SEPARATION AGREEMENT
 
This Separation Agreement (“Agreement”) is made by and between Paul H. Barry
(the “Executive”) and Pepco Holdings, Inc and its subsidiaries and affiliates
(collectively, the “Company”).
 
WHEREAS, Executive is an at-will employee of the Company and serves as the
Senior Vice President and Chief Financial Officer Pepco Holdings, Inc. and also
serves as an officer and/or director of certain of its subsidiaries; and
 
WHEREAS, the Company and Executive have mutually agreed to the termination of
the employment of Executive and wish to set forth herein the terms and
conditions of such termination.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and intending to be legally bound, the Company and Executive agree as
follows:
 
1. 
Termination of Employment and Resignation as a Director

 
Executive acknowledges and agrees that his employment by the Company will cease
on June 12, 2009 (the “Termination Date”).  As of the Termination Date, (i)
Executive shall be deemed to have resigned as director of each Company
subsidiary of which he is a director on the Termination Date and (ii) Executive
shall have no further duties or responsibilities to the Company, except as
otherwise provided in this Agreement, and shall have no authority to act for or
on behalf of the Company.
 
2. 
Severance and Post-Termination Benefits

 
(a)           Executive acknowledges and agrees that, except as otherwise set
forth in this Section 2, Executive shall not be entitled to receive any
compensation or benefits after the Termination Date or by reason of the
termination of his employment and service as a director, except for (i) accrued
base salary through the Termination Date, (ii) vested benefits under any
savings, pension or deferred compensation plan in which Executive participates
accrued as of the Termination Date, and (iii) a payment in the amount of
$29,884.62 as compensation for three weeks of accrued vacation time as of the
Termination Date.
 
(b)           On the condition that, no earlier than on the Termination Date and
no later than 21 days after the Termination Date, Executive executes and
delivers a General Release of Claims, substantially in the form attached hereto
as Attachment A (the “Release”), and does not revoke the Release within the
revocation period specified therein, the Company shall provide to Executive the
following payments and benefits (“Severance Benefits”):
 
i.           a severance payment in the amount of $828,800;
 
ii.           reimbursement by the Company of monthly premiums incurred by
Executive for COBRA continuation health insurance care coverage elected by
Executive (and/or his beneficiaries) covering a period beginning on the
Termination Date and ending on the earlier
 

 
 

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of (i) the date that is 18 months following the Termination Date and (ii) the
date on which Executive obtains health insurance coverage from another
employer.  Each such payment shall be considered to be a separate payment for
purposes of section 409A of the Internal Revenue Code;
 
iii.           reimbursement in the cumulative amount of $50,000 for (i) any
legal fees, costs and expenses incurred in connection with the negotiation of,
and entry into, this Agreement, and (ii) the costs of outplacement or relocation
services incurred by Executive on or before December 31, 2009; and
 
iv.           reimbursement for the fees, costs and expenses of fiscal planning
and tax preparation services for calendar years 2009 and 2010 in an amount not
to exceed $15,000.
 
(c)           Executive acknowledges and agrees (i) that the Severance Benefits
are being provided in consideration of the releases, waivers and agreements of
Executive set forth in this Agreement and the Release and (ii) that upon any
material breach by Executive of this Agreement or the Release that causes actual
injury to the Company, the Company may require that such Severance Benefits (net
of any taxes) shall be forfeited by Executive or, if already paid to Executive,
shall be repaid by Executive to the Company, as liquidated damages for such
breach.
 
(d)           The payment to Executive under clause (i) of paragraph (b) of this
Section 2 shall be due and payable on the third business day following the last
day of the seven-day revocation period referred to in the Release.
 
(e)           The payments to Executive under clause (ii) of paragraph (b) of
this Section 2 shall be subject to the submission by Executive no later than 30
days after the monthly premium is paid by Executive of such evidence as the
Company may reasonably request documenting the payment by the by
Executive.  Reimbursement shall be made within ten business days after the
presentation by Executive of the required documentation.
 
(f)           The payments to Executive under clauses (iii) and (iv) of
paragraph (b) of this Section 2 shall be subject to the submission by Executive
to the Company of receipts, invoices or other evidence documenting such fees,
costs or expenses no later than 60 business days after they are incurred by
Executive and in no event later than May 15, 2011.  Reimbursement shall be made
within 20 business days after the presentation by Executive of the required
documentation.
 
                      (g)           All payments to Executive under this Section
2 are subject to any applicable federal, state, District of Columbia and local
tax withholding requirements.
 
