ex10h





	     Exhibit
      10(h)

       
	     EMPLOYMENT
        AGREEMENT

         

	     THIS
      EMPLOYMENT AGREEMENT is made as of March 21, 2000 between DPL INC., an Ohio
      corporation (the “Company”) and ELIZABETH McCARTHY (“Ms.
      McCarthy”) under the following circumstances:

       
	 	A.

        	The Company
      is a holding company headquartered in Dayton, Ohio, having as its principal
      subsidiary The Dayton Power and Light Company (“DP&L”).

       
	 	B.

        	The Company
      desires to employ Ms. McCarthy as its Vice President and Chief Accounting
      Officer, and Ms. McCarthy desires to accept such employment with the Company,
      subject to the terms and conditions set forth herein.

       
	     NOW,
      THEREFORE, the parties agree as follows:

       
	     Section
      1. Employment and Duties. The Company hereby employs Ms. McCarthy
      as Vice President and Chief Accounting Officer of the Company and Ms. McCarthy
      hereby accepts such employment. In such capacity, Ms. McCarthy shall report
      directly to the Chief Executive Officer of the Company and shall have primary
      responsibility for the Company’s and its subsidiaries’ financial reporting,
      corporate accounting matters, and regulatory accounting matters, including
      the preparation of financial reports and supervision and oversight of divisional
      or subsidiary controllers and assist in strategic and transactional issues.
      Ms. McCarthy shall also perform such other and further duties as may be
      assigned to her from time to time by the Chief Executive Officer. During
      the Term, Ms. McCarthy shall devote her entire business time and attention
      to the performance of her duties hereunder and shall use her best efforts
      to perform her duties hereunder faithfully and efficiently.

       
	     Section
      2. Term. The term of this Agreement (the “Term”) shall
      commence on April 1, 2000 and shall continue thereafter until terminated
      in accordance with Section 7.

       
	     Section
      3. Compensation. As compensation for her services hereunder, Ms.
      McCarthy shall receive the following:

       
	 	 	(a)
          Base
        Salary. Ms. McCarthy shall receive a base salary at the annual rate
        of $250,000 or such greater amount as the Compensation and Management
        Review Committee of the Board of Directors of the Company may determine
        from time to time in its sole discretion (the “Base Salary”),
        to be paid in installments in accordance with the Company’s customary
        payroll practices.

         

	 	 	(b)   Participation
      in MICP. For each calendar year during the Term (commencing with calendar
      year 2000), Ms. McCarthy shall have the opportunity to receive an annual
      bonus under DP&L’s Management Incentive Compensation

       








  
     Plan (“MICP”).
      For calendar year 2000, Ms. McCarthy’s bonus under the MICP shall not be
      less than $100,000.  

     (c)   Stock
      Options. On the terms provided in the Management Stock Option Agreement
      attached hereto as Exhibit A, which Ms. McCarthy and the Company shall execute
      immediately after the execution of this Agreement, the Company shall grant
      to Ms. McCarthy options to purchase up to 250,000 common shares of the Company.
      It is anticipated that no additional options will be granted to Ms. McCarthy
      through the period ending December 31, 2002. Additional options, if any,
      may be granted to Ms. McCarthy in the Company’s sole discretion.
    

      (d)   Special
      One Time Bonus. Immediately upon the execution of this Agreement
      by Ms. McCarthy, the Company shall pay Ms. McCarthy $100,000 net of applicable
      withholding; provided, however, that if Ms. McCarthy terminates her employment
      with the Company (other than, after a Change of Control, for Good Reason
      per the terms of the letter agreement attached hereto as Exhibit B), then
      (i) if such termination occurs on or prior to the second anniversary of
      the date of this Agreement, Ms. McCarthy shall immediately upon termination
      repay to the Company the entire amount of such bonus (i.e., $100,000),
      or (ii) if such termination occurs after the second but prior to the third
      anniversary of the date of this Agreement, Ms. McCarthy shall immediately
      upon termination repay to the Company 50% of such bonus (i.e., $50,000).
      The Company may offset such amounts against any amounts which it may otherwise
      owe Ms. McCarthy on termination.  

     (e)   Relocation
      Expenses. The Company will reimburse Ms. McCarthy for costs and
      expenses reasonably incurred by her in relocating to the greater Dayton,
      Ohio area in an amount not to exceed $25,000 after tax. Ms. McCarthy shall
      provide the Company with a detailed statement showing a breakdown of such
      expenses subject to reimbursement.  

      (f)   Fringe
      Benefits. During the Term, Ms. McCarthy shall be entitled to receive
      such fringe benefits (including, medical, life and disability insurance
      benefits and retirement benefits) as are generally made available to other
      executive level employees of the Company in accordance with the plans, practices,
      programs and policies of the Company in effect from time to time, including
      participation in DP&L’s Key Employees Deferred Compensation Plan. In
      addition, the Company shall provide Ms. McCarthy with additional retirement
      benefits which, when added to those benefits she is entitled to receive
      under Retirement Income Plan Two of DP&L (the “Qualified Plan”),
      will equal the benefits payable to her under the Qualified Plan as if she
      had 18 years of service with DP&L as of the date of this Agreement.
       

  



       Section 4. Vacations. During the Term, Ms. McCarthy shall be entitled to paid vacation time
  of four weeks annually.  

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       Section 5. Expenses. The Company shall reimburse Ms. McCarthy for all reasonable out-of-pocket
  expenses properly incurred by her in connection with the performance of her
  duties hereunder in accordance with the policies established from time to time
  by the Company.  

       Section
  6. Withholdings. The Company may withhold from any amounts payable to
  Ms. McCarthy hereunder such federal, state or local taxes or other amounts as
  the Company shall be required to withhold pursuant to applicable law. 


