficiary, nor any other
individual shall have any right by way of anticipation or otherwise to
alienate, sell, transfer, assign, pledge, charge or otherwise dispose of any
benefits which may become payable under this Plan, prior to the time that
payment of any such benefit is made, and any attempted anticipation,
alienation, sale, transfer, assignment, pledge, charge, or other disposition shall
be null and void.  Furthermore, none of
the benefits payable under this Plan shall be subject to the claim or legal
process of the creditors of any Director or of the beneficiary, spouse or
former spouse of any Director or of any other person or entity.

 

11.                                 INTERPRETATION AND AMENDMENT.

 

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

 

14

 

or accrued under the Plan
by any Director prior to any such amendment, modification or termination
without the prior written consent of such Director.  Notwithstanding
the preceding sentence, the Committee, in its sole discretion, may terminate
this Plan to the extent and in circumstances described in Treas. Reg. §
1.409A-3(j)(4)(ix), or any successor provision. 
In the event of a Change of Control, the authority and discretion
given the Committee under this Section 11 shall be exercised as provided
in Section 8(A) hereof; provided, however, that the Trustee shall
have no authority to terminate the Plan.

 

12.           SECTION 409A OF THE CODE.  It is intended that the Plan (including all
amendments thereto) comply with the provisions of Section 409A of the
Code, so as to prevent the inclusion in gross income of any retirement benefit
accrued hereunder in a taxable year that is prior to the taxable year or years
in which such amount would otherwise be actually distributed or made available
to the Directors.  It is intended that
the Plan shall be administered in a manner that will comply with Section 409A
of the Code, including regulations or any other formal guidance issued by the
Secretary of the Treasury and the Internal Revenue Service with respect
thereto.

 

13.                                 GENDER AND NUMBER.

 

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

 

14.                                 NO RIGHTS AS SHAREHOLDERS.

 

Directors whose accounts are credited with amounts
under the Plan shall have no rights as shareholders of the Company as a result
thereof unless and until the Shares, if any, are distributed to the respective
Directors.

 

15.                                 NO RIGHT TO EMPLOYMENT.

 

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

 

16.                                 GOVERNING LAW.

 

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

 

15

 

SCHEDULE I

 

ELIGIBLE
INVESTMENT OPTIONS

 

Vanguard Prime Money
Market Fund

 

Vanguard Short-Term Treasury
Fund (Admiral Shares)

 

Vanguard Total Bond
Market Index Fund (Investor Shares)

 

Vanguard 500 Index Fund
(Investor Shares)

 

Vanguard Small-Cap Index
Fund (Investor Shares)

 

Vanguard Total
International Stock Index Fund

 

16Exhibit 10(c)

 

THE DAYTON POWER AND
LIGHT COMPANY

 

MANAGEMENT STOCK
INCENTIVE PLAN

 

(AS AMENDED AND RESTATED
THROUGH DECEMBER 31, 2007)

 

SECTION 1.  INTRODUCTION.

 

The
Board of Directors of DPL Inc. (“DPL”) and the Board of Directors of The Dayton
Power and Light Company (“DP&L”) adopted The Dayton Power and Light Company
Management Stock Incentive Plan (the “Plan”). This amended and restated version
of the Plan is effective December 31, 2007.

 

The purposes of the Plan
are (i) to attract and retain in the employment of the Company executives
of experience and ability by providing incentives to those who contribute to
the successful operation of the business and affairs of the Company, (ii) to
increase the identity of interests of such key employees with those of the
Company’s shareholders, (iii) to encourage achievement of the Company’s
long term goals and objectives, and (iv) to prevent frustration of the
goals of this Plan in the event of a Change of Control.

 

SECTION 2.  DEFINITIONS.

 

The
following terms as used herein shall have the following meanings:

 

(a)           “BOARD OF DIRECTORS” means the Board
of Directors of DPL Inc. in place from time to time prior to a Change of
Control.

