8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported):   February 23, 2006

The Dayton Power and Light Company.

(Exact Name of Registrant as Specified in Its Charter)

Ohio	1-2385	31-0258470
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1065 Woodman Drive, Dayton, Ohio	45432
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:   (937) 224-6000

(Former Name or Former Address, if Changed Since Last Report)

        Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.              Entry into a Material Definitive Agreement.

2005-2006 Compensation

On February 23, 2006, upon the recommendation of the Compensation Committee of DPL Inc. and The Dayton Power and Light Company (collectively, the “Company”), the Board of Directors of DPL Inc. and The Dayton Power and Light Company (collectively, the “Board”) approved 2006 annual base salaries, 2005 annual incentive awards (cash bonuses) pursuant to the Management Incentive Compensation Plan (the “MICP”) and 2005 long term incentive awards. The following table shows such awards for the officers to be named executive officers in DPL Inc.’s proxy statement for its 2006 Annual Meeting.

Name and Position	2006 Base Salary		2005 MICP Award as Percent of 2005 Base Salary		2005 MICP Bonus Award Amount		2005 Long Term Incentive Award(1)
James V. Mahoney President and Chief Executive Officer	$	550,000	126	%	$	650,000	$	576,000
Robert D. Biggs Executive Chairman	$	500,000	200	%	$	1,000,000	n/a
John J. Gillen Senior Vice President and Chief Financial Officer	$	332,800	94	%	$	300,000	$	256,000
W. Steven Wolff President, Power Production	$	281,139	74	%	$	200,000	$	205,000
Patricia K. Swanke Vice President, Operations (DP&L)	$	270,400	97	%	$	250,000	$	205,000

(1)For Messrs. Mahoney and Gillen, one-third of this award was payable immediately upon grant, while the remaining two-thirds will vest equally at the end of 2006 and the end of 2007. The full amounts listed for Ms. Swanke and Mr. Wolff were payable immediately upon grant.

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New Executive Compensation and Benefits Program

On February 23, 2006, upon the recommendation of the Compensation Committee the Board of Directors approved a new executive compensation and benefits program. The Compensation Committee determined the following who will be named executive officers (except the Executive Chairman) in DPL Inc.’s proxy statement for its 2006 Annual Meeting, are eligible to participate under this new executive compensation and benefits program, subject to their execution of a Participation Agreement and Waiver: President and Chief Executive Officer; Senior Vice President and Chief Financial Officer; President, Power Production and Vice President, Operations.  As of March 1, 2006 the following named executive officers have signed Participation Agreements and Waivers:  President, Power Production and Vice President, Operations.  The new executive compensation and benefits program includes each of the plans described below. The description of each plan is qualified in its entirety by reference to the complete text of such plan, which is attached to this Form 8-K as indicated.

DPL Inc. Executive Incentive Compensation Plan

The DPL Inc. Executive Incentive Compensation Plan (the “EICP”) replaces the MICP. The purpose of the EICP is to provide certain key executives with incentives for superior performance. Annual cash incentive bonuses will be awarded by the Company’s Compensation Committee upon its determination of the extent to which certain management objectives have been satisfied. Management objectives will be established by the Compensation Committee no later than the ninetieth day of each fiscal year and shall fall under two broad categories: (i) corporate objectives with a weighting of 75% and (ii) business unit and functional objectives with a weighting of 25%. The Compensation Committee will develop a performance/payout schedule for such management objectives with threshold payouts set at 50% of target and maximum payouts set at 200% of target. No bonus will be paid for any year in which the Company has reduced the dividend on its shares.

The amount of a participant’s target bonus shall be based on a percentage of the participant’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, Power Production	40	%
Vice President, Operations	40	%

In addition, individual contribution factors will be assigned to each participant to adjust the EICP award (upwards or downwards). The individual contribution factors, which will be based on such participant’s performance for that year, will range from 0.5 to 1.50.

A copy of the EICP is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

DPL Inc. 2006 Equity and Performance Incentive Plan

Upon the Compensation Committee’s recommendation, the Board approved the DPL Inc.

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2006 Equity and Performance Incentive Plan (the “EPIP”), subject to shareholder approval at DPL Inc.’s 2006 Annual Meeting. If approved by shareholders, the EPIP will immediately become effective and will remain in effect for a term of ten years, unless sooner terminated in accordance with its terms. The Compensation Committee will designate the employees and directors eligible to participate in the EPIP and the times and types of awards to be granted. Under the EPIP, the Compensation Committee may grant equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock-based awards. Awards may be subject to the achievement of certain management objectives. In addition, the EPIP provides, upon recommendation of the Chief Executive Officer and Chairman of the Board, for a grant of a special equity award to recognize outstanding performance. A total of 4,500,000 shares of the Company’s common stock has been reserved for issuance under the EPIP. If the EPIP is approved by shareholders, no further awards will be made under the DPL Inc. Stock Option Plan.

Subject to obtaining shareholder approval of the EPIP, the Board has also adopted a long term incentive plan (the “LTIP”) under which the Company will award a targeted number of performance shares of common stock pursuant to the EPIP. Such grants will be contingent on the achievement of specified levels of Total Shareholder Return Relative to Peers during a performance period. A participant may elect to defer receipt of all or any portion of the earned performance shares, provided the election is made at least one year in advance of the earliest date on which the performance shares could be earned.

Total Shareholder Return Relative to Peers is the percentile ranking of DPL Inc.’s total shareholder return compared to a peer group, where total shareholder return is a rate of return reflecting stock price appreciation plus cash equivalent distributions and reinvestment of dividends and the compounding effect of dividends paid on reinvested dividends. The relationship between award earned and Total Shareholder Return Relative to Peers is below:

	Percent of Award Earned
Measure	50% of Target	100% of Target	150% of Target	200% of Target
	Threshold	Target	Intermediate	Maximum
Total Shareholder Return Relative to Peers	40th Percentile Ranking vs. Peers	50th Percentile Ranking vs. Peers	75th Percentile Ranking vs. Peers	90th or Above Percentile Ranking vs. Peers

No performance shares will be earned in a performance period if the Total Shareholder Return Relative to Peers is below the threshold level of 40^th percentile ranking versus the peers. Further, the LTIP awards are capped at 200% of the targeted performance shares. The LTIP includes provisions for the Company to determine awards if the Total Shareholder Return Relative to Peers falls between any of these categories.

If, following shareholder approval of the EPIP and during a performance period but before the payment of any performance shares, a change of control occurs or a participant’s employment is terminated due to death or disability, the Company shall pay to the participant a pro rata number of the target performance shares based on the number of months that have elapsed during each

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performance period prior to the change of control and the remaining performance shares shall be forfeited. If a participant’s employment terminates for any other reason, other than retirement, before the end of a performance period, the performance shares will be forfeited.

A copy of the EPIP and a copy of the Form of the Long-Term Incentive Plan-Performance Shares Agreement are attached hereto as Exhibits 10.2 and 10.3, respectively, and both are incorporated herein by reference.

DPL Inc. Severance Pay and Change of Control Plan

The DPL Inc. Severance Pay and Change of Control Plan (the “Severance Plan”) provides for severance payments prior to a change of control, as defined in the Severance Plan and enhanced severance payments following a change of control. The Compensation Committee will designate the eligible employees under the Severance Plan. Prior to a change of control, if the employment of an eligible employee is terminated without cause, as defined in the Severance Plan other than by death or disability, such employee will be entitled to receive payment, in installments, equal to the sum of one year’s base salary and his or her target bonus pursuant to the EICP for the year of termination. Following a change of control, if the employment of an eligible employee (other than the CEO) is terminated without cause, other than by death or disability, or for good reason, as defined in the Severance Plan, during the one-year period following a change of control, then such employee will be entitled to receive a lump sum payment equal to the sum of his or her base salary plus target bonus pursuant to the EICP for the year of termination, multiplied by the following applicable factor:

Participant’s Position	Factor
Officers other than the CEO	2x
All Other Participants	1x

Employees who receive the benefits of the Severance Plan will be subject to a two-year non-solicitation agreement.

A copy of the Severance Plan is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

DPL Inc. Supplemental Executive Defined Contribution Retirement Plan

The DPL Inc. Supplemental Executive Defined Contribution Retirement Plan (the “SERP”) replaces the Company’s Supplemental Executive Retirement Plan that was terminated as to new participations in 2000. The Compensation Committee will designate the eligible employees under the SERP. Pursuant to the SERP, the Company will provide a supplemental retirement benefit to participants by crediting an account established for each participant with an amount equal to 15% of the amount by which the sum of the participant’s base salary and target bonus pursuant to the EICP exceeds the annual limit on compensation established by the Internal Revenue Code ($220,000 for 2006). Each participant’s account will also be credited or charged with the income, expenses, gains or losses allocable to such account as if such account had been invested on a tax deferred basis in the hypothetical investment fund selected by the participant. The Company shall designate as

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hypothetical investment funds under the SERP one or more of the investment funds provided under The Dayton Power and Light Company Employee Savings Plan. Each participant may change his or her hypothetical investment fund selection at specified times. If a participant does not elect a hypothetical investment fund(s), then the Company shall select the hypothetical investment fund(s) for such participant.

A participant shall become 100% vested in all amounts credited to his or her account upon the completion of five vesting years, as defined in The Dayton Power and Light Company Retirement Income Plan, or upon a change of control or the participant’s death or disability. If a participant’s employment is terminated, other than by death or disability, prior to such participant becoming 100% vested in his or her account, the account shall be forfeited as of the date of termination.

A copy of the SERP is attached hereto as Exhibit 10.5 and is incorporated herein by reference.

Executive Participation Agreements and Waivers

The Company entered into a Participation Agreement and Waiver (collectively, the “Participation Agreements”) with Patricia K. Swanke, Vice President, Operations, The Dayton Power and Light Company on February 28, 2006 and with W. Steven Wolff, President, Power Production, The Dayton Power and Light Company and DPL Inc., on February 24, 2006. Pursuant to the Participation Agreements, each of these officers agreed to terminate their respective employment agreements with the Company in exchange for participation in the EICP, EPIP, Severance Plan and SERP. In addition, each officer receives a perquisite allowance in the amount of $20,000 in each year that such respective officer is designated by the Compensation Committee to be eligible to receive a perquisite allowance. The Participation Agreements also provide that each officer is subject to a two year non-solicitation agreement.

Ms. Swanke’s Participation Agreement and Waiver preserves certain rights, including, the right to receive previously granted stock options and vested stock incentive units.

A copy of each Participation Agreement is attached hereto as Exhibits 10.6 and 10.7 and is incorporated herein by reference.

Item 1.02.              Termination of a Material Definitive Agreement.

In connection with the Participation Agreements described in Item 1.01 of this Form 8-K, the employment agreements and change of control agreements between the CompFany and Ms. Swanke and Mr. Wolff were terminated as of February 28, 2006 and February 24, 2006, respectively.

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The material terms of the employment agreements and change of control agreements with Ms. Swanke and Mr. Wolff were described in DPL Inc.’s Definitive Proxy Statement filed on March 24, 2005 and such description is incorporated herein by reference.

In addition, in connection with their agreement to participate in the new executive compensation and benefits program, the following officers agreed to terminate their employment agreements: Joseph R. Boni III, Treasurer; Miggie E. Cramblit, Vice President, General Counsel and Corporate Secretary; Gary Stephenson, Vice President–Commercial Operations; and Daniel L. Thobe, Controller. The employment agreements between the Company and each of Ms. Cramblit and Mr. Thobe were attached to the Company’s Form 10-K for the fiscal year ended December 31, 2003. The employment agreements between the Company and each of Messrs. Boni and Stephenson were attached to DPL Inc. Form 8-Ks, dated September 1, 2005 and September 23, 2004, respectively, each of which is incorporated herein by reference.

The Company will not incur any early termination penalties.

Item 9.01(c).         Exhibits.

10.1	DPL Inc. Executive Incentive Compensation Plan
10.2	DPL Inc. 2006 Equity and Performance Incentive Plan
10.3	Form of the Long-Term Incentive Plan–Performance Shares Agreement
10.4	DPL Inc. Severance Pay and Change of Control Plan
10.5	DPL Inc. Supplemental Executive Defined Contribution Retirement Plan
10.6	Participation Agreement and Waiver among DPL Inc., The Dayton Power and Light Company and Patricia K. Swanke, dated February 28, 2006.
10.7	Participation Agreement and Waiver among DPL Inc., The Dayton Power and Light Company and W. Steven Wolff, dated February 24, 2006.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DPL Inc.
Date:  March 2, 2006
	/s/ Miggie E. Cramblit
	Name:	Miggie E. Cramblit
	Title:	Vice President, General Counsel and Corporate Secretary

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EXHIBIT INDEX

Exhibit No.	Description	Paper (P) or  Electronic (E)
10.1	DPL Inc. Executive Incentive Compensation Plan	E
10.2	DPL Inc. 2006 Equity and Performance Incentive Plan	E
10.3	Form of Long-Term Incentive Plan- Performance Shares Agreement	E
10.4	DPL Inc. Severance Pay and Change of Control Plan	E
10.5	DPL Inc. Supplemental Executive Defined Contribution Retirement Plan	E
10.6	Participation Agreement and Waiver among DPL Inc., The Dayton Power and Light Company and Patricia K. Swanke, dated February 28, 2006.	E
10.7	Participation Agreement and Waiver among DPL Inc., The Dayton Power and Light Company and W. Steven Wolff, dated February 24, 2006.	E

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EX-10.1

Exhibit 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;

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(c)Earnings per share;

(d)Operating income;

(e)Net income;

(f)Pretax earnings;

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

(h)Pro forma net income;

(i)Return on equity;

(j)Return on designated assets;

(k)Return on capital;

(l)Economic value added;

(m)Revenues;

(n)Expenses;

(o)Operating cash flow;

(p)Free cash flow;

(q)Cash flow return on investment;

(r)Operating margin or net profit margin; or

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

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

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

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

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ARTICLE III  - ADMINISTRATION OF THE PLAN

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

ARTICLE IV  - ELIGIBILITY

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

ARTICLE V  - AWARDS

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

ARTICLE VI  - COMMITTEE DETERMINATIONS

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

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

ARTICLE VII  - PAYMENT OF INCENTIVE BONUSES

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

ARTICLE VIII  - MISCELLANEOUS

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

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

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

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

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

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Schedule A

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	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.

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EX-10.2

Exhibit 10.2

DPL INC.

2006 EQUITY AND PERFORMANCE INCENTIVE PLAN

ARTICLE I  — PURPOSE

                The purpose of the 2006 Equity and Performance Incentive Plan is to attract and retain directors, consultants, officers and other employees of DPL Inc. and its Subsidiaries, to provide to such persons incentives and rewards for superior performance and to align their interests with those of shareholders.  This 2006 Equity and Performance Incentive Plan is intended to replace the Existing Plan (as defined below) and, if adoption of this Plan is approved by the shareholders of the Company, no new awards will be granted under the Existing Plan, but shares relating to awards that are forfeited or terminated under the Existing Plan may be granted hereunder pursuant to Section 3.1.  Outstanding awards under the Existing Plan will not be affected by approval of this Plan.

ARTICLE II  — DEFINITIONS

Section 2.1.  “Appreciation Right” means a right granted pursuant to Section 4.2 or Section 5.1 of this Plan, and will include both Tandem Appreciation Rights and Free-Standing Appreciation Rights.

Section 2.2.  “Awards” means Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and any other award granted pursuant to Section 6.1 hereof.

Section 2.3.  “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right and a Tandem Appreciation Right.

Section 2.4.  “Board” means the Board of Directors of the Company and, to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 8.1 of this Plan, such committee (or subcommittee).

Section 2.5.  “Change of Control” has the meaning set forth in Section 10.1 hereof.

Section 2.6.  “Code” means the Internal Revenue Code of 1986, as amended from time to time.

Section 2.7.  “Common Shares” means the shares of common stock, par value $0.01 per share, of the Company or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Section 7.2 of this Plan.

Section 2.8.  “Company” means DPL Inc., an Ohio corporation.

Section 2.9.  “Covered Employee” means a Participant who is, or is determined by the Board to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision).

