Document:

Exhibit
10.2

DPL INC.

PARTICIPATION AGREEMENT

This PARTICIPATION
AGREEMENT (“Agreement”) is entered into this 8th day of September 2006 (the “Effective
Date”) among DPL Inc., an Ohio corporation (“DPL”), The Dayton Power and Light
Company, an Ohio corporation (“DP&L”) (collectively, the “Company”), and
Paul M. Barbas (“Executive”).

WHEREAS, DPL has an
executive compensation program (the “Program”), generally effective as of
January 1, 2006;

WHEREAS, the Program
provides benefits pursuant to the following plans which have been approved by
the Compensation Committee of the Board of Directors of DPL (the “Committee”)
and adopted by the Board of Directors of DPL (the “Board”): the DPL Inc.
Severance Pay and Change of Control Plan, the DPL Inc. Supplemental Executive
Defined Contribution Retirement Plan, the DPL Inc. 2006 Equity and Performance
Incentive Plan, and the DPL Inc. Executive Incentive Compensation Plan (the “EICP”)
(collectively, the “Plans”);

WHEREAS, Executive’s
participation in the Plans and eligibility for the benefits provided thereunder
requires execution of this Agreement; and

WHEREAS, DPL
desires to provide Executive benefits in addition to those provided by the
Program, as described herein.

NOW THEREFORE, in
consideration of the promises and agreements contained herein and other good
and valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, and intending to be legally bound, Executive agrees as follows:

1.    Effective Date.  This Agreement is effective on the Effective
Date and will continue in effect as provided herein.

2.    Participation in the Plans.  DPL confirms that Executive has been
designated by the Committee and the Board to participate in each of the Plans
pursuant to the terms thereof as of the date Executive commences his
employment, contingent on his execution of this Agreement; provided, however,
that Executive will not be eligible to participate in the EICP until January 1,
2007.  Executive is eligible to receive
additional benefits as such are provided to other similarly situated employees
of the Company from time to time.

3.    Relocation
Expenses.  DPL expects that Executive
will relocate as soon as practicable. 
DPL shall reimburse Executive for expenses associated with his
relocation from Lewes, Delaware to Dayton, Ohio including customary real estate
commission fees associated with the sale of Executive’s existing primary
residence (or the purchase of his existing primary residence for its appraised
value, if such residence 

 

does not sell within a
reasonable time period), reasonable expenses for house hunting trips and
temporary living expenses including the use of a car.

4.    Perquisite Allowance.  By executing this Agreement, Executive shall
be entitled to receive a perquisite allowance in the amount of $20,000 per year
(the “Perquisite Allowance”), for each year that (a) Executive remains
designated by the Committee as eligible to receive the Perquisite Allowance and
(b) DPL continues to make the Perquisite Allowance available to executive-level
employees of the Company.  Executive has
been designated by the Committee as eligible to receive the Perquisite
Allowance for 2006.  The Perquisite
Allowance for 2006 shall be paid as soon as practicable after the commencement
of Executive’s employment.  The Perquisite
Allowance for years after 2006 shall be paid to Executive as soon as
practicable after the Committee designates Executive as eligible to receive the
Perquisite Allowance for that year.  The
Perquisite Allowance will not be deemed “compensation,” as that term is defined
under any of the Plans, nor under any other plan, practice, program or policy
of the Company or any of its affiliates, as in effect from time to time.

5.    Signing Bonus.  By executing this Agreement, Executive shall
be entitled to receive a one-time signing bonus in the amount of $150,000 (the “Signing
Bonus”).  The Signing Bonus shall be paid
in a lump sum within five (5)
business days after the commencement of Executive’s employment.

6.    Non-Solicitation.  As a condition to his eligibility to
participate in the Program, Executive hereby agrees that during his employment
and for a period of two years following his termination of employment with the
Company, Executive will not (a) solicit for employment with himself or any firm
or entity with which he is associated, any employee of the Company, its
subsidiaries or affiliates, or otherwise disrupt, impair, damage or interfere
with the Company’s, its subsidiaries’ or affiliates’ relationships with their
employees or (b) solicit for Executive’s own behalf or on behalf of any other
person(s), any retail customer of the Company, its subsidiaries or affiliates,
that has purchased products or services from the Company, its subsidiaries or
affiliates, at any time (i) with respect to solicitation during employment,
during the Executive’s employment or (ii) with respect to solicitation after
termination of employment, in the twelve months preceding the date on which
Executive’s employment with the Company, its subsidiaries or affiliates is
terminated or that the Company, its subsidiaries or affiliates are actively
soliciting or have known plans to solicit, for the purpose of marketing or
distributing any product, pricing or service competitive with any product,
pricing or service then offered by the Company, its subsidiaries or affiliates
or which the Company, its subsidiaries or affiliates have known plans to offer.

