Document:

Form of Stock Option Agreement for Officers

  
 Exhibit 10.12 
  

					
	 	 	 411 Seventh Avenue
	  	 412-393-4150

	 	 	 Pittsburgh, PA 15219
	  	 412-393-6185 (Fax)

	 	 	 	  	 mhogel@dqe.com

	 MAUREEN L. HOGEL
 Senior Vice President and Chief Administrative Officer
	  	 

  
 [date] 
  

	Re:	Grant of Nonstatutory Stock Options — Officer 

  
 [Name of optionee] 
  
 It is my pleasure to notify you that effective [date] the Compensation Committee of the Board of Directors (the “Committee”) of DQE
granted you a stock option to purchase <    >shares of Common Stock, no par value, of DQE (“DQE Common Stock”), as set forth on your Option Acceptance Form (enclosed) at an exercise price of
$             per share. Your stock option is granted under, and subject to the terms and conditions of, the DQE, Inc. 2002 Long-Term Incentive Plan, as it may be amended from time
to time (the “Plan”), and to the further conditions set forth in this option award letter. 
  
 The stock option granted to you is a non-statutory stock option as that term is defined in Section 4 of the Plan. Even though the stock option has been
granted to you, the stock option cannot be exercised (i.e., you cannot buy the DQE Common Stock that is subject to the stock option) unless and until the stock option is vested, as described below. 
  
 The Plan is incorporated by reference and made a part of
your stock option as if it were set forth in full in this option award letter. This option award letter is the stock option agreement referred to in Section 5(I) of the Plan. If there is any conflict between the Plan and this option award letter,
the provisions of the Plan will control. Any dispute or disagreement which may arise under or in any way relate to the interpretation or construction of the Plan or this option award letter will be resolved by the Committee in its sole and absolute
discretion and the decision will be final, binding and conclusive for all purposes. 
  
 Notwithstanding any provision hereof to the contrary, if you are a party to an employment agreement, change in control, severance, or similar plan, policy or agreement that provides for accelerated vesting and/or
other modifications of the terms and/or conditions of your stock options or other stock-based awards upon the happening of certain events (including, but not by way of limitation, changes in control and/or terminations of employment), the provisions
of such other plan, policy or agreement, as the case may be, shall supercede the provisions contained in this option award letter to the extent such other provisions are consistent with the Plan and would provide benefits to you greater than those
provided in this option award letter. 
  
 Subject to your timely
execution and return of the enclosed Option Acceptance Form, your stock option will be exercisable to the extent it is vested, and vesting will be based on the price of the DQE Common Stock. At such time as the average closing price per share of

  

 
the DQE Common Stock for any period of 30 consecutive trading days exceeds $            
per share (the “First Stock Price Hurdle”), 50% of the stock option shall be vested. At such time as the average closing price per share of the DQE Common Stock for any period of 30 consecutive trading days exceeds
$             per share (the “Second Stock Price Hurdle”), the remaining 50% of the stock option shall be vested. The First Stock Price Hurdle and/or the Second
Stock Price Hurdle shall be adjusted as determined by the Committee, in its sole discretion, to reflect any changes resulting from the occurrence of certain events such as a stock split, stock dividend, reorganization, reclassification,
re-capitalization, combination of shares, merger or consolidation. Notwithstanding anything to the contrary in this paragraph, no portion of the stock option shall be vested prior to the date
                     months after the date hereof, and if the First Stock Price Hurdle or both the First Stock Price Hurdle and the Second
Stock Price Hurdle are met prior to such date, the applicable portion of your stock option will be vested as of the end of such
                     month period. 
  
 The Committee shall have the sole and absolute discretion to determine the extent to which the First Stock Price Hurdle and the Second Stock Price Hurdle
have been met and the extent to which your stock option has vested. The portion, if any, of your stock option that has been vested will be communicated to you in writing. Upon such notification, you will be entitled to exercise all or any part of
the vested portion of your stock option. Any portion of the stock option that is not determined by the Committee to be vested prior to the third anniversary of the date hereof will be considered forfeited.  
  
 The exercise of your stock option also is subject to the provisions of the
Plan. The exercisable portion of your stock option may be exercised in whole or in part but any exercise must be made as to at least ten shares covered by your stock option (or, if less, all of the shares then remaining subject to the stock option).
Your stock option award will expire at the close of business on                      (the “Expiration Date”), or earlier as
described in the immediately preceding paragraph or in the following paragraphs of this option award letter regarding the effect of changes in your employment status on your stock options. 
  
 Notwithstanding Section 5(H) of the Plan, except as otherwise provided below,
if your employment by DQE or an affiliate of DQE terminates, all outstanding stock options held by you at the time of such termination will automatically terminate: 
  
 (a) Retirement. If you retire under a retirement plan of DQE or an affiliate of DQE, the then
unvested portion of your stock option will be forfeited, and the then vested portion of your stock option will be exercisable at any time prior to the earlier of (i) the Expiration Date, or (ii) the date three years after the date of retirement.