Section 2.10.  “Date of Grant” means the date specified by the Board on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units or other awards contemplated by Section 6.1 of this Plan, or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards contemplated by Section 6.1 of this Plan will become effective (which date will not be earlier than the date on which the Board takes action with respect thereto).

Section 2.11.  “Detrimental Activity” means:

(a)           Engaging in any activity, as an employee, principal, agent, or consultant for another entity that competes with the Company in any actual, researched, or prospective product, service, system, or business activity for which the Participant has had any direct responsibility during the last two years of his or her employment with the Company or a Subsidiary, in any state where the Company or a Subsidiary owns or operates generation or electric distribution assets.

(b)           Soliciting any employee of the Company or a Subsidiary to terminate his or her employment with the Company or a Subsidiary.

(c)           The disclosure to anyone outside the Company or a Subsidiary, or the use in other than the Company’s or a Subsidiary’s business, without prior written authorization from the Company, of any confidential, proprietary or trade secret information or material relating to the business of the Company and its Subsidiaries, acquired by the Participant during his or her employment with the Company or its Subsidiaries or while acting as a consultant for the Company or its Subsidiaries thereafter.

(d)           The failure or refusal to disclose promptly and to assign to the Company upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Company and any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Company or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Company or any Subsidiary to secure a patent where appropriate in the United States and in other countries.

(e)           Activity that results in termination for Cause.  For the purposes of this Plan, “Cause” shall mean (i) any willful or negligent material violation of any applicable securities laws (including the Sarbanes-Oxley Act of 2002); (ii) any act of fraud, intentional misrepresentation, embezzlement, misappropriation or conversion of any asset or business opportunity of the Company; (iii) a conviction of, or entering into a plea of nolo contendere to, a felony; (iv) an intentional, repeated or continuing violation of any of the Company’s policies or procedures that occurs or continues after the

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Company has given notice to the Participant that he or she has materially violated a Company policy or procedure; or (v) any breach of a written covenant or agreement with the Company, including the terms of this Plan (other than a failure to perform Participant’s duties with the Company resulting from the Participant’s incapacity due to physical or mental illness or from the assignment to the Participant of duties that would constitute Good Reason (as defined in the DPL Inc. Severance Pay and Change of Control Plan), which is material and which is not cured within 30 days after written notice thereof from the Company to the Participant.  Notwithstanding the foregoing, the Participant shall not be deemed to have been terminated for Cause unless the Participant receives a written notice of termination from the Company setting forth in reasonable detail the specific reason for the termination and the facts and circumstances claimed to provide a basis for the termination of employment at least 15 calendar days prior to the specified date of termination of employment.

(f)            Any other conduct or act determined to be injurious, detrimental or prejudicial to any significant interest of the Company or any Subsidiary unless the Participant acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company.

Section 2.12.  “Director” means a member of the Board of Directors of the Company.

Section 2.13.  “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Board that sets forth the terms and conditions of the awards granted.  An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, with the approval of the Board, need not be signed by a representative of the Company or a Participant.

Section 2.14.  “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.

Section 2.15.  “Existing Plan” means the DPL Inc. Stock Option Plan.

Section 2.16.  “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 4.2 or Section 5.1 of this Plan that is not granted in tandem with an Option Right.

Section 2.17.  “Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock options” under Section 422 of the Code or any successor provision.

Section 2.18.  “Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares or Performance Units or, when so determined by the Board, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend credits and other awards pursuant to this Plan.  Management Objectives

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may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of the Subsidiary, division, department, region or function within the Company or Subsidiary in which the Participant is employed.  The Management Objectives may be made relative to the performance of other companies.  The Management Objectives applicable to any award to a Covered Employee will be based on specified levels of or growth in one or more of the following criteria:

(a)           Appreciation in value of shares;

(b)           Total shareholder return;

(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.

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                                If the Board determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Management Objectives unsuitable, the Board may in its discretion modify such Management Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Board deems appropriate and equitable, except in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such case, the Board will not make any modification of the Management Objectives or minimum acceptable level of achievement with respect to such Covered Employee.

Section 2.19.  “Market Value per Share” means, as of any particular date, the closing sales price of the Common Shares as reported on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Common Shares are listed.  If there is no regular trading market for such Common Shares, the Market Value per Share shall be determined by the Board.

Section 2.20.  “Non-Employee Director” means a person who is a “non-employee director” of the Company within the meaning of Rule 16b-3 of the Securities and Exchange Commission promulgated under the Exchange Act.

Section 2.21.  “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.

Section 2.22.  “Option Price” means the purchase price payable on exercise of an Option Right.

Section 2.23.  “Option Right” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4.1 or Section 5.1 of this Plan.

Section 2.24.  “Original Directors” has the meaning set forth in Section 10.1 hereof.

Section 2.25.  “Participant” means a person who (a) is selected by the Board to receive benefits under this Plan and who is at the time a consultant or an officer, general management employee or other key employee of the Company or any one or more of its Subsidiaries, or who has agreed to commence serving in any of such capacities within 90 days of the Date of Grant, and will also include each Non-Employee Director who receives Common Shares or an award of Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units or other awards under this Plan and (b) if requested to do so by the Company, has executed a Participation Agreement.

Section 2.26.  “Participation Agreement” means an agreement between the Company and each Employee that must be executed as a condition of the Participant’s eligibility for this Plan.

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Section 2.27.  “Performance Period” means, in respect of a Performance Share or Performance Unit, a period of time established pursuant to Section 4.5 of this Plan within which the Management Objectives relating to such Performance Share or Performance Unit are to be achieved.

Section 2.28.  “Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 4.5 of this Plan.

Section 2.29.  “Performance Unit” means a bookkeeping entry awarded pursuant to Section 4.5 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Board.

Section 2.30.  “Person” has the meaning set forth in Section 10.1 hereof.

Section 2.31.  “Plan” means this DPL Inc. 2006 Equity and Performance Incentive Plan, as may be amended from time to time.

Section 2.32.  “Restricted Stock” means Common Shares granted or sold pursuant to Section 4.3 or Section 5.1 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired.

Section 2.33.  “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions.

Section 2.34.  “Restricted Stock Unit” means an award made pursuant to Section 4.4 or Section 5.1 of this Plan of the right to receive Common Shares or cash at the end of a specified period.

Section 2.35.  “Spread” means the excess of the Market Value per Share on the date when an Appreciation Right is exercised over the Option Price or Base Price provided for in the related Option Right or Free-Standing Appreciation Right, respectively.

Section 2.36.  “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined voting power represented by all classes of stock issued by such corporation.

Section 2.37.  “Successors” has the meaning set forth in Section 10.1 hereof.

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Section 2.38.  “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 4.2 or Section 5.1 of this Plan that is granted in tandem with an Option Right.

Section 2.39.  “Voting Stock” means securities entitled to vote generally in the election of directors.

ARTICLE III  — SHARES

Section 3.1.  Shares Available Under the Plan.

(a)           Subject to adjustment as provided in Section 7.2 of this Plan, the number of Common Shares that may be issued or transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii) as Restricted Stock and released from substantial risks of forfeiture thereof, (iii) as Restricted Stock Units, (iv) in payment of Performance Shares or Performance Units that have been earned, (v) as awards to Non-Employee Directors, (vi) as awards contemplated by Section 6.1 of this Plan, or (vii) in payment of dividend equivalents paid with respect to awards made under the Plan will not exceed in the aggregate 4,500,000 Common Shares, plus any shares relating to Awards that expire or are forfeited, terminated or cancelled.  In addition to the Common Shares authorized by the preceding sentence, to the extent any award under the Existing Plan otherwise terminates without the issuance of some or all of the Common Shares underlying the award to a participant or if any option under the Existing Plan terminates without having been exercised in full, the Common Shares underlying such award, to the extent of any such forfeiture or termination, shall be available for future grant under the Plan and credited toward the Plan limit.  Common Shares covered by an award granted under the Plan shall not be counted as used unless and until they are actually issued and delivered to a Participant.  Without limiting the generality of the foregoing, upon payment in cash of the benefit provided by any award granted under the Plan, any Common Shares that were covered by that award will be available for issue or transfer hereunder.  Notwithstanding anything to the contrary contained herein: (A) shares tendered in payment of the Option Price of a Option Right shall not be added to the aggregate plan limit described above; (B) shares withheld by the Company to satisfy the tax withholding obligation shall not be added to the aggregate plan limit described above; (C) shares that are repurchased by the Company with Option Right proceeds shall not be added to the aggregate plan limit described above; and (D) all shares covered by an Appreciation Right, to the extent that it is exercised and settled in Common Shares, and whether or not shares are actually issued to the Participant upon exercise of the right, shall be considered issued or transferred pursuant to the Plan.  Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.

(b)           If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Common Shares based on fair market value, such Common Shares will not count against the number of shares available in Section 3.1(a) above.

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(c)           Notwithstanding anything in this Section 3.1, or elsewhere in this Plan, to the contrary and subject to adjustment as provided in Section 7.2 of this Plan: (i) the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed 500,000 Common Shares; (ii) no Participant will be granted Option Rights or Appreciation Rights, in the aggregate, for more than 500,000 Common Shares during any calendar year; (iii) no Participant will be granted Restricted Stock or Restricted Stock Units that specify Management Objectives, Performance Shares or other awards under Section 6.1 of this Plan, in the aggregate, for more than 500,000 Common Shares during any calendar year; and (iv) awards will not be granted under Section 5.1 or Section 6.1 of the Plan to the extent they would involve the issuance of more than 1 million shares in the aggregate.

(d)           Notwithstanding any other provision of this Plan to the contrary, in no event will any Participant in any calendar year receive an award of Performance Units having an aggregate maximum value as of their respective Dates of Grant in excess of $5.0 million.

ARTICLE IV  — AUTHORIZED AWARDS

Section 4.1.  Option Rights.  The Board may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of options to purchase Common Shares.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements contained in the following provisions:

(a)           Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3.1 of this Plan.

(b)           Each grant will specify an Option Price per share, which may not be less than the Market Value per Share on the day immediately preceding the Date of Grant.

(c)           Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee for at least 6 months (or other consideration authorized pursuant to Section 4.1(d)) having a value at the time of exercise equal to the total Option Price, (iii) by a combination of such methods of payment, or (iv) by such other methods as may be approved by the Board.

(d)           To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the Common Shares to which such exercise relates.

(e)           Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.

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(f)            Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable; provided, however, that, subject to sub-section (g) below, Option Rights may not become exercisable by the passage of time sooner than one-third per year over three years.  A grant of Option Rights may provide for the earlier exercise of such Option Rights in the event of the retirement, death or disability of a Participant.

(g)           Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights; provided, however, that, except in the case of the retirement, death or disability of a Participant, Option Rights that become exercisable upon the achievement of Management Objectives may not become exercisable sooner than one year from the Date of Grant.

(h)           Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing.  Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

(i)            The Board may at the Date of Grant of any Option Rights (other than Incentive Stock Options), provide for the payment of dividend equivalents to the Optionee on either a current or deferred or contingent basis, either in cash or in additional Common Shares.

(j)            The exercise of an Option Right will result in the cancellation on a share- for-share basis of any Tandem Appreciation Right authorized under Section 4.2 of this Plan.

(k)           No Option Right will be exercisable more than 10 years from the Date of Grant.

(l)            The Board reserves the discretion at or after the Date of Grant to provide for (i) the payment of a cash bonus at the time of exercise; (ii) the availability of a loan at exercise; and (iii) the right to tender in satisfaction of the Option Price nonforfeitable, unrestricted Common Shares, which are already owned by the Optionee and have a value at the time of exercise that is equal to the Option Price.

(m)          Each grant of Option Rights will be evidenced by an Evidence of Award.  Each Evidence of Award shall be subject to the Plan and shall contain such terms and provisions as the Board may approve.

Section 4.2.  Appreciation Rights.

(a)           The Board may authorize the granting (i) to any Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing Appreciation Rights.  A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option Right, to

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receive from the Company an amount determined by the Board, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.  Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the related Option Rights; provided, however, that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock Option.  A Free-Standing Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Board, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.

(b)           Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(i)Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives.

(ii)Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Board at the Date of Grant.

(iii)Any grant may specify waiting periods before exercise and permissible exercise dates or periods; provided, however, that Appreciation Rights may not become exercisable by the passage of time sooner than one-third per year over three years.

(iv)Any grant may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis.

(v)Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights; provided, however, that Appreciation Rights that become exercisable upon the achievement of Management Objectives may not become exercisable sooner than one year from the Date of Grant.

(vi)Any grant may specify that such Appreciation Right may be exercised in the event of, or earlier in the event of, the retirement, death or disability of a Participant.

(vii)Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the related Option Rights (if applicable), and contain

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such other terms and provisions, consistent with this Plan, as the Board may approve.

(c)           Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation.

(d)           Regarding Free-Standing Appreciation Rights only:

(i)Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which will be equal to or greater than the Market Value per Share on the day immediately preceding the Date of Grant;

(ii)Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and

(iii)No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.

Section 4.3.  Restricted Stock.  The Board may also authorize the grant or sale of Restricted Stock to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a)           Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.

(b)           Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.

(c)           Each such grant or sale will provide that the Restricted Stock covered by such grant or sale that vests solely upon the passage of time will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period of not less than three years to be determined by the Board at the Date of Grant and may provide for the earlier lapse of such substantial risk of forfeiture as provided in Section 4.3(e) below or in the event of the retirement, death or disability of a Participant.

(d)           Each such grant or sale will provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Board at the Date of Grant (which restrictions may include, without limitation, rights of

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repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee).

(e)           Any grant of Restricted Stock may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Stock; provided, however, that, except in the case of the retirement, death or disability of a Participant, restrictions relating to Restricted Stock that vests upon the achievement of Management Objectives may not terminate sooner than one year from the Date of Grant.  Each grant may specify in respect of such Management Objectives a minimum acceptable level of achievement and may set forth a formula for determining the number of shares of Restricted Stock on which restrictions will terminate if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives.

(f)            Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional shares of Restricted Stock, which may be subject to the same restrictions as the underlying award.

(g)           Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve.  Unless otherwise directed by the Board, all certificates representing shares of Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Shares.

Section 4.4.  Restricted Stock Units.  The Board may also authorize the granting or sale of Restricted Stock Units to Participants.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements contained in the following provisions:

(a)           Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Board may specify.  If a grant of Restricted Stock Units specifies that the Restriction Period will terminate only upon the achievement of Management Objectives, such Restriction Period may not terminate sooner than one year from the Date of Grant, except in the case of the retirement, death or disability of a Participant.  Each grant may specify in respect of such Management Objectives a minimum acceptable level of achievement and may set forth a formula for determining the number of shares of Restricted Stock Units on which restrictions will terminate if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives.

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(b)           Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.

(c)           If the Restriction Period lapses solely by the passage of time, each such grant or sale will be subject to a Restriction Period of not less than three years, as determined by the Board at the Date of Grant, and may provide for the earlier lapse or other modification of such Restriction Period in the event of the retirement, death or disability of a Participant.

(d)           During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Board may at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares.

(e)           Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve.

Section 4.5.  Performance Shares and Performance Units.  The Board may also authorize the granting of Performance Shares and Performance Units that will become payable to a Participant upon achievement of specified Management Objectives during the Performance Period.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a)           Each grant will specify the number of Performance Shares or Performance Units to which it pertains, which number may be subject to adjustment to reflect changes in compensation or other factors; provided, however, that no such adjustment will be made in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.

(b)           The Performance Period with respect to each Performance Share or Performance Unit will be such period of time (not less than three years) as will be determined by the Board at the time of grant, which may be subject to earlier lapse or other modification in the event of the retirement, death or disability of a Participant.

(c)           Any grant of Performance Shares or Performance Units will specify Management Objectives which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives a minimum acceptable level of achievement and will set forth a formula for determining the number of Performance Shares or Performance Units that will be earned if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives.  The grant of Performance Shares or Performance Units will specify that, before the Performance Shares or

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Performance Units will be earned and paid, the Board must certify that the Management Objectives have been satisfied.

