Document:

Exhibit 10.3

DPL INC.

PENSION RESTORATION PLAN

EFFECTIVE JANUARY 1, 2006

WHEREAS, The
Dayton Power and Light Company, the wholly owned subsidiary of DPL Inc. (the “Company”),
has established the Retirement Income Plan of the Dayton Power and Light
Company (the “Retirement Plan”);

WHEREAS, the
accrued benefit under the Retirement Plan is determined on the basis of base
compensation other than base compensation an employee elects to defer under the
Deferred Compensation Plan (as hereinafter defined); and

WHEREAS, the Company
desires to adopt this Pension Restoration Plan to restore in part the benefits
which are lost as a result of an election to defer base salary under the
Deferred Compensation Plan;

NOW, THEREFORE,
the Company hereby adopts this Plan to provide such benefits.

ARTICLE I - PREFACE

Section 
1.1           Effective
Date.  The effective date of this
Plan is January 1, 2006.

Section 
1.2           Purpose
of the Plan.  The purpose of this Plan
is to restore in part pension benefits lost by certain management and highly
compensated employees of the Company under the Retirement Plan as a result of
such employees’ election to defer base salary under the Company’s Deferred
Compensation Plan.

Section 
1.3           Governing
Law.  This Plan shall be regulated,
construed and administered under the laws of the State of Ohio, except when
preempted by federal law.

Section 
1.4           Section
409A of the Code.  It is intended
that the Plan (including all amendments thereto) comply with the provisions of
Section 409A of the Code, so as to prevent the inclusion in gross income of any
retirement benefit accrued hereunder in a taxable year that is prior to the
taxable year or years in which such amount would otherwise be actually
distributed or made available to the Participants.  It is intended that the Plan shall be
administered in a manner that will comply with Section 409A of the Code,
including proposed, temporary or final regulations or any other guidance issued
by the Secretary of the Treasury and the Internal Revenue Service with respect
thereto (collectively, the “409A Guidance”). 
Any plan provisions that would cause the Plan to fail to satisfy Section
409A of the Code shall have no force and effect unless and until amended to
comply with Section 409A of the Code (which amendment may be retroactive to the
extent permitted by the 409A Guidance).

Section  1.5           Severability.  If any provision of this Plan or the application
thereof to any circumstance(s) or person(s) is held to be invalid by a court of
competent

 

 

jurisdiction,
the remainder of the Plan and the application of such provision to other
circumstances or persons shall not be affected thereby.

ARTICLE II - DEFINITIONS

Words and
phrases used herein with initial capital letters which are defined in the Retirement
Plan are used herein as so defined, unless otherwise specifically defined
herein or the context clearly indicates otherwise.  The following words and phrases when used in
this Plan with initial capital letters shall have the following respective
meanings, unless the context clearly indicates otherwise:

Section 
2.1           “Code”
means the Internal Revenue Code of 1986, as it has been and may be amended from
time to time.

Section 
2.2           
“Compensation Committee” means the Compensation Committee of the Board
of Directors of the Company.

Section 
2.3           “Controlled
Group” means the Company and any and all other corporations, trades and/or
businesses, the employees of which, together with employees of the Company, are
treated under Section 414 of the Code as if they were employed by a single
employer.  Each corporation or
unincorporated trade or business that is or was a member of the Controlled
Group shall be referred to herein as a “Controlled Group Member”, but only
during such period as it is or was such a member.

Section 
2.4           “Deferred
Compensation Plan” means, for the period after September 19, 2006, the DPL
Inc. 2006 Deferred Compensation Plan for Executives, as it may be amended from
time to time, and for prior periods, The Dayton Power and Light Company Key
Employee Deferred Compensation Plan, as it may be amended from time to time.

Section  2.5           “Key
Employee” means a key employee as defined in Section 409A of the Code and
Section 416(i) of the Code (without regard to paragraph (5) thereof) of the
Company (or a Controlled Group Member).

Section  2.6           “Participant”
means each employee of the Company (a) who is either a highly compensated or a
management employee, (b) who is a participant in the Retirement Plan, and (c)
whose benefit under the Retirement Plan is affected by the fact that he or she elected
to defer base salary under the Deferred Compensation Plan.

Section 
2.7           “Plan”
means the DPL Inc. Pension Restoration Plan, as stated herein and as it may be
amended from time to time.

Section 
2.8           “Plan
Administrator” means the Compensation Committee.