  
 (b) Disability. If your employment by
DQE or an affiliate is terminated due to disability (as defined in the Plan), your stock option will be exercisable in full (whether or not so exercisable on the date of termination of employment) at any time prior to the earlier of (i) the
Expiration Date, or (ii) the date three years after the date of termination of employment. 
  
 (c) Death. In the event of your death during employment by DQE or an affiliate, your stock option will be exercisable in full
(whether or not so exercisable 

  

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on the date of your death) by the person entitled to do so under your will or, if you fail to make testamentary disposition of the stock option or die
intestate, by your legal representative, in either case at any time prior to the earlier of (i) the Expiration Date, or (ii) one year after the date of death. In the event of death after termination of employment but during a period when a stock
option remains exercisable by you, any then-outstanding stock option that was exercisable on the date of your death will be exercisable by the person entitled to do so under your will or, if you fail to make testamentary disposition of the stock
option or die intestate, by your legal representative, in either case at any time prior to the earlier of (i) the Expiration Date, or (ii) one year after the date of death. 
  
 (d) Resignation. If you resign from your employment by DQE or an affiliate, the then unvested portion
of your stock option will be forfeited, and the then vested portion of your stock option will be exercisable at any time prior to the earlier of (i) the Expiration Date, or (ii) the date three months after the date of termination of employment.

  
 (e) Discharge Without Cause. If you
are discharged from your employment with DQE or an affiliate other than for cause, the then unvested portion of your stock option will be forfeited, and the then vested portion of your stock option will be exercisable at any time prior to the
earlier of (i) the Expiration Date, or (ii) the date three months after the date of termination of employment. 
  
 (f) Discharge for Cause. If you are discharged from your employment with DQE or an affiliate for cause, your stock option will
terminate in full on the date of termination. 
  
 The
determination of whether a termination of employment is with or without “cause” will be made by the Committee in its sole and absolute discretion. If your employment status changes but you remain an employee of DQE or one of its
affiliates, your stock option will continue in accordance with its terms. 
  
 Enclosed is one copy of your Option Acceptance Form. IF YOU DESIRE TO ACCEPT THE STOCK OPTION, YOU SHOULD SIGN THE OPTION ACCEPTANCE FORM IN DUPLICATE AND RETURN ONE COPY TO MAUREEN L. HOGEL. YOUR STOCK OPTION WILL
BE DEEMED TO BE CANCELLED AND VOID IF THE SIGNED OPTION ACCEPTANCE FORM IS NOT RETURNED TO DQE BY                     . 

  
 Information Statement 
  
 You previously received and are now receiving an Information Statement,
which describes the Plan. You should read the Information Statement, together with the Plan and this option award letter for a full understanding of the stock option granted to you. As long as your stock option remains unexercised, you will continue
to receive notification if there is a material amendment to the Plan or a change in the law, which impacts your rights under the Plan. 
  

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 Payment of Option Price in Cash or Shares 
  
 The option price upon exercise of your stock option may be paid in full in United States dollars in cash (including check,
bank draft or money order), in shares of already-owned DQE Common Stock at the fair market value of such shares on the date of exercise or in any combination of cash and shares, except that any portion of the option price representing a fraction of
a share must be paid in cash. Shares of DQE Common Stock, which have been held less than six months, may not be delivered in payment of the option price. Further information regarding the payment of the option price appears in the Information
Statement under the caption “Stock Options—Time and Manner of Payment of Exercise Price.” 
  
 Officers and Affiliates - Restrictions 
  
 There are certain legal restrictions under the federal securities laws upon officers and affiliates who receive grants of stock options and/or sell shares acquired under the Plan. If you are an officer or affiliate of
DQE, you must consult the Corporate Secretary before exercising stock options or selling shares under the Plan. Such exercises and sales may be restricted in order to ensure compliance with the federal securities laws. You may also consult the
Corporate Secretary if you have any questions concerning your status as an “affiliate” of DQE as defined in the Plan. 
  
 Federal Income Tax Consequences 
  
 Information with respect to the Federal income tax consequences of the exercise of your nonstatutory stock option, and the subsequent disposition of any
shares of DQE Common Stock acquired under the Plan, appears in the Information Statement under the caption “Federal Income Tax Consequences.” The Federal income tax consequences are complex. Accordingly, you are encouraged to carefully
read the material that was provided and to consult your personal tax adviser with specific reference to your own tax situation. 
  
 Withholding of Taxes 
  
 DQE will advise you as to the amount of any Federal income, employment or excise taxes required to be withheld as a result of the cash part of your award
and the exercise of stock option, and that state or local income or employment taxes may also be required to be withheld. You will be required to pay any such taxes directly to DQE in cash within ten days after DQE’s notification, and such
payment will be made before distribution of stock certificates or cash to you. In lieu of payment of cash, however, you may satisfy your withholding obligation by one, or any combination, of the following: (i) delivering previously acquired shares
of DQE Common Stock (valued at their fair market value on the date of delivery) and (ii) having shares of DQE Common Stock withheld from any shares otherwise issuable to you upon exercise of your stock option (valued at their fair market value on
the date of such withholding). 
  
