AGREEMENT AND GENERAL RELEASE OF CLAIMS

                       This Agreement and General Release of Claims (the
"Agreement") is made this 27th day of March, 2006 between Pepco Holdings Inc.,
including, unless the context clearly otherwise requires, its subsidiaries and
affiliates (together, "PHI" or the "Company") and Dr. Eddie R. Mayberry ("Dr.
Mayberry").

                       WHEREAS, during discussions with Dr. Mayberry, he has
indicated that he desires to terminate his employment with and retire from the
Company effective April 1, 2006;

                       WHEREAS, Dr. Mayberry entered into an Employment
Agreement with the Company as of August 1, 2002 for a three year period, which
Employment Agreement was automatically extended for an additional three year
period (the "Employment Agreement");

                       WHEREAS, the parties have agreed that Dr. Mayberry
termination of employment effective April 1, 2006 shall constitute a termination
other than for Cause under the Employment Agreement;

                       NOW, THEREFORE, in consideration of the mutual promises
set forth below, and intending to be legally bound, the parties hereto agree as
follows:

            1.         Dr. Mayberry shall retire from the Company on April 1,
2006 under the terms of the tax-qualified retirement plan generally applicable
to Pepco heritage employees. It is understood that this is an amicable
separation, and any oral or written communications made by Dr. Mayberry and PHI
shall be consistent with an amicable separation. During the period between the
date of this Agreement and the termination of Dr. Mayberry' employment, the
Company shall continue to employ Dr. Mayberry under the following terms and
conditions:

 

     a.     Dr. Mayberry shall remain an officer of Pepco Holdings, Inc.;

 

     b.     The Company shall not reduce Dr. Mayberry' annual salary,
incentives, and benefits prior to his retirement;

 

     c.     For his part, Dr. Mayberry agrees to devote substantially all his
time and attention to the matters for which he is suited by training and
experience reasonably assigned to him by Dennis R. Wraase, PHI Chairman of the
Board and President; and

 

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     d.     Dr. Mayberry shall also assist and support the Company in
transferring his responsibilities to one or more Company employees designated by
Mr. Wraase.

            2.         Provided that upon his termination from employment with
PHI as agreed herein, Dr. Mayberry immediately executes the General Release of
Claims substantially in the form attached hereto as Attachment A, without
revocation, the Company shall provide to Dr. Mayberry the following:

 

     a.     Dr. Mayberry shall receive the benefits to which he would have been
entitled under Sections 5 (a) and 5 (b) of the Employment Agreement if his
termination of employment were other than for Cause under the Employment
Agreement. Such payments provided for herein shall be made as soon as
practicable, but in no event later than March 15, 2007.

 

     b.     Dr. Mayberry shall also be provided the following benefits:

 

1)

As an inducement for Dr. Mayberry to enter into the Non-Competition,
Non-Solicitation and Confidentiality Agreement which Dr. Mayberry and the
Company have signed as in the best interests of both parties, Dr. Mayberry shall
also be paid an additional amount of one years' salary determined as of Dr.
Mayberry's retirement date. Such payments provided for herein shall be made as
soon as practicable, but in no event later than March 15, 2007.

 

2)

For a period of two years from the date of this Agreement, Dr. Mayberry shall be
provided the services of a financial advisor under the same terms and conditions
as similarly situated executives who remain in active employment with the
Company;

 

3)

For a period of two years from the date of this Agreement, Dr. Mayberry shall be
provided the services of a tax preparer under the same terms and conditions as
similarly situated executives who remain in active employment with the Company;

 

4)

The Company further agrees to transfer ownership to Dr. Mayberry of various
incidental items, including his cellular telephone, calculators and any other
miscellaneous Company property which the Company's Chairman and President
authorizes to be retained by Dr. Mayberry.

 

     c.     In addition to the payments and other benefits described herein,
upon his termination, Dr. Mayberry shall receive any other benefits to which he
is entitled under any other applicable welfare, savings, and deferred
compensation plans, including benefits under the Retiree Medical Plan and the
long-term and annual incentive plans, and under any other plan in which he
currently

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participates, as would be available to any similarly situated terminated and
retired Company executives, all in accordance with the terms of the plans.