Section 
2.9           “Retirement
Plan” means the Retirement Income Plan of The Dayton Power and Light Company,
as it may be amended from time to time, including the Schedules thereto.

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Section 
2.10        “Separation
from Service” has the meaning ascribed to it in the 409A Guidance.

Section 
2.11        “Supplemental
Retirement Benefit” means the retirement benefit determined under Article
III.

Section 
2.12        “Vesting
Years” has the meaning ascribed to such phrase in the Retirement Income
Plan of The Dayton Power and Light Company.

ARTICLE III - SUPPLEMENTAL
RETIREMENT BENEFIT

Section  3.1           Amount
of Supplemental Retirement Benefit.

(a)           Amount.  A Participant who is vested under the Plan
shall be eligible to receive a Supplemental Retirement Benefit.  The Supplemental Retirement Benefit shall be
a monthly retirement benefit equal to the difference between (i) the amount of
the Accrued Retirement Pension that the Participant would have accrued under
the Retirement Plan if the Participant had not elected to defer the receipt of base
salary under the Deferred Compensation Plan and (ii) the sum of (x) the amount of the Participant’s Accrued
Retirement Pension under the Retirement Plan and (y) the value of any benefit previously received under this
Plan; each as of the date the Participant’s Supplemental Retirement Benefit is
determined; provided, however, that if the Participant commences
receiving the Supplemental Retirement Benefit prior to attaining age 62, the
Participant’s Supplemental Retirement Benefit shall be reduced by 1⁄4 of 1% for
each calendar month by which his or her first Supplemental Retirement Benefit
payment precedes the first of the month next following his or her 62nd birthday; provided  further, that
such reduction shall in no event exceed 21% in the aggregate.

(b)           Effect of QDRO.  In the event that any portion of a Participant’s
benefit under the Retirement Plan is allocated to an alternate payee pursuant
to the terms of a qualified domestic relations order, the Participant’s
Supplemental Retirement Benefit hereunder shall be calculated without taking
into account such allocation.  In no
event may an alternate payee receive a distribution or an allocation of any portion
of a Supplemental Retirement Benefit hereunder.

(c)           Withholding/Taxes.  The Company may withhold from the  Supplemental Retirement Benefit all foreign,
federal, provincial, state, city or other taxes as shall be required pursuant
to any law or government regulation or ruling.

Section 
3.2           Time
and Manner of Payment.

(a)           In General.  A Participant’s Supplemental Retirement
Benefit shall commence as of the first day of the calendar month next following
the later of the date the Participant attains age 55 and the date of such
Participant’s Separation from Service (the “Payment Date”).  The Supplemental Retirement Benefit shall be
payable in the form of a single life annuity for the Participant; provided,
however, that if the Participant is a Key Employee and to the extent
that the payment is triggered by the Participant’s Separation from Service and
the “short-term deferral” exception under

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Section 409A
of the Code does not apply, then the Supplemental Retirement Benefit shall
commence on the first day of the month immediately following six months after
the Participant’s Separation from Service, and the first payment shall include,
in addition to the amount that would otherwise be payable on the date of such
first payment, an amount equal to the first six months of the Supplemental
Retirement Benefit.

(b)           Spousal Benefit.  Notwithstanding the foregoing, (i) if the
Participant dies after becoming vested in his or her Supplemental Retirement
Benefit and before he or she commences receiving the Supplemental Retirement
Benefit, and leaves a surviving spouse (“Spouse”), then such Participant’s
Spouse shall be entitled to receive a portion of the Supplemental Retirement
Benefit equal to one-half of the monthly Supplemental Retirement Benefit to
which the Participant would have been entitled under Section 3.2(a) had he or
she terminated employment on the date of his or her death with appropriate
reduction for commencement prior to the Participant’s age 62 (“Spousal
Supplemental Retirement Benefit”).  Such
Spousal Supplemental Retirement Benefit shall commence on the later of the
first day of the month immediately following thirty days after the death of the
Participant and the date on which the Participant would have attained age 55
and shall be payable in the form of a single life annuity for the Spouse.

(ii)           If a Participant
dies after the commencement of payment of the Supplemental Retirement Benefit,
then such Participant’s Spouse shall be entitled to receive a portion of the
Supplemental Retirement Benefit equal to one-half of the monthly Supplemental
Retirement Benefit that the Participant had been receiving prior to his death (“Post-Death
Spousal Supplemental Retirement Benefit”). 
Such Post-Death Spousal Supplemental Retirement Benefit shall commence
on the first day of the month immediately following the Participant’s death and
shall be paid in the form of a single life annuity for the Spouse.

