ex10g




 Exhibit 10(g) 
  

 AGREEMENT
   

      THIS
  AGREEMENT is made as of December 31, 1996 among DPL INC., an Ohio corporation
  (“DPL”), THE DAYTON POWER AND LIGHT COMPANY, an Ohio corporation and
  a subsidiary of DPL (“DP&L” and, together with DPL, the “Companies”),
  and PETER H. FORSTER (“Mr. Forster”), under the following circumstances:
   


        A.
    Mr. Forster has been employed by the Companies for many years and he currently
    serves as the Chairman of the Board and Chief Executive Officer of DPL and
    the Chairman of the Board of DP&L. During his tenure, Mr. Forster has
    made a unique and extremely valuable contribution to the Companies and has
    lead the Companies to a position of preeminence within the electric and gas
    utility industry.  

        B.
    Mr. Forster is retiring as an employee of the Companies effective as of the
    date hereof and, in connection therewith, Mr. Forster is also resigning as
    the Chief Executive Officer of DPL.  

        C.
    As the Companies confront the dramatic and rapid changes currently affecting
    the electric and gas utility industry generally and the challenges and uncertainties
    associated therewith, the Board of Directors of each of the Companies desires
    to secure the continued services of Mr. Forster to assure the continued benefit
    of his leadership, experience, wisdom, expertise and insight. Accordingly,
    the Board of Directors of each of the Companies desires that Mr. Forster remain
    as the Chairman of the Board of each of the Companies and as the Chairman
    of the Executive Committee of the Board of Directors of DPL and further desires
    to retain Mr. Forster as a consultant to the Companies.  

        D.
    Mr. Forster is willing to remain, in a non-employee capacity, as the Chairman
    of the Board of each of the Companies and as the Chairman of the Executive
    Committee of the Board of Directors of DPL and to act as a consultant to the
    Companies, subject to and upon the terms and conditions contained herein.
     

        E.
    The Board of Directors of each of the Companies recognizes that Mr. Forster,
    by undertaking the commitment to the Companies contained herein, will forego
    other business opportunities which he otherwise could pursue.  



 NOW, THEREFORE, in consideration
  of the premises and the mutual agreements set forth herein, it is hereby agreed
  as follows:  

      Section
  1. Term.  Unless sooner terminated as provided in Section 11,
  the term of this Agreement (the “Term”) shall commence as of January
  1, 1997 and shall expire on December 31, 1999; provided, however, that the Term
  shall be automatically extended on December 31, 1999 and on each December 31
  thereafter (each a “Renewal Date”) for an additional one year period
  unless, at least 15 months prior to any Renewal Date, either Mr. Forster or
  the Companies gives written notice (a “Nonrenewal Notice”) to the
  other that the Term will not be so extended  





 on such Renewal Date and,
  in such event, the Term shall expire on such Renewal Date. Notwithstanding the
  foregoing, the Term shall continue in effect for a period of not less than 36
  months after each Change of Control occurring during the Term; provided, however,
  that, if the event constituting a Change of Control is either the commencement
  of a tender offer and/or the entering into of an agreement referred to in clauses
  (i) or (ii) of the definition of “Change of Control” and such tender
  offer is still pending or such agreement has not been consummated at the end
  of the 36 month period applicable to such Change of Control, then such 36 month
  period shall be extended through the date on which such tender offer or agreement
  is either (i) terminated or abandoned or (ii) consummated, whichever occurs
  first, and the 36 month period provided for in Section 12(c) shall also be so
  extended. If more than one Change of Control occurs during the Term, the foregoing
  sentence shall be applicable to each such Change of Control.  

      Section
  2. Chairman of the Board. (a) Election.  During the Term, so long
  as Mr. Forster is serving as a director of DPL, Mr. Forster shall serve as the
  Chairman of the Board of DPL, DP&L and Miami Valley Equipment, Inc. (a subsidiary
  of DP&L), in a non-employee capacity, and as the Chairman of the Executive
  Committee of the Board of Directors of DPL. Mr. Forster hereby agrees to serve
  in such capacities and, if requested, to also serve as a member of other committees
  of the Board of Directors of either of the Companies or as a director of other
  subsidiaries of the Companies.  

      (b)
  Duties.  In his capacities as Chairman of the Board of the Companies,
  Mr. Forster shall (i) preside at all meetings of the Board of Directors and
  of the shareholders, (ii) share with the Chief Executive Officers of the Companies
  the responsibility for establishing the agenda for all meetings of the Board
  of Directors (and the committees thereof), (iii) subject to the direction and
  control of the Board of Directors, be the Board’s representative and medium
  for communication, (iv) in conjunction with the Chief Executive Officers of
  the Companies, be responsible for (x) the formulation of the long term utility
  and nonutility corporate strategies of the Companies and the plan of implementation
  thereof, (y) any significant acquisition or business combination activities
  in which the Companies may become involved and (z) shareholder/investor relations
  and external relations with the financial community and the utility industry,
  (v) lend his guidance, experience, wisdom, expertise and insight to the Chief
  Executive Officers of the Companies as requested from time to time, and (vi)
  perform such other duties as may be required by law or the Regulations of the
  Companies or as may be reasonably assigned to him from time to time by the Board
  of Directors of the Companies.  