 

(b)           “CHANGE OF CONTROL” means any change
in control of DPL, or its principal subsidiary, 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 of Directors in its sole
discretion; provided that, without limitation, such a Change of Control shall
be deemed to have occurred if (i) any “person” (as such term is defined in
Sections 13(d) and 14(d)(2) of the Exchange Act; hereafter, a “Person”)
other than DPL or DP&L or an entity then directly or indirectly
controlling, controlled by or under common control with DPL or DP&L is on
the date hereof or becomes or commences a tender offer to become the beneficial
owner, directly or indirectly, of securities of DPL or DP&L representing (A) 15%
or more of the combined voting power of the then outstanding securities of DPL
or DP&L if the acquisition of such beneficial

 

 

ownership or such tender offer is not approved
by the Board of Directors prior to the acquisition or the commencement of such
tender offer or (B) 50% or more of such combined voting power in all other
cases; (ii) DPL or DP&L enters into an agreement to merge or
consolidate itself, or an agreement to consummate a “combination” or “majority
share acquisition” in which it is the “acquiring corporation” (as such terms
are defined in Ohio Rev. Code Sections 1701.01 as in effect on December 31,
1990) and in which shareholders of DPL 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 DPL or DP&L or any surviving
or new corporation, as the case may be, having less than 50% of the “voting
power” of DPL or DP&L or any surviving or new corporation, as the case may
be, including “voting power” exercisable on a contingent or deferred basis as
well as immediately exercisable “voting power”, excluding any merger of DPL
into DP&L or of DP&L into DPL; (iii) DPL or DP&L enters into
an agreement to sell, lease, exchange or otherwise transfer or dispose of all
or substantially all of its assets to any Person other than to a wholly owned
subsidiary or, in the case of DP&L, to DPL or a wholly owned subsidiary(ies)
of DPL; but not including (A) a mortgage or pledge of assets granted in
connection with a financing or (B) a spin-off or sale of assets if DPL
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; (iv) any
transaction referred to in (ii) or (iii) above is consummated; or (v) those
persons serving as directors of DPL or DP&L on February 1, 2000 (the “Original
Directors”) and/or their Successors do not constitute a majority of the whole
Board of Directors of DPL or DP&L, as the case may be (the term “Successors”
shall mean those directors whose election or nomination for election 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
DPL or DP&L, as the case may be, at the time of such election or nomination
for election).

 

(c)           “CEO” means the Chief Executive Officer
of DPL, duly installed, from time to time, prior to a Change of Control.
However, “Committee” will be substituted for “CEO” in discussing the CEO’s
rights and benefits under the Plan.

 

(d)           “COMMITTEE” means the Management
Review and Compensation Committee of the Board of Directors of DPL Inc. or such
other committee(s) as may be designated by the Board of Directors of DPL
Inc. from time to time to administer the Plan.

 

(e)           “COMPANY” means The Dayton Power and
Light Company (“DP&L”), DPL Inc. (“DPL”) and any entity which, prior to a
Change of Control, is controlling, controlled by or under common control with
DP&L or DPL Inc.

 

(f)            “DEFERRED COMPENSATION PLAN” means
the Company’s Key Employees Deferred Compensation Plan, as the same may be
amended, modified or supplemented from time to time.

 

 

(g)           “DIVIDEND EQUIVALENT” means the
expression on the Company’s books of a dividend with respect to a Stock
Incentive Unit; each Dividend Equivalent being equal to the cash dividends paid
from time to time on one Share.

 

(h)           “EARNED STOCK INCENTIVE UNITS” means
Stock Incentive Units which have been awarded and have been earned in
accordance with Section 6, together with all Dividend Equivalents with
respect to such Earned Stock Incentive Units in accordance with Section 6
(including any Stock Incentive Units credited to the Participant’s account as
the result of the conversion of such Dividend Equivalents into Stock Incentive
Units).

 

(i)            “FAIR MARKET VALUE” means the
average of the closing sale price of a Share on the last trading day of each of
the four calendar months preceding the date the value of a Share is to be
determined, as reported on the New York Stock Exchange—Composite Transactions
Tape.

 

(j)            “INCENTIVE PERIOD” means the period
established by the Committee with respect to each Stock Incentive Award, over
which period the Stock Incentive Units included in such award are to be earned
as provided in Section 6(d) of the Plan. The Incentive Period shall
be specified by the Committee in and with respect to each Stock Incentive Award
made. If the Incentive Period is not so specified then it shall be the calendar
plan year to which the Stock Incentive Award relates.

 

(k)           “PLAN” means this Management Stock
Incentive Plan.

 

(l)            “SHARE” means a Common Share of DPL Inc.

