Exhibit 10(bb)

 

December 15, 2000

 

Mr. Arthur G. Meyer

3325 Ridgeway Road

Kettering, OH 45429

 

Dear Art:

 

DPL Inc. (“DPL”) and its subsidiary, The Dayton Power and Light Company (“DP&L”)
hereinafter collectively referred to as the “Company”, considers the
establishment and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its shareholders.
In this connection, the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a Change of Control (as defined
in paragraph 2) can raise distracting and disrupting uncertainties and questions
among management personnel, can interfere with their whole-hearted attention and
devotion to the performance of their duties, and can even lead to their
departure, all to the detriment of the best interests of the Company and its
shareholders. Accordingly, the Board of Directors of DPL (the “Board of
Directors”) and the Board of Directors of DP&L have determined that the best
interests of the Company and its shareholders would be served by assuring to
certain executives of the Company, including yourself, the protection provided
by an agreement which defines the respective rights and obligations of the
Company and the executive in the event of termination of employment subsequent
to a Change of Control.

 

In order to effect the foregoing, this letter agreement sets forth the Company’s
agreement to extend to you certain benefits upon a termination of employment
whenever occurring and to set forth the severance benefits which the Company
agrees will be provided to you in the event your employment with the Company or,
in the case of a Change of Control described in clause (iv) of paragraph 2, with
the successor to the Company is terminated subsequent to a Change of Control
under the circumstances described in paragraph 3 below.

 

 

1.                                      OPERATION AND TERM OF AGREEMENT.

 

This agreement, which amends and restates in its entirety the existing letter
agreement between the Company and you dated July 1, 1998, shall become effective
immediately upon the execution hereof. This agreement shall continue until
May 1, 2002, and shall automatically renew for each consecutive twelve month
period thereafter (i.e., May 1st to April 30th), unless either the Company
provides you or you provide the Company a one (1) year prior written notice of
its or your intention not to renew this agreement. Notwithstanding the
foregoing, the term of this agreement shall continue in effect for a period of
not less than thirty-six (36) months after each Change of Control occurring
during the term of this agreement; and any benefit that accrues to you pursuant
to the terms of this agreement shall continue to be an obligation of the Company
and enforceable by you until paid in full, notwithstanding the subsequent
termination of this agreement; provided however that if the event constituting a
Change of Control is either the commencement of a tender offer, or the entering
into of an agreement referred to in item (ii) or

 

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(iii) of paragraph 2, and such tender offer is still pending or such agreement
has not been consummated at the end of the thirty-six month period applicable to
such Change of Control,

 

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then without limitation of the other provisions of this paragraph, such
thirty-six month period shall be extended through the date on which the tender
offer or agreement is either (a) terminated or abandoned or (b) consummated,
whichever occurs first, and the thirty-six month period provided for in
paragraph 3.A. shall also be so extended. If more than one Change of Control
occurs during the term of this agreement, the provisions of this agreement shall
be applicable to each such Change of Control.

 

1.A.                        TERMINATION FOR ANY REASON.

 

Notwithstanding any other provisions of this agreement to the contrary, upon
termination of employment for any reason at any time, the following shall be
paid or made available to you in compensation for services previously rendered:

 

(i)                                     The Company shall pay to you in a lump
sum in cash not later than the Date of Termination (as defined in paragraph 4)
your full base salary through the Date of Termination at the rate in effect at
the Date of Termination; and also the amount of the award or awards, if any,
with respect to any completed period or periods which, pursuant to the
Management Incentive Compensation Program or any other Company incentive
compensation plan in which you are then participating (other than any deferred
compensation plan in which a contrary installment payment election has been
made), has been determined to have been earned by you but which has not yet been
paid to you.

 

(ii)                                  The Company shall pay or make available to
you all other accrued benefits of any kind to which you are, or would otherwise
have been, entitled through the Date of Termination (as defined in paragraph 4).

