Document:

Exhibit 10.48

 

THIS WARRANT AND THE SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TIME AMERICA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Right to Purchase 108,657 Shares
of Common Stock of

TIME AMERICA, INC. 

(subject to adjustment as provided herein)

 

COMMON STOCK PURCHASE WARRANT

 

	
  No.

  	
   

  	
   

  	
  Issue
  Date: January 3, 2006

  

 

TIME
AMERICA, INC. a corporation organized under the laws of the State of
Nevada, hereby certifies that, for value received, OBERON SECURITIES, LLC, or
assigns (the “Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company (as defined herein) from and after the Issue Date of
this Warrant and at any time or from time to time before 5:00 p.m., New
York time, through the close of business January 3, 2009 (the “Expiration
Date”), up to One Hundred Eight Thousand, Six Hundred and Fifty-Seven (108,657)
fully paid and nonassessable shares of Common Stock (as hereinafter defined),
$0.005 par value per share, at the applicable Exercise Price per share (as
defined below). The number and character of such shares of Common Stock and the
applicable Exercise Price per share are subject to adjustment as provided
herein.

 

As
used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

 

(a)                                  The term “Company” shall include Time America, Inc.,
a Nevada corporation  and any person or
entity that shall succeed, or assume the obligations of, Time America, Inc.,
a Nevada corporation,  hereunder.

 

(b)                                 The term “Common Stock” includes (i) the
Company’s Common Stock, par value $0.005 per share; and (ii) any other securities
into which or for which any of the securities described in (a) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.

 

(c)                                  The term “Other Securities” refers to any
stock (other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the holder of the Warrant at any
time shall be entitled to receive, or shall have received, on the exercise of
the Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement
of Common Stock or Other Securities pursuant to Section 4 or otherwise.

 

(d)                                 The “Exercise Price” applicable under this
Warrant shall be $0.65 per share.

 

1.                                       Exercise of Warrant.

 

1.1                                 Number of Shares Issuable upon Exercise. From and after the date hereof through and
including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of an original or fax
copy of an exercise notice in the form attached hereto as Exhibit A
(the “Exercise Notice”), shares of Common Stock of the Company, subject to
adjustment pursuant to Section 5.

 

 

1.2                                 Fair Market Value. For purposes hereof, the “Fair Market Value”
of a share of Common Stock as of a particular date (the “Determination Date”)
shall mean:

 

(a)                                  If the Company’s Common Stock is traded on
the American Stock Exchange or another national exchange or is quoted on the
National or SmallCap Market of The Nasdaq Stock Market, Inc. (“Nasdaq”),
then the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date.

 

(b)                                 If the Company’s Common Stock is not traded
on the American Stock Exchange or another national exchange or on the Nasdaq
but is traded on the NASD Over The Counter Bulletin Board, then the mean of the
average of the closing bid and asked prices reported for the last business day
immediately preceding the Determination Date.

 

(c)                                  Except as provided in clause (d) below,
if the Company’s Common Stock is not publicly traded, then as the Holder and
the Company agree or in the absence of agreement by arbitration in accordance
with the rules then in effect of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by
education and training to pass on the matter to be decided.

 

(d)                                 If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company’s charter, then
all amounts to be payable per share to holders of the Common Stock pursuant to
the charter in the event of such liquidation, dissolution or winding up, plus
all other amounts to be payable per share in respect of the Common Stock in
liquidation under the charter, assuming for the purposes of this clause (d) that
all of the shares of Common Stock then issuable upon exercise of the Warrant
are outstanding at the Determination Date.

 

1.3                                 Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of the holder hereof acknowledge in
writing its continuing obligation to afford to such holder any rights to which
such holder shall continue to be entitled after such exercise in accordance
with the provisions of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights.

 

1.4                                 Trustee for Warrant Holders. In the event that a bank or trust company
shall have been appointed as trustee for the holders of the Warrant pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and
duties of a warrant agent (as hereinafter described) and shall accept, in its
own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.

 

2.                                       Procedure for Exercise.

 

2.1                                 Delivery of Stock Certificates, Etc., on
Exercise. The Company agrees
that the shares of Common Stock purchased upon exercise of this Warrant shall
be deemed to be issued to the Holder as the record owner of such shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares in accordance herewith. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct
in compliance with applicable securities laws, a certificate or certificates
for the number of duly and validly issued, fully paid and nonassessable shares
of Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

 

2

 

2.2                                 Exercise. Payment may be made either (i) in cash or by certified or
official bank check payable to the order of the Company equal to the applicable
aggregate Exercise Price, (ii) by delivery of the Warrant, or shares of
Common Stock and/or Common Stock receivable upon exercise of the Warrant in
accordance with Section (b) below, or (iii) by a combination of
any of the foregoing methods, for the number of Common Shares specified in such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.