 

(m)          “STOCK INCENTIVE AWARD” means an award
made under the Plan with respect to a specified Incentive Period.

 

(n)           “STOCK INCENTIVE UNIT” means the
expression on the Company’s books of a unit which is equivalent to one Share.

 

(o)           “TERMINATION OF EMPLOYMENT” means,
when used with respect to the payments to be made to a Participant pursuant to Section 8
of the Plan, (i) the date such Participant’s employment with the Company
terminates, if such termination occurs on or after such Participant’s 55th birthday
or (ii) if such Participant’s employment with the Company terminates prior
to such Participant’s 55th birthday, the date of such Participant’s 55th
birthday.

 

SECTION 3.  ADMINISTRATION.

 

(a)           COMMITTEE. The Plan shall be
administered by the Committee. No director shall serve as a voting member of
the Committee if he is then, or was at any time within one year prior to his
appointment, eligible to participate in the Plan or eligible for selection as a
person to whom Shares may be allocated or to whom stock options may be granted
pursuant to any other plan of the Company or any of its affiliates, other than
the DP&L Directors’ Deferred Stock Compensation Plan and the Directors’

 

 

Deferred Compensation Plan, entitling the
participants therein to acquire Shares, options or stock appreciation rights of
the Company or any of its affiliates.

 

(b)           AUTHORITY AND DISCRETION. Prior to a
Change of Control, the Committee shall have the power to interpret the Plan
and, subject to the provisions herein set forth, to prescribe, amend and
rescind rules and regulations and make all other determinations necessary
or desirable for the administration of the Plan. The decision of the Committee
on any questions concerning or involved in the interpretation or administration
of the Plan shall be final and conclusive, and nothing in the Plan shall be
deemed to give any officer or employee, his legal representatives or assigns,
any right to participate in the Plan except to such extent, if any, as the
Committee may have determined or approved pursuant to the provisions of the
Plan.

 

SECTION 4.  ELIGIBILITY.

 

Employees eligible to
participate in the Plan shall be those full-time salaried employees of the
Company or any entity comprising the Company who, in the opinion of the Committee,
serve in key executive, administrative, professional or technical capacities
with the Company or any entity comprising the Company and have made a
significant contribution to the successful operation of the Company or any
entity comprising the Company.

 

SECTION 5.  PARTICIPANTS.

 

From
the employees eligible to participate in the Plan, the Committee may annually
choose those who shall actually participate for that year in the Plan (the “Participants”),
and shall determine the number of Stock Incentive Units to comprise each
Participant’s Stock Incentive Award. In choosing the Participants and in
determining the number of Stock Incentive Units comprising a Stock Incentive
Award, the Committee shall consider, after consulting with the CEO concerning
his recommendations on these matters, the positions and responsibilities of the
eligible employees, their accomplishments during recent periods, the corporate
and individual objectives jointly established with the CEO, the value of such
accomplishments to the Company, and such other factors as the Committee deems
pertinent. The Company may determine in any year during the term of the Plan
not to make any Stock Incentive Awards with respect to such year.

 

SECTION 6.  OPERATION
OF THE PLAN.

 

(a)           STOCK INCENTIVE AWARDS. Stock
Incentive Awards shall be made by the Committee at such time or times as it may
determine; however, Stock Incentive Awards shall generally be made in the year
preceding commencement of the next plan year. At the time the Committee makes a
Stock Incentive Award, it shall determine the aggregate number of Stock
Incentive Units which may be earned by each Participant over the Incentive
Period. Except as expressly provided in a Stock Incentive Award, the terms and
conditions of the Plan shall be deemed to be incorporated in and shall control
all Stock Incentive Awards. However, to the extent inconsistent with any
provision

 

 

of this Plan (including, without limitation, Section 10),
the terms of a Stock Incentive Award (other than a Stock Incentive Award
applicable to Previously Earned Units) shall control this Plan.

 

(b)           PREVIOUSLY AWARDED STOCK INCENTIVE
UNITS. Previously awarded Stock Incentive Units shall be deemed to have been
earned or, in the future, will be earned to the extent to which they would have
been earned if Section 6(d) had been in effect at the time they
previously were awarded and based on the Incentive Period applicable to the
related Stock Incentive Award previously awarded.