      (c)
  Compensation.  For his services under this Section 2, Mr. Forster
  shall (i) be entitled to receive such director’s and similar fees as are
  customarily paid to other non-employee directors of the Companies in accordance
  with the Companies’ standard policies and practices, including the same
  Stock Awards under DP&L’s Directors’ Deferred Stock Compensation
  Plan (the “Directors’ Deferred Stock Plan”) as are awarded to
  other non-employee directors of the Company, (ii) in addition to the Stock Awards
  provided for in the foregoing clause (i), be awarded annually on each January
  1 during the Term a Stock Award opportunity of 35,000 DPL Common Shares under
  the Directors’ Deferred Stock Plan with the Stock Award opportunity for
  each such year subject to the same earning and vesting criteria as are generally
  applicable to Stock Incentive Units granted under DP&L’s Management
  Stock Incentive Plan (the “MSIP”)  





 for such year, (iii) be
  entitled to participate in DP&L’s 1991 Amended Directors’ Deferred
  Compensation Plan (the “Directors’ Deferred Compensation Plan”),
  and (iv) be entitled to receive such other compensation and benefits as are
  customarily provided to other non-employee directors of the Companies in accordance
  with the Companies’ standard policies and practices.  

      Section
  3. Consulting Services. (a) Duties. During the Term, Mr. Forster
  shall provide the Companies and their subsidiaries with such advisory and consulting
  services as the Board of Directors of either of the Companies may reasonably
  request from time to time. Any such advisory or consulting services shall be
  consistent with Mr. Forster’s stature and experience and his previous positions
  with the Companies. In particular, but without limitation of the foregoing,
  during the Term, Mr. Forster: (i) shall be responsible for, and shall report
  directly to the Executive Committee of the Board of Directors of DPL in connection
  with, the management, monitoring and oversight of the nonutility investment
  portfolios and activities of DPL and its subsidiaries, (ii) shall serve as a
  member of the Committee for the Retirement Plan One of DP&L (the “Defined
  Benefit Plan”) and, in connection therewith, shall assist in establishing
  and monitoring the financial and investment guidelines for Defined Benefit Plan
  and (iii) if requested, shall serve on the advisory board or other committee
  of any private equity partnership (or similar investment vehicle) in which DPL
  or any of its subsidiaries has made an investment. In connection with the performance
  of his duties under this Section 3, the Companies shall provide Mr. Forster
  such staff, professional and other support as Mr. Forster may reasonably request
  from time to time.  

      (b)
  Compensation. For his services under this Section 3, Mr. Forster
  shall receive (i) base consulting fees at the annual rate of $500,000, payable
  annually in advance on each January 1 during the Term, (ii) for the calendar
  years of 1997, 1998 and 1999, such bonuses as the Compensation Committee may,
  in its discretion, determine and (iii) for the calendar year of 2000 and for
  each calendar year thereafter, a bonus calculated and determined in accordance
  with Annex A attached hereto, payable within 30 days after the end of each such
  calendar year. In recognition of the substantial contribution which Mr. Forster
  has made, and will continue to make, to the nonutility investment activities
  of DPL and its subsidiaries, the obligation to pay Mr. Forster the amounts specified
  in clause (iii) of the preceding sentence shall survive the termination of this
  Agreement for any reason (including, without limitation, by reason of the expiration
  of the Term or by reason of Mr. Forster’s death) and the Companies shall
  pay to Mr. Forster (or, in the event of his death, to such beneficiary as Mr.
  Forster may designate in writing, from time to time, to the Secretary of DPL
  or, in the absence of such designation, to his estate) annually the amount which
  would have been payable to Mr. Forster pursuant to clause (iii) of the preceding
  sentence had this Agreement remained in effect.  

      (c)
  Deferral of Compensation. Mr. Forster may elect to defer the actual
  payment of any compensation payable to him pursuant to Section 3(b) in accordance
  with the Directors’ Deferred Compensation Plan.  

      (d)
  Other Benefits. During the Term, the Companies shall provide Mr.
  Forster with life, health, accident and disability insurance benefits and similar
  fringe benefits on a basis substantially equivalent to those benefits which
  the Companies are currently providing to Mr. Forster.  





      Section
  4. Place of Performance. In performing his duties under this
  Agreement, Mr. Forster shall not be required to be physically located within
  Dayton, Ohio and Mr. Forster may perform such duties from such locations (either
  within or without Dayton, Ohio) as Mr. Forster may determine from time to time;
  provided, however, that Mr. Forster shall, subject to illness and unavoidable
  personal or other commitments, attend all meetings of the Boards of Directors
  of the Companies (and any committee thereof on which he serves) and be available
  in Dayton, Ohio on an “as needed” basis, from time to time, at such
  times as may be reasonably requested. During the Term, the Companies shall maintain
  at their principal corporate offices in Dayton, Ohio appropriate office facilities
  for Mr. Forster’s use.  

      Section
  5. Expenses. The Companies shall reimburse Mr. Forster for all
  reasonable out-of-pocket expenses (including travel expenses) incurred by him
  in connection with the performance of his duties hereunder.  

      Section
  6. Death Benefit. In accordance with existing arrangements with
  Mr. Forster, upon Mr. Forster’s death during the Term, the Companies shall
  pay a death benefit of $1,000,000 to such beneficiary as Mr. Forster may designate
  in writing to the Secretary of DPL. Mr. Forster may change any beneficiary so
  designated at any time by written notice to the Secretary of DPL. In the event
  that Mr. Forster fails to designate a beneficiary or the beneficiary so designated
  does not survive Mr. Forster, then such death benefit shall be paid to Mr. Forster’s
  estate.  