 

(b)                                 Notwithstanding any provisions herein to the
contrary, if the Fair Market Value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares
equal to the value (as determined below) of this Warrant (or the portion
thereof being exercised) by surrender of this Warrant at the principal office
of the Company together with the properly endorsed Exercise Notice in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:

 

	
  X=Y

  	
  (A-B)

  
	
   

  	
  A

  

 

Where
X =                                      the number of shares of Common Stock to be
issued to the Holder

 

Y
=                                                                              the number of shares of Common Stock
purchasable under the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised (at the date of such
calculation)

 

A
=                                                                            the Fair Market Value of one share of the
Company’s Common Stock (at the date of such calculation)

 

B
=                                                                              Exercise Price (as adjusted to the date of
such calculation)

 

3.                                       [Intentionally Deleted]

 

4.                                       Effect of
Reorganization, Etc.; Adjustment of Exercise Price.

 

4.1                                 Reorganization, Consolidation, Merger, Etc. In case at any time or from time to time,
the Company shall (a) effect a reorganization, (b) consolidate with
or merge into any other person, or (c) transfer all or substantially all
of its properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of
the Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 5.

 

4.2                                 Dissolution. In the event of any dissolution of the Company following the transfer
of all or substantially all of its properties or assets, the Company,
concurrently with any distributions made to holders of its Common Stock, shall
at its expense deliver or cause to be delivered to the Holder the stock and
other securities and property (including cash, where applicable) receivable by
the Holder of the Warrant pursuant to Section 4.1, or, if the Holder shall
so instruct the Company, to a bank or trust company specified by the Holder and
having its principal office in New York, NY as trustee for the Holder of the
Warrant (the “Trustee”).

 

4.3                                 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and

 

3

 

effect and the terms hereof
shall be applicable to the shares of stock and other securities and property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon
the issuer of any such stock or other securities, including, in the case of any
such transfer, the person acquiring all or substantially all of the properties
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 5. In the event
this Warrant does not continue in full force and effect after the consummation
of the transactions described in this Section 4, then the Company’s
securities and property (including cash, where applicable) receivable by the
Holders of the Warrant will be delivered to Holder or the Trustee as
contemplated by Section 4.2.

 

5.                                       Extraordinary Events
Regarding Common Stock. In the event that the Company shall (a) issue
additional shares of the Common Stock as a dividend or other distribution on
outstanding Common Stock, (b) subdivide its outstanding shares of Common
Stock, or (c) combine its outstanding shares of the Common Stock into a
smaller number of shares of the Common Stock, then, in each such event, the
Exercise Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Exercise Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 5.
The number of shares of Common Stock that the holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled
to receive shall be increased to a number determined by multiplying the number
of shares of Common Stock that would otherwise (but for the provisions of this Section 5)
be issuable on such exercise by a fraction of which (a) the numerator is
the Exercise Price that would otherwise (but for the provisions of this Section 5)
be in effect, and (b) the denominator is the Exercise Price in effect on
the date of such exercise.

 

6.                                       Certificate as to
Adjustments. In each case of any adjustment or readjustment in the shares of Common
Stock (or Other Securities) issuable on the exercise of the Warrant, the
Company at its expense will promptly cause its Chief Financial Officer or other
appropriate designee to compute such adjustment or readjustment in accordance
with the terms of the Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares
of Common Stock (or Other Securities) issued or sold or deemed to have been
issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Exercise
Price and the number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such adjustment or readjustment
and as adjusted or readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to the holder of the Warrant and
any Warrant agent of the Company (appointed pursuant to Section 12
hereof).

 

7.                                       Reservation of Stock,
Etc., Issuable on Exercise of Warrant. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the Warrant,
shares of Common Stock (or Other Securities) from time to time issuable on the
exercise of the Warrant.

 

8.                                       Assignment; Exchange of
Warrant.
Subject to compliance with applicable securities laws, this Warrant, and the
rights evidenced hereby, may be transferred by any registered holder
hereof (a “Transferor”) in whole or in part. On the surrender for exchange of
this Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, a legal opinion from
the Transferor’s counsel that such transfer is exempt from the registration
requirements of applicable securities laws, the Company at its expense but with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant of like
tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a “Transferee”), calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the
Transferor.

 

4

 

9.                                       Replacement of Warrant. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case
of any such mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.

 

10.                                 Registration Rights. The Holder of this
Warrant has been granted certain registration rights by the Company. These
registration rights are set forth in a letter agreement entered into by the
Company and the Holder dated January 13, 2006. The registration rights
agreed to by the parties in the letter agreement entitles the Holder to
one-time “piggyback” registration rights.