 

(c)           CREDITING OF STOCK INCENTIVE UNITS
AND DIVIDEND EQUIVALENTS. Earned Stock Incentive Units for each year following
the effective date of the Plan accrue and shall be credited to a Participant’s
separate account under the Plan on the first day of the month following the
date on which they are earned. On each dividend payment date a Dividend
Equivalent shall be credited to such account for each Earned Stock Incentive
Unit (or, if and to the extent that the related Stock Incentive Award otherwise
provides, for Stock Incentive Units awarded, whether or not such units are
Earned Stock Incentive Units) credited to the Participant’s account. On any
dividend payment date when the value of accumulated Dividend Equivalents on
Stock Incentive Units as provided above in a Participant’s account equals the
Fair Market Value of a full Share on such date, such Dividend Equivalents
shall, subject to the terms of the Stock Incentive Award, the terms of which
shall control this Plan to the extent inconsistent herewith, be credited to the
Participant’s account as an Earned Stock Incentive Unit. Such separate accounts
are established only as a mechanism for measuring the potential number of
Shares which may be distributed under the Plan. The Company shall retain
beneficial ownership of all Stock Incentive Units and Dividend Equivalents
credited to the accounts and such Stock Incentive Units and Dividend
Equivalents will be subject to the claims of DP&L’s creditors. No
Participant or beneficiary has or will have any property interest in any Stock
Incentive Units or Dividend Equivalents credited to such Participant’s account
or in any specific assets of the Company.

 

(d)           EARNING OF STOCK INCENTIVE UNITS. Awarded
Stock Incentive Units shall be earned as specified in the related Stock
Incentive Award or as otherwise determined by the Committee. Subject to such
Stock Incentive Award and any determinations by the Committee, the terms of
which shall control this Plan to the extent inconsistent herewith, the maximum
number of Stock Incentive Units which may be earned in any one year shall be equal
to the product obtained by multiplying the total number of Stock Incentive
Units included in a Stock Incentive Award by a fraction, the numerator of which
is one and the denominator of which is the number of calendar years in the
Incentive Period. For example, in the case of a Stock Incentive Award for which
a one-year Incentive Period applies, all of the Stock Incentive Units may be
earned in the calendar year to which the Stock Incentive Award relates, and in
the case of a Stock Incentive Award for which a three year Incentive Period has
been fixed by the Committee, up to one-third of the Stock Incentive Units
included in the Stock Incentive Award may be earned each year. Unless the
related Stock Incentive Award otherwise provides, by its terms or by implication,
prior to or as soon as practicable after the end

 

 

of each calendar year the Committee will review
with each Participant his or her achievement of the related performance goals
and will specify the number of Stock Incentive Units which have been earned for
that year by the Participant.

 

SECTION 7.  PAYMENTS
UNDER THE PLAN.

 

(a)           RIGHT TO PAYMENT OF EARNED STOCK
INCENTIVE UNITS. A Participant shall be entitled to receive payment for an
awarded Stock Incentive Unit in a given year of the Incentive Period only if
such Stock Incentive Unit shall have been earned under the provisions of Section 6(d) and,
except as provided under Section 10 and Section 7(d) hereof, or
in the Stock Incentive Award, a Stock Incentive Unit, though earned, only
becomes vested (and, thus, ultimately payable in accordance with Section 8)
if the Participant is employed by the Company on the last day of the year of
the Incentive Period in which the Participant could earn a portion of the
particular Stock Incentive Units awarded. All Stock Incentive Units which do
not become so vested shall be forfeited. The CEO or the Committee may, however,
accelerate the earning and vesting of any Stock Incentive Units awarded whether
or not earned or vested, if he or it determines in his or its sole opinion that
such action is warranted; provided, however, no such acceleration of the
vesting of any Stock Incentive Units shall cause such Stock Incentive Units to
be paid other than when they would have been paid absent such acceleration of vesting.

 

Notwithstanding any
provision of the Plan to the contrary, in the event of the death of a
Participant, all of such Participant’s awarded Stock Incentive Units shall
immediately become fully vested and shall be paid in cash as soon as
practicable after the Participant’s death.

 

(b)           TIME OF PAYMENT OF EARNED STOCK
INCENTIVE UNITS. Except as provided in Section 8, Earned Stock Incentive
Units shall vest on July 1st of the year in which they are scheduled to
vest and shall be paid in cash no later than July 31st of such year of
vesting.

