Exhibit
10.1


 


EMPLOYMENT
AGREEMENT


 


THIS EMPLOYMENT AGREEMENT is made as of July 21, 2004 among DPL
INC., an Ohio corporation (“DPL”), The Dayton Power and Light Companies, an
Ohio corporation (“DP&L”; and, collectively with DPL, the “Companies”) and
Robert Biggs (“Executive”) under the following circumstances:


 


A.                                   DPL
is a holding company headquartered in Dayton, Ohio, having as its principal
subsidiary DP&L.


 


B.                                     Executive is currently the acting
non-executive Chairman of the Board of Directors of the DPL and DP&L;


 


C.                                     Executive has rendered extraordinary
services to the Companies in the preceding months and has had to forgo certain
benefits from his prior employer in connection with his employment hereunder;
and


 


D.                                    The Companies and Executive believe that
it is in the best interests of the Companies for Executive to assume the duties
of Executive Chairman of DPL and DP&L; and


 


E.                                      Subject to the terms and considerations
hereinafter set forth, the Companies wish to employ Executive in the positions
set forth herein and Executive wishes to accept such employment.


 


NOW, THEREFORE, the
parties agree as follows:


 


Section 1.  Employment and Duties.  The Companies hereby employ Executive and
Executive hereby accepts such employment, as an executive of the Companies,
subject to the terms and conditions set forth in this Agreement.  Executive shall serve as Executive Chairman
of the Boards of Directors of DPL and DP&L and shall properly perform such
duties as may reasonably be assigned to him from time to time by each such
Board of Directors.  If requested by the
Companies’ Boards of Directors, Executive shall serve on any committee of the
Companies’ Boards of Directors without additional compensation.  During the Term of this Agreement, Executive
shall devote such time as Executive and Companies’ Boards of Directors deem
necessary for the performance of Executive’s duties hereunder.


 


Section 2.  Term.  The term of this Agreement (the “Term”) shall commence on May 16,
2004 (the “Effective Date”) and shall continue until the second anniversary of
the Effective Date; provided that the Term shall automatically be extended for
successive one-year periods unless either party shall give the other at least
ninety (90) days written notice of its intention not to extend the Term.


 

















 


Section 3.  Compensation.  As compensation for his services hereunder,
Executive shall receive the following:


 


(a)                                  Base
Salary.  During the Term,
the Companies shall pay to Executive an annual base salary of Two Hundred Fifty
Thousand Dollars ($250,000) for his services hereunder.  Executive’s base salary, as in effect at any
time, is hereinafter referred to as the “Base Salary.”  Executive’s Base Salary shall be paid in substantially
equal installments on a basis consistent with the Companies’ payroll practices.


 


(b)                                 Participation
in MICP.  For each
calendar year during the Term (commencing with calendar year 2004), Executive
shall be eligible to receive an annual bonus under the Companies’ Management
Incentive Compensation Plan (“MICP”) in an amount, if any, determined by the
Board of Directors of DPL in its discretion.


 


(c)                                  Stock
Options.  DPL shall grant
to Executive an option to purchase 200,000 common shares of DPL (the “Option”)
under the DPL Inc. Stock Option Plan (the “Option Plan”).  The per share exercise price of the Option
will be the Fair Market Value (as defined in the Option Plan) on the Effective
Date. The Option will become vested and exercisable as to 50% of the shares
subject thereto on each of the first two anniversaries of the Effective Date;
provided that the Option shall become fully vested and exercisable upon the
consummation of a Change of Control (as defined below).  The Option shall be exercisable for a period
of five years from the date(s) it becomes vested.  In connection with Executive’s exercise of the Option at any time
during which Executive is employed by or serving as a director of either of the
Companies, Executive may sell a sufficient number of DPL shares to satisfy any
exercise price and income taxes arising in connection with such exercise.  However, Executive agrees that he will hold
any DPL shares delivered in connection with the exercise of the Option, which
remain after giving effect to the foregoing sentence, until the earlier of (i)
the first anniversary of the date of exercise or (ii) the first date on which
he is neither an employee nor a director of either of the Companies.


 


(d)                                 Annuity.  As soon as practicable following the
Effective Date, in consideration of the existing pension benefits foregone by
Executive to accept employment hereunder, DPL shall purchase an annuity for the
benefit of the Executive that provides the Executive with a lifetime annual
benefit of $71,000 and that includes a joint and survivor benefit feature that
provides thirty [30] percent of the amount of Executive’s annual annuity
benefit to his surviving spouse for her lifetime.  In addition, DPL shall pay Executive an amount in respect of any
income taxes incurred by Executive as a result of its provision of the annuity
to Executive (the “Annuity Taxes”) such that after payment of the Annuity Taxes
and any additional taxes as a result of the additional payments provided for in
this sentence, Executive is in the same position as if no Annuity


 


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Taxes had been incurred
(such a payment in respect of a tax liability by Executive incurred under this
Agreement shall hereinafter be referred to as a “Tax Gross Up”).


