**Exhibit 10.5**

[DPL Letterhead]

July 31, 2006

Mr. James V. Mahoney

3600 Wood Hollow Road

Dayton, Ohio 45429

Dear Jim:

Reference is made to the Employment Agreement, dated May 18, 2006, byand between you, DPL Inc. and The Dayton Power and Light Company (together withDPL Inc., the “Company”), which provided that your resignation from the Companyand the Boards of the Directors of the Company would be effective on July 31,2006.

This letter agreement amends the Employment Agreement to provide thatyou will continue your employment with the Company and your service on theBoards of Directors until such date as may be determined by the Boards ofDirectors, provided you may elect to terminate your employment on a datespecified by you in a written notice provided to the Boards of Directors atleast 14 days in advance of such date (the earlier of the date specified by theBoards or the date specified by you in such written notice, “New Effective Date”).  In consideration for your continuedemployment, you will receive your base salary through the New Effective Dateand you will be eligible to participate in the Executive Incentive CompensationProgram (the “EICP”) for 2006 through the New Effective Date; provided that anypayment you may receive under the EICP will be pro rated for the period you areemployed by the Company.

Notwithstanding anything herein to the contrary, this letter agreementalso confirms that the Company shall pay to you on July 31, 2006 (or promptlythereafter) a lump sum cash payment of (i) five hundred and fifty thousanddollars ($550,000), less any applicable withholding taxes and payrolldeductions, and (ii) your unpaid base salary, if any, through July 31, 2006pursuant to Section 2(a) of the Employment Agreement.  In addition, the following Sections of theEmployment Agreement shall continue in full force and effect in accordance withtheir terms: Section 2(c) (health insurance program), Section 2(d)(out-of-pocket business expenses), Section 3 (waiver of certaincompensation/benefits), Section 4 (indemnification), Sections 5 and 6 (releaseand Directors and Officers Insurance Policy), Section 7 (return of property),Section 8 (confidentiality), Section 9 (non-disparagement), Section 10(non-compete), Section 11 (amendment), Section 12 (entire agreement), Section13 (severability) and Section 14 (governing law).

Please indicate your agreement to the terms of this letter agreement bysigning below.

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|                                | Very truly yours,                   |
|--------------------------------|-------------------------------------|
|                           |                                |
|                           | DPL Inc.                            |
|                           |                                |
|                           | By:                                 |   |
|                           |                                | Glenn E. Harder |
|                           |                                | Chairman of the Board |
|                           |                                |   |
|                           |                                |   |
|                           |                                |   |
|                           | The Dayton Power  and Light Company |
|                           | By:                                 |   |
|                           |                                | Glenn E. Harder |
|                           |                                | Chairman of the Board |
|                           |                                |   |
| Acknowledged and  Agreed to:   |                                |   |
|                           |                                |   |
| James V. Mahoney               |                                |   |
| Dated:  ______________________ |                                |   |
|                                |                                     |  |  |

 

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