 

(c)           WITHHOLDINGS. There shall be deducted
from all payments any taxes required by an Federal, state, or local government
to be withheld and paid over to the government for the account of the
Participant.

 

(d)           SPECIAL PROVISION FOR VESTING OF
CERTAIN EARNED STOCK INCENTIVE UNITS. All Earned Stock Incentive Units
comprising the 1997 award (which covers the period 1998-2000) and the 1998
award (which covers the period 1999-2001) (“Previously Earned Units”) will vest
in three equal annual installments commencing on December 31, 2000 and December 31
of each year thereafter. The Participant must be employed by the Company on the
date of an installment in order to become vested in and be entitled to payment
with respect to the Previously Earned Units vesting on that date. Notwithstanding
the above sentence, in the event a

 

 

Participant is entitled to benefits pursuant to
paragraph 3 (or successor provision) of the Participant’s severance letter
agreement with the Company (or, if the Participant is not then a party to a
severance letter agreement, pursuant to paragraph 3 (or successor provision) of
the most restrictive severance letter agreement between the Company and any
employee [in terms of triggering the Company’s obligation to pay benefits to
the employee]), then all Previously Earned Units which have not yet vested
shall immediately become fully vested and shall be paid in accordance with the
provisions of Section 10 of the Plan.

 

SECTION 8.  DEFERRAL
PROVISIONS.

 

(a)           FILING OF ELECTION FORM. Under the
Plan, a Participant must elect to defer payment of any amounts payable under
the Plan by providing the Company with a written Election Form, in the form
attached hereto as Exhibit A or such other form as the Committee may
designate from time to time (the “Deferral Election Form”), prior to the
commencement of the Incentive Period which the Committee uses as a basis for
determining what portion of the particular annual installment of his Stock
Incentive Award may be earned. For example, if a Participant were to elect to
defer payment of Stock Incentive Units which would be deemed to be earned on December 31,
2000, the Election Form must be received by the Company prior to January 1,
2000.

 

Notwithstanding the foregoing, because no further Incentive Periods
have commenced or will commence on or after January 1, 2005, no further
elections to defer payment of any amounts payable under the Plan have been or
will be made for Incentive Periods commencing on or after that date.

 

(b)           PAYMENT OF AMOUNTS DEFERRED UNDER THE
PLAN. Payment of a Participant’s deferred Stock Incentive Units which become
earned and vested shall be made in the form of Shares in a lump sum or in
annual installments over a period of up to twenty years, as the Participant may
elect in his Deferral Election Form, and shall be made, or commence, unless
otherwise determined by the Committee in its discretion, on or prior to the January 31
immediately following the date specified by the Participant in his Deferral
Election Form, provided such date is after his termination of employment, and
with subsequent annual installments, if payments are to be made in annual
installments, to be paid on or prior to each January 31 thereafter. All
payments under the Plan with respect to earned and vested Stock Incentive Units
shall be in the form of Shares and a Participant shall be entitled to receive
one Share for each earned and vested Stock Incentive Unit credited to his
account (with a cash payment being made for any fractional shares). After
termination of a Participant’s employment, such Participant’s account shall
continue to be credited with Dividend Equivalents as provided in Section 6(c) with
respect to any unpaid earned and vested Stock Incentive Units.

 

Notwithstanding
any other provision of the Plan (other than Sections 8(d) and 10(b)) or
any election made by a Participant under the Plan or in any Deferral Election
Form, no Participant who has been granted stock options under the DPL Inc.
Stock Option Plan (the “Stock Option Plan”) shall be entitled to receive any
payment under the

 

 

Plan
prior to January 1, 2005 with respect to that number of earned and vested
Stock Incentive Units which is equal to 1/3 of the aggregate number of stock
options which have been granted to such Participant under the Stock Option
Plan. Notwithstanding the foregoing, any Participant may receive payment of his
earned and vested Stock Incentive Units in accordance with Sections 8(d) and
10(b).