(d)           Each grant will specify the time and manner of payment of Performance Shares or Performance Units that have been earned.  Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives.

(e)           Any grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified by the Board at the Date of Grant.  Any grant of Performance Units may specify that the amount payable or the number of Common Shares issued with respect thereto may not exceed maximums specified by the Board at the Date of Grant.

(f)            The Board may at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof on either a current or deferred or contingent basis, either in cash or in additional Common Shares.

(g)           Each grant of Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Board may approve.

ARTICLE V  — AWARDS TO NON-EMPLOYEE DIRECTORS

Section 5.1.  Awards to Non-Employee Directors.  The Board may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Non-Employee Directors Option Rights, Appreciation Rights or other awards contemplated by Section 6.1 of this Plan and may also authorize the grant or sale of Common Shares, Restricted Stock or Restricted Stock Units to Non-Employee Directors.  Each grant of an Award to a Non-Employee Director will be upon such terms and conditions as approved by the Board and will be evidenced by an Evidence of Award in such form as will be approved by the Board.  Each grant will specify in the case of an Option Right an Option Price per share, and in the case of a Free-Standing Appreciation Right, a Base Price per share, which will not be less than the Market Value per Share on the day immediately preceding the Date of Grant.  Each Option Right and Free-Standing Appreciation Right granted under the Plan to a Non-Employee Director will expire not more than 10 years from the Date of Grant and will be subject to earlier termination as hereinafter provided.  If a Non-Employee Director subsequently becomes an employee of the Company or a Subsidiary while remaining a member of the Board, any Award held under the Plan by such individual at the time of such commencement of employment will not be affected thereby.  Non-Employee Directors, pursuant to this Section 5.1, may be awarded, or may be permitted to elect to receive, pursuant to procedures established by the Board, all or any portion of their annual retainer, meeting fees or other fees in Common Shares in lieu of cash.

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ARTICLE VI  — OTHER AWARDS

Section 6.1.  Other Awards.

(a)           The Board may, subject to limitations under applicable law, grant to any Participant such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Board, and awards valued by reference to the book value of Common Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company.  The Board may consider recommendations from the Chief Executive Officer or the Chairman of the Board relating to such awards and shall determine the terms and conditions of such awards.  Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 6.1 shall be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, cash, Common Shares, other awards, notes or other property, as the Board shall determine.

(b)           Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 6.1 of this Plan.

(c)           The Board may grant Common Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Board.

ARTICLE VII  — GENERAL PROVISIONS

Section 7.1.  Transferability.

(a)           Except as otherwise determined by the Board, no Option Right, Appreciation Right or other derivative security granted under the Plan shall be transferable by the Participant except by will or the laws of descent and distribution or, except with respect to an Incentive Stock Option, pursuant to a domestic relations order (within the meaning of Rule 16a-12 promulgated under the Exchange Act).  Except as otherwise determined by the Board, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law and/or court supervision.

(b)           The Board may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction

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Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6.1 of this Plan, will be subject to further restrictions on transfer.

Section 7.2.  Adjustments.  The Board may make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option Rights, Appreciation Rights, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of Common Shares covered by other awards granted pursuant to Section 6.1 hereof, in the Option Price and Base Price provided in outstanding Appreciation Rights, and in the kind of shares covered thereby, as the Board, in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (b) any merger, consolidation, spin-off, split- off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing.  Moreover, in the event of any such transaction or event or in the event of a Change of Control, the Board, in its discretion, may provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced.  The Board may also make or provide for such adjustments in the numbers of shares specified in Section 3.1 of this Plan as the Board in its sole discretion, exercised in good faith, may determine is appropriate to reflect any transaction or event described in this Section 7.2; provided, however, that any such adjustment to the number specified in Section 3.1(c)(i) will be made only if and to the extent that such adjustment would not cause any option intended to qualify as an Incentive Stock Option to fail so to qualify.

Section 7.3.  Fractional Shares.  The Company will not be required to issue any fractional Common Shares pursuant to this Plan.  The Board may provide for the elimination of fractions or for the settlement of fractions in cash.

Section 7.4.  Withholding Taxes.  To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Board) may include relinquishment of a portion of such benefit.

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ARTICLE VIII  — ADMINISTRATION

Section 8.1.  Administration of the Plan.

(a)           This Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to the Compensation Committee of the Board or any other committee of the Board (or a subcommittee thereof), as constituted from time to time.  To the extent of any such delegation, references in this Plan to the Board will be deemed to be references to such committee or subcommittee.  A majority of the committee (or subcommittee) will constitute a quorum, and the action of the members of the committee (or subcommittee) present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the committee (or subcommittee).

(b)           The interpretation and construction by the Board of any provision of this Plan or of any agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units or other awards pursuant to Section 6.1 of this Plan and any determination by the Board pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive.  No member of the Board will be liable for any such action or determination made in good faith.

(c)           The Board or, to the extent of any delegation as provided in Section 8.1(a), the committee, may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Board, the committee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Board, the committee or such person may have under the Plan.  The Board or the committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Board or the committee: (i) designate employees to be recipients of awards under this Plan; (ii) determine the size of any such awards; provided, however, that (A) the Board or the Committee shall not delegate such responsibilities to any such officer for awards granted to an employee who is an officer, Director, or more than 10% beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act; (B) the resolution providing for such authorization sets forth the total number of Common Shares such officer(s) may grant; and (iii) the officer(s) shall report periodically to the Board or the committee, as the case may be, regarding the nature and scope of the awards granted pursuant to the authority delegated.

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ARTICLE IX  — AMENDMENTS AND TERMINATION

Section 9.1.  Amendments, Etc.

(a)           The Board may at any time and from time to time amend the Plan in whole or in part; provided, however, that if an amendment to the Plan (i) would materially increase the benefits accruing to participants under the Plan, (ii) would materially increase the number of securities which may be issued under the Plan, (iii) would materially modify the requirements for participation in the Plan or (iv) must otherwise be approved by the shareholders of the Company in order to comply with applicable law or the rules of the New York Stock Exchange or, if the Common Shares are not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Shares are traded or quoted, then, such amendment will be subject to shareholder approval and will not be effective unless and until such approval has been obtained.

(b)           The Board will not, without the further approval of the shareholders of the Company, authorize the amendment of any outstanding Option Right to reduce the Option Price.  Furthermore, no Option Right will be cancelled and replaced with awards having a lower Option Price without further approval of the shareholders of the Company.  This Section 9.1(b) is intended to prohibit the repricing of “underwater” Option Rights and will not be construed to prohibit the adjustments provided for in Section 7.2 of this Plan.

(c)           The Board may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.

(d)           If permitted by Section 409A of the Code, in case of termination of employment by reason of death, disability or normal or early retirement, or in the case of unforeseeable emergency or other special circumstances, of a Participant who holds an Option Right or Appreciation Right not immediately exercisable in full, or any shares of Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Performance Shares or Performance Units which have not been fully earned, or any other awards made pursuant to Section 6.1 subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 7.1(b) of this Plan, the Board may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award.

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(e)           This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.

(f)            To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right.  Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.

(g)           The Board may amend the terms of any award theretofore granted under this Plan prospectively or retroactively, but subject to Section 7.2 above, no such amendment shall impair the rights of any Participant without his or her consent.  The Board may, in its discretion, terminate this Plan at any time.  Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.

ARTICLE X  — CHANGE OF CONTROL

Section 10.1.  Change of Control.  For purposes of this Plan, except as may be otherwise prescribed by the Board in an Evidence of Award made under this Plan, a “Change of Control” means the consummation of any Change of Control of the Company, or its principal subsidiary, DP&L (“DP&L”), of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as determined by the Board in its sole discretion; provided that, without limitation, such a Change of Control shall be deemed to have occurred if:

(a)           any “Person” (as such term is defined in Sections 13(d) or 14(d)(2) of the Exchange Act; hereafter, a “Person”) is on the date hereof or becomes the beneficial owner, directly or indirectly, of securities of the Company or DP&L representing (i) 25% or more of the combined voting power of the then outstanding Voting Stock of the Company or DP&L if the acquisition of such beneficial ownership is not approved by the Board prior to the acquisition or (ii) 50% or more of such combined voting power in all other cases; provided, however, that:

(i)for purposes of this Section 10.1(a), the following acquisitions shall not constitute a Change of Control: (A) any acquisition of Voting Stock of the Company or DP&L directly from the Company or DP&L that is approved by a majority of the Original Directors or their Successors (as defined below), (B) any acquisition of Voting Stock of the Company or DP&L by the Company or any Subsidiary, and (C) any acquisition of Voting Stock of the Company or DP&L by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary;

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(ii)if any Person is or becomes the beneficial owner of 25% or more of the combined voting power of the then-outstanding Voting Stock of the Company or DP&L as a result of a transaction described in clause (A) of Section 10.1(a)(i) above and such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company or DP&L representing 1% or more of the then-outstanding Voting Stock of the Company or DP&L, other than in an acquisition directly from the Company or DP&L that is approved by a majority of the Original Directors or their Successors or other than as a result of a stock dividend, stock split or similar transaction effected by the Company or DP&L in which all holders of Voting Stock of the Company or DP&L are treated equally, such subsequent acquisition shall be treated as a Change in Control;

(iii)a Change in Control will not be deemed to have occurred if a Person is or becomes the beneficial owner of 25% or more of the Voting Stock of the Company or DP&L as a result of a reduction in the number of shares of Voting Stock of the Company or DP&L outstanding pursuant to a transaction or series of transactions that is approved by a majority of the Original Directors or their Successors unless and until such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company or DP&L representing 1% or more of the then-outstanding Voting Stock of the Company or DP&L, other than as a result of a stock dividend, stock split or similar transaction effected by the Company or DP&L in which all holders of Voting Stock are treated equally; and

(iv)if at least a majority of the Original Directors or their Successors determine in good faith that a Person has acquired beneficial ownership of 25% or more of the Voting Stock of the Company or DP&L inadvertently, and such Person divests as promptly as practicable but no later than the date, if any, set by the Original Directors or their Successors a sufficient number of shares so that such Person beneficially owns less than 25% of the Voting Stock of the Company or DP&L, then no Change of Control shall have occurred as a result of such Person’s acquisition; or

(b)           the Company or DP&L consummates a merger or consolidation, or consummates a “combination” or “majority share acquisition” in which it is the “acquiring corporation” (as such terms are defined in Ohio Rev. Code § 1701.01 as in effect on the Effective Date) and in which shareholders of the Company or DP&L, as the case may be, immediately prior to entering into such agreement, will beneficially own, immediately after the effective time of the merger, consolidation, combination or majority share acquisition, securities of the Company or DP&L or any surviving or new corporation, as the case may be, having less than 50% of the “voting power” of the Company or DP&L or any surviving or new corporation, as the case may be, including “voting power”

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exercisable on a contingent or deferred basis as well as immediately exercisable “voting power”, excluding any merger of DP&L into the Company or of the Company into DP&L; or

(c)           the Company or DP&L consummates a sale, lease, exchange or other transfer or disposition of all or substantially all of its assets to any Person other than to a wholly owned subsidiary or, in the case of DP&L, to the Company or a wholly owned subsidiary(ies) of the Company; but not including (i) a mortgage or pledge of assets granted in connection with a financing or (ii) a spin-off or sale of assets if the Company continues in existence and its common shares are listed on a national securities exchange, quoted on the automated quotation system of a national securities association or traded in the over-the-counter market; or

(d)           those persons serving as directors of the Company or DP&L on the Effective Date (the “Original Directors”) and/or their Successors do not constitute a majority of the whole Board of Directors of the Company or DP&L, as the case may be (the term “Successors” shall mean those directors whose election or nomination for election by shareholders has been approved by the vote of at least two-thirds of the Original Directors and previously qualified Successors serving as directors of the Company or DP&L, as the case may be, at the time of such election or nomination for election); or

(e)           approval by the shareholders of the Company or DP&L of a complete liquidation or dissolution of the Company or DP&L, as the case may be.

Section 10.2.  Acceleration.  Notwithstanding anything to the contrary contained in this Plan and except and unless the Board determines otherwise at the time of grant of an Award under the Plan (and as set forth in the applicable Evidence of Award), upon the occurrence of a Change of Control: (a) any Awards that are outstanding as of the date of such Change of Control that are subject to vesting requirements and that are not then vested, shall become fully vested; (b) all then-outstanding Option Rights and Appreciation Rights shall be fully vested and immediately exercisable, provided that in no event shall any Option Right or Appreciation Right be exercisable beyond its original expiration date; and (c) all restrictions and other conditions prescribed by the Board, if any, with respect to grants of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and other awards granted pursuant to Section 6.1 hereof, shall automatically lapse, expire and terminate and all such awards shall be deemed to be fully earned.

Section 10.3.  Section 409A.  To the extent an Award shall be deemed to be vested or restrictions lapse, expire or terminate upon the occurrence of a Change of Control pursuant to Section 10.2 and such Change of Control does not constitute a “change in the ownership or effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code, then notwithstanding that the award shall be deemed to be vested or restrictions lapse, expire or terminate upon the occurrence of the Change of Control or any other provision of this Plan, payment will be made, to the extent

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necessary to comply with the provisions of Section 409A of the Code, to the Participant on the earliest of (i) the Participant’s “separation from service” with the Company (determined in accordance with Section 409A of the Code); provided, however, that if the Participant is a “specified employee” (within the meaning of Section 409A of the Code), the payment date shall be the date that is six months after the date of the Participant’s separation from service with the Company,  (ii) the date payment otherwise would have been made in the absence of Section 10.2(provided such date is a permissible distribution date under Section 409A of the Code), or (iii) the Participant’s death.

ARTICLE XI  — MISCELLANEOUS

Section 11.1.  Detrimental Activity.  Any Evidence of Award may provide that if a Participant, either during employment by the Company or a Subsidiary or within a specified period after termination of such employment, shall engage in any Detrimental Activity, and the Board shall so find, forthwith upon notice of such finding, the Participant shall:

(a)           Forfeit any Award granted under the Plan then held by the Participant;

(b)           Return to the Company, in exchange for payment by the Company of any amount actually paid therefor by the Participant, all Common Shares that the Participant has not disposed of that were offered pursuant to this Plan within a specified period prior to the date of the commencement of such Detrimental Activity, and

(c)           With respect to any Common Shares so acquired that the Participant has disposed of, pay to the Company in cash the difference between:

(i)Any amount actually paid therefor by the Participant pursuant to this Plan, and

(ii)The Market Value per Share of the Common Shares on the date of such acquisition.

To the extent that such amounts are not paid to the Company, the Company may set off the amounts so payable to it against any amounts that may be owing from time to time by the Company or a Subsidiary to the Participant, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason.

Section 11.2.  Compliance with Section 409A of the Code.  To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code.  The Plan and any grants made hereunder shall be administered in a manner consistent with this intent, and any provision that would cause the Plan or any grant made hereunder 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 Section 409A of the Code and may be made by the Company without the consent of

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Participants).  Any reference in this Plan to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

Section 11.3.  Governing Law.  The Plan and all grants and awards and actions taken thereunder shall be governed by and construed in accordance with the internal substantive laws of the State of Ohio.

Section 11.4.  Termination.  No grant will be made under this Plan more than 10 years after the date on which this Plan is first approved by the shareholders of the Company, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.

Section 11.5.  General Provisions.

(a)           No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Board, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.

(b)           Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries shall not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder, except that no awards may be granted to an employee while he or she is absent on leave.

(c)           No Participant shall have any rights as a stockholder with respect to any shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.

(d)           If any provision of the Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any award under any law deemed applicable by the Board, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Board, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

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EX-10.3

Exhibit 10.3

Draft of February 16, 2006

DPL INC.

LONG-TERM INCENTIVE PLAN - PERFORMANCE SHARES AGREEMENT

(Granted Under the 2006 Equity and Performance Incentive Plan)

                This Long-Term Incentive Plan - Performance Shares Agreement (this “Agreement”) is made as of __________________, 2006 between DPL Inc., an Ohio corporation (“DPL”) and _________________, an employee of DPL or its Subsidiaries (the “Grantee”).