 

2.                                      CHANGE OF CONTROL.

 

Except as provided in paragraph 1.A. above, no benefits shall be payable
hereunder unless there shall have been a Change of Control, as defined below,
and your employment by the Company shall thereafter have been terminated in
accordance with paragraph 3 below. For purposes of this agreement, a ‘Change of
Control’ means any change in 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 (i) any ‘person’ (as such term is
defined in Sections 13 (d) and 14 (d) (2) of the Exchange Act; hereafter, a
‘Person’) other than DPL or DP&L or an entity then directly or indirectly
controlling, controlled by or under common control with DPL or DP&L is on the
date hereof or becomes or commences a tender offer to become the beneficial
owner, directly or indirectly, of securities of DPL or DP&L representing (A) 15%
or more of the combined voting power of the then outstanding securities of DPL
or DP&L if the acquisition of such beneficial ownership or such tender offer is
not approved by the Board of Directors of DPL prior to the acquisition or the
commencement of such tender offer or (B) 50% or more of such combined voting
power in all other cases; (ii) DPL or DP&L enters into an agreement to merge or
consolidate itself, or an agreement to consummate a ‘combination’ or ‘majority
share acquisition’ in which it is the ‘acquiring corporation’ (as such terms are
defined in Ohio Rev.

 

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Code § 1701.01 as in effect on December 31, 1990) 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 DPL into DP&L or of DP&L into DPL; (iii) DPL or DP&L
enters into an agreement to sell, lease, exchange or otherwise transfer or
dispose 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 DPL; but not including (A) a mortgage or pledge of assets
granted in connection with a financing or (B) 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; (iv) any
transaction referred to in (ii) or (iii) above is consummated; or (v) those
persons serving as directors of DPL or DP&L on February 1, 2000 (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 maybe (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).

 

3.                                      TERMINATION FOLLOWING CHANGE OF CONTROL.

 

A.                                   If any of the events described in paragraph
2 constituting a Change of Control shall have occurred, then upon any subsequent
termination of your employment at any time within thirty-six months following
the occurrence of any such event, you shall be entitled to the benefits set
forth in paragraph 5, unless such termination
is                                       

 

(i)                                     by the Company because of your
Disability or for Cause;

 

(ii)                                  by you without Good Reason, except that if
no Change of Control has occurred other than the commencement of a tender offer
or the entering into of an agreement referred to in item (ii) or (iii) of
paragraph 2 by you for any reason; or

 

(iii)                               because of your death.

 

Notwithstanding the foregoing sentence and any other provision herein to the
contrary, if (a) the event constituting the Change of Control is only the
commencement of a tender offer or the entering into of an agreement referred to
in item (ii) or (iii) of paragraph 2 above, (b) the tender offer or agreement is
abandoned or terminated, and (c) a majority of the Original Directors and/or
their Successors (as defined in paragraph 2 above) of DPL Inc. determine that
the tender offer or agreement will not effectuate or otherwise result in a
subsequent Change of Control and gives you written notice of such determination,
then, as to that particular event only, a subsequent termination of your
employment will not entitle you to the benefits set forth in paragraph 5.

 

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For purposes of this agreement, termination of your employment shall be deemed
to have occurred within thirty-six months following the occurrence of a Change
of Control if a Notice of Termination (as defined in paragraph 4) with respect
thereto is given within such three year period.

 

B.                                     As used in this agreement, the terms
“Disability”, “Cause” and “Good Reason” shall have the meaning set forth below:

 

(i)                                     Disability. “Disability” shall mean, for
the purposes of this agreement, your inability to perform the duties required of
you 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,
followed by the Company giving you thirty days’ written notice of its intention
to terminate your employment by reason thereof, and your failure because of
physical or mental illness or other physical or mental disability or incapacity
to resume the full-time performance of your duties within such period of thirty
days and thereafter perform the same for a period of two consecutive months.

 

(ii)                                  Cause. “Cause” shall mean (a) commission
of a felony, (b) embezzlement, (c) the illegal use of drugs, or (d) if no Change
of Control has occurred other than the commencement of a tender offer and/or the
entering into of an agreement referred to in items (ii) or (iii) of paragraph 2,
the failure by you to substantially perform your duties with the Company (other
than any such failure resulting from your physical or mental illness or other
physical or mental incapacity) as determined by the Board of Directors.
Notwithstanding the foregoing, Cause shall not be deemed to exist unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by written consent of not less than three-fourths of the number of directors
then in office (after reasonable notice to you and an opportunity for you,
together with you counsel, to be heard at a meeting of the Board of Directors
called and held for that purpose), finding that in the good faith opinion of the
Board of Directors you were guilty of conduct set forth above in clauses (a),
(b), (c) or (d) of the first sentence of this subparagraph and specifying the
particulars thereof in detail.