 

[Signatures
on the Following Page]

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first written above.

	
   

  	
  DPL INC. and

  
	
   

  	
  THE DAYTON POWER AND LIGHT COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn E.
  Harder

  
	
   

  	
   

  	
  Glenn E. Harder

  
	
   

  	
   

  	
  Non-Executive Chairman of the Boards of Directors

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Paul M. Barbas

  
	
   

  	
  Paul M. BarbasExhibit
10.3

DPL INC.

EXECUTIVE INCENTIVE COMPENSATION
PLAN

EFFECTIVE
JANUARY 1, 2006

ARTICLE I  — PURPOSE

The purpose of the DPL Inc. Executive Incentive Compensation Plan is to
attract and retain key executives for DPL Inc. and its Subsidiaries and to provide
such persons with incentives for superior performance.

ARTICLE II  — DEFINITIONS

Section
2.1.           “Board”
means the Board of Directors of the Company.

Section
2.2.           “Committee”
means the Compensation Committee of the Board or any other committee appointed
by the Board to administer the Plan.

Section
2.3.           “Company”
means DPL Inc., an Ohio corporation, and any entity that succeeds DPL Inc. by
merger, consolidation, reorganization or otherwise.

Section
2.4.           “Eligible
Executive” means the Company’s Chief Executive Officer and each other
officer of the Company that the Committee determines should be an Eligible
Executive hereunder.

Section
2.5.           “Incentive
Bonus” shall mean, for each Eligible Executive, a bonus opportunity
amount determined by the Committee pursuant to Article V below.

Section
2.6.           “Management
Objectives” means the measurable performance objective or objectives
established pursuant to this Plan for Eligible Executives who have received an
award pursuant to this Plan.  Management
Objectives may be described in terms of Company-wide objectives or objectives
that are related to the performance of the individual Eligible Executive or of
the Subsidiary, division, department, region or function within the Company or
Subsidiary in which the Eligible Executive is employed.  The Management Objectives may be made
relative to the performance of other companies. 
The Management Objectives applicable to an award under this Plan will be
based on specified levels of or growth in one or more criteria such as the following,
and other individual performance criteria specific to the Eligible Executive’s
position with the Company:

(a)           Appreciation in
value of shares;

(b)           Total shareholder
return;

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(c)           Earnings per share;

(d)           Operating income;

(e)           Net income;

(f)            Pretax earnings;

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

(h)           Pro forma net
income;

(i)            Return on equity;

(j)            Return on
designated assets;

(k)           Return on capital;

(l)            Economic value
added;

(m)          Revenues;

(n)           Expenses;

(o)           Operating cash flow;

(p)           Free cash flow;

(q)           Cash flow return on
investment;

(r)            Operating margin or
net profit margin; or

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

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

Section
2.8.           “Plan”
means the DPL Inc. Executive Incentive Compensation Plan, as hereinafter set
forth and as the same may from time to time be amended or restated.

Section
2.9.           “Subsidiary”
means a corporation, partnership, joint venture, unincorporated association or
other entity in which the Company has a direct or indirect ownership or other
equity interest.

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ARTICLE III  — ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Committee, which shall have full
power and authority to construe, interpret and administer the Plan and shall
have the exclusive right to establish Management Objectives and the amount of
Incentive Bonus payable to each Eligible Executive upon the achievement of the
specified Management Objectives.

ARTICLE IV  — ELIGIBILITY

Eligibility under this Plan is limited to Eligible Executives
designated by the Committee in its sole and absolute discretion who have each
executed a Participation Agreement.

ARTICLE V  — AWARDS

Not later than the 90th day of each fiscal year of the Company, the
Committee shall establish the Management Objectives and the relative weight
assigned thereto for each Eligible Executive and the amount of Incentive Bonus
payable (or formula for determining such amount) upon full achievement of the
specified Management Objectives. 
Guidelines for the weighting of the Management Objectives and the
formula for determining the amount of the target bonus are set forth on Schedule A attached hereto.  The Committee may further specify in respect
of the specified Management Objectives a minimum acceptable level of
achievement below which no Incentive Bonus payment will be made and/or a
maximum level of achievement above which no additional Incentive Bonus payments
will be made, and shall set forth a formula for determining the amount of any
payment to be made if performance is at or above the minimum acceptable level
but falls short of full achievement of the specified Management Objectives, or
if performance is at or above full achievement of the specified Management
Objectives but below the maximum level of achievement. The Committee may modify
the terms of awards established pursuant to this Article V in its sole
discretion to achieve the purposes of the Plan.