            3.         It is understood that the payments and benefits
specifically referred to in this Agreement are in lieu of and replace any other
payments or other benefits otherwise payable to Dr. Mayberry under any severance
program for which Dr. Mayberry may have been eligible, including any additional
payments under the Employment Agreement and such Employment Agreement is
superseded and will have no further force and effect, except that Section 5 (d)
of Dr. Mayberry's Employment Agreement shall apply to the provisions of this
Agreement relating to payments and benefits due to Dr. Mayberry and for that
purpose is incorporated herein.

            4.         Dr. Mayberry, on behalf of himself and his heirs, agents,
attorneys, and assigns, hereby releases and discharges forever all claims and
causes of action that have arisen or might have arisen at any time up to and
including the date of this Agreement (whether known or unknown, accrued or
contingent, liquidated or unliquidated) that he now has or may have against the
Company, and any or all of its current or former subsidiaries and/or affiliated
entities, and their officers, directors, employees, representatives, agents,
attorneys, successors and assigns, including, without any limitation on the
general nature of the foregoing release, any claims relating to his employment
with the Company; 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; any claims for attorneys' fees; and any claims relating to his
employment with or retirement from the Company. Dr. Mayberry agrees 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 herein in any federal, state, District of Columbia, local, or other
court administrative agency or other forum concerning any claims released
herein, and Dr. Mayberry specifically represents that no such complaints or
charges by his are pending. Dr. Mayberry warrants that this is a general release
and warrants that there has been no assignment or transfer of any claims covered
hereby.

            5.         With respect to the general release in Paragraph 4
hereof, Dr. Mayberry agrees and understands that he is specifically releasing
all claims under the Age Discrimination in Employment Act, as amended, 29 U.S.C.
§ 621 et seq. He further understands that he has at least twenty-one (21) days
to consider the release of such claims; that if he signs this Agreement, he may
revoke it within seven (7) days after signing; and that this Agreement shall not
be enforceable until the seven-day revocation period has expired without
revocation. He expressly agrees that, if he revokes this release during the
revocation period and has received any benefits during the revocation period,
all such benefits will be rescinded and, to the extent practicable, will be
returnable to the Company. Revocation can be made by delivering a written notice
of revocation to Dennis R. Wraase, Chairman of the Board and President, Pepco
Holdings, Inc., 701

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Ninth Street, N.W., Washington, D.C. 20068. For such revocation to be effective,
notice must be received no later than 5:00 p.m. on the seventh calendar day
after Dr. Mayberry signs this Agreement. If Dr. Mayberry revokes the Agreement
as set forth herein, Dr. Mayberry acknowledges that his employment shall
terminate and he shall not be reinstated.

            6.         Dr. Mayberry recognizes that PHI must maintain continued
harmonious relationships with the public and the business community. Dr.
Mayberry therefore agrees not to malign or otherwise make statements critical of
PHI, its successors, subsidiaries or affiliates, or their officers, directors,
agents and employees, to any person or entity. Dr. Mayberry specifically agrees
not to state or suggest to any person or entity that PHI, its successors,
subsidiaries or affiliates, or their officers, directors, agents or employees,
have not treated him in a fair and equitable manner.

            7.         Dr. Mayberry will return any PHI property and documents
in his possession or control to PHI on or before his retirement date, unless
PHI's Chairman and President agrees to allow Dr. Mayberry to retain certain PHI
property. Following his retirement, Dr. Mayberry will not disclose to others any
confidential or proprietary information he received during his employment
concerning PHI.

            8.         By making this Agreement, PHI does not admit any
liability to Dr. Mayberry.

            9.         This is the whole Agreement between Dr. Mayberry and the
Company. Dr. Mayberry and the Company acknowledge that they are not relying on
any promises or oral or written statements or representations other than those
in this Agreement.

          10.         Dr. Mayberry agrees to keep the terms, amount and fact of
this Agreement completely confidential, and that he will not disclose any
information concerning this Agreement, other than the fact that he has
voluntarily retired from his employment with the Company, to anyone other than
his immediate family, tax and/or other financial advisors and his lawyer(s), who
will be bound by the confidentiality clause, or as may be required by law or as
agreed to by the parties.

          11.         Dr. Mayberry agrees that PHI's obligation to make any
payments to him pursuant to this Agreement is contingent upon Dr. Mayberry
fulfilling his obligations under this Agreement. The parties agree that any
breach of the terms of this Agreement shall entitle the aggrieved party to sue
thereon in any court of competent jurisdiction and upon proof of such breach to
recover payments made herein, other monetary damages, attorneys' fees and costs.
The parties agree that neither the waiver by any party of a breach of or a
default under any of the provisions of the Agreement, nor the failure of any
party, on one or more occasions, to enforce any of the provisions of the
Agreement or to exercise any right or privilege hereunder shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any provisions, rights or privileges hereunder.