 

(iii)                               Good Reason. “Good Reason” shall mean:

 

(a)                                  The assignment to you, without your express
consent, of any duties inconsistent with the written Objectives approved by the
Company with respect to your position, duties, responsibilities and status with
the Company in effect immediately prior to a Change of Control, or a change in
your reporting responsibilities, titles or offices as described in the Company’s
written objectives in effect immediately prior to a Change of Control, or your
removal from or any failure to re-elect you to any of such positions or offices,
except in connection with the termination of your employment for

 

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Disability or Cause, or by you other than for Good Reason, or as a result of
your death.

 

(b)                                 Failure by the Company to increase your
annual base salary, at the time when salary adjustments were historically made
by the Company prior to the Change of Control, by an amount which at least
equals on a percentage basis the average percentage increase in your base salary
during the three (3) full calendar years immediately preceding the Change of
Control.

 

(c)                                  A reduction by the Company of your base
salary as in effect on the date hereof or as the same may be increased from time
to time.

 

(d)                                 Failure by the Company to continue in effect
any benefit or compensation plan (including but not limited to the Company’s
Management Incentive Compensation Program, Key Employees Deferred Compensation
Plan, Management Stock Incentive Plan, Supplemental Executive Retirement Plan or
any other pension, employee stock ownership, life insurance, medical, health and
accident, or disability plan) in which you are participating at the time of a
Change of Control or plans providing you with substantially similar benefits; or
the taking of any action by the Company which would adversely affect your
participation in or materially reduce your benefits under any of such plans or
deprive you of any material fringe benefit enjoyed by you at the time of the
Change of Control; or the failure by the Company to provide you with the number
of paid vacation days to which you would then be entitled in accordance with the
Company’s vacation policy in effect at the time of the Change of Control.

 

(e)                                  The relocation of the Company’s principal
executive offices to a location outside Montgomery County, Ohio, if at the time
of a Change of Control you are based at the Company’s principal executive
offices.

 

(f)                                    The Company’s requiring you to be based
anywhere more than fifty miles from the location where you are based at the time
of a Change of Control (except for required travel on the Company’s business to
an extent substantially consistent with your business travel obligations as they
existed at the time of a Change of Control); or, in the event you consent to
being based anywhere more than fifty miles from such location, the failure by
the Company to pay (or reimburse you for) all reasonable moving expenses
incurred by you relating to a change of your principal residence in connection
with such relocation and to indemnify you against any loss (defined as the
difference between the actual sale price of such residence after the deduction
of all real estate brokerage charges and related selling expenses and the higher
of

 

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(1) your aggregate investment in such residence or (2) the fair market value of
such residence as determined by a real estate appraiser designated by you and
reasonably satisfactory to the Company realized upon the sale of such residence
in connection with any such change of residence.

 

(g)                                 The Company’s requiring you to perform
duties or services which necessitate absence overnight from your place of
residence, because of travel involving the business or affairs of the Company,
to a degree not substantially consistent with the extent of such absence
necessitated by such travel during the period of twelve months immediately
preceding a Change of Control.

 

(h)                                 The failure of the Company to obtain the
assumption of this agreement by any successor as provided in paragraph 7 hereof.

 

(i)                                     The Company’s termination of your
employment without satisfying any applicable requirements of subparagraph
(ii) above or of paragraph 4.

 

(j)                                     If, within thirty-six months after the
date of a Change of Control you determine in good faith that due to the Change
of Control, you are not able to effectively discharge your duties.

 

C.                                     Should your employment be terminated
because of a Disability within thirty-six (36) months following the occurrence
of a Change of Control, you shall be entitled to receive benefits under any
Company employee salary continuation plan or employee disability insurance plan
then in effect in accordance with the then applicable terms thereof; provided
that if the Change of Control is other than a Change of Control consisting only
of the commencement of a tender offer and/or the entering into of an agreement
referred to in item (ii) or (iii) of paragraph 2 above, you shall be entitled to
receive such benefits or benefits under any similar plan in effect as of the
date of the occurrence of such Change of Control, whichever shall result in the
highest amount of benefits being paid to you as a result of the Disability in
question.

 

D.                                    If subsequent to a Change of Control your
employment is terminated by the Company for Cause, the Company shall pay or make
available to you, in compensation for services previously rendered, the amounts
provided under paragraph 1.A. above; and the Company shall thereupon have no
further obligation to you under this agreement.