ARTICLE VI  — COMMITTEE DETERMINATIONS

                As
soon as reasonably practicable after the end of each fiscal year of the
Company, but in any event at a time that will permit payment by the date
specified in Article VII, the Committee shall determine for such fiscal year
whether the Management Objectives have been achieved, each Eligible Executive’s
individual contribution factor and the amount of the Incentive Bonus to be paid
to each Eligible Executive who remains employed by the Company as of the last
date of such fiscal year, provided, however, in no event shall any Incentive
Bonus be payable for any fiscal year in which the Company has reduced dividends
payable on its shares.  The Committee may
make 

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such
adjustments in its determination of Incentive Bonus amounts as it determines to
be appropriate in its discretion.

ARTICLE VII  — PAYMENT OF INCENTIVE BONUSES

Subject to a valid election made by an Eligible Executive with respect
to the deferral of all or a portion of his or her Incentive Bonus pursuant to a
deferred compensation plan maintained by the Company, an Incentive Bonus earned
during a fiscal year shall be paid in cash on March 15 of the fiscal year
following the fiscal year in which such Incentive Bonus is earned.

ARTICLE VIII  — MISCELLANEOUS

Section 8.1.           Amendment
of Plan.  The Committee may at any
time amend any or all of the provisions of this Plan. A proper amendment of
this Plan automatically shall effect a corresponding amendment to all
Participants’ rights hereunder.

Section 8.2.           No
Right to Bonus or Continued Employment. 
Neither the establishment of the Plan, the provision for or payment of
any amounts hereunder nor any action of the Company, the Board or the Committee
with respect to the Plan shall be held or construed to confer upon any person
(a) any legal right to receive, or any interest in, an Incentive Bonus or any
other benefit under the Plan or (b) any legal right to continue to serve as an
officer or employee of the Company or any Subsidiary of the Company.

Section 8.3.           Withholding.  The Company shall have the right to withhold,
or require an Eligible Executive to remit to the Company, an amount sufficient
to satisfy any applicable federal, state, local or foreign withholding tax
requirements imposed with respect to the payment of any Incentive Bonus.

Section 8.4.           Nontransferability.  Except as expressly provided by the
Committee, the rights and benefits under the Plan shall not be transferable or
assignable other than by will or the laws of descent and distribution.

Section 8.5.           Effective
Date.  This Plan shall become
effective for bonuses earned in years beginning with the year 2006.

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Schedule A

(as amended September 5, 2006)

The following are
guidelines to be followed by the Committee in establishing the Management
Objectives and their relative weightings, the target bonuses, and the
individual contribution factors for the Eligible Executives:

(a)           Establishment of Management
Objectives and their Relative Weightings: The Management Objectives
selected by the Committee shall fall under two broad categories: (i) corporate
objectives (“Corporate Objectives”) and (ii) business unit and functional
objectives (“Functional Objectives”). 
The Committee shall assign a relative weighting of 75% to Corporate
Objectives and 25% to Functional Objectives. 
The Committee shall develop a performance/payout schedule for the
Corporate Objectives and the Functional Objectives that specifies performance
targets and their corresponding payouts at threshold, target and maximum
levels, with threshold payouts set at 50% of target and maximum payouts set at
200% of target.

(b)           Determination of Target Bonus:  The amount of an Eligible Executive’s target
bonus shall be based on a percentage of the Eligible Executive’s base salary
for the fiscal year.  In no event will
the percentage be less than the factor set forth below:

	
  Participant’s Position

  	
  Factor

  
	
  President and Chief Executive Officer

  	
  60%

  
	
  President, Power Production

  	
  40%

  
	
  Vice President, Operations

  	
  40%

  
	
  Vice President, Commercial Operations

  	
  50%

  
	
  Senior Vice President and Chief Financial Officer

  	
  50%

  
	
  Vice President, General Counsel and Corporate
  Secretary

  	
  35%

  
	
  Vice President, Corporate and Regulatory Affairs

  	
  35%

  
	
  Treasurer

  	
  35%

  
	
  Controller

  	
  30%

  
	
  Director, Internal Audit

  	
  25%

  

 

(c)           Determination of Individual
Contribution Factor: Each year the Committee will assign an individual
contribution factor to each Eligible Executive, which shall range from 0.5 to
1.50.  The individual contribution factor
assigned to each Eligible Executive for a year will be such so that the application
of the individual contribution factors does not result in an increase in the
total amount of Incentive Bonuses paid for the year over the total amount of
Incentive Bonuses that would be paid without the application of the 

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individual contribution
factors.  If the Company must reduce
dividends in a fiscal year, the Company will not pay any portion of an award
for that particular year.

 

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