      Section
  7. Relationship of Parties. In the performance of his duties
  hereunder, Mr. Forster’s relationship to the Companies shall be that of
  an independent contractor and not that of an employee. Mr. Forster shall be
  solely responsible for and shall pay all applicable federal, state, local or
  other self-employment and income taxes applicable to the compensation payable
  to him hereunder.  

      Section
  8. Confidentiality. During the Term and indefinitely thereafter,
  Mr. Forster (i) shall keep and hold all confidential, nonpublic and/or proprietary
  information (including, without limitation, any information which may constitute
  a “trade secret” within the meaning of Ohio law) of, or relating to,
  either of Companies or any of their subsidiaries or affiliates in strict confidence
  and (ii) shall not, directly or indirectly, use or disclose to any person or
  entity any of such information, except to the extent that any such use or disclosure
  is related to the performance of his duties hereunder. Upon termination of this
  Agreement, Mr. Forster shall promptly return to the Companies all documents
  or other written or computer readable material containing or reflecting any
  of such confidential information in his possession or control.  

      Section
  9. Indemnification. The Companies shall indemnify Mr. Forster
  against any and all losses, liabilities, damages, expenses (including attorneys’
  fees), judgments and amounts paid in settlement incurred by Mr. Forster in connection
  with any claim, action, suit or proceeding (whether civil, criminal, administrative
  or investigative), including any action by or in the right of either of the
  Companies, by reason of any act or omission to act in connection with the performance
  of his duties hereunder to the full extent that the Companies are permitted
  to indemnify a director, officer, employee or agent against the foregoing under
  Ohio law, including, without limitation, Section 1701.13(E) of the Ohio Revised
  Code. The Companies shall at all  





 times cause Mr. Forster
  to be included, in his capacities hereunder, as a named insured under all directors’
  and officers’ liability insurance coverage (or similar insurance coverage)
  maintained by either of the Companies from time to time.  

      Section
  10. Other Activities. Nothing contained herein shall prevent Mr. Forster
  from engaging in other business, civic, charitable or industry activities so
  long as such other activities do not unreasonably interfere with the performance
  of his duties hereunder.  

      Section
  11. Termination. (a) Death. This Agreement shall terminate automatically
  upon Mr. Forster’s death during the Term.  

      (b)
  By the Companies. The Companies may terminate this Agreement during
  the Term on account of Mr. Forster’s Disability or for Cause.  

      (c)
  By Mr. Forster. Mr. Forster may terminate this Agreement during the
  Term for Good Reason.  

      (d)
  Notice of Termination. Any termination of this Agreement pursuant
  to Section 11(b) or 11(c) shall be communicated by a Notice of Termination.
  For this purpose, a “Notice of Termination” means a written notice
  given by the Companies to Mr. Forster or by Mr. Forster to the Companies which
  (i) indicates the specific termination provision(s) relied upon, (ii) to the
  extent applicable, sets forth in reasonable detail the facts and circumstances
  claimed to provide a basis for termination and (iii) specifies the Date of Termination.
   

      Section
  12. Obligations of the Companies Upon Termination. (a) Generally. Upon
  termination of this Agreement for any reason (including, without limitation,
  by reason of the expiration of the Term), the Companies shall:  


           (i)
    pay to Mr. Forster in cash not later than the fifteenth day after the Date
    of Termination the amount of any compensation payable to Mr. Forster pursuant
    to Section 2(c)(i) or 3(b) through the Date of Termination to the extent not
    theretofore paid;  

           (ii)
    provide benefits under, or benefits substantially equivalent to benefits under,
    the standard medical plan which was available to management and professional
    employees of the Companies in 1986 to Mr. Forster and his spouse for life
    and to any dependents of Mr. Forster for so long as, and to the extent that,
    his dependents would otherwise be covered under such plan;  

           (iii)
    pay to Mr. Forster the amounts required to be paid to him pursuant to the
    second sentence of Section 3(b);  

           (iv)
    pay or make available to Mr. Forster all other accrued benefits of any kind
    to which he is, or would otherwise have been, entitled through the Date of
    Termination.  



 Upon such termination,
  all earned and vested Stock Awards granted to Mr. Forster under the Directors’
  Deferred Stock Plan and all compensation deferred by Mr. Forster in accordance
  with  




the Directors’ Deferred
  Compensation Plan shall be payable to Mr. Forster in accordance with such plans.

     (b)
  Severance Benefits Upon Termination in Certain Events. In addition to the
  payments and benefits provided for in Section 12(a), if this Agreement is terminated
  prior to the expiration of the Term (x) by Mr. Forster pursuant to Section 11(c)
  or (y) by the Companies other than pursuant to Section 11(b) and, as a result
  of such termination, Mr. Forster is not entitled to the severance benefits provided
  for in Section 12(d), then:


       (i) the
    Companies shall pay to Mr. Forster as severance compensation in a lump sum
    in cash not later than the fifteenth day after the Date of Termination an
    amount equal to the aggregate amount of the base annual consulting fees which
    would have been payable to Mr. Forster pursuant to Section 3(b) during the
    remainder of the Term;

       (ii)
    all unearned and/or unvested Stock Incentive Units awarded to Mr. Forster
    under the MSIP, and all unearned and/or unvested Stock Awards awarded to Mr.
    Forster under the Directors’ Deferred Stock Plan, shall be deemed to
    be fully earned and vested and such Stock Incentive Units and such Stock Awards
    shall be payable to Mr. Forster in accordance with the MSIP and the Directors’
    Deferred Stock Plan; and

       (iii) the
    Companies shall, at their expense, continue to provide to Mr. Forster benefits
    substantially equivalent to the benefits required to be provided to him pursuant
    to Section 3(d) during, subject to Section 12(a)(ii), the remainder of the
    Term.