 If you do not pay any taxes
required to be withheld, DQE may withhold such taxes from any other compensation to which you are entitled from DQE. You agree to hold DQE harmless in acting to satisfy the withholding obligation in this manner if it becomes 

  

 4 

 
necessary to do so. Further information regarding withholding of taxes appears in the Information Statement under the caption, “Federal Income Tax
Consequences - Withholding.” 
  
 Investment Representation

  
 You shall deliver to the Committee, upon demand by
the Committee, at the time shares of DQE Common Stock are to be issued to you pursuant to your stock option, a written representation that the shares to be acquired are to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to delivery of any shares of DQE Common Stock shall be a condition precedent to your right to receive any shares. 
  
 No Rights as Shareholder 
  
 You shall have no rights as a shareholder of DQE with respect to the shares
of DQE Common Stock subject to the stock option evidenced hereby unless and until a certificate for shares of DQE Common Stock is issued to you. 
  
 Option Grant Not a Bar to Corporate Event 
  
 The existence of the stock option granted hereunder shall not affect in any way the right or the power of DQE or its shareholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in DQE’s capital structure or its business, or any merger or consolidation of DQE, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the DQE Common Stock or the rights thereof, or the dissolution or liquidation of DQE, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of similar character or
otherwise. 
  
 Exercise Procedures 
  
 Your stock option may be exercised only by execution and delivery by you to
DQE of an exercise form(s) prescribed by the Committee. Copies of the exercise forms may be obtained from Mr. Thomas E. Ross, Manager, Shareholder Relations, 411 Seventh Avenue, Pittsburgh, PA 15219 or by telephone at (412) 393-1191. Each exercise
form must set forth the number of whole shares of DQE Common Stock as to which your stock option is exercised, must be dated and signed by you (or the person exercising the stock option), and must be accompanied by cash in United States dollars
(including check, bank draft or money order), shares of already-owned DQE Common Stock (see “Payment of Option Price in Cash or Shares” above) at the fair market value of such share on the date of exercise, or any combination of cash and
such shares, in the amount of the full purchase price for the number of shares of DQE Common Stock as to which the option is exercised. 
  
 DQE will advise any person exercising the stock option in whole or in part with shares of already-owned DQE Common Stock as to the amount of any cash
required to be paid to DQE representing a fraction of a share. Such person will be required to (i) pay any such 

  

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cash directly to DQE before any distribution of certificates representing shares of DQE Common Stock will be made and (ii) deliver an executed Assignment
Separate from Certificate with respect to each stock certificate delivered in payment of the option price as necessary. The signature on all Assignments Separate from Certificate must be guaranteed by a commercial bank or trust company or by a firm
having membership in the New York Stock Exchange, Inc., the American Stock Exchange, Inc., or the National Association of Securities Dealers, Inc. 
  
 If a person other than you (such as the executor of your estate) exercises the option, the exercise material must include proof satisfactory to DQE of the
right of such person to exercise the option. 
  
 The date of
exercise is the date on which the exercise form or forms, proof of right to exercise (if required) and payment of the option price in cash or shares of already-owned DQE Common Stock are received by DQE at the address set forth in this section.

  
 Issuance of Stock Certificates 
  
 Subject to the second paragraph under “Exercise Procedures”
above, DQE will issue a certificate(s) representing the number of shares of DQE Common Stock to which the person exercising the stock option is entitled, if any, as soon as practicable after the date of exercise. Unless the person exercising the
stock option otherwise directs DQE in writing, the certificate(s) will be registered in the name of the person exercising the stock option and will be delivered to such person. If the stock option is exercised and the option price is paid in whole
or in part with shares of already-owned DQE Common Stock, DQE will issue at the same time (and return to the person exercising the stock option) a certificate representing the number of any excess shares included in any certificate(s) delivered to
DQE at the time of exercise. 
  
 General Restriction 
  
 To the extent this stock option is denominated in DQE Common Stock under
this option award letter, it shall be subject to the requirement that if at any time the Committee shall determine that any listing or registration of the shares of DQE Common Stock or any consent or approval of any governmental body or any other
agreement or consent is necessary or desirable as a condition of the issuance of shares of DQE Common Stock or cash in satisfaction thereof, such issuance of shares of DQE Common Stock may not be consummated unless such requirement is satisfied in a
manner acceptable to the Committee. DQE shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as the same shall be in effect from time to time) or to take any other affirmative action to cause the issuance
of shares pursuant to this stock options to comply with any law or regulation of any governmental authority. 
  