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          12.         Dr. Mayberry affirms that he has read this Agreement in
its entirety, has had a full and fair opportunity to consider and understand its
terms, and has been advised to consult with counsel of his choice at his
expense. Dr. Mayberry further acknowledges that he has, of his own free will,
agreed to the terms hereof.

          13.         This Agreement may not be changed after its execution
unless the changes are made in writing and signed by both parties.

          14.         This Agreement shall be binding upon the parties and any
successors thereto.

          15.         This Agreement shall be governed by and construed in
accordance with the laws of the District of Columbia.

 

/s/ E. R. MAYBERRY        

Eddie R. Mayberry

/s/ D. R. WRAASE                     

Dennis R. Wraase
Chairman, President and Chief
          Executive Officer
Pepco Holdings, Inc.  

Date: March 27, 2006          

Date: March 27, 2006                  

ELECTION TO EXECUTE PRIOR TO EXPIRATION OF
TWENTY-ONE DAY CONSIDERATION PERIOD

                     I, Eddie R. Mayberry, understand that I have at least
twenty-one (21) days within which to consider and execute the foregoing
Separation Agreement and General Release of Claims. However, after having an
opportunity to consult counsel, I have freely and voluntarily elected to execute
the Agreement before the twenty-one (21) day period has expired.

March 27, 2006          

Date

/s/ E. R. MAYBERRY                      

Eddie R. Mayberry

 

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ATTACHMENT A

 

RELEASE OF CLAIMS

          I, Eddie R. Mayberry, in consideration of the mutual promises set
forth in that certain Separation Agreement and General Release of Claims (the
"Agreement") executed by me and Pepco Holdings Inc. ("PHI" or the "Company") on
March 27, 2006, including the payments and benefits set forth in Paragraph 2,
thereof, and intending to be legally bound, hereby agree as follows:

          I, on behalf of myself and my heirs, agents, attorneys, and assigns
hereby release and discharge forever all claims and causes of action that have
arisen or might have arisen at any time 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 any or all
of its successors, current or former subsidiaries and/or affiliated entities and
their officers, directors, employees, representatives, agents, attorneys,
successors and assigns, including, without any limitation on the general nature
of the foregoing release, any claims relating to my employment with the Company
or any of its subsidiaries or successors; 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; any claims for attorneys' fees; and any claims relating
to my employment with or retirement from the Company. 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 herein in any federal, state, District of Columbia, local, or other
court administrative agency or other forum concerning any claims released
herein, and I specifically represent that no such complaints or charges by me
are pending. I warrant that this is a general release and warrant that there has
been no assignment or transfer of any claims covered hereby.

          With respect to the general release herein, I agree and understand
that I am specifically releasing all claims under the Age Discrimination in
Employment Act, as amended, 29 U.S.C. § 621 et seq. I further understand that I
have at least twenty-one (21) days to consider the release of such claims; that
if I sign this Agreement, I may revoke it within seven (7) days after signing;
and that this Agreement shall not be enforceable until the seven-day revocation
period has expired without revocation. I expressly agree that, if I revoke this
release during the revocation period and have received any benefits during

 

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the revocation period, all such benefits will be rescinded and, to the extent
practicable, will be returnable to Pepco Holdings, Inc., or its successor.
Revocation can be made by delivering a written notice of revocation to Dennis R.
Wraase, Chairman and President, Pepco Holdings, Inc., 701 Ninth Street, N.W.,
Washington, D.C. 20068. For such revocation to be effective, notice must be
received no later than 5:00 p.m. on the seventh calendar day after I sign this
Agreement. If I revoke the Agreement as set forth herein, I acknowledge that my
employment shall be terminated and shall not be reinstated.

          I affirm that I have read this Agreement 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.

April 7, 2006                       

          Date

/s/ E. R. MAYBERRY                      

Eddie R. Mayberry

ELECTION TO EXECUTE PRIOR TO EXPIRATION OF
TWENTY-ONE DAY CONSIDERATION PERIOD

          I, Eddie R. Mayberry, 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 before the twenty-one (21) day period
has expired.

April 7, 2006                       

Date

/s/ E. R. MAYBERRY                      

Eddie R. Mayberry

 

 

 

 

 

 

 

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