     (c) Termination
  after a Change of Control. In addition to the payments and benefits provided
  for in Section 12(a), if a Change of Control shall have occurred, then upon
  any subsequent termination of this Agreement at any time within 36 months following
  the occurrence of such Change of Control, Mr. Forster shall be entitled to the
  severance benefits provided for in Section 12(d), unless such termination is:


       (i)
    by the Companies on account of Mr. Forster’s Disability or for Cause,

       (ii)
    by Mr. Forster without Good Reason, or

       (iii)
    on account of Mr. Forster’s death.



Notwithstanding the foregoing
  or any other provision of this Agreement, if (x) the event constituting a Change
  of Control is only the commencement of a tender offer, (y) the tender offer
  is abandoned or terminated and (z) a majority of the Original Directors and/or
  their Successors (as such terms are defined within the definition of “Change
  of Control”) determine that the tender offer will not effectuate or result
  in a subsequent Change of Control and gives Mr. Forster written notice of such
  determination, then, as to that particular event only, a subsequent termination
  of this Agreement will not entitle Mr. Forster to the benefits provided for
  in Section 12(d). For purposes of this Agreement, termination of this Agreement
  shall be deemed to have occurred within 36 months following the occurrence of
  a Change of Control if a Notice of Termination with respect thereto is given
  within such 36 month period.





      (d)
  Severance Benefits After a Change of Control. If this Agreement is
  terminated under circumstances which, pursuant to Section 12(c), entitle Mr.
  Forster to receive severance benefits pursuant to this Section 12(d), then:
   


           (i)
    the Companies shall pay to Mr. Forster as severance compensation in a lump
    sum in cash not later than the fifteenth day after the Date of Termination
    an amount equal to the sum of: (x) 300% of the base annual consulting fees
    payable to Mr. Forster pursuant to Section 3(b), (y) 300% of the average annual
    bonus paid to Mr. Forster for the three calendar years immediately preceding
    the year in which the Date of Termination occurs, whether paid pursuant to
    the MICP or pursuant to clauses (ii) or (iii) of the first sentence of Section
    3(b) and (z) any amount payable to Mr. Forster pursuant to Section 17; 
  

           (ii)
    all unearned and/or unvested Stock Incentive Units awarded to Mr. Forster
    under the MSIP, and all unearned and/or unvested Stock Awards awarded to Mr.
    Forster under the Directors’ Deferred Stock Plan, shall be deemed to
    be fully earned and vested and such Stock Incentive Units and Stock Awards
    shall be payable to Mr. Forster in accordance with the MSIP and the Directors’
    Deferred Stock Plan; and  

           (iii)
    the Companies shall, at their expense, continue to provide to Mr. Forster
    benefits substantially equivalent to the benefits required to be provided
    to him pursuant to Section 3(d) until, subject to Section 12(a)(ii), the third
    anniversary of the Date of Termination.  



      (d)
  No Mitigation. The benefits provided under Sections 12(b) and (d)
  shall not be treated as damages, but rather shall be treated as severance compensation
  to which Mr. Forster is entitled under the terms and conditions set forth herein.
  Mr. Forster shall not be required to mitigate the amount of any benefit provided
  for in Sections 12(b) or (d) by seeking employment or otherwise.  

      Section
  13. Certain Definitions. For purposes of this Agreement, the following
  terms have the following meanings:  

      “Cause”
  means (i) the commission of a felony, (ii) embezzlement, (iii) the illegal use
  of drugs or (iv) 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 clauses
  (ii) or (iii) of the definition of Change of Control), the failure by Mr. Forster
  to substantially perform his duties hereunder (other than any such failure resulting
  from his physical or mental illness or other physical or mental incapacity)
  as determined by the Board of Directors of DPL. Notwithstanding the foregoing,
  “Cause” shall not be deemed to exist unless and until there shall
  have been delivered to Mr. Forster a copy of a resolution duly adopted by the
  written consent of not less than three-fourths of the number of directors of
  DPL then in office (after reasonable notice to Mr. Forster and an opportunity
  for Mr. Forster, together with his counsel, to be heard at a meeting of the
  Board of Directors of DPL called and held for that purpose), finding that in
  the good faith  





opinion of such directors
  Mr. Forster was guilty of conduct set forth in clauses (i), (ii), (iii) or of
  the preceding sentence and specifying the particulars thereof in detail.

     “Change
  of Control” means any change in control of DPL or DP&L of a
  nature that would be required to be reported in response to Item 6(e) of Schedule
  14A of Regulation 14A under the Securities Exchange Act of 1934, as amended
  (the “Exchange Act”); 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 15% or more of the combined voting power of the then outstanding
  securities of DPL or DP&L; (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 Section 1701.01 of the Ohio
  Revised Code 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 67% 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, but not including a mortgage or pledge of assets granted
  in connection with a financing; (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 the date hereof (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 (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).

     “Date
  of Termination” means (a) if this Agreement is terminated pursuant
  to Section 11(b) or pursuant to Section 11(c), the date specified in the Notice
  of Termination or (b) if this Agreement is terminated for any other reason (including,
  without limitation, by reason of the expiration of the Term), the date of such
  termination.