 Determinations of Committee 
  
 The actions taken and determinations of the Committee made pursuant to this option award letter and of the Committee pursuant to the Plan shall be final,
conclusive and binding 

  

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upon DQE and upon you. No member of the Committee shall be liable for any action taken or determination made relating to this option award letter or the Plan
if made in good faith. 
  
 Miscellaneous 
  
 Your stock option may not be transferred otherwise than by will or by the
law of decent and distribution, and your stock option will be exercisable during your lifetime only by you or by your guardian or legal representative. No assignment or transfer of your stock option or of the rights represented thereby, whether
voluntary or involuntary, by operation of law or otherwise (except by will or the laws of descent and distribution), shall vest in the assignee or transferee any interest or right herein whatsoever, and immediately upon such purported assignment or
transfer, the stock option shall terminate and become of no further effect. 
  
 This option award letter does not confer any right on you to continue in the employ of DQE or its affiliates, or interfere in any way with the rights of DQE or its affiliates to terminate your employment. 

 
 Whenever the word “you” is used in any provision of this option
award letter under circumstances where the provision should logically be construed to apply to your executors, administrators, or the person or persons to whom your stock option may be transferred by will or by the laws of descent and distribution,
the word “you” shall be deemed to include such person or persons. 
  
 The Plan, or any part thereof, may be terminated or may, from time to time be amended, in accordance with the Plan; provided, however, the termination or amendment of the Plan shall not, without your consent, affect
your rights under this option award letter. 
  
 This option award
letter shall be binding upon the successors and assigns of DQE and upon your legal representatives, heirs and legatees. This option award letter, along with the Plan and the Information Statement, constitutes the entire agreement between you and DQE
with respect to the stock option granted to you and supersedes all prior agreements and understandings, oral or written, between you and DQE with respect to the subject matter of this option award letter. This option award letter may be amended only
by a written instrument signed by you and DQE and will be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania. 
  
 Between the date of this option award letter and the date your stock option is exercised, you will receive copies of all
reports, proxy statements and other communications distributed generally to the shareholders of DQE. 
  
 It is recommended that you establish a file for this option award letter and enclosures as well as any other material you receive regarding the Plan,
including the Information Statement. 
  
 If you have any questions
with respect to the exercise of your stock option, please direct your inquiry to Thomas E. Ross. 
  

 7 

 Very truly yours, 
  

	
	
	

	Maureen L. Hogel

  
 Enclosures 
  

 8 

 OPTION ACCEPTANCE FORM 
  
 I, the undersigned optionee, accept the grant of the nonstatutory stock option confirmed by the attached option award letter
dated [date], for the number of shares identified in the attached option award letter. Also, I understand that the number of shares set forth represents my grant, and that the extent to which those options are vested will be determined based on the
price of the DQE Common Stock. I further agree to be bound by the terms and provisions of the Plan, as the Plan may be amended from time to time, and the attached option award letter; provided, however, that no alteration, amendment, revocation or
termination of the Plan shall, without my written consent, adversely affect my rights with respect to this stock option. 
  
 In addition, by signing and dating this Option Acceptance Form below, I am agreeing to be bound by the Plan, as the Plan may be amended from time to time,
and any related option award letter I receive from DQE, with respect to any stock options granted to me in the future pursuant to the Plan. 
  
 IN WITNESS WHEREOF, I have executed this Option Acceptance Form as of
                    , subject to the terms and conditions set forth in the Plan and in the applicable option award letter. 
  
 [name of optionee] 
 [address of optionee] 
  

					
			
	  	 	 	 	  
	Optionee’s Signature	 	 	 	Date

  
 For your grant to be effective, one

 signed copy of this form must be 
 returned by
                     to: 
  
 Maureen L. Hogel 
 Senior Vice President and Chief Administrative Officer

 Duquesne Light Company 
 411 Seventh Avenue 
 16th Floor (16-3) 
 Pittsburgh, PA 15219Form of Deferred Stock Unit Agreement for Officers

  
 Exhibit 10.13 
  
 

 
  

					
	 	 	 411 Seventh Avenue
	  	 Telephone: 412-393-4150

	 	 	 Mail Drop 16-3
	  	 Fax:             412-393-4151

	 	 	 Pittsburgh, PA 15219
	  	 E-mail: mhogel@duqlight.com

	 MAUREEN L. HOGEL
 Senior Vice President and
Chief Legal and Administrative Officer
	  	 

  
 [date] 
  

	Re:	Performance-Based Deferred Stock Unit Award 

  
 [Name of participant] 
  
 It is my pleasure to notify you that effective [date] the Compensation Committee of the Board of Directors (the “Committee”) of Duquesne Light Holdings, Inc. (“the Company”) granted
you a Performance-Based Deferred Stock Unit Award of              shares of Common Stock, no par value, of DLH (“Common Stock”) as set forth on your
Performance-Based Deferred Stock Unit Award Acceptance Form (enclosed). Your Performance-Based Deferred Stock Unit Award is granted under, and subject to the terms and conditions of, the Duquesne Light Holdings, Inc. 2002 Long-Term Incentive Plan,
as it may be amended from time to time (the “Plan”), and to the further conditions set forth in this letter. 
  