(c)           Cash-Out of Small
Benefits.  Notwithstanding the
foregoing, if the present value of a Participant’s Supplemental Retirement
Benefit, Spousal Supplemental Retirement Benefit or Post-Death Spousal
Supplemental Retirement Benefit hereunder as of the date on which payment of
the such benefit is to commence is $100,000 or less, such present value of the
Supplemental Retirement Benefit, Spousal Supplemental Retirement Benefit or
Post-Death Spousal Supplemental Retirement Benefit shall be paid in lump sum as
soon as practicable following such date on which payment of such benefit
commences.  For purposes of this Section
3.2(c), the present value shall be calculated using the Applicable Mortality
Table and the annual rate of interest on 30-year Treasury securities as in
effect for the second month preceding the first day of the calendar year in
which the distribution is made.

ARTICLE IV- VESTING

Section  4.1           Vesting.  A Participant shall become vested in his or
her Supplemental Retirement Benefit at the earlier of the date he or she
attains age 62 or completes five Vesting Years.

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ARTICLE V - MISCELLANEOUS

Section 
5.1           Limitation
on Rights of Participants and Beneficiaries - No Lien. This Plan is
an unfunded, nonqualified plan and the entire cost of this Plan shall be paid
from the general assets of the Company. 
No trust has been established for the Participants, Spouses or
Beneficiaries.  No liability for the
payment of benefits under the Plan shall be imposed upon any officer, director,
employee, or stockholder of the Company. 
Nothing contained herein shall be deemed to create a lien in favor of
any Participant or Spouse on any assets of the Company.  The Company shall have no obligation to
purchase any assets that do not remain subject to the claims of the creditors
of the Company for use in connection with the Plan.  Each Participant and Spouse shall have the
status of a general unsecured creditor of the Company and shall have no right
to, prior claim to, or security interest in, any assets of the Company.

Section 
5.2           Nonalienation.  No right or interest of any Participant or
Spouse under this Plan shall be assignable or transferable in any manner or be
subject to alienation, anticipation, sale, pledge, encumbrance or other legal
process or in any manner be liable for or subject to the debts or liabilities
of the Participant or Spouse.

Section 
5.3           Employment
Rights.  Nothing in this Plan shall
be construed as guaranteeing future employment to Participants.  A Participant continues to be an employee of
the Company solely at the will of the Company subject to discharge at any time,
with or without cause.

Section  5.4           Administration
of Plan.

(a)           The Plan shall be
administered by the Plan Administrator. 
The Plan Administrator shall have discretion to interpret where
necessary all provisions of the Plan (including, without limitation, by
supplying omissions from, correcting deficiencies in, or resolving
inconsistencies or ambiguities in, the language of the Plan), to make factual findings
with respect to any issue arising under the Plan, to determine the rights and
status under the Plan of Participants or other persons, to resolve questions
(including factual questions) or disputes arising under the Plan and to make
any determinations with respect to the benefits payable under the Plan and the
persons entitled thereto as may be necessary for the purposes of the Plan.  Without limiting the generality of the
foregoing, the Plan Administrator is hereby granted the authority (i) to determine
whether a particular employee is a Participant, and (ii) to determine if a
person is entitled to benefits hereunder and, if so, the amount and duration of
such benefits.  The Plan Administrator’s
determination of the rights of any person hereunder shall be final and binding
on all persons, subject only to the provisions of Section 5.6 hereof.

(b)           The Plan
Administrator may delegate any of its administrative duties, including, without
limitation, duties with respect to the processing, review, investigation,
approval and payment of benefits, to a named administrator or administrators.

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(c)           It is intended that,
to the extent applicable, the Plan will comply with the Section 409A of the
Code.  The Plan Administrator is
authorized to adopt rules or regulations deemed necessary or appropriate in
connection therewith to anticipate and/or comply with the requirements thereof
(including any transition rules thereunder).

Section 
5.5           Expenses.  The Company shall pay all expenses incurred
in the administration and operation of the Plan.

Section  5.6           Claims
Procedure.

(a)           The Plan
Administrator shall determine the rights of any person to any benefit
hereunder.  Any person who believes that
he or she has not received the benefit to which he or she is entitled under the
Plan must file a claim in writing with the Plan Administrator specifying the
basis for his or her claim and the facts upon which he or she relies in making
such a claim.