     “Disability”
  means the inability of Mr. Forster to perform his duties hereunder for a
  period of six consecutive months because of physical or mental illness or other
  physical or mental disability or incapacity, followed by DPL giving Mr. Forster
  30 days’ written notice of its intention to terminate this Agreement by
  reason thereof and Mr. Forster’s failure because of such physical or mental
  illness or other physical or mental disability or incapacity to resume the performance
  of his duties hereunder within such 30 day period and thereafter perform the
  same for a period of two consecutive months.

  





      “Good Reason”
  means:  

      (a)
  other than in connection with the termination of this Agreement pursuant to
  Section 11(a), (b) or (c) or by reason of the expiration of the Term, the failure
  to elect Mr. Forster to any of the offices specified in Section 2(a) for any
  reason whatsoever;  

      (b)
  the assignment to Mr. Forster, without his consent, of any duties inconsistent
  with the duties contemplated by Sections 2(b) and 3(a);  

      (c)
  if, within 36 months after the date of a Change of Control (other than a Change
  of Control consisting only of a commencement of a tender offer and/or the entering
  into of an agreement referred to in clauses (ii) or (iii) of the definition
  of “Change of Control”), Mr. Forster determines in good faith that,
  due to such Change of Control, he is not able to effectively discharge his duties
  hereunder;  

      (d)
  the failure by the Companies to obtain the assumption of this Agreement by any
  successor as provided in Section 15;  

      (e)
  the termination of this Agreement by the Companies without satisfying any of
  the applicable requirements therefor set forth herein; or  

      (f) any other material
  breach by the Companies of this Agreement.  

      Section
  14. Rights as Former Employee. Nothing contained in this Agreement shall
  be construed as preventing Mr. Forster from participating in any benefit or
  in any plan, program or arrangement in the same manner and to the same extent
  that Mr. Forster, as a former employee of the Companies, is entitled to participate
  and nothing contained herein shall limit or otherwise affect any of Mr. Forster’s
  rights thereunder.  

      Section
  15. Successors. This Agreement is personal and shall not be assignable
  by either of the Companies or by Mr. Forster (otherwise than by will or the
  laws of descent and distribution) without prior written consent. This Agreement
  shall inure to the benefit of, and be enforceable by, Mr. Forster’s personal
  or legal representatives, executors, administrators, successors, beneficiaries,
  heirs, distributees, devisees and legatees. In the event of Mr. Forster’s
  death while any amounts are still payable to him hereunder, all such amounts,
  unless otherwise provided herein, shall be paid to such beneficiary or beneficiaries
  as Mr. Forster shall have designated by written notice delivered to the Companies
  prior to his death or, failing such written notice, to his estate. This Agreement
  shall inure to the benefit of, and be binding upon, the Companies and their
  respective successors. The Companies 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 either of the Companies, by agreement in
  form and substance satisfactory to Mr. Forster, to expressly assume and agree
  to perform this Agreement in the same manner and to the same extent that the
  Companies would be required to perform it if no such succession had taken place.
   





      Section
  16. Legal Expenses. The Companies shall reimburse Mr. Forster in full
  for all legal fees and expenses reasonably incurred by him in connection with
  this Agreement (including, without limitation, any such fees and expenses incurred
  in contesting or disputing any termination of this Agreement or in seeking to
  obtain or enforce any right or benefit provided herein, regardless of the outcome,
  unless, in the case of a legal action brought by Mr. Forster or in his name,
  a court finally determines that such action was not brought in good faith).
   

      Section
  17. Gross-Up Payment. In the event that any payments under 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, as amended (“Code”)
  or any successor or similar provision, the Companies shall pay Mr. Forster an
  additional amount (the “Gross-Up Payment”) such that the net amount
  retained by Mr. Forster after deduction of any Excise Tax on such payments (excluding
  payments pursuant to this Section 17), and after deduction for any federal,
  state and local income tax and Excise Tax upon the payment provided for by this
  Section 17, shall be equal to the amount of such payments (excluding payments
  pursuant to this Section 17) 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 Mr.
  Forster in connection with a Change of Control or the termination of this Agreement
  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 independent auditors of the Companies
  and acceptable to Mr. Forster such payments or benefits do not constitute parachute
  payments or excess parachute payments. For purposes of determining the amount
  of the Gross-Up Payment, Mr. Forster shall be deemed to pay 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 his 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 Date of Termination, Mr. Forster shall repay
  to the Companies, 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 Date of Termination, the Companies 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
  fifteenth day after the Date of Termination.  

      Section
  18. Nature of Obligations. The obligations of the Companies hereunder
  are joint and several.  

      Section
  19. Funding of Master Trust. Upon a Change of Control, the Companies
  shall immediately transfer to the Master Trust (the “Barnett Banks Master
  Trust”) established pursuant to the Master Trust Agreement dated as of
  February 1, 1995 among the Companies and Barnett  





 Banks Trust Company N.A.,
  Richard J. Chernesky and Richard A. Broock, as trustees cash or other property
  in an amount sufficient to fund all payments and benefits, based upon reasonable
  estimates, which may thereafter be payable by the Companies to Mr. Forster hereunder
  or otherwise (including, without limitation, under any plan, program or arrangement
  of either of the Companies in which Mr. Forster is participating or has participated).
  From time to time thereafter, the Companies shall, at least on a quarterly basis,
  transfer to the Barnett Banks Master Trust such additional cash or other property
  as may then be necessary to fund all such payments and benefits.  