 Definitions 
  
 For purposes of this letter agreement, the capitalized terms set forth below shall have the following meanings: 
  
 Change in Control means, and shall be deemed to have occurred upon, the first to occur of any of the following events: 

 
 (a) The acquisition by any individual, entity, or group
(a “Person”), including a “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of beneficial ownership within the meaning of
Rule 13d-3 promulgated under the Exchange Act, of twenty percent (20%) or more of either: (i) the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”); or (ii) the combined voting power of the then

  

 
outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”);
excluding, however the following: (A) any acquisition directly from the Company (excluding an acquisition resulting from the exercise of an exercise, conversion, or exchange privilege unless the security being so exercised, converted or exchanged
was acquired directly from the Company); (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (D) any
acquisition by any corporation pursuant to a transaction which complies with subclauses (i), (ii), and (iii) of clause (c) below; 
  
 (b) During any twenty-four (24) consecutive month period, the individuals who, at the beginning of such period, constitute the Board (the
“Incumbent Directors”) cease for any reason other than death to constitute at least a majority thereof, provided, however, that a director who was not a director at the beginning of such twenty-four (24) month period shall be deemed
to have satisfied such twenty-four (24) month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of, at least two-thirds (2/3) of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the beginning of such period) or by prior operation of the provisions of this clause (b); 
  
 (c) The consummation of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all
of the assets of the Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which: (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the
Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the outstanding shares of common stock, and
the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a
corporation, which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be; (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, twenty-five percent
(25%) or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, twenty-five percent (25%) or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors; and (iii) individuals 

  

 2 

 
who were Incumbent Directors will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate
Transaction; or 
  
 (d) The consummation of a
plan of complete liquidation or dissolution of the Company. 
  
 Notwithstanding the foregoing, a Change in Control will not be deemed to have occurred by reason of a distribution of the voting securities of any of the Company’s subsidiaries to the stockholders of the Company,
or by means of an initial public offering of such securities. 
  
 Basic Earnings Per Share from Continuing Operations means, for any period, (i) the total revenue earned by the Company from continuing operations for such period, less the Company’s cost of sales,
operating expenses and taxes from continuing operations for such period, divided by (ii) the average daily number of shares of the Company common stock outstanding during such period. 
  
 EPS Performance Period means the period beginning on
                     and continuing until
                    . 
  
 Fair Market Value shall mean, with respect to a share of stock on a specific day, the last quoted sales price for such stock on
such day on a national securities exchange or, if no such sale is recorded on such day, the most recent day on which a sale of such stock was recorded. 
  
 Performance-Based Deferred Stock Unit Award means an award of an opportunity to earn a number of shares of Common Stock in the EPS
Performance Period or the TSR Performance Period, as applicable 
  
 Total Shareholder Return means, with respect to a share of stock for any period, the percentage determined by dividing (i) the sum of (A) the increase in the Fair Market Value of such share during such period
and (B) the dollar amount of dividends paid in cash and the fair market value of dividends paid in a form other than cash with respect to such share during such period, divided by (ii) the Fair Market Value of such share on the first day of such
period. 
  
 TSR Performance Period means
the period beginning on                      and continuing until
                    . The closing price of a share of Common Stock was
$             on                     , the starting date of the
performance period. 
  
 Withholding
Obligations means the amount of federal, state and local income and payroll taxes DLH determines in good faith must be withheld with respect to a Performance-Based Deferred Stock Unit Award. Withholding Obligations may be settled by the
participant, as permitted by the Committee in its discretion, in shares of DLH 

  

 3 

	 	 
Common Stock otherwise deliverable under this agreement, cash, previously owned shares of DLH Common Stock or any combination of the foregoing.

  
 The Plan 
  
 Your Performance-Based Deferred Stock Unit Award is subject to the terms and conditions of
the Plan. This letter agreement is the award agreement referred to in Section 7(A)(i) of the Plan. If there is any conflict between the Plan and this letter agreement, the provisions of the Plan will control, except as expressly set forth in the
next two sections (Change in Control and Other Agreements). Any dispute or disagreement which may arise under or in any way relate to the interpretation or construction of the Plan or this letter agreement will be resolved by the
Committee in its sole and absolute discretion and the decision will be final, binding and conclusive for all purposes. 
  
 Change in Control 
  
 Upon the occurrence of a Change in Control, the Committee shall determine the number of shares of Common Stock subject to the Performance-Based Deferred Stock Unit Award
that had become Vested Shares prior to the Change in Control, and stock certificates (or, at the discretion of the Committee, an amount in cash or a combination of cash and stock certificates, with the case in each case representing the fair market
value of the stock certificates that would otherwise be due under the Performance-Based Deferred Stock Unit Award) representing the number of such Vested Shares shall be delivered to the participant as soon as reasonably practicable after the date
of the Change in Control. Certificates representing the remaining shares of Common Stock subject to the Performance-Based Deferred Stock Unit Award shall be delivered at the time or times otherwise specified in this letter agreement.