 

4.                                      NOTICE UPON TERMINATION.

 

A. Any termination of your employment subsequent to a Change of Control, unless
by you without Good Reason or because of your death, shall be consummated by
written Notice of Termination given to the other party. For purposes of this
agreement, “Notice of Termination” shall mean a notice given by the Company, or
by you following the event specified in subparagraph 3.B(iii), which indicates
the specific termination provision or provisions in this agreement relied upon,
if any, and sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of your employment.

 

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B.                                     “Date of Termination” shall mean

 

(i)                                     if your employment is terminated by the
Company for Cause, the date specified in the Notice of Termination;

 

(ii)                                  if you terminate your employment for Good
Reason, the date specified in your Notice of Termination; or

 

(iii)                               if your employment is terminated by the
Company or by you for any other reason, the date of such termination.

 

5.                                      COMPENSATION UPON TERMINATION.

 

A.                                   If you are entitled to benefits under
paragraph 3.A., then

 

(i)                                     The Company shall pay to you as
severance pay in a lump sum in cash not later than the Date of Termination (or
in the case of payments under (e), if, and to the extent the amount of such
payments are not known or calculable as of such due date, as soon as the amount
is known and calculable), subject, however, to any contrary deferral election
you may have made with respect thereto, the amounts determined as provided
below:

 

(a)                                  In the event the Date of Termination
precedes the completion of a period in which, pursuant to the Management
Incentive Compensation Plan or any other Company incentive compensation plan in
which you are then participating or have participated except for the MSIP), you
could have earned compensation thereunder had your employment not been
terminated prior to the completion of such period, or in the event the Date of
Termination precedes the determination of compensation that you have earned for
a completed period under the Management Incentive Compensation Plan or other
incentive plan (except for the MSIP), then, with respect to each such period,
you shall be entitled to an amount equal to the average of the last three annual
award payments made to you under the Management Incentive Compensation Plan or
other incentive plan (except for the MSIP) prior to the Date of Termination (or
for the years you have participated in the Plan, if less than three), including
any portion of any such payments which you elected to defer to your Standard
Deferral Account in the Company’s Key Employees Deferred Compensation Plan.

 

(b)                                 In lieu of further salary payments to you
for periods subsequent to the Date of Termination, an amount equal to 300% of
the sum of (1) your annual base salary (which base salary is computed before
deduction for any deferred compensation or other employee deferrals) at the rate
in effect as of Date of Termination (or, if

 

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higher, at the rate in effect at the time of the Change of Control) plus (2) the
average of the last three annual award payments made to you under the Company’s
Management Incentive Compensation Plan prior to the Date of Termination (or for
the years you have participated in the Plan if less than three), including any
portion of any such payments which you elected to defer to your Standard
Deferral Account in the Company’s Key Employees Deferred Compensation Plan.

 

(c)                                  In consideration of your agreeing to the
following covenants in this paragraph 5.A.(i)(c), if you are due an amount under
paragraph 5.A.(i)(b), an additional amount equal to one-half (1/2) the amount
determined under paragraph 5.A.(i)(b). In consideration of the Company’s
agreement to make this payment per the terms of this paragraph 5.A.(i)(c), you
agree that in the event and only in the event that you receive any payments
under this paragraph 5.A., then during the term of your employment with the
Company and for a period of two years after termination of your employment for
any reason, you will not, without our prior written consent, engage, participate
or be interested, directly or indirectly, in any business: (i) which is engaged
in Ohio, Indiana, Kentucky, Michigan and/or Pennsylvania in providing (as a
public utility or otherwise) gas and/or electric power or services on a retail
and/or wholesale basis or in providing energy marketing, aggregation and/or
procurement services or (ii) which is engaged in any other business being
conducted or proposed to be conducted by the Company.

 

Furthermore, you agree that, during the aforementioned two year period, you will
not (i) directly or indirectly, solicit for employment with yourself or any firm
or entity with which you are associated, any employee of the Company or
otherwise disrupt, impair, damage or interfere with the Company’s relationship
with its employees; (ii) solicit for your own behalf or on behalf of any other
person(s), any customer of the Company that has purchased goods from the Company
at any time in the twelve (12) months preceding your date of termination or that
the Company is actively soliciting, for the purpose of marketing or distributing
any product or service competitive with any product or service then offered by
the Company in any geographic market where the Company is doing or preparing to
do business; or (iii) engage yourself or be affiliated with any person(s), in
the development or marketing, including but not limited to the establishment of
product prices, of any product which will compete with any product the Company
is then developing or marketing in any geographic market where the Company is
doing or preparing to do business.