      Section
  20. General Provisions. (a) 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 Companies, addressed to  

	 	DPL INC.

      MacGregor Park

      1065 Woodman Drive

      Dayton, OH 45432

      Attention: Corporate
      Secretary 
	 	 	 
	 	and if
      to Mr. Forster, addressed to
	 	 	 
	 	 	Mr. Peter
      H. Forster
	 	 	P.O. Box
      1519
	 	 	Ponte
      Vedra Beach, Florida 32004


 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 Section
  19.  

      (b)
  Waiver. No failure or delay in exercising any right hereunder shall
  operate as a waiver thereof, nor shall any single or partial exercise thereof
  preclude any other or further exercise thereof or the exercise of any other
  right.  

      (c)
  Amendment. Any amendment to this Agreement or any waiver of rights
  or any consent hereunder shall not be operative unless it is in writing and
  signed by the party sought to be charged.  

      (d)
  Counterparts. This Agreement may be executed in multiple counterparts,
  each of which shall be deemed an original for all purposes and all of which
  shall constitute a single instrument.  

      (e)
  Injunctive Relief. Each party acknowledges that a party may be irreparably
  injured by any breach of this Agreement; accordingly, any party alleging a breach
  (or threatened breach) shall be entitled to seek specific performance and other
  injunctive relief as remedies for any such breach (or threatened breach), in
  addition to all other remedies available at law or in equity.  





      (f)
  Severability. If any provision hereof or the application of such
  provision to any party or any circumstances shall be held invalid or unenforceable
  to any extent, the remainder thereof and the application of such provision to
  other circumstances shall not be affected thereby and such provision shall be
  enforced to the greatest extent permitted by applicable law and such invalidity
  or unenforceability shall not affect the validity or enforceability of any other
  provision hereof.  

      (g)
  Governing Law. This Agreement shall be governed by, and construed
  and enforced in accordance with, the laws of the State of Ohio, without giving
  effect to the principles of conflict of laws thereof.  

 IN WITNESS WHEREOF, the
  parties have executed this Agreement as of the date first written above. 


	 	DPL INC.
      
	 	 	 
	 	By: 	 
	 	 	

	 	 	Title: 
	 	 	 
	 	THE DAYTON
      POWER AND
 LIGHT
      COMPANY 
	 	 
	 	By: 	 
	 	 	

	 	 	Title:
	 	 	 
	 	 	

	 	 	PETER H. FORSTER
	 	 	 
	Prepared by:	 	 
	 	 	 
	Chernesky, Heyman
      & Kress P.L.L.	 	 
	10 Courthouse Plaza,
      S.W.	 	 
	Suite 1100	 	 
	Dayton, Ohio 45402	 	 
	(937)
      449-2800	 	 


  





ANNEX
  A



  MVE INCENTIVE PROGRAM

  

AMENDED



       For the calendar year of 2000 and for each
  calendar year thereafter, DPL Inc. and its subsidiaries (the “Companies”)
  shall pay to Mr. Forster for each such calendar year a bonus equal to (a) 2%
  of the cumulative cash distributed to or on behalf of any of the Companies attributable
  to each separate investment made by any private equity partnership (or similar
  investment vehicle) in which any of the Companies has invested at any time (whether
  before or after the date hereof) prior to the expiration or termination of this
  Agreement determined after recovery of the amount actually invested in such
  separate investment, attributable to the Companies’ investment in such
  investment vehicle and all related expenses, less (b) the aggregate amount of
  all bonuses previously paid to Mr. Forster with respect to such investment in
  all prior years. If any private equity investment has resulted in a loss, such
  loss should be taken into account in such calculation, in which case that loss
  shall reduce the cash return for such calendar year and, to the extent it exceeds
  that year’s cash return, the excess loss shall be carried forward to subsequent
  years until fully applied.

     The
  selection, ongoing management of partnerships and integration of investments
  with the long-term strategic plans of DPL requires continuity of the key players.
  The purpose of this program is to motivate and retain key people in both the
  near and future term.

     Therefore,
  the same incentive program outlined above will apply to other MVE principals.
  The same terms and conditions will apply except the principals will split 2%
  of the annual net cumulative cash distributed to or on behalf of the Companies.
  Additionally, up to 1% of the net distributed cash can be shared by the staff
  of MVE for a program total not to exceed 5% of the cumulative distributed cash.

     The
  determination of incentive payouts will be based on the following:

PRIVATE
  EQUITY

	Partnership approach
    – accounting by individual Partnerships

    
	Partnership management
    fees – recognized as reported.

    
	Losses/Write-offs –
    recognized as reported

    
	Annual calculation of
    return on investments. Cash basis for determining gains and losses. (each
    separate investment + management fees – investment proceeds) = basis
    for incentive




  EQUITY SECURITIES

  

	The reported annual gain
    or loss of each equity fund managed by MVE will be included in the net annual
    performance results of MVE.


Incentive calculated on net
  annual performance of entire array of MVE managed portfolio gains/losses.

  







December
  15, 2000

Mr. Peter H. Forster 

  Chairman of the Board

  DPL Inc.