  
 Other Agreements 
  
 Notwithstanding any provision hereof to the contrary, if you are a party to an employment
agreement, change in control, severance, or similar plan, policy or agreement that provides for accelerated payment and/or other modifications of the terms and/or conditions of your Performance-Based Deferred Stock Unit Award or other stock-based
awards upon the happening of certain events (including, but not by way of limitation, changes in control and/or terminations of employment), the provisions of such other plan, policy or agreement, as the case may be, shall supercede the provisions
contained in this agreement to the extent such other provisions would provide benefits to you greater than those provided in this agreement. 
  
 Determination of Vested Shares 
  
 Subject to your timely execution and return of the Performance-Based Deferred Stock Unit Award Acceptance Form attached hereto as Exhibit A, the extent to which the
shares of Common Stock subject to your Performance-Based Deferred Stock Unit Award will be transferred to you after the end of the EPS Performance Period and the TSR Performance Period will be determined by the Committee, in its sole and absolute
discretion. As promptly as administratively feasible but 

  

 4 

 
in no event later than the date sixty (60) days following the last day of the EPS Performance Period and the TSR Performance Period, the Committee shall
determine the number of shares subject to the Performance-Based Deferred Stock Unit Award to be issued by the Company and transferred to you, as follows: 
  

	 	•	 	50% of the shares of Common Stock subject to your Performance-Based Deferred Stock Unit Award (the “EPS Deferred Stock Unit Award”) will be issued by the Company and
transferred to you after the end of the EPS Performance Period on the basis of achievement of Basic Earnings Per Share from Continuing Operations targets. The number of shares of Common Stock that will be issued with respect to the EPS Deferred
Stock Unit Award shall be the percentage applicable to the cumulative Basic Earnings Per Share from Continuing Operations for the Company Common Stock for the EPS Performance Period, as set forth in the Cumulative Basic Earnings Per Share from
Continuing Operations Table attached hereto as Exhibit B. 

  

	 	•	 	50% of the shares of Common Stock subject to your Performance-Based Deferred Stock Unit Award (the “TSR Deferred Stock Unit Award”) will be issued by the Company and
transferred to you after the end of the TSR Performance Period on the basis of achievement of cumulative Total Shareholder Return targets. The number of shares of Common Stock that will be issued with respect to the TSR Deferred Stock Unit Award
shall be the percentage applicable to the percentile ranking of the cumulative Total Shareholder Return for Common Stock within the Standard and Poor’s Mid-Cap Utility Index for the TSR Performance Period, as set forth in the Cumulative Total
Shareholder Return Table attached hereto as Exhibit C. 

  
 The shares of Common Stock subject to your Performance-Based Deferred Stock Unit Award that becomes transferable to you after the end of the EPS Performance Period and the TSR Performance Period on the basis of the achievement of the
foregoing Basic Earnings Per Share from Continuing Operations and Total Shareholder Return targets are referred to in this letter agreement as “Vested Shares.” 
  
 Payment of Awards and Delivery of Certificates 
  
 Subject to the Withholding Obligations and any requirements of this letter agreement then applicable, within sixty (60) days after the end
of the EPS Performance Period and the TSR Performance Period, the Company shall deliver to you certificates representing the Vested Shares unless you have elected to defer receipt of the Vested Shares to a later date (which date may be no earlier
than                     ) by timely completing and returning the Deferral Election Form attached hereto as Exhibit D, in which case, the
Company will deliver certificates representing the Vested Shares as such time as may be specified in your Deferral Election Form (or any Deferral Election Form that is completed and returned to the Company in accordance with procedures established
by the Company for such purpose). If you elect to defer receipt of your Vested Shares, you will not pay any federal income tax with respect to the payment of the Vested 

  

 5 

 
Shares until the date that they are actually transferred to you. Notwithstanding anything to the contrary in this letter agreement, the Committee may, in its
sole discretion, pay up to one-third of your Vested Shares in the form of cash in an amount representing the fair market value of the stock certificates that would otherwise be delivered under your Performance-Based Deferred Stock Unit
Award. 
  
 Termination of Employment 
  
 Your Performance-Based Deferred Stock Unit Award also is subject to the provisions of the
Plan. Notwithstanding the foregoing paragraph, if your employment with the Company and each affiliate of the Company is terminated prior to the completion of the EPS Performance Period and the TSR Performance Period for any reason, all of your
rights with respect to your Performance-Based Deferred Stock Unit Award and your rights hereunder shall terminate as of the date of your termination of employment and you will, as of that date, forfeit any right to receive payment of any shares of
Common Stock subject to your Performance-Based Deferred Stock Unit Award, including any Vested Shares. 
  