                WHEREAS, the Board of Directors of DPL has duly adopted the 2006 Equity and Performance Incentive Plan (the “Plan”), which authorizes DPL to grant to eligible individuals performance shares, each such performance share being equal in value to one share of DPL’s common stock, par value of $0.01 per share (the “Common Shares”);

                WHEREAS, the Board of Directors plans to submit the Plan to DPL’s shareholders for their approval and this grant of performance shares is in all cases subject to the approval of the Plan by the affirmative vote of the holders of the requisite number of outstanding Common Shares at DPL’s 2006 Annual Meeting of Shareholders (“Shareholder Approval”); and

                WHEREAS, the Board of Directors of DPL has determined that it is desirable and in the best interests of DPL and its shareholders to approve a long-term incentive program in 2006 and, in connection therewith, to grant the Grantee a certain number of performance shares, in order to provide the Grantee with an incentive to advance the interests of DPL, all according to the terms and conditions set forth herein and in the Plan.

                NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties hereto do hereby agree as follows:

ARTICLE I  — GRANT OF PERFORMANCE SHARES

Section 1.1  Performance Shares Granted.  Subject to the terms of the Plan, DPL hereby grants to the Grantee a targeted number of performance shares equal to ______________ (the “Target Performance Shares”), payment of which depends on DPL’s performance as set forth in this Agreement and in the Statement of Performance Goals (the “Statement of Performance Goals”) approved by the Compensation Committee of DPL’s Board of Directors (the “Committee”).

Section 1.2  Performance Measure.  The Grantee’s right to receive all, any portion of, or more than, the Target Performance Shares will be contingent upon the

achievement of specified levels of Total Shareholder Return Relative to Peers (“TSR Relative to Peers”), as set forth in the Statement of Performance Goals.  The achievement of the levels of TSR Relative to Peers will be measured over the following periods (each, a “Performance Period” and, collectively, the “Performance Periods”):

(a)  Payment of __________ of the Target Performance Shares (the “First Transition Performance Shares”) will be contingent upon the achievement of specified levels of TSR Relative to Peers during the period from January 1, 2004 through December 31, 2006 (the “First Transition Period”);

(b)  Payment of __________ of the Target Performance Shares (the “Second Transition Performance Shares”) will be contingent upon the achievement of specified levels of TSR Relative to Peers during the period from January 1, 2005 through December 31, 2007 (the “Second Transition Period”);

(c)  Payment of __________ of the Target Performance Shares (the “Regular Grant Performance Shares”) will be contingent upon the achievement of specified levels of TSR Relative to Peers during the period from January 1, 2006 through December 31, 2008 (the “Regular Performance Period”);

ARTICLE II  — EARNING OF PERFORMANCE SHARES

Section 2.1  Below Threshold.  If, upon the conclusion of each of the Performance Periods, TSR Relative to Peers for that Performance Period falls below the threshold level, as set forth in the Performance Matrix contained in the Statement of Performance Goals, no performance shares for that Performance Period shall become earned.

Section 2.2  Between Threshold and Target.  If, upon the conclusion of the relevant Performance Period, TSR Relative to Peers equals or exceeds the threshold level, but is less than the target level, as set forth in the Performance Matrix contained in the Statement of Performance Goals:

(a)  the First Transition Performance Shares shall become earned based on performance during the First Transition Period, as determined by mathematical interpolation between 50% of the targeted First Transition Performance Shares and 100% of the targeted First Transition Performance Shares and rounded up to the nearest whole share;

(b)  the Second Transition Performance Shares shall become earned based on performance during the Second Transition Period, as determined by mathematical interpolation between 50% of the targeted Second Transition Performance Shares and 100% of the targeted Second Transition Performance Shares and rounded up to the nearest whole share; and

(c)  the Regular Grant Performance Shares shall become earned based on performance during the Regular Performance Period, as determined by mathematical interpolation between 50% of the targeted Regular Grant Performance

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Shares and 100% of the targeted Regular Grant Performance Shares and rounded up to the nearest whole share.

Section 2.3  Between Target and Intermediate.  If, upon the conclusion of the relevant Performance Period, TSR Relative to Peers equals or exceeds the target level, but is less than the intermediate level, as set forth in the Performance Matrix contained in the Statement of Performance Goals:

(a)  the First Transition Performance Shares shall become earned based on performance during the First Transition Period, as determined by mathematical interpolation between 100% of the targeted First Transition Performance Shares and 150% of the targeted First Transition Performance Shares and rounded up to the nearest whole share;

(b)  the Second Transition Performance Shares shall become earned based on performance during the Second Transition Period, as determined by mathematical interpolation between 100% of the targeted Second Transition Performance Shares and 150% of the targeted Second Transition Performance Shares and rounded up to the nearest whole share; and

(c)  the Regular Grant Performance Shares shall become earned based on performance during the Regular Performance Period, as determined by mathematical interpolation between 100% of the targeted Regular Grant Performance Shares and 150% of the targeted Regular Grant Performance Shares and rounded up to the nearest whole share.

Section 2.4  Between Intermediate and Maximum.  If, upon the conclusion of the relevant Performance Period, TSR Relative to Peers equals or exceeds the intermediate level, but is less than the maximum level, as set forth in the Performance Matrix contained in the Statement of Performance Goals:

(a)  the First Transition Performance Shares shall become earned based on performance during the First Transition Period, as determined by mathematical interpolation between 150% of the targeted First Transition Performance Shares and 200% of the targeted First Transition Performance Shares and rounded up to the nearest whole share;

(b)  the Second Transition Performance Shares shall become earned based on performance during the Second Transition Period, as determined by mathematical interpolation between 150% of the targeted Second Transition Performance Shares and 200% of the targeted Second Transition Performance Shares and rounded up to the nearest whole share; and

(c)  the Regular Grant Performance Shares shall become earned based on performance during the Regular Performance Period, as determined by mathematical interpolation between 150% of the targeted Regular Grant Performance Shares and 200% of the targeted Regular Grant Performance Shares and rounded up to the nearest whole share.

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Section 2.5  Equals or Exceeds Maximum.  If, upon the conclusion of each of the Performance Periods, TSR Relative to Peers for that Performance Period equals or exceeds the maximum level, as set forth in the Performance Matrix contained in the Statement of Performance Goals, 200% of the Targeted Performance Shares for that Performance Period shall become earned.

Section 2.6  Conditions; Determination of Earned Award.  Except as otherwise provided herein, the Grantee’s right to receive any performance shares is contingent upon (a) his or her remaining in the continuous employ of DPL or a Subsidiary through the end of each Performance Period and (b) Shareholder Approval of the Plan.  For purposes of this Agreement, the continuous employ of the Grantee shall not be considered interrupted or terminated in the case of sick leave, military leave or any other leave of absence approved by DPL or in the case of transfers between locations of DPL and its Subsidiaries.  Following the Performance Periods, the Committee (or the independent members of the Board of Directors) shall determine whether and to what extent the goals relating to TSR Relative to Peers have been satisfied for each Performance Period and shall determine the number of performance shares that shall have become earned hereunder.

ARTICLE III  — CHANGE OF CONTROL

                If a Change of Control (as defined in the Plan) occurs following Shareholder Approval of the Plan and during the Performance Periods, but before the payment of any performance shares as set forth in Article VII below, DPL shall pay to the Grantee, as soon as practicable following the Change of Control, a pro rata number of the Target Performance Shares based on the number of full months that have elapsed during each Performance Period prior to the Change of Control and the remaining performance shares will be forfeited.

ARTICLE IV  — DISABILITY OR DEATH

                If the Grantee’s employment with DPL or a Subsidiary terminates following Shareholder Approval of the Plan and during the Performance Periods, but before the payment of any performance shares as set forth in Article VII below due to (a) “disability” (as defined in DPL’s long-term disability plan) or (b) death, DPL shall pay to the Grantee or his or her executor or administrator, as the case may be, as soon as practicable following such termination of employment, a pro rata number of the Target Performance Shares based on the number of full months during the Performance Period during which the Grantee was employed by DPL and the remaining performance shares will be forfeited.

ARTICLE V  — RETIREMENT

                If the Grantee’s employment with DPL or a Subsidiary terminates following Shareholder Approval of the Plan and during any Performance Period, but before the payment of any performance shares as set forth in Article VII below due to the Grantee’s retirement approved by the Committee or the Board, DPL shall pay to the

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Grantee, as soon as practicable following the end of each Performance Period, the performance shares to which the Grantee would have been entitled under Article II above, had the Grantee remained employed by DPL through the end of each of the Performance Periods, prorated based on the number of full months during the Performance Period during which the Grantee was employed by DPL and the remaining performance shares will be forfeited.

ARTICLE VI  — FORFEITING OF PERFORMANCE SHARES

                If the Grantee’s employment with DPL or a Subsidiary terminates before the end of the applicable Performance Period for any reason other than as set forth in Articles IV and V above or if Shareholder Approval of the Plan is not obtained, the performance shares will be forfeited.

ARTICLE VII  — PAYMENT OF PERFORMANCE SHARES

                Payment of any performance shares that become earned as set forth herein will be made in the form of Common Shares.  Except as otherwise provided in Articles III, IV and V, payment will be made as soon as practicable after the last fiscal year of each Performance Period and the determination by the Committee (or the independent members of the Board of Directors) of the level of attainment of TSR Relative to Peers, but in no event shall such payment occur after two and a half months from the end of the applicable Performance Period.  Performance shares will be forfeited if they are not earned at the end of the applicable Performance Period and, except as otherwise provided in this Agreement, if the Grantee ceases to be employed by DPL or a Subsidiary at any time prior to such shares becoming earned at the end of each Performance Period.  To the extent that DPL or any Subsidiary is required to withhold any federal, state, local or foreign tax in connection with the payment of earned performance shares pursuant to this Agreement, it shall be a condition to the receipt of such performance shares that the Grantee make arrangements satisfactory to DPL or such Subsidiary for payment of such taxes required to be withheld.  This tax withholding obligation shall be satisfied by DPL withholding performance shares otherwise payable pursuant to this award.

ARTICLE VIII  — DIVIDENDS

Except as provided in Section 11.5 below, no dividends shall be accrued or earned with respect to the performance shares until such performance shares are earned by the Grantee as provided in Article II hereof.

ARTICLE IX  — NON-ASSIGNABILITY

                The performance shares and the Common Shares subject to this grant are personal to the Grantee and may not be sold, exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of by the Grantee until they become earned as provided in this Agreement; provided, however, that the Grantee’s rights with respect to such performance shares and Common Shares may be transferred by will or pursuant to the laws of descent and distribution.  Any purported transfer or

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encumbrance in violation of the provisions of this Article IX shall be void, and the other party to any such purported transaction shall not obtain any rights to or interest in such performance shares or Common Shares.

ARTICLE X  — ADJUSTMENTS

                In the event of any change in the number of Common Shares by reason of a merger, consolidation, reorganization, recapitalization, or similar transaction, or in the event of a stock dividend, stock split, or distribution to shareholders (other than normal cash dividends), the Committee shall adjust the number and class of shares subject to outstanding Target Performance Shares and Deferred Units (as defined below) and other value determinations applicable to outstanding Target Performance Shares and Deferred Units.  No adjustment provided for in this Article X shall require DPL to issue any fractional share.

ARTICLE XI  — DEFERRAL

Section 11.1  Ability to Defer.  The Grantee may elect to defer receipt of all or any portion of the earned performance shares, which will be credited to a bookkeeping account in the Grantee’s name.

Section 11.2  Elections.  An election pursuant Section 11.1 must be made in writing and delivered to DPL within 30 days of the date of grant of such performance shares, provided that the election is made at least one year in advance of the earliest date on which the performance shares could be earned.  If the Grantee does not file an election form by the specified date, he or she will receive the performance shares when they otherwise would have been paid pursuant to Article VII.

Section 11.3  Crediting to Accounts.  If a Grantee elects to defer receipt of the earned performance shares, there will be credited to the Grantee’s account as of the day such Common Shares underlying the earned performance shares would have been paid, a number of deferred units (the “Deferred Units”) equal to the number of Common Shares that would otherwise have been delivered to the Grantee pursuant to Article VII on such date.  The Deferred Units credited to the Grantee’s account (plus any additional shares credited pursuant to Section 11.5 below) will represent the number of Common Shares that DPL will issue to the Grantee at the end of the deferral period.  All Deferred Units will be 100% vested at all times.

Section 11.4  Deferral Period.  The Deferred Units will be subject to a deferral period beginning on the date of crediting to the Grantee’s account and ending upon such period as the Grantee may have elected.  The period of deferral will be for a minimum period of one year, except in the case where the Grantee elects a deferral period determined by reference to his or her termination of employment.  The Grantee may elect payment in a lump sum or payment in equal installments.  The Grantee may change the period of deferral by filing a subsequent election with DPL at least twelve months before the date of the previously elected payment date and the newly elected payment date (or payment commencement date) must be at least five years after the

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previously elected payment date (or the previously elected payment commencement date); provided, however, that such modification shall not be effective unless the Grantee remains an employee for at least twelve months after the date on which such modification was made.  During the deferral period, the Grantee will have no right to transfer any rights under his or her Deferred Units and will have no other rights of ownership therein.

Section 11.5  Dividend Equivalents.  The Grantee’s account will be credited as of the last day of each calendar quarter with that number of additional Deferred Units equal to the amount of cash dividends paid by DPL during such quarter on the number of Common Shares equivalent to the number of Deferred Units in the Grantee’s account from time to time during such quarter divided by the Market Value per Share of one Common Share on the day immediately preceding the last business day of such calendar quarter.  Such dividend equivalents, which will likewise be credited with dividend equivalents, will be deferred until the end of the deferral period for the Deferred Units with respect to which the dividend equivalents were credited.

Section 11.6  Early Payment.  Notwithstanding the foregoing provisions, (i) if, upon the Grantee’s termination of employment, the value of the Grantee’s account is less than $500, the amount of the Grantee’s account will be immediately paid to the Grantee in Common Shares, (ii) if a Change of Control occurs, the amount of the Grantee’s account will immediately be paid to the Grantee in full in Common Shares and (iii) in the event of an unforeseeable emergency, as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), that is caused by an event beyond the control of the Grantee and that would result in severe financial hardship to the Grantee if acceleration was not permitted, the Committee will accelerate the payment of Common Shares to the Grantee in the Grantee’s account, but only up to the amount necessary to meet the emergency.

ARTICLE XII  — COMPLIANCE WITH SECTION 409A OF THE CODE

                To the extent applicable, it is intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Grantee.  This Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause the Agreement or 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 Section 409A of the Code and may be made by DPL without the consent of the Grantee).  In particular, to the extent the Grantee has a right to receive payment pursuant to Article III or IV and the event triggering the right to payment does not constitute a permitted distribution event under Section 409A(a)(2) of the Code, then notwithstanding anything to the contrary in Article III, IV or VII above, issuance of the Common Shares will be made, to the extent necessary to comply with Section 409A of the Code, to the Grantee on the earlier of (a) the Grantee’s “separation from service” with DPL (determined in accordance with Section 409A); provided, however, that if the Grantee is a “specified employee” (within the meaning of Section 409A), the Grantee’s date of issuance of the

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Common Shares shall be the date that is six months after the date of the Grantee’s separation of service with DPL; (b) the date the payment would otherwise occur under this Agreement (to the extent it constitutes a permitted distribution event); or (c) the Grantee’s death.  References to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

ARTICLE XIII  — MISCELLANEOUS

Section 13.1  Interpretation.  The contents of this Agreement are subject in all respects to the terms and conditions of the Plan as approved by the Board of Directors and the shareholders of DPL, which are controlling.  The interpretation and construction by the Board and/or the Committee of any provision of the Plan or this Agreement shall be final and conclusive upon the Grantee, the Grantee’s estate, executor, administrator, beneficiaries, personal representative and guardian and DPL and its successors and assigns.  Unless otherwise indicated, the capitalized terms used in this Agreement shall have the same meanings as set forth in the Plan.

Section 13.2  Fractional Shares.  Any fractional share earned under this Agreement will be rounded up or down to the nearest whole share.