(b)           The Plan
Administrator will notify the claimant of its decision regarding his or her
claim within a reasonable period of time, but not later than 90 days following
the date on which the claim is filed, unless special circumstances require a
longer period for adjudication and the claimant is notified in writing of the
reasons for an extension of time prior to the end of the initial 90-day period
and the date by which the Plan Administrator expects to make the final
decision.  In no event will the Plan
Administrator be given an extension for processing the claim beyond 180 days
after the date on which the claim is first filed with the Plan Administrator.

If such a claim is
denied, the Plan Administrator’s notice will be in writing, will be written in
a manner calculated to be understood by the claimant and will contain the
following information:

(i)            The specific
reason(s) for the denial;

(ii)           A specific
reference to the pertinent Plan provision(s) on which the denial is based;

(iii)          A description of
additional information or material necessary for the claimant to perfect his or
her claim, if any, and an explanation of why such information or material is
necessary; and

(iv)          An explanation of
the Plan’s claim review procedure and the applicable time limits under such
procedure and a statement as to the claimant’s right to bring a civil action under
ERISA after all of the Plan’s review procedures have been satisfied.

If additional
information is needed, the claimant shall be provided at least 45 days within
which to provide the information and any otherwise applicable time period for
making a determination shall be suspended during the period the information is
being obtained.

 6
 

 

Within 60 days
after receipt of a denial of a claim, the claimant must file with the Plan
Administrator, a written request for review of such claim.  If a request for review is not filed within
such 60-day period, the claimant shall be deemed to have acquiesced in the
original decision of the Plan Administrator on his or her claim.  If a request for review is filed, the Plan
Administrator shall conduct a full and fair review of the claim.  The claimant will be provided, upon request
and free of charge, reasonable access to and copies of all documents and
information relevant to the claim for benefits. 
The claimant may submit issues and comments in writing, and the review
must take into account all information submitted by the claimant regardless of
whether it was reviewed as part of the initial determination.  The decision by the Plan Administrator with
respect to the review must be given within 60 days after receipt of the request
for review, unless circumstances warrant an extension of time not to exceed an
additional 60 days.  If this occurs,
written notice of the extension will be furnished to the claimant before the
end of the initial 60-day period, indicating the special circumstances
requiring the extension and the date by which the Plan Administrator expects to
make the final decision.  The decision
shall be written in a manner calculated to be understood by the claimant, and
it shall include

(A)          The
specific reason(s) for the denial;

(B)           A
reference to the specific Plan provision(s) on which the denial is based;

(C)           A
statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of all information relevant to the claimant’s
claim for benefits; and

(D)          A
statement describing any voluntary appeal procedures offered by the Plan and a
statement of the claimant’s right to bring a civil action under ERISA.

(c)           The Plan
Administrator’s decision on review shall be, to the extent permitted by
applicable law, final and binding on all interested persons.

Section 
5.7           Effect
on other Benefits.  Benefits payable
to or with respect to a Participant under the Retirement Plan or any other
Company sponsored (qualified or nonqualified) plan, if any, are in addition to
those provided under this Plan, except as specifically provided in such other
plans.

Section 
5.8           Payment
to Guardian.  If a benefit payable
hereunder is payable to a minor, to a person declared incompetent or to a
person incapable of handling the disposition of his or her property, the
Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or custodial person.  The Compensation Committee
may require such proof of incompetency, minority, incapacity or guardianship as
it may deem appropriate prior to distribution of the benefit.  Such distribution shall completely discharge
the Company from all liability with respect to such benefit.

 7
 

 

Section 
5.9           Regulations.  The Plan Administrator shall promulgate any
rules and regulations it deems necessary in order to carry out the purposes of
the Plan or to interpret the provisions of the Plan; provided, however,
that no rule, regulation or interpretation shall be contrary to the provisions
of the Plan or Section 409A of the Code. 
The rules, regulations and interpretations made by the Plan
Administrator shall, subject only to the provisions of Sections 5.6, 5.10 and
5.11 hereof, be final and binding on all persons.