 Acceptance Form 
  
 Enclosed are
two copies of your Performance-Based Deferred Stock Units Acceptance Form. IF YOU DESIRE TO ACCEPT THE PERFORMANCE-BASED DEFERRED STOCK UNIT AWARD, YOU SHOULD SIGN BOTH COPIES OF THE PERFORMANCE-BASED DEFERRED STOCK UNIT AWARD ACCEPTANCE FORM IN
DUPLICATE, RETURN ONE COPY TO MAUREEN L. HOGEL AND RETAIN THE OTHER COPY FOR YOUR RECORDS. YOUR PERFORMANCE-BASED DEFERRED STOCK UNIT AWARD WILL BE DEEMED TO BE CANCELLED AND BE VOID IF THE SIGNED PERFORMANCE-BASED DEFERRED STOCK
UNIT AWARD ACCEPTANCE FORM IS NOT RETURNED TO DLH BY                     . 
  
 Information Statement 
  
 You are receiving an Information Statement which describes the Plan. You should read the Information Statement, together with the Plan and this letter agreement for a
full understanding of the Performance-Based Deferred Stock Unit Award granted to you. Until your Performance-Based Deferred Stock Unit Award is earned by you, you will continue to receive notification if there is a material amendment to the Plan or
a change in the law which impacts your rights under the Plan. 
  
 Officers
and Affiliates - Restrictions 
  
 There are certain legal restrictions
under the federal securities laws upon officers and affiliates who receive grants of Performance-Based Deferred Stock Units Awards and/or sell shares acquired under the Plan. If you are an officer or affiliate of the Company, you must consult the
Corporate Secretary before selling shares under the Plan. Such sales may be restricted in order to ensure compliance with the federal securities laws. You may also consult the Corporate Secretary 

  

 6 

 
if you have any questions concerning your status as an “affiliate” of the Company as defined in the Plan. 
  
 Federal Income Tax Consequences 
  
 Information with respect to the federal income tax consequences of the receipt of
Performance-Based Deferred Stock Unit Award, whether in cash or Common Stock, and the subsequent disposition of any shares of Common Stock acquired under the Plan, appears in the Information Statement under the caption “Federal Income Tax
Consequences.” The federal income tax consequences are complex. Accordingly, you are encouraged to carefully read the material which was provided and to consult your personal tax adviser with specific reference to your own tax situation.

  
 Withholding of Taxes 
  
 The Company will advise you as to the amount of any Federal income, employment or excise
taxes required to be withheld as a result of the cash part of your award and the delivery of Common Stock in connection with a Performance-Based Deferred Stock Unit Award, and that state or local income or employment taxes may also be required to be
withheld. You will be required to pay any such taxes directly to the Company in cash within ten days after the Company’s notification, and such payment will be made before distribution of stock certificates or cash to you. In lieu of payment of
cash, however, you may satisfy your withholding obligation by one, or any combination, of the following: (i) delivering previously acquired shares of Common Stock (valued at their fair market value on the date of delivery) (ii) having cash withheld
from any cash otherwise payable to you with respect to your Performance-Based Deferred Stock Unit Award and (iii) having shares of Common Stock withheld from any shares otherwise issuable to you with respect to your Performance-Based Deferred Stock
Unit Award (valued at their fair market value on the date of such withholding). 
  
 If you do not pay any taxes required to be withheld, the Company may withhold such taxes from any other compensation to which you are entitled from the Company. You agree to hold the Company harmless in acting to satisfy the withholding
obligation in this manner if it becomes necessary to do so. Further information regarding withholding of taxes appears in the Information Statement under the caption, “Federal Income Tax Consequences – Tax Withholding.” 
  
 Investment Representation 
  
 You shall deliver to the Committee, upon demand by the Committee, at the time of any
transfer of any shares of Common Stock, a written representation that the shares to be acquired are to be acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior
to delivery of any shares of Common Stock shall be a condition precedent to your right to receive any shares. 
  

 7 

 No Rights as Shareholder 
  
 You shall have no rights as a shareholder of the Company with respect to the shares of Common Stock subject to the Performance-Based
Deferred Stock Unit Award evidenced hereby unless and until a certificate for shares of Common Stock is issued to you. 
  
 Performance-Based Deferred Stock Units Awards Not a Bar to Corporate Event 
  
 The existence of the Performance-Based Deferred Stock Unit Award granted hereunder shall not affect in any way the right or the power of the
Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of similar character or otherwise. 
  
 General Restriction 
  
 To the extent any
Performance-Based Deferred Stock Unit Award is denominated in Common Stock under this letter agreement, it shall be subject to the requirement that if at any time the Committee shall determine that any listing or registration of the shares of Common
Stock or any consent or approval of any governmental body or any other agreement or consent is necessary or desirable as a condition of the issuance of shares of Common Stock or cash in satisfaction thereof, such issuance of shares of Common Stock
may not be consummated unless such requirement is satisfied in a manner acceptable to the Committee. The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as the same shall be in effect from
time to time) or to take any other affirmative action to cause the issuance of shares to comply with any law or regulation of any governmental authority. 
  