 


(e)                                  Benefits.  During the Term, Executive shall be entitled
to receive such fringe benefits as are generally made available to non-employee
directors of the Companies in accordance with the plans, practices, programs
and policies of the Companies in effect from time to time.  In addition, during the Term, the Companies
shall provide Executive with a term life insurance policy with a death benefit
of $500,000.


 


Section 4.  Dayton Residence and Automobile.  During the Term, the Companies shall
provide, at their expense, such place of residence and automobile for
Executive’s use while in Dayton, Ohio as Executive and the Companies may
reasonably agree.  In addition, the
Companies shall pay Executive a Tax Gross Up in respect of such residence and
automobile.


 


Section 5.  Expenses; Corporate Aircraft.  The Companies shall reimburse Executive for
all reasonable out-of-pocket expenses properly incurred by him in connection
with the performance of his duties hereunder in accordance with the policies
established from time to time by the Companies.  In addition, the Companies shall provide Executive with the use
of corporate aircraft in connection with Executive’s travel between Dayton and
Executive’s home in Florida and shall pay the Executive a Tax Gross Up in
respect of such use.  Other use of
corporate aircraft shall be in accordance with the policies of the Companies.


 


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


 


Section 7.  Termination.  (a)  Executive’s
employment with the Companies may be terminated at any time, with or without
Cause, by either the Companies or Executive upon ninety [90] days’ prior
written notice; provided this Agreement and Executive’s employment with the
Companies may be terminated by the Companies for Cause without prior
notice.  In addition, this Agreement and
Executive’s employment with the Companies shall automatically terminate upon
Executive’s death or Disability.


 


(b)  Upon the termination of Executive’s
employment with the Companies, there shall be no further liability on the part
of either party, other than based upon its obligations under this Agreement.


 


(c)  Any termination of Executive’s employment
with the Companies, other than due to Executive’s death or due to expiration of
the term, shall be communicated by a Notice of Termination. For this purpose, a
“Notice of Termination” means a written notice given by the Companies to
Executive or by Executive to the Companies which (i) indicates the specific
termination provision(s) relied upon, (ii) to the extent applicable, sets forth
in reasonable detail


 


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the facts and
circumstances claimed to provide a basis for termination and (iii) specifies
the Date of Termination.


 


Section 8.  Severance Benefits.  (a) 
In the event of termination of Executive’s employment hereunder for any
reason, Executive shall be entitled to his Base Salary earned through the Date
of Termination and any accrued benefits under any of the Companies’
compensation or benefit plans or arrangements (including, without limitation,
this Agreement) in accordance with their terms, including, without limitation,
any unpaid bonus payable in respect of a completed fiscal period.


 


(b)  If the Companies terminate Executive’s
employment with the Companies without Cause prior to a Change of Control, then,
in addition to the payments and benefits provided for under Section 8(a)
and contingent upon execution by Executive of a full and unconditional release
of any claims which he may have against the Companies:


 


(i)                                     the
Companies shall pay to Executive as severance compensation a lump sum in cash
not later than the fifteenth day after the Date of Termination in an amount
equal to the aggregate amount of the Base Salary which would have been payable
to Executive during the remainder of the Term;


 


(ii)                                  the
Companies shall, at their expense, continue to provide to Executive benefits
substantially equivalent to the benefits required to be provided to him
pursuant to Section 3(e) during the remainder of the Term; and


 


(iii)                               all
unvested stock options awarded to Executive under the Stock Option Plan shall
become fully vested.


 


(c)  If Executive’s employment is terminated by
the Companies without Cause or due to non-extension of the Term by the
Companies, in each case within one year following a Change of Control, then in
addition to the payments and benefits provided for under Section 8(a) and
contingent upon execution by Executive of a full and unconditional release of
any claims which he may have against the Companies:


 


(i)                                     the
Companies shall pay to Executive as severance compensation a lump sum in cash
not later than the fifteenth day after the Date of Termination in an amount
equal to the sum of: (x) 200% of Executive’s Base Salary, (y) 200% of the
annual bonus paid or payable to Executive for the calendar year immediately
preceding the year in which the Date of Termination occurs; provided that if
executive has not had an opportunity to earn an annual bonus prior to the Date
of Termination, the annual bonus amount shall be deemed to be $250,000 for
purposes of this clause (y), and (z) any amount payable to Executive pursuant
to Section 9;


 


(ii)                                  the
Companies shall, at their expense, continue to provide to Executive benefits
substantially equivalent to the benefits required to be provided to him
pursuant to Section 3(e) until the second anniversary of the Date of
Termination.


 


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(iii)                               all
unvested stock options awarded to Executive under the Stock Option Plan shall
become fully vested.


 


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
be effectuated or result in a subsequent Change of Control and gives Executive
written notice of such determination, then, as to that particular event only, a
subsequent termination of employment by the Company will not entitle Executive
to the benefits provided for in this Section 8(c). For purposes of this
Agreement, termination of employment shall be deemed to have occurred within 12
months following the occurrence of a Change of Control if a Notice of
Termination with respect thereto is given within such 12 month period.