  P.O. Box 8815

  Dayton, OH 45401

Dear Pete:

The Compensation Committee
  has been reviewing the Company’s compensation structure for senior executives
  and other key personnel including the severance arrangements that are presently
  in place. The Committee has modified the existing severance arrangements, and
  relevant changes will be applicable to your December 31, 1996 consulting agreement.
  The changes, as applicable to you, are as follows:

Entitlement
  to Benefits After a Change of Control

	The Committee has determined
    that it would be in the best interests of DPL Inc. and The Dayton Power and
    Light Company (collectively the “Company”) to modify the existing
    severance arrangements so that key executives such as yourself will be entitled
    to severance benefits upon the consummation of a Change of Control. Included
    in Exhibit B to this letter is revised language to Section 12(c) of your consulting
    agreement with the Companies dated December 31, 1996 (the “Consulting
    Agreement”) which will reflect this change. In addition, you may elect
    to defer all or a portion of the payment to which you become entitled under
    Section 12(d) of your Consulting Agreement by executing a Deferral Election
    Form in the form attached as Exhibit A to this letter, in which event any
    amount so deferred shall be credited to your Standard Deferral Account in
    the 1991 Amended Directors’ Deferred Compensation Plan.


Covenant
  Not to Compete

	Given your knowledge
    and experience as to the electric power industry and the business activities
    that DPL Inc. and it affiliates are pursuing and may in the future pursue
    throughout the United States, the Committee has determined that it would be

    






Mr. Peter H. Forster 

  Page 2

  December 15, 2000

      


  in the best interests
    of the Company to amend your Consulting Agreement to include a geographically
    broad covenant not to compete that would apply in the event of the consummation
    of a Change of Control. Included in Exhibit B is revised language to Section
    12(d) of your Consulting Agreement that accomplishes this.



Other
  Changes

	There are other revisions
    to Section 12 of a minor nature (e.g., with respect to the timing of payments
    under Section 12).


Section 12 of the Consulting
  Agreement, restated to reflect the above revisions, is attached as Exhibit B.

We ask that you execute
  the duplicative copy of this letter where indicated below that will express
  your acknowledgement and agreement to the above-referenced changes effective
  immediately.

  

	 	Very truly
      yours,
	 	 	 
	 	 	Stephen
      F. Koziar, Jr., Esq
	 	 	 
	ACKNOWLEDGED
      AND AGREED TO:	 
	 	 	 
	
      
	.
	Peter
      H. Forster	 
	 	 	 
	Dated:	 	 
	 	
	 
	 	 	 


 





 EXHIBIT
  B  

 Section 12. Obligations
  of the Companies Upon Termination and/or a Change of Control.

      (a)
  Generally. Upon termination of this Agreement for any reason (including,
  without limitation, by reason of the expiration of the Term), the Companies
  shall:  


           (i)
    pay to Mr. Forster in cash not later than the Date of Termination the amount
    of any compensation payable to Mr. Forster pursuant to Section 2(c)(i) or
    3(b) through the Date of Termination to the extent not theretofore paid; 
  

           (ii)
    provide benefits under, or benefits substantially equivalent to benefits under,
    the standard medical plan which was available to management and professional
    employees of the Companies in 1986 to Mr. Forster and his spouse for life
    and to any dependents of Mr. Forster for so long as, and to the extent that,
    his dependents would otherwise be covered under such plan;  

           (iii)
    pay to Mr. Forster the amounts required to be paid to him pursuant to the
    second sentence of Section 3(b);  

           (iv)
    pay or make available to Mr. Forster all other accrued benefits of any kind
    to which he is, or would otherwise have been, entitled through the Date of
    Termination.  



 Upon such termination,
  all earned and vested Stock Awards granted to Mr. Forster under the Directors’
  Deferred Stock Plan and all compensation deferred by Mr. Forster in accordance
  with the Directors’ Deferred Compensation Plan shall be payable to Mr.
  Forster in accordance with such plans.  

      (b)
  Severance Benefits Upon Termination in Certain Events. In addition
  to the payments and benefits provided for in Section 12(a), if this Agreement
  is terminated prior to the expiration of the Term (x) by Mr. Forster pursuant
  to Section 11(c) or (y) by the Companies other than pursuant to Section 11(b),
  and, as a result of such termination, Mr. Forster is not entitled to the severance
  benefits provided for in Section 12(d), then:  


           (i)
    the Companies shall pay to Mr. Forster as severance compensation in a lump
    sum in cash not later than the Date of Termination an amount equal to the
    aggregate amount of the base annual consulting fees which would have been
    payable to Mr. Forster pursuant to Section 3(b) during the remainder of the
    Term;  

           (ii)
    all unearned and/or unvested Stock Incentive Units awarded to Mr. Forster
    under the MSIP, and all unearned and/or unvested Stock Awards awarded to Mr.
    Forster under the Directors’ Deferred Stock Plan, shall be deemed to
    be fully earned and vested and such Stock Incentive Units and such Stock Awards
    shall be payable to Mr. Forster in accordance with the MSIP and the Directors’
    Deferred Stock Plan; and  







       (iii) the
    Companies shall, at their expense, continue to provide to Mr. Forster benefits
    substantially equivalent to the benefits required to be provided to him pursuant
    to Section 3(d) during, subject to Section 12(a)(ii), the remainder of the
    Term.