 

At all times, you (i) will keep all confidential, nonpublic and/or proprietary
information (including, for example, trade secrets,

 

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financial information, customer information and business and strategic plans) of
the Company (regardless of when you became aware of such information) in strict
confidence and (ii) will not, directly or indirectly, use or disclose to any
person in any manner any of such information, except to the extent directly
related to and required by your performance of the duties assigned to you by the
Company. You will take all appropriate steps to safeguard such information and
to protect it against unauthorized disclosure, misuse, loss or theft. Upon
termination of your employment, you will promptly return to the Company, without
retaining any copies, all written or computer readable material containing any
of such information, as well as all other property and records of the Company,
in your possession or control.

 

The payment under this paragraph 5.A.(i)(c) and the payment under paragraph
5.A.(i)(b) are herein together referred to as the “Additional Compensation
Payment.”

 

Notwithstanding the above, you may elect to defer payment of all or a portion of
the Additional Compensation Payment by executing and delivering to the Company a
Deferral Election Form in the form attached as Exhibit A, in which event the
portion of the Additional Compensation Payment so deferred shall be credited to
your Standard Deferral Account in the Company’s Key Employees Deferred
Compensation Plan.

 

(d)                                 Anything in the Management Incentive
Compensation Plan or any action taken by the Board of Directors or any committee
of the Board of Directors pursuant thereto to the contrary notwithstanding, any
awards, whether in cash or Company shares, made under such plan prior to the
Date of Termination which have been credited to your account but the payment of
which has been deferred.

 

(e)                                  Any amount payable under paragraph 9
hereof.

 

(ii)                                  The Company shall, at its expense,
maintain in full force and effect for your continued benefit all life insurance,
health and accident, and disability plans, programs and arrangements in which
you were entitled to participate immediately prior to the Date of Termination,
or, if more favorable to you, on the date of a prior Change of Control, provided
that your continued participation is possible under the terms of such plans,
programs and arrangements. In the event that the terms of any such plan, program
or arrangement do not permit your continued participation or that any such plan,
program or arrangement is discontinued or the benefits thereunder materially
reduced, the Company shall arrange to provide, at its expense, benefits to you
which are substantially similar to those which you were entitled to receive
under such plan, program or arrangement

 

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immediately prior to the Date of Termination. The Company’s obligation under
this subparagraph (ii) shall terminate on the earliest of the following dates:

 

(a)                                  the third anniversary date of the Date of
Termination; or

 

(b)                                 the date an essentially equivalent and no
less favorable benefit is made available to you at no cost by a subsequent
employer.

 

At the end of the applicable period of coverage set forth above, you shall have
the option to have assigned to you, at no cost and with no apportionment of
prepaid premiums, any assignable insurance owned by the Company and relating
specifically to you.

 

(iii)                               In the event that because of their
relationship to you, members of your family or other individuals are covered by
a plan, program, or arrangement described in subparagraph (ii) above immediately
prior to the Date of Termination, the provisions set forth in the above
subparagraph shall apply equally to require the continued coverage of such
persons; provided, however, that if under the terms of any such plan, program or
arrangement, any such person would have ceased to be eligible for coverage
during the period in which the Company is obligated to continue coverage for
you, nothing set forth herein shall obligate the Company to continue to provide
coverage which would have ceased even if you had remained an employee of the
Company during such period.

 

(iv)                              The Company shall enable you to purchase the
automobile, if any, which the Company was providing for your use at the time
Notice of Termination was given at the wholesale value of such automobile at
such time, or to assume the lease obligation on any such Company automobile
leased by the Company.

 

B.                                     With respect to the Management Stock
Incentive Plan (“MSIP”), upon a Change of Control except for a Change of Control
consisting only of the commencement of a tender offer or the entering into of an
agreement referred to in items (ii) or (iii) of paragraph 2 above, any and all
awarded Stock Incentive Units (other than to the extent related to a completed
Incentive Period for which the determination of the number of Earned Stock
Incentive Units has already been made; and not to exceed the number of Stock
Incentive Units comprising the target award under the applicable Stock Incentive
Award regardless of the potential to earn more than such target award if and as
provided in such Stock Incentive Award), shall be deemed to be Earned Stock
Incentive Units which are vested, and all such Earned Stock Incentive Units
including, without limitation, the 1997 award (which covers the period
1998-2000) and the 1998 award (which covers the period 1999-2001) shall be
payable to you as provided in Section l0(b) (or successor provision) of the
MSIP. All capitalized terms in this paragraph B shall have the same meaning as
in the MSIP. Stock Incentive Units are sometimes referred to as “Restricted
Stock Units.”