Section 13.3  No Right to Employment.  The grant of the performance shares is discretionary and will not be considered to be an employment contract or a part of the Grantee’s terms and conditions of employment or of the Grantee’s salary or compensation.

Section 13.4  Successors and Assigns.  This Agreement, and the terms and conditions of the Plan, shall bind, and inure to the benefit of the Grantee, the Grantee’s estate, executor, administrator, beneficiaries, personal representative and guardian and DPL and its successors and assigns.

Section 13.5  Governing Law.  This Agreement shall be governed by the laws of the State of Ohio (but not including the choice of law rules thereof).

Section 13.6  Amendment.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto.  The terms and conditions of this Agreement may not be modified, amended or waived, except by an instrument in writing signed by a duly authorized executive officer at DPL.  Notwithstanding the foregoing, no amendment shall adversely affect the Grantee’s rights under this Agreement without the Grantee’s consent.

ARTICLE XIV  — NOTICES

                All notices under this Agreement to DPL must be delivered personally or mailed to DPL at its principal office, addressed to the attention of the Corporate Secretary.  DPL’s address may be changed at any time by written notice of such change to the Grantee.  All notices under this Agreement to the Grantee will be delivered personally or

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mailed to the Grantee at his or her address as shown from time to time in DPL’s records.

IN WITNESS WHEREOF, the parties hereto have duly executed this Long Term Incentive Plan - Performance Shares Agreement, or caused this Long-Term Incentive Plan - Performance Shares Agreement to be duly executed on their behalf, as of the day and year first above written.

DPL INC.

By:

Name: James V. Mahoney

Title: President and Chief Executive Officer

Grantee

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EX-10.4

Exhibit 10.4

Draft of Febuary 16, 2006

DPL INC.
SEVERANCE PAY AND CHANGE OF CONTROL PLAN
EFFECTIVE JANUARY 1, 2006

ARTICLE I  - INTRODUCTION

The Board of Directors of DPL Inc. (“DPL”) and the Board of Directors of The Dayton Power and Light Company (“DP&L”) (collectively, the “Company”) hereby adopt the DPL Inc. Severance Pay and Change of Control Plan (the “Plan”).  The Plan shall be effective as of the Effective Date.  The Plan is designed to (a) provide severance protection to certain Employees of the Company who are expected to make substantial contributions to the success of the Company and thereby provide for stability and continuity of operations and (b) enable certain Employees to make career decisions without regard to the time pressure and financial uncertainty which may result from a proposed or threatened Change of Control (as defined herein) transaction, encourage such Employees to remain employees of the Company and its Subsidiaries notwithstanding the outcome of any such proposed transaction, and to assure fair treatment of such Employees in the event of a Change of Control of the Company.

ARTICLE II  - ESTABLISHMENT OF THE PLAN

Section 2.1.Applicability of Plan.  The benefits provided by this Plan shall be available to all Employees who, at or after the Effective Date, meet the eligibility requirements of Article IV hereof.

Section 2.2.Contractual Right to Benefits.  Subject to the provisions of Article IX hereof, this Plan establishes and vests in each Participant a contractual right to the benefits to which he or she is entitled hereunder, enforceable by the Participant against the Company on the terms and subject to the conditions hereof.

ARTICLE III  - DEFINITIONS AND CONSTRUCTION

Section 3.1.“Affiliate” means, with respect to any person, any entity, directly or indirectly, controlled by, controlling or under common control with such person.

Section 3.2.“Base Pay” of a Participant means the Participant’s annual base salary rate as in effect on the Termination Date from the Participant’s Employer; provided, however, that any reductions in Base Pay following the date of a Change of Control will not be taken into account when determining Base Pay hereunder; and further provided, any reduction in Base Pay that occurs prior to a Change of Control but which the Participant reasonably demonstrates (i) was at the request of a third party who effectuates a Change of Control or (ii) otherwise occurred in connection with or in anticipation of a Change of Control which has been threatened or proposed and which

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actually occurs, shall not be taken into account when determining Base Pay hereunder, it being agreed that any such reduction taken following shareholder approval of a transaction which if consummated would constitute a Change of Control, shall be deemed to be in anticipation of a Change of Control provided such transaction is actually consummated.

Section 3.3.“Board” means the Board of Directors of DPL Inc.

Section 3.4.“Cause” means:

(a)any willful or negligent material violation of any applicable securities laws (including the Sarbanes-Oxley Act of 2002);

(b)any act of fraud, intentional misrepresentation, embezzlement, misappropriation or conversion of any asset or business opportunity of the Company;

(c)a conviction of, or entering into a plea of nolo contendere to, a felony;

(d)an intentional, repeated or continuing violation of any of the Company’s policies or procedures that occurs or continues after the Company has given notice to the Participant that he or she has materially violated a Company policy or procedure; or

(e)any breach of a written covenant or agreement with the Company, including the terms of this Plan (other than a failure to perform Participant’s duties with the Company resulting from the Participant’s incapacity due to physical or mental illness or from the assignment to the Participant of duties that would constitute Good Reason), which is material and which is not cured within 30 days after written notice thereof from the Company to the Participant

For purposes of this Plan, the Participant shall not be deemed to have been terminated for Cause under clauses (a), (b), (c), (d) or (e) hereunder unless the Participant receives a Notice of Termination setting forth the grounds for the termination at least 15 calendar days prior to the specified Termination Date.

Section 3.5.“Change of Control” means the consummation of any Change of Control of DPL, or its principal subsidiary, DP&L, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as determined by the Board of Directors of DPL in its sole discretion; provided that, without limitation, such a Change of Control shall be deemed to have occurred if:

(a)any “Person” (as such term is defined in Sections 13(d) or 14(d)(2) of the Exchange Act; hereafter, a “Person”) is on the date hereof or becomes the beneficial owner, directly or indirectly, of securities of DPL or DP&L representing (i) 25% or more of the combined voting power of the then outstanding Voting Stock of DPL or DP&L if the acquisition of such beneficial ownership is not

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approved by the Board of Directors of DPL prior to the acquisition or (ii) 50% or more of such combined voting power in all other cases; provided, however, that:

(i)for purposes of this Section 3.5(a), the following acquisitions shall not constitute a Change of Control: (A) any acquisition of Voting Stock of DPL or DP&L directly from DPL or DP&L that is approved by a majority of those persons serving as directors of the Company or DP&L on the date of this Plan (the “Original Directors”) or their Successors (as defined below), (B) any acquisition of Voting Stock of DPL or DP&L by DPL or any Subsidiary, and (C) any acquisition of Voting Stock of DPL or DP&L by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by DPL or any Subsidiary (the term “Successors” shall mean those directors whose election or nomination for election by shareholders has been approved by the vote of at least two-thirds of the Original Directors and previously qualified Successors serving as directors of DPL or DP&L, as the case may be, at the time of such election or nomination for election);

(ii)if any Person is or becomes the beneficial owner of 25% or more of the combined voting power of the then-outstanding Voting Stock of DPL or DP&L as a result of a transaction described in clause (A) of Section 3.5(a)(i) above and such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of DPL or DP&L representing 1% or more of the then-outstanding Voting Stock of DPL or DP&L, other than in an acquisition directly from DPL or DP&L that is approved by a majority of the Original Directors or their Successors or other than as a result of a stock dividend, stock split or similar transaction effected by DPL or DP&L in which all holders of Voting Stock of DPL or DP&L are treated equally, such subsequent acquisition shall be treated as a Change in Control;

(iii)a Change in Control will not be deemed to have occurred if a Person is or becomes the beneficial owner of 25% or more of the Voting Stock of DPL or DP&L as a result of a reduction in the number of shares of Voting Stock of DPL or DP&L outstanding pursuant to a transaction or series of transactions that is approved by a majority of the Original Directors or their Successors unless and until such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of DPL or DP&L representing 1% or more of the then-outstanding Voting Stock of DPL or DP&L, other than as a result of a stock dividend, stock split or similar transaction effected by DPL or DP&L in which all holders of Voting Stock are treated equally; and

(iv)if at least a majority of the Original Directors or their Successors determine in good faith that a Person has acquired beneficial ownership of 25% or more of the Voting Stock of DPL or DP&L inadvertently, and such Person divests as promptly as practicable but no later than the date, if any, set by the Original Directors or their Successors a sufficient number

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of shares so that such Person beneficially owns less than 25% of the Voting Stock of DPL or DP&L, then no Change of Control shall have occurred as a result of such Person’s acquisition; or

(b)DPL or DP&L consummates a merger or consolidation, or consummates a “combination” or “majority share acquisition” in which it is the “acquiring corporation” (as such terms are defined in Ohio Rev. Code § 1701.01 as in effect on the Effective Date) and in which shareholders of DPL or DP&L, as the case may be, immediately prior to entering into such agreement, will beneficially own, immediately after the effective time of the merger, consolidation, combination or majority share acquisition, securities of DPL or DP&L or any surviving or new corporation, as the case may be, having less than 50% of the “voting power” of DPL or DP&L or any surviving or new corporation, as the case may be, including “voting power” exercisable on a contingent or deferred basis as well as immediately exercisable “voting power”, excluding any merger of DP&L into DPL or of DPL into DP&L; or

(c)DPL or DP&L consummates a sale, lease, exchange or other transfer or disposition of all or substantially all of its assets to any Person other than to a wholly owned subsidiary or, in the case of DP&L, to DPL or a wholly owned subsidiary(ies) of the Company; but not including (i) a mortgage or pledge of assets granted in connection with a financing or (ii) a spin-off or sale of assets if DPL continues in existence and its common shares are listed on a national securities exchange, quoted on the automated quotation system of a national securities association or traded in the over-the-counter market; or

(d)the Original Directors and/or their Successors do not constitute a majority of the whole Board of Directors of DPL or DP&L, as the case may be; or

(e)approval by the shareholders of DPL or DP&L of a complete liquidation or dissolution of DPL or DP&L, as the case may be.

Section 3.6.“Code” means the Internal Revenue Code of 1986, as amended.

Section 3.7.“Company” means DPL Inc., an Ohio corporation, any successor thereto as provided in Article VIII hereof, and The Dayton Power and Light Company.

Section 3.8.“Disability” means a Participant’s inability to perform the duties required of the Participant in his or her position with the Company on a full-time basis for a period of six consecutive months because of physical or mental illness or other physical or mental disability or incapacity.

Section 3.9.“Effective Date” means January 1, 2006.

Section 3.10.“EICP” means the DPL Inc. Executive Incentive Compensation Plan, as it may be amended from time to time.

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Section 3.11.“Employee” means a full-time salaried employee of an Employer.

Section 3.12.“ERISA” means Employee Retirement Income Security Act of 1974, as amended from time to time.

Section 3.13.“Employer” means the Company, any Subsidiary or any Affiliate which employs a Participant or any person or entity that has adopted this Plan pursuant to Article VIII hereof.

Section 3.14.“Good Reason” means, following a Change of Control:

(a)a demotion or a significant reduction in the Participant’s position, duties, responsibilities, and status with the Company in effect immediately prior to a Change of Control;

(b)a reduction by the Company of a Participant’s base salary;

(c)the taking of any action by the Company which would adversely affect a Participant’s participation in or materially reduce a Participant’s benefits under any employee benefit plans maintained by the Company for its executives or deprive a Participant of any material fringe benefit enjoyed by a Participant at the time of the Change of Control; or

(d)the relocation of the Company’s principal executive offices more than 50 miles from their current location, if at the time of a Change of Control the Participant is based at the Company’s principal executive offices, or the requirement of the Participant to be based at a location more than 50 miles from the Participant’s location as of the Change of Control;

provided, however, that any event or condition described in clauses (a) through (d) that occurs prior to a Change of Control but which the Participant reasonably demonstrates (i) was at the request of a third party who effectuates a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control which has been threatened or proposed and which actually occurs, shall constitute Good Reason for purposes of this Plan notwithstanding that it occurred prior to a Change of Control, it being agreed that any such action taken following shareholder approval of a transaction which if consummated would constitute a Change of Control, shall be deemed to be in anticipation of a Change of Control provided such transaction is actually consummated.

Before a termination by a Participant will constitute termination for Good Reason, the Participant must give the Company a Notice of Termination within 30 calendar days following the occurrence of the event that constitutes Good Reason.  Failure to provide such Notice of Termination within such 30-day period shall be conclusive proof that the Participant shall not have Good Reason to terminate employment.

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Good Reason shall exist only if the Employer fails to remedy the event or events constituting Good Reason within 15 calendar days after receipt of the Notice of Termination from the Participant.  If the Participant determines that Good Reason for termination exists and timely files a Notice of Termination, such determination shall be presumed to be true and the Company will have the burden of proving that Good Reason does not exist.

Section 3.15.“Key Employee” means a key employee as defined in Section 416(i) of the Code (without regard to paragraph (5) thereof) of an Employer.

Section 3.16.“Notice of Termination” means (i) a written notice of termination by the Company to the Participant provided to the Participant no less than 15 calendar days prior to the specified Termination Date or (ii) a written notice of termination for Good Reason by the Participant to the Company, in either case, setting forth in reasonable detail the specific reason for termination and the facts and circumstances claimed to provide a basis for termination of employment under the provision indicated and the specified Termination Date.

Section 3.17.“Participant” means an Employee who meets the eligibility requirements of Article IV hereof, other than an Employee who, after becoming a Participant, has entered into an employment, severance or other similar agreement with the Company (other than a stock option, restricted stock, supplemental retirement, deferred compensation or similar plan or agreement or other form of participation document entered into pursuant to an Employer-sponsored plan which may contain provisions operative on a termination of the Participant’s employment or may incidentally refer to accelerated vesting or accelerated payment upon a Change of Control (as defined in such separate plan or document)).

Section 3.18.“Participation Agreement” means an agreement between the Company and each Employee that must be executed as a condition of the Participant’s eligibility for this Plan.

Section 3.19.“Plan” means this Severance Pay and Change of Control Plan.

Section 3.20.“Plan Administrator” means the Compensation Committee of the Board.

Section 3.21.“Protection Period” means (i) for all Participants, excluding the individual who is the Chief Executive Officer of the Company (the “CEO”) at the time of a Change of Control, the period of time commencing on the date of the first occurrence of a Change of Control and continuing until the first anniversary of the first occurrence of the Change of Control and (ii) for the CEO of the Company, the period of time commencing on the date of the first occurrence of a Change of Control and continuing until the second anniversary of the first occurrence of the Change of Control.

Section 3.22.“Separation from Service” has the meaning ascribed to such phrase in the 409A Guidance.

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Section 3.23.“Severance Payment” or “Severance Payments” means the payment or payments of severance compensation described in Article V hereof.

Section 3.24.“Severance Period” means (i) for the CEO, the period of time commencing on the Termination Date and continuing until the third anniversary of the Termination Date, (ii) for all officers, other than the CEO, the period of time commencing on the Termination Date and continuing until the second anniversary of the Termination Date, and (iii) for all other Participants, the period of time commencing on the Termination Date and continuing until the first anniversary of the Termination Date.

Section 3.25.“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.

Section 3.26.“Termination Date” means the date on which the Participant’s employment terminates.

Section 3.27.“Voting Stock” means securities entitled to vote generally in the election of directors.

Section 3.28.“409A Guidance” means 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.

ARTICLE IV  – ELIGIBILITY

Section 4.1.Participation.  Each person who is an Employee, who is designated by the Compensation Committee to be a Participant in this Plan, and who has executed a Participation Agreement shall be a Participant commencing on the date such Participant executes a Participation Agreement.

Section 4.2.Duration of Participation.  A Participant shall cease to be a Participant and shall have no rights hereunder, without further action, when (a) he or she ceases to be an Employee, unless such Participant is then entitled to payment of a Severance Payment as provided in Article V hereof or (b) prior to a Change of Control, the Compensation Committee designates a Participant to be ineligible to continue to participate in this Plan as a result of a change in the Participant’s job title or duties.  A Participant entitled to a Severance Payment shall remain a Participant in this Plan until the full amount of the Severance Payment has been paid to the Participant.

ARTICLE V  - SEVERANCE PAYMENTS

Section 5.1.Right to Severance Payment - Termination Prior to a Change of Control.