 

(c)           EARNED STOCK INCENTIVE UNITS CREDITED
AS CASH. Prior to December 31, 1999, certain Participants (the “Electing
Participants”) elected to convert a portion of their Earned Stock Incentive
Units to cash. The amount each Electing Participant so elected to convert to
cash was credited to the Standard Deferral Account of such Electing Participant
under the Deferred Compensation Plan. Since February 2, 1999, no further
conversion of any Earned Stock Incentive Units into cash has been permitted
under the Plan and payment of the Earned Stock Incentive Units previously
converted into cash shall be in accordance with the Deferred Compensation Plan.

 

(d)           LACK OF STOCK EXCHANGE LISTING. In
the event that the Shares cease to be listed on the New York Stock Exchange,
then there shall be established for such Participant an account (the “Cash
Account”) to which shall be credited a cash amount equal to the Conversion
Price multiplied by the number of Earned Stock Incentive Units credited to his
or her account. “Conversion Price” means: (i) the Fair Market Value of a
Share determined as of the date that the Shares cease to be listed on the New
York Stock Exchange or (ii) if the Shares cease to be so listed as a
result of a Change of Control, the greatest of (x) the amount determined
in accordance with the foregoing clause (i), (y) the closing sales price
of a Share on the New York Stock Exchange — Composite Transaction Tape on the
date the Shares cease to be so listed, or (z) the closing sales price of a
Share on the New York Stock Exchange — Composite Transaction Tape on the date
on which the Change of Control occurs. Each Participant’s Cash Account shall be
administered and subject to the same deemed investment rules as if it were
an “Account” under Section 3.3 of the DPL Inc. 2006 Deferred Compensation
Plan for Executives. Each Participant shall vest in his or her Cash Account as
such Participant would have vested in the Stock Incentive Units that were
converted into the Cash Account. Each Participant’s Cash Account shall be paid
to the Participant in cash when the Stock Incentive Units that were converted
into the Cash Account would have been paid under Section 7(b).

 

SECTION 9.  MASTER
TRUSTS.

 

(a)           PARTICIPANT’S ACCOUNT. The Company
has established, and may in the future establish, one or more trusts (each such
trust, as it may be amended from time to time, is referred to herein as a “Master
Trust”) for the purpose, among others, of securing the performance by the
Company of its obligations to Participants under the Plan and has funded one or
more of the Master Trusts in an aggregate amount of Shares and/or cash as the
Company has determined to be equal to the value of all Earned Stock Incentive
Units and other currently vested or earned benefits of the Participants under
the Plan. Pursuant to one or more of the Master Trusts, each Participant has
been assigned a separate account as a mechanism for measuring the potential
benefits which may be distributed in the future. Subsequent transfers of

 

 

Shares and/or cash which the Company is required
to make to the Master Trusts pursuant to Section 9(b) or 10(d) hereof
or otherwise shall be allocated among the Master Trusts as the Committee may
determine from time to time.

 

(b)           SUCCESSIVE TRANSFERS. On or before
the twentieth day following the end of each successive calendar quarter, the
Company shall transfer to one or more of the Master Trusts an aggregate amount
of Shares and/or cash as it shall determine to be equal to the value of
benefits of Participants under the Plan which benefits have vested or have been
earned (i.e., all Earned Stock Incentive Units) during such calendar quarter;
provided, however, no amount shall be so transferred to a Master Trust if,
pursuant to Section 409A(b)(3)(A) of the Internal Revenue Code (the “Code”),
such amount would, for purposes of Section 83 of the Code, be treated as
property transferred in connection with the performance of services.

 

(c)           TITLE TO FUNDS. DP&L shall retain
beneficial ownership of all assets transferred to the Master Trusts and such
assets will be subject to the claims of DP&L’s creditors. No Participant or
beneficiary has or will have any property interest in the assets held in the
Master Trusts or in any other specific asset of the Company.

 

SECTION 10.  CHANGE
OF CONTROL.

 

(a)           AUTOMATIC TRANSFER OF AUTHORITY. In
the event of a Change of Control, any and all authority and discretion which is
exercisable by the Committee, or the CEO, as heretofore or hereafter described
in the Plan, shall automatically be transferred to the Trustees of each Master
Trust to the extent that benefits under the Plan are being funded under such
Master Trust.