       Section 7. Termination. (a) This Agreement and Ms. McCarthy’s employment with the Company may
  be terminated at any time, with or without cause, by either the Company or Ms.
  McCarthy upon 30 days’ prior written notice; provided this Agreement and Ms.
  McCarthy’s employment with the Company may be terminated by the Company for
  Cause without prior notice.  

      (b) In addition, this
  Agreement and Ms. McCarthy’s employment with the Company shall automatically
  terminate upon Ms. McCarthy’s death or Disability. 

      (c) Upon the termination
  of this Agreement for any reason, this Agreement shall forthwith be of no further
  force and effect (except that the provisions of Sections 8 and 9 shall continue
  in full force and effect) and there shall be no further liability on the part
  of either party, other than based upon (i) its obligations under this Agreement
  arising prior to such termination or (ii) the obligations of such party contained
  in Sections 8 or 9 or under the agreements attached hereto as Exhibits A and
  B.  

       Section 8. Severance
  Benefits. (a) Immediately upon the execution of this Agreement, the
  parties shall execute the letter agreement attached hereto as Exhibit B providing
  for the payment of severance benefits to Ms. McCarthy in certain circumstances
  as described therein.  

      (b) If prior to the third
  anniversary of the date of this Agreement, the Company terminates Ms. McCarthy’s
  employment with the Company without Cause, and a Change of Control (as defined
  in the agreement attached hereto as Exhibit B) has not occurred or is not pending,
  the Company shall pay to Ms. McCarthy a sum equal to two times the base salary
  then in effect. This, plus the payments and benefits specified in Section 3.b.
  of the agreement attached hereto as Exhibit A and Section 1.A. of the agreement
  attached hereto as Exhibit B, shall be the Company’s entire obligation to Ms.
  McCarthy in such event, and Ms. McCarthy will execute a full and unconditional
  release of any claims which she may have against the Company as a condition
  to receiving such payment.  

       Section 9. Non-Competition
  and Confidentiality. In consideration of the Company’s entering into
  this Agreement and as an inducement for it to do so, Ms. McCarthy agrees to
  be bound by the non-competition and confidentiality provisions included in the
  agreement attached hereto as Exhibit B under “Non-Competition and Confidentiality”,
  and such provisions are incorporated herein by reference.  

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       Section 10. Certain
  Definitions. For purposes of this Agreement, the following terms have
  the following meanings:  

       “Cause” shall have
  the meaning specified in Section 3.B.(ii) of the agreement attached hereto as
  Exhibit B. 

       “Disability”
  shall have the meaning specified in Section 3.B.(i) of the agreement attached
  hereto as Exhibit B.  

       Section 11. Parties
  in Interest. This Agreement is for the sole benefit of the parties and
  shall not create any rights to any person not a party. This Agreement is personal
  and may not be assigned by any party without the prior written consent of the
  other party. Subject to the foregoing, this Agreement shall be binding upon,
  inure to the benefit of, and be enforceable by, the respective successors and
  assigns of the parties, but on assignment shall, of itself, relieve any party
  of its obligations hereunder. 

       Section
  12.Entire Agreement. This Agreement, including the agreements
  attached hereto as Exhibits A and B, sets forth the entire agreement and understandings
  of the parties in respect to the subject matter hereof and supersedes all prior
  agreements, arrangements and understandings relating to the subject matter hereof.
   

       Section 13. Interpretation. The section and other headings contained in this Agreement are for reference
  purposes only and shall not affect in any way the meaning or interpretation
  of this Agreement. Words used in this Agreement in the singular number shall
  include the plural, and vice versa, unless the context requires otherwise. Words
  of gender used in this Agreement may be read as masculine, feminine or neuter
  as the context may require. The terms “this Agreement”, “hereto”, “herein”,
  “hereby”, “hereof” and similar expressions refer to this Agreement in its entirety
  and not to any particular provision or portion of this Agreement. When a reference
  is made to Sections, such reference shall be to a Section of this Agreement,
  unless otherwise indicated. Whenever the words “include”, “includes” or “including”
  are used herein, they shall be deemed to be followed by the words “without limitation”.


       Section 14. Law
  Governing. This Agreement shall be governed by, and construed and enforced
  in accordance with, the laws of the State of Ohio without regard to its conflicts
  of laws rules. 

       Section 15. Counterparts.
  This Agreement may be executed simultaneously in two or more counterparts,
  each of which shall be deemed an original but all of which taken together shall
  constitute one and the same instrument.  

       Section 16. 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.  

       Section 17. Equitable
  Relief. Ms. McCarthy acknowledges that the Company may be irreparably
  injured by any breach of Section 9. Accordingly, the Company shall be entitled
  to  

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 specific performance and
  other injunctive relief as remedies for any breach (or threatened breach) of
  Section 9, in addition to all other remedies available at law or in equity.
   

       Section 18. Severability. If any provision of this Agreement or the application thereof to any
  party or circumstance shall be held invalid or unenforceable to any extent,
  the remainder of this Agreement and the application of such provision to another
  party or circumstance shall not be affected thereby and such provision shall
  be enforced to the greatest extent permitted by applicable law.  

       Section 19. Waiver. The failure or delay on the part of any party to insist upon strict
  performance of any of the terms or conditions of this Agreement will not constitute
  a waiver of any of its rights hereunder. No right or remedy herein conferred
  upon or reserved to any party is intended to be exclusive of any other right
  or remedy and all such rights and remedies shall be cumulative.  

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

	 	DPL INC.
      
	 	 	 
	 	By: 	 
	 	 	

	 	 	 
	 	 	

	 	 	Elizabeth McCarthy
	 	 	 


 
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