3. 
Reimbursement Of Business Expenses

 
Executive shall submit all requests for reimbursement of business expenses
incurred by Executive by no later than 60 business days after the Termination
Date.  The Company will process such requests in the ordinary course consistent
with it policies and procedures in effect

 
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immediately prior to the Termination Date, but in no event later than 20
business days after the receipt by the Company of all required documentation.

4. 
Return Of Company Property and Passwords

 
Executive shall return to the Company, no later than the Termination Date, all
Company property in the possession or control of Executive, including without
limitation any company car, computer, cell phone, pager or other electronic
equipment, and any Company credit card, software, key, access device, book,
record and policy and procedure manual.
 
5. 
Non-Disparagement

 
(a) For a period of five years following the Termination Date, Executive agrees
(i) not to make any disparaging, negative or defamatory comments about the
Company, its businesses or its directors, officers and employees, whether
written, oral or electronic, (ii) not to make any public or private statements
including, but not limited to, press releases, statements to journalists,
employees, prospective employers, interviews, speeches or conversations, that
disparage the Company or any of its businesses, or (iii) in addition to the
confidentiality requirements set forth in this Agreement and those imposed by
law, not to provide any third party, directly or indirectly, with any documents,
papers, recordings, e-mail, internet postings, or other written or recorded
communications referring or relating to the Company or its businesses that would
support, directly or indirectly, any disparaging, negative or defamatory
statement.  Notwithstanding the foregoing, nothing in this Agreement shall
prevent or restrict Executive from disclosing any information required by law,
regulation, legal or administrative process.
 
(b) For a period of five years following the Termination Date, the Company
agrees that neither it nor any of its directors or officers will (i) make any
disparaging, negative or defamatory comments about Executive or his businesses,
whether written, oral or electronic, (ii) make any public or private statements
including, but not limited to, press releases, statements to journalists,
employees, prospective employers, interviews, speeches or conversations, that
disparage Executive, or (iii) provide any third party, directly or indirectly,
with any documents, papers, recordings, e-mail, internet postings, or other
written or recorded communications referring or relating to Executive that would
support, directly or indirectly, any disparaging, negative or defamatory
statement.  Notwithstanding the foregoing, nothing in this Agreement shall
prevent or restrict the Company or its directors and officers from disclosing
any information required by law, regulation, legal or administrative process.
 
6. 
Confidential Information And Trade Secrets

 
Executive agrees that at all times following the Termination Date he shall keep
secret and retain in strictest confidence, and shall not use or disclose,
directly or indirectly, any confidential information, trade secrets or
proprietary data of the Company, including without limitation, any data,
information, ideas, knowledge and papers pertaining to the customers,
prospective customers, business methods, business plans, financial data and
financial projections of the Company; provided, however, that nothing in this
Agreement shall prevent Executive from disclosing information (i) that becomes
publicly available or (ii) in response to any subpoena or court order.
 

 
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7. 
Non-Solicitation Of Employees

 
Executive agrees that, for a period of one year from the date of this Agreement,
he will not solicit for employment any employee of the Company or, directly or
indirectly, attempt to cause or influence any employee to terminate or modify
his or her employment with the Company.
 
8. 
Company Release

 
The Company hereby irrevocably and unconditionally releases Executive, and his
estate, executors and administrators (collectively, the "Executive Releasees")
from any and all claims, damages, causes of action, suits, controversies, causes
of action, cross-claims, counter-claims, demands, debts, or liabilities of any
nature whatsoever in law and in equity ("Claims") that the Company ever had, now
has or at any time hereafter may have against any of the Executive Releasees by
reason of any matter, cause or thing whatsoever from the beginning of time to
the date this Agreement is signed by Executive (the "Company Release");
provided, however, that (i) this release shall not apply to any unlawful conduct
that Executive may have engaged in while an employee of the Company and (ii)
nothing in this Section 8 shall in any way release the Executive Releasees from
any obligation of Executive under this Agreement or the Release or waive or
discharge the right of the Company to bring any Claim to enforce any provision
of this Agreement or the Release.  The Company represents that it has not
commenced or joined in any claim, charge or action against Executive arising out
of or relating in any way to Executive's employment or positions held with the
Company, the termination thereof, or any other matter released pursuant to this
Section 8.
 
9. 
Indemnification

 
The Company agrees that the entry by Executive into this Agreement or the
Release will not alter or amend the rights of Executive, or the obligations of
the Company, with respect to indemnification under the Company’s Certificate of
Incorporation as in effect on the date Executive signs this Agreement.
 