(a)Subject to Section 5.3, a Participant shall be entitled to receive from the Company Severance Payments in the amount provided in Section 5.1(b), payable as described in Section 5.1(c), upon the termination by an Employer of

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the Participant’s employment without Cause and for reasons other than death or Disability, if the Participant is not entitled to Severance Payments under Section 5.2 as a result of such termination.

(b)The amount of Severance Payments under this Section 5.1(b) shall equal the sum of (i) the Participant’s Base Pay and (ii) the amount of the Participant’s target award under the EICP for the year in which the Termination Date occurs; provided, however, that the amount of such cash payment determined pursuant to this Section 5.2(b) shall be reduced by an amount equal to the aggregate amount of any other cash payments in the nature of severance payments paid or payable by an Employer pursuant to any agreement, Plan, program, arrangement or requirement of statutory or common law (other than this Plan or cash payments received in lieu of stock incentives).

(c)The Severance Payments paid pursuant to this Section 5.1 shall be paid in equal installments over the twelve month period described in this Section 5.1(c) according to the Company’s then current payroll policies.  The amount of each installment shall be equal to the total amount of the Severance Payments divided by the number of payroll dates in the twelve-month period described in this Section 5.1(c).  The period during which Severance Payments pursuant to this Section 5.1 will be paid is the twelve-month period beginning on the date 60 calendar days after the Participant’s Separation from Service and ending twelve months later.  The first installment of the Severance Payments to which a Participant is entitled under this Section 5.1 shall be paid with the first normal pay period that occurs on or after 60 calendar days after the Participant’s Separation from Service.  Notwithstanding the foregoing, if the Participant is a Key Employee, then, unless permitted pursuant to the “short-term deferral” exception under Section 409A of the Code, no Severance Payments shall be made during the six month period following the Participant’s Separation from Service, and the first six months of Severance Payments to which a Participant is entitled under this Section 5.1 shall be paid to the Participant by the Company in cash and in full, as soon as practicable following six months after the Participant’s Separation from Service.  If a Participant entitled to Severance Payments under this Section 5.1 should die before all amounts payable to him or her have been paid, such unpaid amounts shall be paid as soon as practicable following the Participant’s death to the Participant’s spouse, if living, otherwise to the personal representative of the Participant’s estate.

Section 5.2.Right to Severance Payment - Termination After a Change of Control.

(a)Subject to Section 5.3, a Participant shall be entitled to receive from the Company Severance Payments in the amount provided in Section 5.2(b), payable as described in Section 5.2(c), if, after a Change of Control and within the Protection Period, (i) the Employer shall terminate Participant’s employment with the Employers without Cause and for reasons other than death or Disability

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or (ii) the Participant shall terminate employment with the Employers for Good Reason.

(b)The amount of Severance Payments under this Section 5.2(b) shall equal the sum of (i) the Participant’s Base Pay multiplied by the factor set forth on Schedule A for the Participant and (ii) the amount of the Participant’s target award under the EICP for the year in which the Termination Date occurs multiplied by the factor set forth on Schedule A for the Participant;  provided, however, that the amount of such cash payment determined pursuant to this Section 5.2(c) shall be reduced by an amount equal to the aggregate amount of any other cash payments in the nature of severance payments paid or payable by an Employer pursuant to any agreement, plan, program, arrangement or requirement of statutory or common law (other than this Plan or cash payments received in lieu of stock incentives). In addition, such Participant will be entitled to receive as Severance Payments (i) a pro rata portion of the Participant’s target award under the EICP and the DPL Inc. 2006 Executive Performance and Incentive Plan, as of the Termination Date,(ii) an amount equal to the amount that would be credited to the Participant under the Company’s Supplemental Executive Defined Contribution Retirement Plan for the applicable Severance Period, determined as if the Participant had remained employed during that period and had received remuneration each year during that period equal to the sum of the Participant’s Base Pay plus the Participant’s target award under the EICP for the year in which the Termination Date occurs, and the Code Limit, as defined in the EICP, remained unchanged during the Severance Period, (iii) continued participation in the Company’s medical plan for the Severance Period; provided, however, that such coverage shall be provided only to the extent that such coverage would not be considered “deferred compensation” subject to the requirements of Section 409A of the Code, and (iv) an amount equal to $20,000 multiplied by the factor set forth on Schedule A for the Participant.

(c)Subject to the following sentence, the cash Severance Payments to which a Participant is entitled under this Section 5.2 shall be paid to the Participant by the Company in cash and in full as soon as practicable after the Participant’s Termination Date (or, if later the date the applicable revocation period for the release required in Section 5.3 has expired).  Notwithstanding the foregoing, if the Participant is a Key Employee and to the extent the “short-term deferral” exception under Section 409A of the Code does not apply, then the Severance Payment to which a Participant is entitled under this Section 5.2 shall be paid to the Participant by the Company in cash and in full, as soon as practicable following six months after the Participant’s Separation from Service.  If a Participant entitled to Severance Payments under this Section 5.2 should die before all amounts payable to him or her have been paid, such unpaid amounts shall be paid as soon as practicable following the Participant’s death to the Participant’s spouse, if living, otherwise to the personal representative of the Participant’s estate.

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Section 5.3.Release.  Notwithstanding anything to the contrary contained in this Plan, a Participant shall not be entitled to receive any Severance Payment hereunder unless and until he or she has signed and returned to the Company a release (the “Release”) by the deadline established by the Plan Administrator (which shall be no later than 50 calendar days after the Participant’s Termination Date) and the period during which the Participant may revoke the Release, if any, has elapsed.  The Release, which shall be signed by the Participant no earlier than the Participant’s Termination Date, shall be a written document, in a form prescribed by the Company, intended to create a binding agreement by a Participant to release any claim that the Participant has or may have against the Company and certain related entities and individuals, that arise on or before the date on which Participant signs the Release, including, without limitation, any claims under the federal Age Discrimination in Employment Act.  The Release shall also include confidentiality and non-disparagement covenants.

Section 5.4.Third Party Removal.  Notwithstanding anything to the contrary contained in this Plan, any termination of employment of the Participant that occurs prior to a Change of Control but which the Participant reasonably demonstrates occurred at the request of a third party who had taken steps reasonably calculated to effect the Change of Control shall be deemed to be a termination or removal of the Participant after a Change of Control for purposes of this Plan.

Section 5.5.Breach.  The Company’s payment obligations and the Participant’s participation rights under Sections 5.1 and 5.2 shall cease in the event the Participant breaches any of the covenants contained in the Participant’s Participation Agreement or the Release.

Section 5.6.No Mitigation Obligation.  The Participant shall not be required to mitigate damages or the amount of his or her Severance Payment by seeking other employment or otherwise, nor shall the amount of such payment be reduced by any compensation earned by the Participant as a result of employment after the termination of his or her employment by an Employer.

Section 5.7.Excess Parachute Payments.

(a)Notwithstanding any provision of this Plan to the contrary, if the aggregate “present value” (as determined under Section 280G of the Code) of the “parachute payments” (as defined under Section 280G(b)(2) of the Code) to be paid or provided under this Plan or any other plan or agreement between the Participant and an Employer exceeds 300% of the Participant’s “base amount” (as defined in Section 280G(b)(3)) (“Excess Parachute Payment”) by more than 10% and is determined to be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then the Participant shall be entitled to receive an additional payment or payments (collectively, a “Gross-Up

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Payment”). The Gross-Up Payment shall be in an amount such that, after payment by the Participant of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.  The Company shall pay the required Gross-Up Payment to the Participant within thirty (30) business days after the Participant’s termination.

(b)Notwithstanding any provision of this Plan to the contrary, if the aggregate “present value” (as determined under Section 280G of the Code) of the “parachute payments” (as defined under Section 280G(b)(2) of the Code) to be paid or provided under this Plan or any other plan or agreement between the Participant and an Employer exceeds 300% of the Participant’s “base amount” (as defined in Section 280G(b)(3)) by 10% or less and is determined to be subject to the Excise Tax, then the payments and benefits to be paid or provided under this Plan shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment.

(c)Procedures for all determinations to be made under this Section 5.7 are set forth on Schedule B.

ARTICLE VI  - NON-SOLICITATION

Section 6.1.Non-Solicitation.  In the event that a Participant receives a Severance Payment pursuant to this Plan, during the Participant’s employment and for a period of two years after the Termination Date, Participant will not (i) solicit for employment with himself or herself or any firm or entity with which he or she is associated, any employee of the Company, its Subsidiaries or Affiliates, or otherwise disrupt, impair, damage or interfere with the Company’s, its Subsidiaries’ or Affiliates’ relationships with their employees or (ii) solicit for Participant’s own behalf or on behalf of any other person(s), any retail customer of the Company, its Subsidiaries or Affiliates, that has purchased products or services from the Company, its Subsidiaries or Affiliates, at any time (a) with respect to solicitation during employment, during the Participant’s employment, or (b) with respect to solicitation after employment, in the twelve months preceding the Participant’s Termination Date or that the Company, its Subsidiaries or Affiliates are actively soliciting or have known plans to solicit, for the purpose of marketing or distributing any product, pricing or service competitive with any product, pricing or service then offered by the Company or its Subsidiaries or Affiliates or which the Company or its Subsidiaries or Affiliates have known plans to offer.

ARTICLE VII  - OTHER RIGHTS AND BENEFITS NOT AFFECTED

Section 7.1.Other Benefits.  Except as provided in Section 5.7, neither the provisions of this Plan nor the Severance Payments provided for hereunder shall reduce or increase any amounts otherwise payable, or in any other way affect a Participant’s rights as an employee of an Employer, whether existing now or hereafter, under any

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benefit, incentive, retirement, stock option, stock bonus, stock purchase or employment agreement, plan (other than this Plan), program or arrangement (collectively, the “Other Plans”), except to the extent specifically provided under such Other Plans.

Section 7.2.Certain Limitations.  This Plan does not constitute a contract of employment or impose on any Participant, the Company or any other Employer any obligation to retain any Participant as an employee or in any other capacity, to change or not change the status, terms or conditions of any Participant’s employment, or to change or not change the Employer’s policies regarding termination of employment.

ARTICLE VIII  - SUCCESSORS

Section 8.1.Company’s Successor.  Without limiting the obligations of any person or entity under applicable law, the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place.  In such event, the term “Company,” as used in this Plan, shall mean the Company as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by the terms and provisions of this Plan.

Section 8.2.Participant’s Successor.

(a)This Plan shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees and/or legatees.

(b)The rights under this Plan are personal in nature and neither the Company nor any Participant shall, without the consent of the other, assign, transfer or delegate any rights or obligations hereunder except as expressly provided in this Article VIII.  Without limiting the generality of the foregoing, the Participant’s right to receive a Severance Payment hereunder shall not be assignable, transferable or delegable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by his or her will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 8.2(b), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

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ARTICLE IX  - AMENDMENT AND TERMINATION

Section 9.1.Amendment.  This Plan may be amended by the Compensation Committee or terminated in any respect by resolution adopted by a majority of the members of the Compensation Committee.  However, if a Change of Control occurs, notwithstanding the foregoing, during the Protection Period that follows such Change of Control or following such Protection Period with respect to all Participants receiving Severance Payments attributable to terminations of employment that occurred during the Protection Period, no amendment or termination shall be effective unless, (a) in the case of amendments or terminations adopted during the Protection Period, such amendment or termination is consented to by all Participants, and (b) in the case of amendments or terminations adopted after the Protection Period, such amendment or termination is consented to by all Participants who are receiving Severance Payments attributable to terminations of employment that occurred during the Protection Period.

Section 9.2.Effect of Amendment or Termination.  A proper amendment of this Plan automatically shall effect a corresponding amendment to all Participants’ rights hereunder.  A proper termination of this Plan automatically shall effect a termination of all Participants’ rights and benefits hereunder without further action; provided, however, no termination shall reduce or terminate any Participant’s right to receive, or continue to receive, any Severance Payments that became payable prior to the date of such termination of the Plan.

ARTICLE X  ADMINISTRATION OF PLAN

Section 10.1.Administration.

(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 10.3 hereof.  Notwithstanding the foregoing, it is intended that in the event of litigation arising from a claim for benefits under Section 5.2, a reviewing court shall review de novo the Plan Administrator’s determinations with respect to such claim, and the Plan Administrator’s determinations shall not be given deference.

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(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.

(c)The Plan Administrator shall not take any action that would violate any provisions of 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 10.2.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 the 409A Guidance.  The rules, regulations and interpretations made by the Plan Administrator shall, subject only to the provisions of Section 10.3 hereof, be final and binding on all persons.

Section 10.3.Claims Procedures.

(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

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(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.

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.

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

ARTICLE XI  - MISCELLANEOUS

Section 11.1.Legal Fees and Expenses.  It is the intent of the Company that Participants not be required to incur any expenses associated with the enforcement of rights under Section 5.2 of this Plan because the cost and expense thereof would substantially detract from the benefits intended to be extended to Participants

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hereunder.  Accordingly, if any Employer has failed to comply with any of its obligations under Section 5.2 of this Plan or in the event that any Employer, or any other person takes any action to declare Section 5.2 of this Plan void or unenforceable, or institutes any litigation designed to deny, or to recover from, a Participant the benefits intended to be provided to the Participant under Section 5.2 of this Plan, each Employer irrevocably authorizes the Participant from time to time to retain counsel of his or her choice, at the expense of the Company, as hereafter provided, to represent the Participant in connection with the initiation or defense of any legal action, whether by or against any Employer, in any jurisdiction.  The Company shall pay or cause to be paid and shall be solely responsible for any and all reasonable attorneys’ fees and expenses incurred by the Participant in enforcing his or her rights under Section 5.2 of this Plan individually (but not as a representative of any class) as a result of any Employer’s failure to perform under Section 5.2 of this Plan or as a result of any Employer or any person contesting the validity or enforceability of Section 5.2 of this Plan.

Section 11.2.Withholding of Taxes.  The Employer may withhold from any amounts payable under this Plan all foreign, federal, provincial, state, city or other taxes as shall be required pursuant to any law or government regulation or ruling.

Section 11.3.Remedy at Law.  The Company and each Participant recognize that each party will have no adequate remedy at law for breach by the other of any of the agreements contained herein and, in the event of any such breach, the Company hereby, and each Participant by execution of a Participation Agreement, agree and consent that the other shall be entitled to a decree of specific performance, mandamus or other appropriate remedy to enforce performance of this Plan.

Section 11.4.Notices.  For all purposes of this Plan, all communications, including without limitation notices, consents, requests or approvals provided for herein, shall be in writing and shall be deemed to have been duly given when delivered or five business days after having been mailed by registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (to the attention of the Secretary of the Company), at its principal office and to any Participant at his or her principal residence as shown in the relevant records of the Employer, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of change of address shall be effective only upon receipt.

Section 11.5.Governing Law.  This Plan shall be administered, construed and enforced according to the laws of the State of Ohio to the extent they are not preempted by the ERISA.

Section 11.6.Severability.  If a provision of this Plan shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining parts of this Plan and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

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Section 11.7.Headings.  The headings are intended only for convenience in finding the subject matter and do not constitute part of the text of this Plan and shall not be considered in the interpretation of this Plan.

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Schedule A

Participant’s Position	Factor
Chief Executive Officer of the Company (“CEO”)	3x
Officers other than the CEO	2x
All Other Participants	1x

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Schedule B

Gross-Up Payment Determination Procedures

(a)Subject to the provisions of Section (e) of this Schedule B, all determinations required to be made under this Schedule B, including whether (i) pursuant to Section 5.7(a), a Gross-Up Payment is required to be paid by the Company to the Participant and the amount of such Gross-Up Payment or (ii) pursuant to Section 5.7(b), a reduction in the payments and benefits to be provided under this Plan is required, shall be made by the accounting firm or law firm selected by the Company (the “Tax Professional”). The Company shall direct the Tax Professional to submit its determination and detailed supporting calculations to both the Company and the Participant within thirty calendar days after the Termination Date, if applicable, and any such other time or times as may be requested by the Company or the Participant.  As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) and the possibility of similar uncertainty regarding applicable state or local tax law at the time of any determination by the Tax Professional hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made hereunder.  In the event that the Company exhausts or fails to pursue its remedies pursuant to Section (e) of this Section and the Participant thereafter is required to make a payment of any Excise Tax, the Participant shall direct the Tax Professional to determine the amount of the Underpayment that has occurred and to submit its determination and detailed supporting calculations to both the Company and the Participant as promptly as possible.  Any such Underpayment shall be promptly paid by the Company to, or for the benefit of, the Participant within five business days after receipt of such determination and calculations.