 

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C.                                     The benefits provided under this
agreement shall not be treated as damages, but rather shall be treated as
severance compensation to which. you are entitled under the terms and conditions
provided herein. You shall not be required to mitigate the amount of any benefit
provided under this agreement by seeking other employment or otherwise.

 

6.                                      RIGHTS AS FORMER EMPLOYER.

 

Nothing contained in this agreement shall be construed as preventing you, and
shall not prevent you, following any termination of your employment whether
pursuant to this agreement or otherwise, from thereafter participating in any
benefit or insurance plans, programs or arrangements (including, without
limitation thereto, any retirement plans or programs) in the same manner and to
the same extent that you, as a former employee of the Company, would have been
entitled to participate had this agreement not have been entered into.

 

7.                                      SUCCESSORS.

 

The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement to expressly and
unconditionally assume and agree to perform this agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of such succession shall be a breach of this
agreement and shall entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled hereunder if you
terminated your employment for Good Reason regardless of whether you in fact
have done so, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Date of
Termination.

 

The above provisions of this paragraph 7 shall not apply to a) a spin-off or
sale of assets, or b) a transaction described in item (ii) of paragraph 2 above
involving only DP &L if in each case 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.

 

This agreement shall inure to the benefit of and be enforceable by your personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amounts would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid to such beneficiary or
beneficiaries as you shall have designated by written notice delivered to the
Company prior to your death or, failing written notice, to your estate.

 

8.                                      LEGAL FEES.

 

The Company shall reimburse you in full for all. legal fees and expenses
reasonably incurred by you in connection with this agreement (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment subsequent to a Change of Control
or in seeking to obtain or enforce any right or benefit

 

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provided by this agreement, regardless of the outcome, unless, in the case of a
legal action brought by you or in your name, a court finally determines that
such action was not brought in good faith by you).

 

9.                                      GROSS-UP PAYMENT.

 

In the event that any payment pursuant to this agreement or any other agreement
will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the
Internal Revenue Code of 1986 (“Code”) or any successor or similar provision,
the Company shall pay you an additional amount (the “Gross-Up Payment”) such
that the net amount retained by you after deduction of any Excise Tax on such
payments (excluding payments pursuant to this paragraph 9), and after deduction
for any federal, state and local income tax and Excise Tax upon the payment
provided for by this paragraph, shall be equal to the amount of such payments
(excluding payments pursuant to this paragraph 9) before payment of any Excise
Tax (hereinafter the “Excise Tax Compensation Net Payment”).  For purposes of
determining whether any of such payments will be subject to the Excise Tax and
the amount of such Excise Tax, any payments or benefits received or to be
received by you in connection with a Change of Control or your termination of
employment shall be treated as “parachute payments” within the meaning of
Section 280G of the Code, and all “excess parachute payments” within the meaning
of Section 280G of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Company’s independent
auditors and acceptable to you such payments or benefits do not constitute
parachute payments or excess parachute payments. For purposes of determining the
amount of the Gross-Up Payment, you shall be deemed to pay all federal income
taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rates of taxation in the state and locality of
your residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time of termination of
your employment, you shall repay to the Company, at the time that the amount of
such reduction in Excise Tax is finally determined, an amount necessary so that
the total payments hereunder equal the Excise Tax Compensation Net Payment, plus
interest on the amount of such repayment at a rate equivalent to the rate
described in Section 280G (d) (4) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time of
the termination of your employment, the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of such excess is finally
determined.

 

The Gross-Up Payment shall be paid not later than the Date of Termination or, if
and to the extent such payment is not known or calculable as of such date, as
soon as the amount is known and calculable.