 

(b)           ACCELERATION UPON CHANGE OF CONTROL. In
the event any Participant who is a party to a Severance Contract (as defined in
the Master Trust or as otherwise determined by the Committee) is entitled to
benefits pursuant to paragraph 3 (or successor provision) of such Severance
Contract, any and all of his awarded Stock Incentive Units (other than to the
extent related to a completed Incentive Period for which the determination of
the number of Earned Stock Incentive Units has already been made; and not to
exceed the number of Stock Incentive Units comprising the target award under
the applicable Stock Incentive Award regardless of the potential to earn more
than such target award if and as provided in such Stock Incentive Award) shall
be deemed to be Earned Stock Incentive Units which are vested and,
notwithstanding the second paragraph of Section 8(b) hereof, all such
Earned Stock Incentive Units (including, without limitation, Previously Earned
Units), shall be payable to such Participant as the Participant has elected on
his Deferral Election Form. For purposes of any payment to a Participant
pursuant to the foregoing sentence, all Earned Stock Incentive Units shall be
valued as at the date of termination of employment at an amount equal to the
greater of (i) an amount based on the higher of the closing sales price on
the New York Stock Exchange—Composite Transaction Tape on the date of
termination or the date on which a Change of Control occurs, whichever is
greater, of Common Shares of DPL Inc. or (ii) the Conversion Price (as
determined in accordance with Section 8(e)). If such Earned Stock
Incentive Units are not payable in a lump sum

 

 

upon termination of employment in accordance
with the Participant’s Deferral Election Form, the value of such Earned Stock
Incentive Units shall be immediately credited to the Standard Deferral Account
of such Participant under the Deferred Compensation Plan (or if the Participant
does not have such an account, the Company shall establish such an account for
him or her), and thereafter payment of the amount so credited shall be in
accordance with the Deferred Compensation Plan.

 

(c)           FUNDING OF MASTER TRUSTS. Upon a
Change of Control, the Company shall immediately transfer to one or more of the
Master Trusts an aggregate amount of Shares and/or cash which, when combined
with the other assets of the Master Trusts contributed or accruing thereto
under or by reason of Section 9 hereof, is equal to the value of benefits
of Participants under the Plan (i.e., the value of all Earned Stock Incentive
Units) accrued through the date of occurrence of the Change of Control event,
determined after application of Section 10(b); provided, however, no
amount shall be so transferred to a Master Trust if, pursuant to Section 409A(b)(3)(A) of
the Code, such amount would, for purposes of Section 83 of the Code, be
treated as property transferred in connection with the performance of services.

 

SECTION 11.  NOTICES.

 

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

 

(a)                                Prior to a
Change of Control, to the Corporate Secretary of the Company at:

 

The
Dayton Power and Light Company

MacGregor Park

1065 Woodman Drive

Dayton, Ohio 45432

Attention: Corporate Secretary

 

(b)          After a Change of Control, to the
Trustees of each Master Trust pursuant to which benefits under the Plan are
being funded, at the notice address specified by such Trustees in the
applicable trust agreement.

 

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

 

SECTION 12.  CONDITIONS UPON
AWARDS AND PAYMENTS.

 

No provision of the Plan
or any Stock Incentive Award shall be binding upon the Company or enforceable
against the Company to the extent that it would cause the Company not to comply
with all relevant provisions of state and federal law.

 

 

SECTION 13.  NO RIGHT TO
EMPLOYMENT.

 

Nothing in the Plan
shall confer upon any Participant or other eligible employee the right to
continue in the employment of the Company or affect any right the Company may
have to terminate the employment of any Participant or other eligible employee.

 

SECTION 14.  NO RIGHTS AS
SHAREHOLDERS.

 

No Participant who
receives a Stock Incentive Award under the Plan shall have any rights as a
shareholder of the Company as a result thereof unless and until Shares are
issued to such Participant in accordance with the Plan.

 

SECTION 15.  NON-UNIFORM DETERMINATIONS.

 

The Committee’s determination
under the Plan (including, without limitation, its selection of Participants to
receive Stock Incentive Awards, the length of Incentive Periods, and the amount
of timing of awards) need not be uniform, and may be made by it selectively
among persons who receive, or are eligible to receive Stock Incentive Awards
under the Plan, whether or not such persons are similarly situated.

 

SECTION 16.  NON-TRANSFERABILITY.