(b)The Company and the Participant shall each provide the Tax Professional access to and copies of any books, records and documents in the possession of the Company or the Participant, as the case may be, reasonably requested by the Tax Professional, and otherwise cooperate with the Tax Professional in connection with the preparation and issuance of the determinations and calculations contemplated by Section (a) of this Schedule B.  Any determination by the Tax Professional shall be binding upon the Company and the Participant.

(c)The federal, state and local income or other tax returns filed by the Participant shall be prepared and filed on a consistent basis with the determination of the Tax Professional.  The Executive shall make proper payment of the amount of any Excise Tax, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his or her federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company, evidencing such payment.  If prior to the filing of the Participant’s

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federal income tax return, or corresponding state or local tax return, if relevant, the Tax Professional determines that the amount of the Gross-Up Payment should be reduced, the Participant shall within five business days pay to the Company the amount of such reduction.

(d)The fees and expenses of the Tax Professional for its services in connection with the determinations and calculations contemplated by Section (a) of this Schedule B shall be borne by the Company.  If such fees and expenses are initially paid by the Participant, the Company shall reimburse the Participant the full amount of such fees and expenses within ten business days after receipt from the Participant of a statement therefor and reasonable evidence of his or her payment thereof.

(e)The Participant shall notify the Company in writing of any claim by the Internal Revenue Service or any other taxing authority that, if successful, would require the payment by the Company of a Gross-Up Payment.  Such notification shall be given as promptly as practicable but no later than ten business days after the Participant actually receives notice of such claim and the Participant shall further apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by the Participant).  The Participant shall not pay such claim prior to the earlier of (i) the expiration of the 30-calendar-day period following the date on which he or she gives such notice to the Company and (ii) the date that any payment of amount with respect to such claim is due.  If the Company notifies the Participant in writing prior to the expiration of such period that it desires to contest such claim, the Participant shall:

(i)provide the Company with any written records or documents in his or her possession relating to such claim reasonably requested by the Company;

(ii)take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation accepting legal representation with respect to such claim by an attorney competent in respect of the subject matter and reasonably selected by the Company;

(iii)cooperate with the Company in good faith in order to effectively contest such claim; and

(iv)permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and shall indemnify and hold harmless the Participant, on an after-tax basis, for and against any Excise Tax or income tax, including interest and

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penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses.  Without limiting the foregoing provisions of this subsection, the Company shall control all proceedings taken in connection with the contest of any claim contemplated by this subsection and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided, however, that the Participant may participate therein at his or her own cost and expense) and may, at its option, either direct the Participant to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Participant to pay the tax claimed and sue for a refund, the Company shall indemnify and hold the Participant harmless, on an after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Participant with respect to which the contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of any such contested claim shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Participant shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

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EX-10.5

Exhibit 10.5

Draft of February 16, 2006

DPL INC.

SUPPLEMENTAL EXECUTIVE DEFINED CONTRIBUTION RETIREMENT PLAN

EFFECTIVE JANUARY 1, 2006

DPL Inc. hereby adopts the DPL Inc. Supplemental Executive Defined Contribution Retirement Plan on the terms and conditions described hereunder, effective as of January 1, 2006.

ARTICLE I - PREFACE

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

Section 1.2.Purpose of the Plan.  The purpose of this Plan is to provide additional retirement benefits beyond the dollar limitation on Compensation imposed under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”).

Section 1.3.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 1.4.Interpretation.  For purposes of interpreting the provisions of this Plan, the singular shall include the plural unless otherwise clearly required by the context.

ARTICLE II - DEFINITIONS

Section 2.1.“Account” means the notional account maintained by the Company in accordance with Section 4.1.

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Section 2.2.“Beneficiary” means the person or persons designated by the Participant as his or her Beneficiary under this Plan, in accordance with the provisions of Article VII hereof.

Section 2.3.“Board” means the Board of Directors of the Company.

Section 2.4.“Change of Control” means the consummation of any Change of Control of the Company, or its principal subsidiary, The Dayton Power and Light Company (“DP&L”), of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as determined by the Board in its sole discretion; provided that, without limitation, such a Change of Control shall be deemed to have occurred if:

(a)any “Person” (as such term is defined in Sections 13(d) or 14(d)(2) of the Exchange Act; hereafter, a “Person”) is on the date hereof or becomes the beneficial owner, directly or indirectly, of securities of the Company or DP&L representing (I) 25% or more of the combined voting power of the then outstanding Voting Stock of the Company or DP&L if the acquisition of such beneficial ownership is not approved by the Board prior to the acquisition or (II) 50% or more of such combined voting power in all other cases;

(i)for purposes of this Section 2.4, the following acquisitions shall not constitute a Change of Control: (A) any acquisition of Voting Stock of the Company or DP&L directly from the Company or DP&L that is approved by a majority of those persons serving as directors of the Company or DP&L on the date of this Plan (the “Original Directors”) or their Successors (as defined below), (B) any acquisition of Voting Stock of the Company or DP&L by the Company or any Subsidiary, and (C) any acquisition of Voting Stock of the Company or DP&L by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by DPL or any Subsidiary (the term “Successors” shall mean those directors whose election or nomination for election by shareholders has been approved by the vote of at least two-thirds of the Original Directors and previously qualified Successors serving as directors of the Company or DP&L, as the case may be, at the time of such election or nomination for election);

(ii)if any Person is or becomes the beneficial owner of 25% or more of combined voting power of the then-outstanding Voting Stock of the Company or DP&L as a result of a transaction described in clause (A) of Section 2.4(a)(i) above and such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company or DP&L representing 1% or more of the then-outstanding Voting Stock of the Company or DP&L, other than

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in an acquisition directly from the Company or DP&L that is approved by a majority of the Original Directors or their Successors or other than as a result of a stock dividend, stock split or similar transaction effected by the Company or DP&L in which all holders of Voting Stock of the Company or DP&L are treated equally, such subsequent acquisition shall be treated as a Change in Control;

(iii)a Change in Control will not be deemed to have occurred if a Person is or becomes the beneficial owner of 25% or more of the Voting Stock of the Company or DP&L as a result of a reduction in the number of shares of Voting Stock of the Company or DP&L outstanding pursuant to a transaction or series of transactions that is approved by a majority of the Original Directors or their Successors unless and until such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company or DP&L representing 1% or more of the then-outstanding Voting Stock of the Company or DP&L, other than as a result of a stock dividend, stock split or similar transaction effected by the Company or DP&L in which all holders of Voting Stock are treated equally; and

(iv)if at least a majority of the Original Directors or their Successors determine in good faith that a Person has acquired beneficial ownership of 25% or more of the Voting Stock of the Company or DP&L inadvertently, and such Person divests as promptly as practicable but no later than the date, if any, set by the Original Directors or their Successors a sufficient number of shares so that such Person beneficially owns less than 25% of the Voting Stock of the Company or DP&L, then no Change of Control shall have occurred as a result of such Person’s acquisition; or

(b)the Company or DP&L consummates a merger or consolidation, or consummates a “combination” or “majority share acquisition” in which it is the “acquiring corporation” (as such terms are defined in Ohio Rev. Code § 1701.01 as in effect on December 31, 1990) and in which shareholders of the Company or DP&L, as the case may be, immediately prior to entering into such agreement, will beneficially own, immediately after the effective time of the merger, consolidation, combination or majority share acquisition, securities of the Company or DP&L or any surviving or new corporation, as the case may be, having less than 50% of the “voting power” of DPL or DP&L or any surviving or new corporation, as the case may be, including “voting power” exercisable on a contingent or deferred basis as well as immediately exercisable “voting power”, excluding any merger of DP&L into the Company or of the Company into DP&L;

(c)the Company or DP&L consummates a sale, lease, exchange or other transfer or disposition of all or substantially all of its assets to any Person other than to a wholly owned subsidiary or, in the case of DP&L, to the Company or a wholly owned subsidiary(ies) of the Company; but not including (I) a mortgage or pledge of

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assets granted in connection with a financing or (II) a spin-off or sale of assets if the Company continues in existence and its common shares are listed on a national securities exchange, quoted on the automated quotation system of a national securities association or traded in the over-the-counter market; or

(d)the Original Directors and/or their Successors do not constitute a majority of the whole Board or the Board of Directors of DP&L, as the case may be; or

(e)approval by the shareholders of the Company or DP&L of a complete liquidation or dissolution of the Company or DP&L, as the case may be.

Section 2.5.“Company” means DPL Inc., an Ohio corporation, and any entity that succeeds DPL Inc. by merger, reorganization or otherwise.

Section 2.6.“Compensation” means, for a Plan Year, a Participant’s annual base salary as of the end of such Plan Year and the benefit earned by such Participant under the Company’s Executive Incentive Compensation Program for such Plan Year.

Section 2.7.“Compensation Committee” means the Compensation Committee of the Board.

Section 2.8.“Contributions” means the contributions credited pursuant to Section 3.1 of the Plan.

Section 2.9.“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 2.10.“Disability” means a Participant’s inability to perform the duties required on a full-time basis for a period of six consecutive months because of physical or mental illness or other physical or mental disability or incapacity.

Section 2.11.“Employee” means a full-time salaried employee of an Employer.

Section 2.12.“Employer” means the Company and any other Controlled Group Member.

Section 2.13.“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

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Section 2.14.“Hypothetical Investment Fund” means any investment fund designated by the Company pursuant to Section 8.1.

Section 2.15.“Participant” means an Employee that the Compensation Committee has designated to participate under this Plan and who has executed a Participation Agreement.

Section 2.16.“Participation Agreement” means an agreement between the Company and each Employee that must be executed as a condition of the Participant’s eligibility for this Plan.

Section 2.17.“Plan” means the DPL Inc. Supplemental Executive Defined Contribution Retirement Plan, as herein set forth and as the same may from time to time be amended or restated.

Section 2.18.“Plan Administrator” means the Compensation Committee.

Section 2.19.“Plan Year” means the calendar year.

Section 2.20.“Qualified Plan” means The Dayton Power and Light Company Employee Savings Plan.

Section 2.21.“Retirement” has the meaning ascribed to such term in the Retirement Income Plan of The Dayton Power and Light Company.

Section 2.22.“Separates from Service” or “Separation from Service” has the meaning ascribed to such phrase in the 409A Guidance.

Section 2.23.“Unforseeable Emergency” means an event which results in a severe financial hardship to the Participant resulting from (a) an illness or accident of the Participant, the Participant’s spouse or a dependent of the Participant, (b) loss of the Participant’s property due to casualty or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

Section 2.24.“Valuation Date” means each December 31, plus such additional date(s), if any, selected by the Plan Administrator.  In the event of a Change of Control, the term “Valuation Date” shall also mean the last day of the calendar month immediately preceding the date of the Change of Control.

Section 2.25.“Vesting Years” has the meaning ascribed to such phrase in the Retirement Income Plan of The Dayton Power and Light Company.

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Section 2.26.“Voting Stock” means securities entitled to vote generally in the election of directors.

Section 2.27.“409A Guidance” has the meaning set forth in Section 1.3.

ARTICLE III - CONTRIBUTIONS

Section 3.1.Contributions.  For each Plan Year, the Company shall credit to the Account established for each Participant an amount (the “Contribution”) equal to 15% of the amount, if any, by which the Participant’s Compensation for such Plan Year exceeds the limit on Compensation imposed by Section 401(a)(17) of the Code (the “Code Limit”) for that Plan Year.  The Company shall credit the Contribution to each Participant’s Account as soon as practicable after the Participant’s Compensation for the Plan Year is determined.

ARTICLE IV - ACCOUNTS

Section 4.1.Participants’ Accounts.  The Company shall establish and maintain on its books an Account for each Participant which shall contain the following entries:

(a)Credits for the Contributions described in Section 3.1.

(b)Credits or charges representing the income, expenses, gains or losses allocable to the Participant’s Account which would be applicable if such Account had been invested on a tax deferred basis in the Hypothetical Investment Fund(s) selected by the Participant or the Participant’s Beneficiary as provided in Section 8.1.  The entries provided by this Subsection shall continue to be made until the Participant’s entire Account has been distributed to the Participant or the Participant’s Beneficiary pursuant to Article VI.

(c)Debits for any distributions made from the Account and any amounts forfeited under Section 5.2.

Section 4.2.Effect on other Benefits.  Benefits payable to or with respect to a Participant under any other Employer sponsored (qualified or nonqualified) plan, if any, are in addition to those provided under this Plan.

ARTICLE V - VESTING

Section 5.1.Vesting.  A Participant shall become 100% vested in all amounts credited to the Participant’s Account hereunder upon completion of five Vesting Years.  In addition, a Participant shall become 100% vested in all amounts credited to the Participant’s Account hereunder upon the Participant’s death or Disability or upon a Change of Control.

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Section 5.2.Forfeitures.  If a Participant Separates from Service (other than by reason of death or Disability) prior to becoming 100% vested in the Participant’s Account, the Participant’s Account shall be forfeited as of the date of the Participant’s Separation from Service.

ARTICLE VI - DISTRIBUTION OF BENEFITS TO PARTICIPANTS

Section 6.1.Time and Manner of Payment.

(a)Upon the Separation from Service (other than by reason of death) of a Participant who is 100% vested in his or her Account, the Participant’s Account shall be paid or commence to be paid to him or her six months after such Participant’s Separation from Service with the Company.  Subject to Subsection (c), upon a Change of Control or upon a Participant’s Disability, the Participant’s Account shall be paid as soon as practicable following such Change of Control or Disability, as the case may be.  Upon the death of a Participant, the Participant’s Account shall be paid at the time provided in Section 7.3.

(b)The Participant’s Account shall be paid in the following manner:

(i)If the Participant’s Separation from Service is on account of Retirement:

(1)If the balance in the Participant’s Account is $100,000 or less, the Participant’s entire Account shall be paid in the form of a lump sum cash payment at the time prescribed in Subsection (a); and

(2)If the balance in a Participant’s Account is in excess of $100,000, the Participant’s Account shall be paid in the form of five annual cash installments (A) with the first installment being payable at the time prescribed in Subsection (a) of this Section and each other installment being payable on the anniversary date of the date of payment of the first installment and (B) with the amount of each installment equal to the value of the Participant’s Account on the Valuation Date immediately preceding the date for payment of the installment multiplied by a fraction the numerator of which is one and the denominator of which is the total number of remaining installments.

(ii)If the Participant’s Separation from Service is other than on account of Retirement, death or Disability, the Participant’s account shall be paid in the form of a lump sum cash payment at the time prescribed in Subsection (a).

(iii)If the Participant’s Separation from Service is on account of death, the Participant’s Account shall be paid as provided in Section 7.3.

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(iv)Subject to Subsection (c), upon the Participant’s Disability or upon a Change of Control, the Participant’s account shall be paid in the form of a lump sum cash payment at the time prescribed in Subsection (a).

(c)To the extent (i) a Participant shall be deemed to be vested upon the occurrence of a Change of Control pursuant to Section 5.1 and such Change of Control does not constitute a “change in the ownership or effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code, or (ii) a Participant shall be deemed to be vested upon the Participant’s Disability pursuant to Section 5.1 and such Participant is not considered to be “disabled” within the meaning of Section 409A(a)(2)(C) of the Code, then, notwithstanding that the Participant shall be deemed to be vested in his or her Account upon the occurrence of the Change of Control or the occurrence of the Disability, as the case may be, payment will be made, to the extent necessary to comply with the provisions of Section 409A of the Code, to the Participant on the earlier of (1) six months after the Participant’s Separation from Service with the Company or (2) the Participant’s death.