     (c) Entitlement
  to Benefits After a Change of Control. In addition to the payments and benefits
  provided for in this Agreement, if a Change of Control shall have occurred (other
  than a Change of Control consisting only of the commencement of a tender offer
  or the entering into of an agreement referred to in clauses (ii) or (iii) of
  the definition of Change of Control), Mr. Forster shall be entitled to the payments
  and benefits provided in Section 12(d); for purposes of Section 12(d), the date
  of the Change of Control shall be deemed to be the “Date of Termination.”
  Upon a Change of Control consisting only of the commencement of a tender offer
  or the entering into of an agreement referred to in clauses (ii) or (iii) of
  the definition of Change of Control, then upon any subsequent termination of
  this Agreement at any time within 36 months following the occurrence of any
  such event and prior to a Change of Control referred to in clauses (iv) or (v)
  or the consummation of a tender offer referred to in clause (i) of the definition
  of Change of Control, Mr. Forster shall be entitled to the severance benefits
  provided for in Section 12(d), unless such termination is:


       (i)
    by the Companies on account of Mr. Forster’s Disability or for Cause,

       (ii)
    by Mr. Forster without Good Reason, or

       (iii)
    on account of Mr. Forster’s death.



Notwithstanding the foregoing
  or any other provision of this Agreement, if (x) the event constituting a Change
  of Control is only the commencement of a tender offer or the entering into of
  an agreement referred to in clauses (ii) or (iii) of the definition of Change
  of Control, (y) the tender offer or agreement is abandoned for terminated and
  (z) a majority of the Original Directors and/or their Successors (as such terms
  are defined within the definition of “Change of Control”) determine
  that the tender offer or agreement will not effectuate or result in a subsequent
  Change of Control and gives Mr. Forster written notice of such determination,
  then, as to that particular event only, a subsequent termination of this Agreement
  will not entitle Mr. Forster to the benefits provided for in Section 12(d).
  For purposes of this Agreement, termination of this Agreement shall be deemed
  to have occurred within 36 months following the occurrence of a Change of Control
  if a Notice of Termination with respect thereto is given within such 36 month
  period.

     (d)
  Payments and Benefits After a Change of Control. If this Agreement is terminated
  under circumstances which, pursuant to Section 12(c), entitle Mr. Forster to
  receive payments and benefits pursuant to this Section 12(d), then:


       (i) the
    Companies shall pay to Mr. Forster as severance compensation in a lump sum
    in cash not later than the Date of Termination (or in the case of payments
    under (2), 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 or calculable)
    an amount equal to the sum of : (x) 200%
    of the base annual consulting fees payable to Mr. Forster pursuant to Section
    3(b) as amended by the DPL Inc. Board of Directors on January 30, 2001, (y)
    200% of the average annual bonus paid to Mr. Forster for the three calendar
    years immediately







   preceding the year in
    which the Date of Termination occurs, whether paid pursuant to the MICP or
    pursuant to clauses (ii) or (iii) of the first sentence of Section 3(b) and
    (z) any amount payable to Mr. Forster pursuant to Section 17; 

        (ii)
    in consideration of Mr. Forster’s agreeing to the following covenant
    not to compete, if Mr. Forster is entitled to a payment under Section 12(d)(i),
    the Companies shall pay to Mr. Forster an additional amount equal to one-half
    (1/2) the amount payable under Section 12(d)(i). In consideration of the Companies’
    agreement to make this payment per the terms of this Section 12(d)(ii), Mr.
    Forster agrees that in the event and only in the event that he receives any
    payments under this Section 12(d), then during the term of this Agreement
    and for a period of two years after the Date of Termination, he will not,
    without the Companies’ prior written consent, engage, participate or
    be interested, directly or indirectly, in any business: (i) which is engaged
    in the continental United States 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 Companies, except in each case for the management of or
    investment in financial assets. Furthermore, except as related to the management
    of or investment in financial assets, Mr. Forster agrees that, during the
    aforementioned two year period, he will not (i) directly or indirectly, solicit
    for employment with Mr. Forster or any firm or entity with which he is associated,
    any employee of the Companies or otherwise disrupt, impair, damage or interfere
    with the Companies’ relationship with its employees; (ii) solicit for
    his own behalf or on behalf of any other person(s),
    any customer of the Companies that has purchased goods from the Companies
    at any time in the twelve (12) months preceding the Date of Termination or
    that the Companies are actively soliciting, for the purpose of marketing or
    distributing any product or service competitive with any product or service
    then offered by the Companies in any geographic market where the Companies
    are doing or preparing to do business; or (iii) engage himself 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 Companies are then developing or marketing in any geographic
    market where the Companies are doing or preparing to do business; 
  

        (iii)
    all unearned and/or unvested Stock Incentive Units awarded to Mr. Forster
    under the MSIP, and all unearned and/or unvested Stock Awards awarded to Mr.
    Forster under the Directors’ Deferred Stock Plan, shall be deemed to
    be fully earned and vested and such Stock Incentive Units and Stock Awards
    shall be payable to Mr. Forster in accordance with the MSIP and the Directors’
    Deferred Stock Plan; and  

        (iv)
    the Companies shall, at their expense, continue to provide to Mr. Forster
    benefits substantially equivalent to the benefits required to be provided
    to him pursuant to Section 3(d) until, subject to Section 12(a)(ii), the third
    anniversary of the Date of Termination.  







      (e)
  No Mitigation. The benefits provided under Sections 12(b) and (d)
  shall not be treated as damages, but rather shall be treated as severance compensation,
  and consideration for an agreement not to compete, to which Mr. Forster is entitled
  under the terms and conditions set forth herein. Mr. Forster shall not be required
  to mitigate the amount of any benefit provided for in Sections 12(b) or (d)
  by seeking employment or otherwise.