 


Section 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 Executive
an additional amount (the “Gross-Up Payment”) such that the net amount retained
by Executive 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 Executive in
connection with a Change of Control or Executive’s 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 Executive such payments or benefits do
not constitute parachute payments or excess parachute payments. For purposes of
determining the amount of the Gross-Up Payment, Executive 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 in which Executive is taxed on the payments giving rise to
the Gross-Up Payment, 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, Executive 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, 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


 


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paid not later than the
date on which the payments giving rise to the Gross-Up Payment are made, 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.


 


Section 10.                                   Indemnification.  The Companies shall indemnify Executive
against any and all losses, liabilities, damages, expenses (including
attorneys’ fees) judgments, fines and amounts paid in settlement incurred by
Executive 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 Executive to be included,
in his capacities hereunder, under all liability insurance coverage (or similar
insurance coverage) maintained by any of the Companies from time to time.


 


Section 11.                                   Legal
Expenses.  The Companies
shall reimburse Executive 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 or related 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 Executive or in his name, a court finally
determines that such action was not brought in good faith.


 


Section 12.  Non-Competition
and Confidentiality.  In
consideration of the Companies entering into this Agreement and as an
inducement for them to do so, Executive agrees that for a period of two years
after termination of his employment for any reason, he will not, without the
Companies’ prior written consent, directly or indirectly, (i) participate or be
interested in any business (aa) which is engaged in Ohio, Indiana, Kentucky,
Michigan and/or Pennsylvania in providing (as a public utility or otherwise)
electric power or services on a retail and/or wholesale basis or in providing
energy marketing, aggregation and/or procurement services, or (bb) which is
engaged in any other business being conducted or proposed to be conducted by
the Companies; (ii) solicit for employment with himself 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
their employees; (iii) solicit for his own behalf or on behalf of any other
person(s), any customer of the Companies that has purchased products or
services from the Companies at any time in the twelve (12) months preceding his
Date of Termination or that the Companies are actively soliciting or have known
plans to solicit, for the purpose of marketing or distributing any product,
pricing or service competitive with any product, pricing or service then
offered by the companies or which the Companies have known plans to offer; or
(iv) engage or be affiliated with any person(s), in the development or
marketing, including but not limited to the establishment of product or service
prices, of any product or service which will compete with any product or
service the Companies are then developing or marketing in any geographic market
where the Companies are doing or preparing to do business.


 


At all times, Executive (i) will keep all confidential, nonpublic
and/or proprietary


 


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information
(including, for example, trade secrets, financial information, customer
information and business and strategic plans) of the Companies (regardless of
when he 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 his
performance of the duties assigned to him by the Companies.  Executive will take all appropriate steps to
safeguard such information and to protect it against unauthorized disclosure,
misuse, loss or theft.  Upon termination
of his employment, he will promptly return to the Companies, 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 Companies, in his
possession or control.


 


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


 


“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
clauses (ii) or (iii) of the definition of Change of Control), the failure by
Executive to substantially perform his duties with the Companies (other than
any such failure resulting from Executive’s 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 Executive 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 Executive and an
opportunity for Executive, together with Executive’s 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 Executive is guilty of
conduct set forth above in clauses (a), (b), (c) or (d) of the first sentence
of this definition and specifying the particulars thereof in detail.


 


“Change of Control”
shall mean 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. Code
§ 1701.01 as in effect on December 31, 1990) and in which
shareholders of DPL or DP&L, as the case may


 


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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 July 1, 2004 (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”
shall mean (a) the date specified in a Notice of Termination or (b) if this
Agreement is terminated due to executive’s death or expiration of the Term, the
date of such termination.


 


“Disability”
shall mean, for the purposes of this agreement, Executive’s inability to
perform the duties required of Executive on a full-time basis for a period of
six consecutive months because of physical or mental illness or other physical
or mental disability or incapacity.


 


Section 14.  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 (including the heirs
and estate of Executive), but no assignment shall, of itself, relieve any party
of its obligations hereunder.


 


Section 15.  Entire Agreement.  This Agreement 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 16.  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


 


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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 17.  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 18.  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 19.  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 20.  Equitable Relief.  Executive acknowledges that the Companies
may be irreparably injured by any breach of Section 12.  Accordingly, the Companies shall be entitled
to specific performance and other injunctive relief as remedies for any breach
(or threatened breach) of Section 12, in addition to all other remedies
available at law or in equity.


 


Section 21.  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 22.  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.


 


Section 23.  No Mitigation.  Executive shall not be required to mitigate
the amount of any payment provided for pursuant to this Agreement by seeking
other employment and, to the extent that Executive obtains or undertakes other
employment, the payment will not be reduced by the earnings of Executive from
the other employment.


 


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


 


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  DPL INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  /s/ Chief Executive
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert Biggs

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  W
  August Hillenbrand

  	
   

  
	
   

  	
  Vice Chairman

  	
   

  
						



 


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