Section 6.2.Liability for Payment/Expenses.  The Employer by which the Participant was last employed prior to the Participant’s Separation from Service or death shall pay the Participant’s vested Account to the Participant or the Participant’s Beneficiary, but such Employer’s liability shall be limited to its proportionate share of the Account, as hereinafter provided.  If the Account payable to or on behalf of a Participant is based on the Participant’s employment with more than one Employer, the liability for the payment of such Account shall be shared by all such Employers (by reimbursement to the Employer making such payment) as may be agreed to among them in good faith and as will permit the deduction (for purposes of federal income tax) by each such Employer of its portion of the payments made and to be made hereunder.  Expenses of administering the Plan shall be paid by the Employers, as directed by the Company.

Section 6.3.Prohibition on Acceleration of Distributions.  Notwithstanding any provision of the Plan to the contrary, the time for payment or the schedule of any payment with respect to a Participant’s Account as provided under the Plan shall not be accelerated (within the meaning of the Section 409A Guidance) except as follows:

(a)To the extent necessary to comply with terms of a domestic relations order (as defined in section 414(p)(1)(B) of the Code), the Plan may permit such acceleration of the time or schedule of a payment of all or a portion of a Participant’s Account to an individual other than the Participant;

(b)To the extent necessary to comply with a certificate of divestiture (as defined in section 1043(b)(2) of the Code), the Plan may permit the acceleration of the time or schedule of a payment of a Participant’s Account;

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(c)The Plan may permit acceleration of the time for payment or schedule of a payment with respect to a Participant’s Account in order (i) to pay the Federal Insurance Contributions Act (“FICA”) tax imposed under sections 3101 and 3121(v)(2) of the Code on compensation deferred under the plan (the “FICA Amount”), (ii) pay the income tax at source on wages imposed under section 3401 of the Code on the FICA Amount, and (iii) pay the additional income tax at source on wages attributable to the pyramiding of section 3401 wages and taxes, provided that the total payment permissible under this acceleration provision shall not exceed the aggregate of the FICA Amount and the income tax withholding related to such FICA Amount;

(d)The Company at any time, upon written request of the Participant, may cause to be paid to such Participant, an amount equal to all or any part of the Participant’s Account if the Company determines, based on such reasonable evidence that it shall require, that such a payment is necessary for the purpose of alleviating the consequences of an Unforseeable Emergency.  Payments of amounts because of an Unforseeable Emergency may not exceed the amount necessary to satisfy the Unforseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution after taking into account the extent to which the hardship is or may be relieved through reimbursement or compensation by insurance or otherwise by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship); and

(e)The Plan may permit acceleration of the time for payment or schedule of a payment with respect to a Participant’s Account in such other circumstances as prescribed in the 409A Guidance and in accordance with such Guidance.

ARTICLE VII - BENEFICIARIES

Section 7.1.Beneficiary Designations.  A designation of a Beneficiary hereunder may be made only by an instrument (in form acceptable to the Plan Administrator) signed by the Participant and filed with the Plan Administrator prior to the Participant’s death.  The Beneficiary hereunder need not be the same as under other retirement plans in which Participant participates.  In the absence of a Beneficiary designation and at any other time when there is no existing Beneficiary designated hereunder, the Beneficiary of a Participant shall be the Participant’s beneficiary under the Qualified Plan.  A person designated by a Participant as the Participant’s Beneficiary who or which ceases to exist shall not be entitled to any part of any payment thereafter to be made to the Participant’s Beneficiary unless the Participant’s designation specifically provided to the contrary.  If two or more persons designated as a Participant’s Beneficiary are in existence, the amount of any payment to the Beneficiary under this Plan shall be divided equally among such persons unless the Participant’s designation specifically provides for a different allocation.

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Section 7.2.Change in Beneficiary.

(a)Anything herein or in the Qualified Plan to the contrary notwithstanding, a Participant may, at any time and from time to time, change a Beneficiary designation hereunder without the consent of any existing Beneficiary or any other person.

(b)Any change in Beneficiary shall be made by giving written notice thereof to the Plan Administrator and any change shall be effective only if received prior to the death of the Participant.

Section 7.3.Distributions to Beneficiaries.  Upon the death of a Participant who had commenced to receive payment of his or her Account prior to his or her death in the form of installments (as provided in Section 6.1(b)), any unpaid installments shall be paid to the Participant’s Beneficiary at the same time that they would have been paid to the Participant had the Participant not died (as provided in Section 6.1(b)). Upon the death of any other Participant, the entire Account of the Participant shall be paid to the Participant’s Beneficiary in a lump sum cash payment as soon as practicable following the Participant’s death, but in no event later than 60 days after the Company receives notice of the Participant’s death.  Notwithstanding the foregoing, distributions to Beneficiaries of amounts that are allocated to Participants’ Accounts shall be made in a manner that satisfies the requirements of Code Section 409A.

ARTICLE VIII - INVESTMENT OF ACCOUNTS

Section 8.1.Hypothetical Investment Fund(s).  The Company shall designate as a Hypothetical Investment Fund or Funds under this Plan one or more of the investment funds provided under the Qualified Plan or offered by the trustee thereunder.  Any such designation shall be in a writing which may be amended or supplemented from time to time by the Company pursuant to rules adopted by the Company.  Each Participant (or the Participant’s Beneficiary) shall elect a Hypothetical Investment Fund (or, if permitted by rules adopted by the Company, one or more Hypothetical Investment Funds) for the purposes of Section 4.1.  Such an election may be made in accordance with rules and procedures established by the Company.  A Participant or Beneficiary may change the Participant’s (or Beneficiary’s, as the case may be) Hypothetical Investment Fund election to another election at times specified in rules adopted by the Company and, from and after the effective date of such change, the Participant’s (or Beneficiary’s, as the case may be) new Hypothetical Investment Fund election shall be applicable.  In the absence of a hypothetical investment election by a Participant or the Participant’s Beneficiary, the Company shall select the Hypothetical Investment Fund(s) which shall be applicable to such person’s Account.

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ARTICLE IX - MISCELLANEOUS

Section 9.1.Liability of Employers.  Nothing in this Plan shall constitute the creation of a trust or other fiduciary relationship between an Employer and any Participant, Beneficiary or any other person.

Section 9.2.Limitation on Rights of Participants and Beneficiaries - No Lien.  This Plan is designed to be an unfunded, nonqualified plan.  Nothing contained herein shall be deemed to create a trust or lien in favor of any Participant or Beneficiary on any assets of an Employer.  The Employers shall have no obligation to purchase any assets that do not remain subject to the claims of the creditors of the Employers for use in connection with the Plan.  No Participant or Beneficiary or any other person shall have any preferred claim on, or any beneficial ownership interest in, any assets of an Employer prior to the time that such assets are paid to the Participant or Beneficiary as provided herein.  Each Participant and Beneficiary shall have the status of a general unsecured creditor of the Employers.  The amount standing to the credit of any Participant’s Account is purely notional and affects only the calculation of benefits payable to or in respect of him or her.  It does not give the Participant any right or entitlement (whether legal, equitable or otherwise) to any particular assets held for the purposes of the Plan or otherwise.

Section 9.3.No Guarantee of Employment.  Nothing in this Plan shall be construed as guaranteeing future employment to Participants.  A Participant continues to be an employee of the Employers solely at the will of the Employers subject to discharge at any time, with or without cause.

Section 9.4.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 the Participant’s property, the Plan Administrator may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person.  The Plan Administrator 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 Employers from all liability with respect to such benefit.

Section 9.5.Assignment.

(a)Subject to Subsection (b), no right or interest under this Plan of any Participant or Beneficiary 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 Beneficiary.

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(b)Notwithstanding the foregoing, to the extent provided in Section 6.3, the Plan Administrator shall honor a judgment, order or decree from a state domestic relations court which requires the payment of all or a part of a Participant’s vested Account under this Plan to an “alternate payee” as defined in Section 414(p) of the Code.

Section 9.6.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.

Section 9.7.Governing Law.  Except as otherwise provided in Section 1.3 and except when preempted by federal law, this Plan shall be regulated, construed and administered under the laws of the State of Ohio.

ARTICLE X - ADMINISTRATION OF PLAN

Section 10.1.Administration.

(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 10.3, 10.4 and 10.5 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.

(c)It is intended that, to the extent applicable, all Participant elections hereunder will comply with the 409A Guidance.  The Plan Administrator is authorized to adopt rules or regulations deemed necessary or appropriate in connection therewith to

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anticipate and/or comply with the requirements thereof (including any transition rules thereunder).

Section 10.2.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 the 409A Guidance.  The rules, regulations and interpretations made by the Plan Administrator shall, subject only to the provisions of Section 10.3, 10.4 and 10.5 hereof, be final and binding on all persons.

Section 10.3.Claims Procedures.

(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

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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.

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.

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Section 10.4.Arbitration.

(a)After a Participant has exhausted all administrative remedies as provided in Section 10.3, 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.

(b)If, following exhaustion of all administrative remedies as provided in Section 10.3 and Subsection (a) above, the Participant pursues litigation with respect to a dispute arising hereunder and prevails in such litigation, the Company shall pay and be solely responsible for attorneys’ and related fees and expenses incurred by the employee with respect to such litigation in an aggregate amount not to exceed the amount of the Participant’s most recent base salary.

Section 10.5.Revocability of Plan Administrator/Employer Action.  Any action taken by the Plan Administrator or an 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.

Section 10.6.Amendment.

(a)The Compensation Committee may at any time (without the consent of the Employees) 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 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.

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(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 the 409A Guidance.

Section 10.7.Termination.

(a)The Compensation Committee, in its sole discretion, may terminate this Plan at any time and for any reason whatsoever, except that, subject to Subsection (b) hereof, no such termination may adversely affect the amount of any Participant’s accrued 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.

(b)Any Employer (other than the Company) that adopts the Plan may elect to withdraw from the Plan and such withdrawal shall constitute a termination of the Plan as to such Employer; provided, however, that such terminating Employer shall continue to be an Employer for purposes hereof as to Participants or Beneficiaries to whom it owes obligations hereunder.  Such withdrawal and termination shall be expressed in an instrument executed by the terminating Employer and filed with the Company, and shall become effective as of the date designated in such instrument or, if no such date is specified, on the date of its execution.

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EX-10.6

Exhibit 10.6

DPL INC.

PARTICIPATION AGREEMENT AND WAIVER

This PARTICIPATION AGREEMENT AND WAIVER (“Agreement”) is entered into this 28^th day of February 2006 (the “Effective Date”) among DPL Inc., an Ohio corporation (“DPL”), The Dayton Power and Light Company, an Ohio corporation (“DP&L”), and Patricia K. Swanke (“Executive”).

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

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

WHEREAS, Executive’s participation in the Plans requires execution of this Agreement in order to be eligible to receive benefits under such Program; and

WHEREAS, Executive previously entered into an Employment Agreement with DPL and DP&L (collectively, the “Company”), dated September 17, 2003, and a Change of Control Letter Agreementwith the Company, dated July 1, 2004 (the “Prior Agreements”);

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

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

2.             Participation in the Plans.  DPL confirms that Executive (a) has been designated by the Committee and the Board to participate in each of the Plans pursuant to the terms thereof, contingent on her execution of this Agreement and, with respect to the EPIP, its approval by the shareholders of the Company at their annual meeting on April 26, 2006, and (b) is eligible to receive additional benefits as such are provided to other similarly situated employees of the Company from time to time.

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3.             Termination of Prior Agreements.  Executive, for herself and her dependents, successors, assigns, heirs, executors and administrators (and her and their legal representatives of every kind), and the Company hereby agree that, upon execution of this Agreement, the Prior Agreements shall terminate and have no further force and effect.

4.             Remaining Rights.  Notwithstanding the terms of Section 3 of this Agreement, Executive and the Company hereby agree that nothing in this Agreement negates or diminishes Executive’s rights under any agreement other than the Prior Agreements, including, the rights (a) with respect to any stock incentive units granted under DP&L’s Management Stock Incentive Plan, subject to the terms and conditions contained in the Non-Competition Agreement between the Company and Executive, dated October 3, 1996, a copy of which is attached hereto as Exhibit A, and as further described in the Letter Agreement between the Company and Executive, dated April 27, 2001, a copy of which is attached hereto as Exhibit B, and (b) to purchase from DPL, to the extent not yet purchased, up to a total of 50,000 common shares of DPL at an exercise price of $29 5/8 per share pursuant to the terms of Executive’s Management Stock Option Agreement, dated January 1, 2001, a copy of which is attached hereto as Exhibit C.

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

6.             Non-Solicitation.  As a condition to her eligibility to participate in the Program, Executive hereby agrees that during her employment and for a period of two years following her termination of employment with the Company, Executive will not (a) solicit for employment with herself or any firm or entity with which she is associated, any employee of DPL, its subsidiaries or affiliates, or otherwise disrupt, impair, damage or interfere with DPL’s, its subsidiaries’ or affiliates’ relationships with their employees or (b) solicit for Executive’s own behalf or on behalf of any other person(s), any retail customer of DPL, its subsidiaries or affiliates, that has purchased products or services from the DPL, its subsidiaries or affiliates, at any time (i) with respect to solicitation during employment, during the Executive’s employment or (ii) with respect to solicitation after termination of employment, in the twelve months preceding the date on which

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Executive’s employment with DPL, its subsidiaries or affiliates is terminated or that DPL, its subsidiaries or affiliates are actively soliciting or have known plans to solicit, for the purpose of marketing or distributing any product, pricing or service competitive with any product, pricing or service then offered by DPL, its subsidiaries or affiliates or which DPL, its subsidiaries or affiliates have known plans to offer.

7.             No Inducement.  Executive agrees and acknowledges that no representations, promises or inducements have been made by the Company to induce Executive to enter into this Agreement other than as set forth herein.

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

DPL INC.
By:
	Name: James V. Mahoney
	Title: President and CEO
THE DAYTON POWER AND LIGHT COMPANY
By:
	Name: James V. Mahoney
	Title: President and CEO
Patricia K. Swanke

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Exhibit A

Swanke Non-Competition Agreement

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Exhibit B

Swanke SIU Letter Agreement, dated April 27, 2001

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Exhibit C

Swanke Management Stock Option Agreement

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EX-10.7

Exhibit 10.7

DPL INC.
PARTICIPATION AGREEMENT AND WAIVER

This PARTICIPATION AGREEMENT AND WAIVER (“Agreement”) is entered into this 24^th day of February 2006 (the “Effective Date”) among DPL Inc., an Ohio corporation (“DPL”), The Dayton Power and Light Company, an Ohio corporation (“DP&L”), and W. Steven Wolff (“Executive”).

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

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

WHEREAS, Executive’s participation in the Plans requires execution of this Agreement in order to be eligible to receive benefits under such Program; and

WHEREAS, Executive previously entered into an Employment Agreement with DPL and DP&L (collectively, the “Company”), dated September 27, 2003, and a Change of Control Letter Agreement with the Company, dated November 1, 2002 (as modified through September 10, 2004) (the “Prior Agreements”);

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

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

2.             Participation in the Plans.  DPL confirms that Executive (a) has been designated by the Committee and the Board to participate in each of the Plans pursuant to the terms thereof, contingent on his execution of this Agreement and, with respect to the EPIP, its approval by the shareholders of the Company at their annual meeting on April 26, 2006, and (b) is eligible to receive additional benefits as such are provided to other similarly situated employees of the Company from time to time.

3.             Termination of Prior Agreements.  Executive, for himself and his dependents, successors, assigns, heirs, executors and administrators (and his and their legal representatives of every kind), and the Company hereby agree that, upon

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execution of this Agreement, the Prior Agreements shall terminate and have no further force and effect.

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

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

6.             No Inducement.  Executive agrees and acknowledges that no representations, promises or inducements have been made by the Company to induce Executive to enter into this Agreement other than as set forth herein.

[SIGNATURES ON FOLLOWING PAGE]

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

DPL INC.
By:
	Name: James V. Mahoney
	Title: President and CEO
THE DAYTON POWER AND LIGHT COMPANY
By:
	Name: James V. Mahoney
	Title: President and CEO
W. Steven Wolff

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