 Determinations of Committee 
  
 The actions taken and determinations of the Committee made pursuant to this letter agreement and of the Committee pursuant to the Plan shall be final, conclusive and
binding upon the Company and upon you. No member of the Committee shall be liable for any action taken or determination made relating to this letter agreement or the Plan if made in good faith. 
  
 Miscellaneous 
  
 Your Performance-Based Deferred Stock Unit Award may not be transferred otherwise than by will or by the law of descent and distribution.
During your lifetime, any share of Common Stock subject to your Performance-Based Deferred Stock Unit Award shall be payable only to you. No assignment or transfer of a Performance-Based Deferred Stock Unit Award or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise (except by will or the laws of descent and distribution), shall vest in the assignee or transferee any interest 

  

 8 

 
or right herein whatsoever, and immediately upon such purported assignment or transfer, the Performance-Based Deferred Stock Unit Award shall terminate and
become of no further effect. 
  
 This letter agreement does not confer any right
on you to continue in the employ of the Company or its affiliates, or interfere in any way with the rights of the Company or its affiliates to terminate your employment. 
  
 Whenever the word “you” is used in any provision of this letter agreement under circumstances where the provision should logically
be construed to apply to your executors, administrators, or the person or persons to whom the Performance-Based Deferred Stock Unit Award may be transferred by will or by the laws of descent and distribution, the word “you” shall be deemed
to include such person or persons. 
  
 The Plan, or any part thereof, may be
terminated or may, from time to time be amended, in accordance with the Plan; provided, however, the termination or amendment of the Plan shall not, without your consent, affect your rights under this letter agreement. 
  
 This letter agreement shall be binding upon the successors and assigns of the Company and
upon your legal representatives, heirs and legatees. This letter agreement, along with the Plan and the Information Statement, constitutes the entire agreement between you and the Company with respect to the Performance-Based Deferred Stock Unit
Award granted to you and supersedes all prior agreements and understandings, oral or written, between you and the Company with respect to the subject matter of this letter agreement. This letter agreement may be amended only by a written instrument
signed by you and the Company and will be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania. 
  
 Between the date of this letter agreement and the date your Performance-Based Deferred Stock Unit Award is paid to you, you will receive copies of all reports, proxy
statements and other communications distributed generally to the shareholders of the Company. 
  
 It is recommended that you establish a file for this letter and enclosures as well as any other material you receive regarding the Plan, including the Information Statement. 
  
 If you have any questions with respect to your Performance-Based Deferred Stock Unit Award,
please direct your inquiry to Maureen L. Hogel, Senior Vice President and Chief Legal and Administrative Officer, Duquesne Light, 411 Seventh Avenue, 16th Floor (16-3), Pittsburgh, PA 15219. 
  
 Very truly yours, 
  

	
	
	  
	Maureen L. Hogel

  
 Enclosures 
  

 9 

  
 EXHIBIT A 

 
 PERFORMANCE-BASED DEFERRED STOCK UNIT AWARD ACCEPTANCE FORM

  
 I, the undersigned participant, accept the grant of the
Performance-Based Deferred Stock Unit Award confirmed by the attached letter agreement effective [date], for the number of shares set forth below. Also, I understand that the number of shares set forth below represents my grant, and that the extent
to which those shares are awarded will be determined based on cumulative Basic Earnings Per Share from Continuing Operations and cumulative Total Shareholder Return (as defined in the attached letter agreement) of the Company for the EPS Performance
Period and the TSR Performance Period. I agree to be bound by the terms and provisions of the Plan, as the Plan may be amended from time to time, and the attached letter agreement; provided, however, that no alteration, amendment, revocation or
termination of the Plan shall, without my written consent, adversely affect my rights with respect to this Performance-Based Deferred Stock Unit Award. 
  
 IN WITNESS WHEREOF, I have executed this Performance-Based Deferred Stock Unit Award Acceptance Form as of
                , the date on which the Performance-Based Deferred Stock Unit Award was granted to me, subject to the terms and conditions set forth in the Plan
and in the attached letter agreement. 
  
 Number of Shares of Common Stock for
which 
 Performance-Based Deferred Stock Unit Award 
 is Granted
-                          
  
 [name of participant] 
 [address of participant] 
  

					
			
	  	 	 	 	  
	Participant’s Signature	 	 	 	Date

  
 For your grant to be effective, one

 signed copy of this form must be 
 returned by
                     to: 
  
 Maureen L. Hogel 
 Senior Vice President and Chief Legal and Administrative
Officer 
 Duquesne Light 
 411 Seventh Avenue 
 16th Floor (16-3) 
 Pittsburgh, PA 15219 
  
 Retain the other signed copy of this form for your records.

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