Section 
5.10        Arbitration.  After a Participant has exhausted all
administrative remedies as provided in Section 5.6, any disputes arising
hereunder may, at the election of the Participant, be submitted for non-binding
arbitration to an arbitrator appointed under the auspices of the American
Arbitration Association (“AAA”) office in Cincinnati, Ohio, or if closer, the
AAA office that is located in a U.S. city nearest to the general corporate
offices of the Company for resolution under the AAA Employment Dispute
Arbitration Rules.  Such arbitration
shall be held in such place as the parties and the arbitrator shall mutually
agree.  The arbitrator shall apply applicable
Federal and state law, including ERISA. 
The provisions of ERISA, including, but not limited to, preemption,
review of claims, and standards of review, shall be applied by the arbitrator
to the same extent as if the matter were proceeding in federal court.  The state law applied shall be the law of the
state in which the general corporate offices of the Company are located (Ohio
as of the date hereof).  The entire cost
of the proceedings, except for the Participant’s attorney’s fees and costs,
shall be borne by the Company.

Section 
5.11        Revocability
of Plan Administrator/Employer Action. 
Any action taken by the Plan Administrator or the employer with respect
to the rights or benefits under the Plan of any person shall be revocable by
the Plan Administrator or the employer as to payments not yet made to such
person, and acceptance of any benefits under the Plan constitutes acceptance of
and agreement to the Plan Administrator’s or the employer’s making any
appropriate adjustments in future payments to such person to recover from such
person any excess payment or make up any underpayment previously made to him or
her.

ARTICLE VI- AMENDMENT AND
TERMINATION

Section 
6.1           Amendment.  (a) The Compensation Committee may at any
time (without the consent of the executives) amend any or all of the provisions
of this Plan, except that no such amendment may adversely affect the amount of
any Participant’s accrued vested Supplemental Retirement Benefit as of the date
of such amendment, without the prior written consent of the affected
Participant.  A proper amendment of this
Plan automatically shall effect a corresponding amendment to all Participants’
rights hereunder.

(b)           Without limiting the
generality of the foregoing, the Compensation Committee shall have the
authority to adopt an amendment to the Plan that conforms the terms of the Plan
to the requirements of Section 409A of the Code at such time as the Company
determines is necessary to comply with Section 409A of the Code.

 8
 

 

Section  6.2           Termination.  The Compensation Committee, in its sole
discretion, may terminate this Plan at any time and for any reason whatsoever,
except that no such termination may adversely affect the amount of any
Participant’s accrued vested Supplemental Retirement Benefit as of the date of
such termination, without the prior written consent of the affected Participant.  Notwithstanding the preceding sentence, the
Compensation Committee, in its sole discretion, may terminate this Plan to the
extent and in circumstances described in Prop. Treas. Reg.
§ 1.409A-3(h)(2)(viii), or any successor provision.  A proper termination of this Plan
automatically shall effect a termination of all Participants’ rights and
benefits hereunder without further action. 
Written notice of any termination shall be given to the Participants as
soon as practicable after a proper termination.

 

 9Exhibit 10.1

Non-Employee Director Compensation Schedule

Annual Retainer

Each non-employee director will receive $54,000 as an
annual cash retainer on or about May 1 of each year for service on the Board of
Directors of DPL Inc. and The Dayton Power and Light Company (collectively, the
“Company”).

Meeting Fees

For each Board of Directors and committee meeting
attended in person, a non-employee director will receive $1,500.  A non-employee director will receive $750 for
Board of Directors and committee meetings attended by telephone.  

Committee Chair

The chair of each committee of the Board of Directors
of the Company, currently including the Audit Committee, Nominating and
Corporate Governance Committee, and Compensation Committee, will receive an
annual cash retainer of $10,000.

Equity Compensation

Each non-employee director will receive under the DPL
Inc. 2006 Equity and Performance Incentive Plan an equity grant consisting of
an amount of restricted stock units having an approximate value of $54,000 (the
“Units”).  The Units will be granted on
the date of each DPL Inc. Annual Meeting of Shareholders and will vest 100% on
the day before the next DPL Inc. Annual Meeting of Shareholders immediately
following the date of the grant.  Each
non-employee director will have the opportunity to defer the Units.  The Units will be subject to the terms and
conditions set forth in an evidence of award between DPL Inc. and the
non-employee director.

Fee Structure

Each non-employee director will receive only one (i)
annual cash retainer, (ii) annual committee chair fee, and (iii) annual equity
grant for service on both Boards of Directors of DPL Inc. and The Dayton Power
and Light Company.  Each non-employee
director will receive only one meeting fee for concurrent meetings of the Board
of Directors and a committee of DPL Inc. or The Dayton Power and Light Company.

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