 

10.                               AGREEMENT TO PROVIDE SERVICES.

 

In the event that (i) a Person commences a tender offer to become the beneficial
owner, directly or indirectly, of securities of DPL or DP&L representing fifteen
percent (15%) or more of the combined voting power of the then outstanding
securities of DPL or DP&L, as the case may be, or (ii) a Change of Control
occurs consisting of the entering into of an agreement

 

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referred to in item (ii) or (iii) of paragraph 2 above, you agree that you will
perform services for the Company and that you will not voluntarily terminate
your employment with the Company until the first to occur of the following:

 

(i)                                     the abandonment or termination of such
tender offer or the transaction that is the subject of the agreement; or

 

(ii)                                  the occurrence of a Change of Control
(other than the commencement of the tender offer or the entering into of an
agreement referred to in item (ii) or (iii) of paragraph 2 above).

 

11.                               FUNDING OF MASTER TRUST.

 

Upon a Change of Control, the Company shall immediately transfer to the Amended
and Restated Master Trust dated February 1, 1995, as amended (or to an Other
Trust as defined in such Trust) previously established to secure the Company’s
obligations to participants under various Company deferred and incentive
compensation plans, cash in an amount sufficient to fund all payments which
would be made to you hereunder if your employment was terminated on the date of
the Change of Control under circumstances in which payments under paragraph 5
hereof would become due and payable to you, including, without limitation, cash
in an amount sufficient to fund payments of all future medical, life insurance,
accident and disability plans as provided in paragraphs 5.A (ii) and
(iii) hereof, and the Gross-Up Payment as defined in paragraph 9 above, in each
case based on reasonable estimates.

 

12.                               NOTICES.

 

All notices required or permitted to be given under this agreement shall be in
writing and shall be mailed (postage prepaid by either registered or certified
mail) or delivered, if to the Company, addressed to

 

(a)                                  Prior to a Change of Control, to the
Corporate Secretary of the Company at:

 

 

The Dayton Power and Light Company

 

MacGregor Park

 

1065 Woodman Drive

 

Dayton, Ohio 45432

 

Attention: Corporate Secretary

 

(b)                                 After a Change of Control, to the Trustees
at:

 

 

Chernesky, Heyman & Kress P.L.L.

 

Suite 1100

 

10 Courthouse Plaza, S.W.

 

Dayton, Ohio 45402

 

Attn:

Richard J. Chernesky, Esq.

 

 

Richard A. Broock, Esq.

 

 

Frederick J. Caspar, Esq.

 

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and if to you, addressed to

 

 

Arthur G. Meyer 3325

 

Ridgeway Road

 

Kettering, Ohio 45429

 

Any party may change the address to which notices to such party are to be
directed by giving written notice of such change to the other parties in the
manner specified in this paragraph.

 

13.                               MISCELLANEOUS.

 

No provision of this agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing, signed by you and
such officer of the Company as may be specifically designated by the Board of
Directors. No waiver by any party hereto at any time of any breach by any other
party hereto of, or of compliance by such other party with, any condition or
provision of this agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.  No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this agreement.

 

14.                               GOVERNING LAW.

 

The validity, interpretation, construction and performance of this agreement
shall be governed by the laws of the State of Ohio, without giving effect to the
principles of conflicts of law thereof.

 

15.                               VALIDITY.

 

The provisions of this agreement are divisible; if any provision of this
agreement is ruled invalid or unenforceable by any court, such invalidity or
enforceability, shall not affect the validity or enforceability of any other
provision, which shall remain in full force and effect; and such provision shall
be modified by such court consistent with the intent of the parties to the
extent necessary to render it valid and enforceable, if possible.

 

16.                               NO RIGHT TO EMPLOYMENT.

 

Nothing in this agreement shall confer upon you the right to continue employment
with the Company, or obligate you to continue employment with the Company
(except as provided in paragraph l0); nor shall it interfere with the rights of
the Company to discharge you or take other action with respect to you, subject
to the Company’s providing the benefits specified herein in accordance with the
terms hereof.

 

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If this letter correctly sets forth our agreement on the subject matter hereof,
please so confirm by signing and returning the enclosed copy.

 

 

Very truly yours,

 

 

 

DPL INC.

 

 

 

 

 

By:

 

 

 

 

Its President

 

 

 

 

 

THE DAYTON POWER AND LIGHT COMPANY

 

 

 

 

 

By:

 

 

 

 

Its President

 

 

 

 

Confirmed and agreed to:

 

 

 

 

 

 

 

 

 

 

Date:

 

 

 

 

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