10. 
Enforcement

 
(a)           Executive agrees that any breach by him, whether willful or
otherwise, of Sections 5(a), 6 or 7 of this Agreement will cause continuing and
irreparable harm to the Company for which monetary damages would not be an
adequate remedy.  In the event of a breach by Executive of any of Sections 5(a),
6 or 7, the Company shall have the right to enforce the provision by seeking
injunctive or other relief in any court, without limiting the remedies at law or
in equity otherwise available to the Company.
 
(b)           In any action at law or in equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to recover, in
addition to any other relief, reasonable attorneys’ fees, costs and
disbursements.

 
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11. 
Warranties and Covenants of Executive

 
Executive warrants and covenants that: (i) he personally has read this
Agreement, (ii) he has had an opportunity to seek legal counsel to advise him
with regard to this Agreement and the Release, (iii) he has had sufficient time
to consider this Agreement and fully understands the contents of this Agreement
and of the Release, including the fact that the Release contains a release of
and a covenant not to sue for any and all claims which he may have against the
Company, both known or unknown, even though there may be facts and consequences
unknown to Executive, and (iv) he has freely and voluntarily entered into this
Agreement.
 
12. 
Cooperation on Litigation or Disputes

 
For a period of five years following the Termination Date, if requested by the
Company, and subject to reimbursement for expenses reasonably incurred
(including, but not limited to, meals, accommodations, travel and other
incidental expenses) and payment at the hourly rate of $460, Executive agrees to
cooperate with and assist the Company in response to reasonable requests
regarding the defense of any ongoing litigation, claims, grievances,
arbitrations or disputes concerning Company or its businesses with respect to
matters that were within the scope of Executive’s responsibilities while
employed by the Company.
 
13.  
Entire Agreement

 
This Agreement contains the entire agreement and understanding between the
Company and Executive with regard to the termination of Executive’s employment
and supersedes any prior or contemporaneous negotiations or agreements, written
or oral, with respect to the termination of Executive’s employment.
 
14. 
Amendments and Waivers

 
(a)           This Agreement can be modified or waived only by a written
agreement signed by the Company and Executive.
 
(b)           The Company and Executive agree that neither the waiver by a party
of a breach of any term or condition of this Agreement, nor the failure of a
party on one or more occasions to enforce any term or condition of this
Agreement, shall be construed as a waiver by such party of any subsequent breach
of such term or condition or any other term or condition of this Agreement.
 
15. 
Governing Law

 
This Agreement shall be governed by, and construed in accordance with, the laws
of the District of Columbia (without regard to any conflicts of law rule that
might otherwise refer construction or interpretation of this provision to the
substantive law of another jurisdiction).
 
16. 
Severability

 
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law in any

 
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jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
 
17. 
Section Headings

 
The section headings in this Agreement are for convenience only and shall not be
taken into account in the interpretation of this Agreement.
 
18. 
Facsimile Signatures and Counterparts

 
This Agreement may be executed by facsimile signature, and in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
 
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a
duly authorized officer, and Executive has executed this Agreement, in each case
on the date indicated below.
 

 

 

 
PAUL H. BARRY
 
PEPCO HOLDINGS, INC.
               
/s/ Paul H. Barry
 
By:
/s/ Joseph M. Rigby
     
Joseph M. Rigby
President and Chief Executive Officer
       
Date:  June 12, 2009
   
Date:  June 12, 2009

 

 

 
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RELEASE OF CLAIMS
 
I, Paul H. Barry, in consideration of the mutual promises set forth in that
certain Separation Agreement (the "Agreement") executed by me and Pepco Holdings
Inc. (together with its subsidiaries and affiliates, the "Company") on June 12,
2009, including the payments and benefits set forth in Section 2 thereof, and
intending to be legally bound, hereby agree as follows:
 
I understand that the “Severance Benefits” (as defined in Section 2(b) of the
Agreement) are being provided by the Company in consideration for the execution
and delivery by me of this Release of Claims and are not salary, wages or
benefits to which I was already entitled.  I understand and agree that I will
not receive the Severance Benefits unless I (i) execute this Release of Claims
and (ii) do not revoke this Release of Claims within the time period specified
herein or breach any term of this Release of Claims or the Agreement.
 
