Exhibit 10.34

SEPARATION AGREEMENT

This Separation Agreement (“Agreement”), dated as of October 25, 2010, is made
by and between Gary J. Morsches (the “Executive”) and Pepco Holdings, Inc and
its subsidiaries and affiliates (collectively, the “Company”).

WHEREAS, Executive was previously employed by the Company under the terms of an
Employment Agreement, dated as of February 3, 2010, between the Executive and
Pepco Holdings, Inc. (the “Employment Agreement”);

WHEREAS, the Company terminated the employment of Executive under Section 5.2 of
the Agreement effective September 13, 2010; and

WHEREAS, the Company and Executive wish to set forth certain agreements of the
Company and Executive relating to the termination of Executive’s employment.

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

Executive acknowledges and agrees that his employment by the Company ceased on
September 13, 2010 (the “Termination Date”).

2. Accrued Compensation and Severance

(a) Executive acknowledges and agrees that Executive shall not be entitled to
receive any compensation or benefits after the Termination Date or by reason of
the termination of his employment or his service as a director of any subsidiary
of the Company, except for (i) accrued base salary through the Termination Date
and a payment as compensation for accrued vacation time through the Termination
Date, the receipt of which is hereby acknowledged by Executive, (ii) vested
benefits under any savings, pension or deferred compensation plan in which
Executive participates accrued as of the Termination Date, and (iii) the payment
that is payable upon the satisfaction of the conditions set forth in paragraph
(b) of this Section 2.

(b) On the condition that Executive, no later than 21 days following the date
Executive executes this Agreement, 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 a severance payment in
the amount of $109,819, such severance payment being an amount equal to the sum
of (i) salary that Executive would have earned at his current salary rate had
his employment continued after the Termination Date until December 31, 2010 (the
“Severance Payment”) and (ii) $5,000. The Severance Payment shall become due and
payable on the fifth business day following the last day of the seven-day
revocation period referred to in the Release.

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(c) Executive acknowledges and agrees that the Severance Payment is being
provided in consideration of the releases, waivers and agreements of Executive
set forth in this Agreement and the Release and that, upon any breach by
Executive of any provision of this Agreement or the Release, the Severance
Payment shall be forfeited by Executive or, if already paid to Executive, shall
be repaid by Executive to the Company.

(d) All payments to Executive under this Section 2 are subject to any applicable
federal, state, District of Columbia and local tax withholding requirements.

(e) Executive acknowledges that, in accordance with the terms of the (i) the
Pepco Holdings, Inc. annual Executive Incentive Compensation Plan and (ii) the
Pepco Holdings, Inc Long-Term Incentive Plan, the termination of Executive’s
employment on the Termination Date resulted in a forfeiture of any and all of
Executive’s outstanding awards under the respective plans.

3. Reimbursement Of Business Expenses

Executive acknowledges and agrees that (i) all claims submitted by Executive for
the reimbursement of business expenses incurred by Executive have been processed
by the Company to the satisfaction of Executive and (ii) Executive has no claims
for the reimbursement of business expenses that have not been submitted to the
Company.

4. Return Of Company Property and Passwords

Executive has returned to the Company all Company property at any time in the
possession or control of Executive, including without limitation any computer,
cell phone, pager or other electronic equipment, and any and all Company credit
cards, software, keys, access devices, books, records and policy and procedure
manuals.

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 any of 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,
employers, prospective employers, interviews, speeches or conversations, that
disparage the Company, its businesses or any of its directors, officers and
employees, 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, whether written,
oral or electronic, (ii) make any public or private statements, including, but
not limited to, press releases, statements to

 

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journalists, employers, 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.

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,
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 release Executive from damage or loss
suffered by the Company that is attributable to any unlawful conduct or breach
of fiduciary duty by Executive while an employee of the Company, whether known
or unknown by the Company at the time of the execution of this Agreement, 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.

9. Indemnification

The Company agrees that the entry by Executive into this Agreement will not
alter or amend the rights of Executive, or the obligations of the Company, with
respect to indemnification or reimbursement of expenses under the Company’s
Certificate of Incorporation.

 

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10. Enforcement

(a) Executive agrees that any breach by him, whether willful or otherwise, of
Sections 5(a), 6 or 7 of this Agreement (i) will cause continuing and
irreparable harm to the Company for which monetary damages would not be an
adequate remedy and (ii) in such event, the Company shall have the right to
enforce such 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.

11. Warranties and Covenants of Executive

Executive warrants and covenants that Executive: (i) personally has read this
Agreement, (ii) he has been advised to consult with legal counsel at Executive’s
expense with regard to this Agreement and the Release, (iii) has had sufficient
time to consider this Agreement and fully understands the contents of this
Agreement and 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) 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 $168, 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.

 

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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

If an arbitrator or court of competent jurisdiction determines that any term,
provision, or portion of this Agreement or the Release is void, illegal or
unenforceable, the other terms, provisions, and portions of this Agreement or
the Release shall remain in full force and effect, and the terms, provisions and
portions that are determined to be void, illegal or unenforceable shall either
be limited so that they shall remain in effect to the extent permissible by law,
or such arbitrator or court shall substitute, to the extent enforceable,
provisions similar thereto or other provisions, so as to provide to the Company,
to the fullest extent permitted by applicable law, the benefits intended by this
Agreement and the Release.

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.

19. Confidential Agreement

Employee agrees that this Agreement is confidential and that Employee has not
disclosed and will not in the future disclose to any third party the existence
of this Agreement or any term of this Agreement, except that Employee may
disclose the existence of this Agreement or any term hereof (i) to Employee’s
spouse and legal and tax advisors and (ii) to the extent such disclosure is
required by law.

 

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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.

 

  PEPCO HOLDINGS, INC

/s/ G. MORSCHES

  By:  

/s/ ERNEST L. JENKINS

Gary J. Morsches     Ernest L. Jenkins

                10/25/10

   

Vice President, People Strategy and

Human Resources

Date: October 25, 2010   Date: October 25, 2010

 

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RELEASE OF CLAIMS

I, Gary J. Morsches, 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 October
__, 2010, including the payments set forth in Section 2 thereof, and intending
to be legally bound, hereby agree as follows:

I understand that the “Severance Payment” (as defined in Section 2(b) of the
Agreement) is being provided by the Company in consideration for the execution
and delivery by me of this Release of Claims and is not salary, wages or
benefits to which I was already entitled. I understand and agree that I will not
receive the Severance Payment 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, 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
it officers, directors, employees, representatives, agents, attorneys, insurers,
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 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

 

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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 of Claims 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.

 

 

        10/25/10        

 

/s/ G. MORSCHES

    Date   Gary J. Morsches

ELECTION TO EXECUTE PRIOR TO EXPIRATION OF

TWENTY-ONE DAY CONSIDERATION PERIOD

I, Gary J. Morsches, understand that I have at least twenty-one (21) days from
the date I execute the Agreement 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.

 

 

        10/25/10        

 

/s/ G. MORSCHES

    Date   Gary J. Morsches

 

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