 

Neither a Participant,
nor his beneficiary, nor any other individual shall have any right by way of
anticipation or otherwise to alienate, sell, transfer, assign, pledge, charge
or otherwise dispose of any benefits which may become payable under this Plan,
prior to the time that payment of any such benefit is made, and any attempted anticipation,
alienation, sale, transfer, assignment, pledge, charge, or other disposition
shall be null and void. Furthermore, none of the benefits payable under this
Plan shall be subject to the claim or legal process of the creditors of any
Participant or of the beneficiary, spouse or former spouse of any Participant
or of any other person or entity.

 

SECTION 17.  ADJUSTMENTS UPON
CHANGES IN CAPITALIZATION.

 

In the event of a share
dividend, a stock split, recapitalization, merger, consolidation, reorganization,
split-up, combination or exchange of shares, spin-off, extraordinary dividend
in property or in kind, or other similar corporate changes (each of the
foregoing, an “Extraordinary Transaction”) the number and/or kind of Stock
Incentive Units allocated to a Participant’s account shall be appropriately
adjusted by the Committee (whose determination in each case shall be
conclusive) as the Committee may determine to be necessary to ensure equitable
treatment to each Participant as a result of the consummation of any
Extraordinary Transaction.

 

SECTION 18.  INTERPRETATION AND
AMENDMENT.

 

This Plan will be
administered by the Committee. The decision of the Committee with respect to
the administration or interpretation of the Plan will be final and binding.

 

 

The Committee reserves the right, prior to a
Change in Control, to amend, modify or terminate the Plan; provided, however
that (i) no amendment, modification or termination of the Plan shall
affect an election to defer payments already in effect for the current calendar
year or any preceding calendar year or shall otherwise adversely affect any
right or benefit earned or accrued under the Plan by any Participant prior to
any such amendment, modification or termination without the prior written
consent of such Participant, and (ii) following a Change of Control the
Committee’s discretion will be exercised as provided in Section 10(a) hereof;
provided further that the Trustees shall have no authority to terminate the
Plan.

 

SECTION 19.  GENDER AND NUMBER.

 

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

 

SECTION 20.  CHOICE OF LAW.

 

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

 

SECTION 21.  SECTION 409A.

 

It is intended that the Plan comply with the
provisions of Section 409A of the Code so as to prevent the inclusion in
gross income of any amounts earned hereunder in a taxable year that is prior to
the taxable year or years in which such amounts would otherwise actually be
distributed or made available to the Participants. It is intended that the Plan
shall be administered in a manner that will comply with Section 409A of
the Code, including any proposed, temporary or final regulations or any other
guidance issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto.

 

It is intended that no action be taken with respect to
the Plan that would violate any provision of Section 409A of the Code. The
Compensation Committee is authorized to adopt rules or regulations deemed
necessary or appropriate in connection therewith to anticipate and/or comply
with the requirements thereof (including any transition rules thereunder).

 

 

EXHIBIT A

 

THE DAYTON POWER AND
LIGHT COMPANY

 

MANAGEMENT STOCK
INCENTIVE PLAN

 

DEFERRAL ELECTION FORM

 

INSTRUCTIONS:

 

This Election Form relates
to Stock Incentive Units deferred pursuant to the Management Stock Incentive
Plan (the “Plan”). Under the Plan, deferred Stock Incentive Units are credited
to a Participant’s Account in a Master Trust or Trusts created by DP&L.

 

PAYMENTS. Payments
shall be made from the Plan in the form of DPL Inc. common shares after
termination of employment (check one):

 

a.          
in a lump sum payment;

 

b.          
annually over a period of up to twenty years. (Specify number of years ______.)

 

Such
payment(s) shall be made or commence by no later than the January 31
immediately following:                            
(specify date).

 

  Upon my death
(check one):

 

____ payments to
my beneficiary shall continue or commence in the same

         method to be paid to me
as elected above.

 

____ payments are to be made to my beneficiary in a
lump sum.

 

DESIGNATION OF BENEFICIARY

 

In the event of my
death all payments required to be made under the Plan shall be made to the
following person:

 

	
  Name of designated beneficiary:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address of designated beneficiary:

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

If the
above-designated beneficiary does not survive me, payments will be made to the
following successor beneficiary (or to my estate on failure to designate
otherwise):

 

	
  Name of designated beneficiary:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address of designated beneficiary:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date

  	
   

  

 

This Election Form was received by the Secretary
of the Company on

 

	
   

  	
  Secretary

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