I, on my own behalf, and on behalf of my heirs, agents, attorneys, assigns and
anyone else claiming for and through me, hereby knowingly, voluntarily and fully
waive, unconditionally release and forever discharge (except to the extent
provided in the next succeeding paragraph) all claims, damages, causes of
action, suits, controversies, causes of action, cross-claims, counter-claims,
demands, debts, or liabilities of any nature whatsoever in law and in equity
(“Claims”) that have arisen or might have arisen at any time prior and up to and
including the date of this Release of Claims (whether known or unknown, accrued
or contingent, liquidated or unliquidated) that I now have or may have against
the Company and its officers, directors, employees, representatives, agents,
attorneys, insurers (but only with respect to Claims that Executive otherwise
could assert against the Company), predecessors, successors and assigns,
including, without any limitation on the general nature of the foregoing
release: (i) any Claims relating to my employment and the termination of my
employment with the Company, including any Claim of wrongful discharge or breach
of contract, (ii) any Claims arising under any federal, state, District of
Columbia or local law relating to discrimination on account of race, color,
religion, sex, national origin, age, disability, marital status or other illegal
basis, (iii) any Claims based on any tort, such as fraud, defamation or
intentional infliction of emotional distress, (iv) any Claims for wages,
insurance or other fringe benefits, including group health and pension benefits
and (v) any Claims for attorneys' fees or costs.  I agree not to sue, or
otherwise institute or cause to be instituted or in any way voluntarily
participate in or assist in the prosecution of (whether as an individual or
class representative) any complaints or charges against any persons or entities
released hereby in any federal, state, District of Columbia, local or other
court, administrative agency or other forum concerning any claims released
hereby, and I represent that no such complaint or charge by me or on my behalf
is pending.  I warrant that this is a general release and that there has been no
assignment or transfer of any claim covered hereby.
 
I understand and agree that in providing the general release set forth herein, I
am specifically releasing all claims under the Age Discrimination in Employment
Act, as amended, 29 U.S.C. § 621 et seq.
 
Notwithstanding the above, I further acknowledge and agree that I am not waiving
and am not being required to waive (i) any claim for the benefits provided for
in the Agreement, (ii) any claim for vested benefits under any employee benefit
plan in which I was a
 

 
 

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participant on or prior to the date of the Agreement, (iii) any rights or claims
that I may have that first arise after the date I execute this Release of
Claims, (iv) any right that cannot be waived under law, such as unemployment
insurance and worker’s compensation benefits and the right to file an
administrative charge or participate in an administrative investigation or
proceeding; provided, however, that I disclaim and waive any right to share or
participate in any monetary award resulting from the prosecution of such charge
or investigation or proceeding with respect to any such administrative change I
may file under this clause (iv), and (v) any claim that I may have to
indemnification and reimbursement of expenses under the Company’s Certificate of
Incorporation.
 
I further understand and acknowledge that: (i) I have at least twenty-one (21)
days to consider the release of such claims, (ii) for a period of seven (7) days
following the signing of this Release of Claim, I may revoke this Release of
Claims and (iii) this Release of Claims shall not be enforceable until the
seven-day revocation period has expired without revocation.  I agree that, if I
revoke this release during the revocation period and have received any benefits
under the Agreement during the revocation period, all such benefits shall be
rescinded and, to the extent practicable, will be returnable to the Company.  I
further acknowledge that (i) revocation can be made by delivering a written
notice of revocation to Ellen Sheriff Rogers, Secretary, Pepco Holdings, Inc.,
701 Ninth Street, N.W., Washington, D.C. 20068 and (ii) for such revocation to
be effective, notice must be received no later than 5:00 p.m. on the seventh
calendar day after the day on which I sign this Release of Claims.  If I revoke
this Release of Claims as set forth herein, I acknowledge that I shall not be
reinstated as an employee of the Company. 
 
I affirm that I have read this Release of Claims in its entirety, have had a
full and fair opportunity to consider and understand its terms, and have been
advised to consult with counsel of my choice at my expense. I further
acknowledge that I have, of my own free will, agreed to the terms hereof.
 

 
June 12, 2009
 
/s/ Paul H. Barry
Date
 
Paul H. Barry

 
ELECTION TO EXECUTE PRIOR TO EXPIRATION OF
TWENTY-ONE DAY CONSIDERATION PERIOD
 
I, Paul H. Barry, understand that I have at least twenty-one (21) days within
which to consider and execute the foregoing Release of Claims.  However, after
having an opportunity to consult counsel, I have freely and voluntarily elected
to execute the Release of Claims before the twenty-one (21) day period has
expired.
 

 
June 12, 2009
 
/s/ Paul H. Barry
Date
 
Paul H. Barry

 

 
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