 

11.                                 Maximum Exercise. The Holder shall not
be entitled to exercise this Warrant on an exercise date, in connection with
that number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common
Stock issuable upon the exercise of this Warrant with respect to which the
determination of this proviso is being made on an exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the Company on such date. For
the purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.

 

12.                                 Warrant Agent. The Company may, by
written notice to the each Holder of the Warrant, appoint an agent for the
purpose of issuing Common Stock (or Other Securities) on the exercise of this
Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 8,
and replacing this Warrant pursuant to Section 9, or any of the foregoing,
and thereafter any such issuance, exchange or replacement, as the case may be,
shall be made at such office by such agent.

 

13.                                 Transfer on the Company’s
Books. Until
this Warrant is transferred on the books of the Company, the Company may treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

 

14.                                 Notices, Etc. All notices and other
communications from the Company to the Holder of this Warrant shall be mailed
by first class registered or certified mail, postage prepaid, at such
address as may have been furnished to the Company in writing by such
Holder or, until any such Holder furnishes to the Company an address, then to,
and at the address of, the last Holder of this Warrant who has so furnished an
address to the Company.

 

15.                                 Miscellaneous. This Warrant and any
term hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. THIS WARRANT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY
IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE
OF NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS
PROVISION AND BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. The Company agrees
to submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform to such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision of
this Warrant. The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof. The invalidity
or unenforceability of any provision hereof shall in no way affect the validity
or enforceability of any other provision. The Company acknowledges that legal
counsel participated in the preparation of this Warrant and, therefore,
stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the interpretation
of this Warrant to favor any party against the other party.

 

5

 

IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above. 

 

	
   

  	
   

  	
  TIME AMERICA, INC.

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

6

 

EXHIBIT A

FORM OF SUBSCRIPTION

(To Be Signed Only On Exercise Of Warrant)

 

	
  To:

  	
   

  	
  Time
  America, Inc.

  
	
   

  	
   

  	
  8840
  East Chaparral Road, Suite 100

  
	
   

  	
   

  	
  Scottsdale,
  Arizona 85250

  
	
  Attention:

  	
   

  	
  Corporate
  Secretary

  

 

The
undersigned, pursuant to the provisions set forth in the attached Warrant (No.       ),
hereby irrevocably elects to purchase (check applicable box):

 

	
   

  	
   

  	
                  
  shares of the Common Stock covered by such Warrant; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  the
  maximum number of shares of Common Stock covered by such Warrant pursuant to
  the cashless exercise procedure set forth in Section 2.

  
	
   

  

 

The
undersigned herewith makes payment of the full Exercise Price for such shares
at the price per share provided for in such Warrant, which is $                      .
Such payment takes the form of (check applicable box or boxes):

 

	
   

  	
   

  	
  $                    in lawful money of the United States; and/or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  the
  cancellation of such portion of the attached Warrant as is exercisable for a
  total of               
  shares of Common Stock (using a Fair Market Value of $              per share for purposes of this calculation); and/or

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  the
  cancellation of such number of shares of Common Stock as is necessary, in
  accordance with the formula set forth in Section 2.2, to exercise this
  Warrant with respect to the maximum number of shares of Common Stock
  purchasable pursuant to the cashless exercise procedure set forth in Section 2.

  

 

The
undersigned requests that the certificates for such shares be issued in the
name of, and delivered to                                                                                             
whose address is                                                                                                                                                       .

 

The
undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the “Securities Act”) or pursuant to an exemption from
registration under the Securities Act.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform to name of holder as
  specified on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

A-1

 

EXHIBIT B

 

FORM OF TRANSFEROR
ENDORSEMENT

(To Be Signed Only On Transfer Of Warrant)

 

For
value received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of Time America, Inc. into which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of Time America, Inc.
with full power of substitution in the premises.

 

	
  Transferees

  	
   

  	
  Address

  	
   

  	
  Percentage

  Transferred

  	
   

  	
  Number

  Transferred

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform to name of holder as
  specified on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
  SIGNED IN THE PRESENCE OF:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name)

  
	
  ACCEPTED
  AND AGREED:

  	
   

  
	
  [TRANSFEREE]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Name)

  	
   

  

 

B-1Exhibit 10.1

 

Draft of
February 16, 2006

 

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;

 

1

 

(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.

 

2

 

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

 

3

 

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.

 

4

 

Schedule A

 

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

  	
   

  	
  75

  	
  %

  
	
  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

  	
   

  	
  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 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.

 

5

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