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Exhibit 10

RETIREMENT AGREEMENT

This Retirement Agreement (the “Agreement”) is entered into as of September 6,
2012, by and between Pepco Holdings Inc. (the “Company”) and Kirk J. Emge (the
“Executive”).

WHEREAS, the Company has offered the Executive the opportunity to elect early
retirement in consideration for payment of certain severance payments and the
receipt of certain other benefits; and

WHEREAS, the Executive wishes to retire from the Company in accordance with the
terms set forth in this Agreement.

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

1.           Retirement of the Executive.

(a)           The Executive’s retirement date shall be April 1, 2013 (the
“Retirement Date”).  If the Executive voluntarily terminates his employment
prior to the Retirement Date, this Agreement shall become null and void.

(b)           From the date of this Agreement through the Retirement Date, the
Executive shall continue to be employed as an executive of the Company at his
current annual salary of $400,000 (i) with duties and responsibilities
commensurate with his position as an executive of the Company as he shall be
assigned from time to time by the Chief Executive Officer of the Company and
(ii) otherwise on the same terms and conditions as were in effect immediately
prior to the date of this Agreement, subject only to the terms and conditions of
this Agreement.

2.           Treatment of Incentive Compensation Awards.

(a)           With regard to the Amended and Restated Annual Executive Incentive
Compensation Plan (the “EICP”):

(i)           The Executive (i) shall be entitled to receive an award for 2012
(payable in 2013) if and to the extent so determined by the Compensation/Human
Resources Committee (the “Compensation Committee”) in accordance with the terms
of the EICP, and to the extent earned, shall be payable in the normal course.

(ii)           The Executive shall not be entitled to participate in the EICP in
2013.

(b)           With regard to the Long-Term Incentive Plan (the “LTIP”):

 
 

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                                                (i)           The Executive’s
time-based and performance-based awards for the 2010-2012 award cycle shall vest
if and to the extent determined by the Committee in accordance with the terms
thereof, and to the extent earned, shall be payable in the normal course.

(ii)           The Executive’s award agreement with respect to the time-based
restricted stock unit award for the 2011-2013 award cycle is hereby amended to
provide that on the Retirement Date the award shall vest on a prorated based on
the number of full months elapsed over the period beginning on the grant date
and ending on the Retirement Date (the “Proration Period”), with the result that
on the Retirement Date the Executive shall become fully vested in (A) 5,144
restricted stock units, representing 26/36th of the restricted stock units
initially granted under the award and (B) any additional restricted stock units
accrued as dividend equivalents in accordance with the terms of the award over
the Proration Period, and the remainder of the award shall be forfeited.  The
vested restricted stock units shall be settled on the Retirement Date.
 
(iii)           The Executive’s award agreement with respect to the
performance-based restricted stock unit award for the 2011-2013 award cycle is
hereby amended to provide that the vesting of the award shall be based on actual
performance over the entire three-year performance period relative to the
performance goals as determined by the Committee in accordance with the terms of
the award, with the number of restricted stock units, if any, that otherwise
would have become vested to be prorated by multiplying that number of restricted
stock units by the fraction 27/36, representing the number of full months
elapsed over the period beginning on the grant date and ending on the Retirement
Date (the “Pro-Rated Award”).  The Pro-Rated Amount, along with any additional
restricted stock units accrued as dividend equivalents on the Pro-Rated Award,
shall be settled no later than 30 days after the amount of the award is
determined (but in no event later than the short-term deferral period under
Treas. Reg. 1.409A-1(b)(4).

(iv)           The Executive’s time-based and performance-based awards for the
2012-2014 award cycle shall be forfeited, effective as of the Retirement Date.
 
 
(v)           The Executive shall not be entitled to an award for the 2013-2015
award cycle.

3.           Severance and Other Payments.

(a)           On the condition that the Executive, on or after the Retirement
Date and no later than 45 days after the Retirement Date, executes and delivers
a General Release of Claims in the form attached hereto as Attachment A (the
“Release”), and does not revoke the Release within the revocation period
specified therein, and in consideration for the other agreements of the
Executive as set forth in this Agreement, including in Section 9, the Company
shall make a non-pensionable severance payment to the Executive in an amount
equal to $706,667, consisting of the sum of (i) $466,667, representing an amount
equal to the salary that the Executive would have earned at his current salary
rate over the period April 1, 2013, through May 31, 2014 and (ii) $240,000,
representing an amount equal to the Executive’s 2013 EICP target bonus had the
Executive been a participant in the EICP for 2013.

 
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                                (b)           The Severance Payment shall become
due and payable in a lump sum on the tenth business day following the last day
of the seven-day revocation period referred to in the Release. The Executive
acknowledges and agrees that the Severance Payment is being provided in
consideration of the releases, waivers and agreements of the Executive set forth
in this Agreement and the Release and that, upon any breach by the Executive of
any provision of this Agreement or the Release, the Severance Payment shall be
forfeited by the Executive or, if already paid to the Executive, shall be
immediately repaid by the Executive to the Company.
 
(c)           The Company shall pay an additional benefit to the Executive based
on the difference between (i) his early retirement benefit under the Pepco
Holdings, Inc. Retirement Plan (the “Retirement Plan”) and the Pepco Holdings,
Inc. 2011 Supplemental Executive Retirement Plan (the “Supplemental Plan”) and
(ii) his retirement benefit under the Retirement Plan and Supplemental Plan
unreduced for early commencement.  The Company and the Executive agree that this
difference is equal to $546.86 per month when expressed as a single life annuity
beginning as of the Retirement Date.  This benefit shall be paid to the
Executive at the same time and in the same form as the Executive’s benefits
under the Supplemental Plan, converted, if necessary, from the single life
annuity stated above using the assumptions for actuarial equivalence specified
in the Retirement Plan.

4.           Retirement Plan and Supplemental Pension Benefits.  The Executive
shall continue to accrue benefits under the Pepco Holdings Retirement Plan and
the Executive Supplemental Retirement Plan through the Retirement Date, and
beginning on the Retirement Date shall be entitled to receive benefits under the
respective plans in accordance with the terms thereof and the elections made by
the Executive thereunder.

5.           Other Benefits.

(a)           Deferred Compensation.   The Executive shall be eligible to
continue to participate in the Second Amended and Restated PHI Executive and
Director Deferred Compensation Plan in accordance with the terms thereof and the
elections made by the Executive thereunder.

(b)           401(k) Plan.  The Executive shall be eligible to continue to
participate in the Retirement Savings in accordance with the terms thereof and
the elections made by the Executive thereunder.

(c)           Health and Welfare Benefits.   The Executive shall be eligible to
continue to participate in each of the health and welfare benefits in which he
is a participant as of the date of this Agreement in accordance with the terms
thereof and the elections made by the Executive thereunder.  For a period up to
one year following the Retirement Date, any medical, dental and vision benefits
to which the Executive is entitled under the Consolidated Omnibus Budget and
Reconciliation Act (COBRA) shall be charged to the Executive at a cost that is
the same as the Executive would have paid had the Executive remained an active
employee of the Company.

6.            No Participation in Future Severance Plans.   The Executive hereby
agrees that Executive shall not be entitled to participate in any severance plan
or arrangement that may be instituted by the Company following the date of this
Agreement.
 
 
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7.           Withholding Taxes.  Other than incentive awards, which shall be
governed by the terms and conditions of the plans under which they were made and
any award agreement entered into with respect thereto, all payments to the
Executive under this Agreement are subject to any applicable federal, state,
District of Columbia and local tax withholding requirements.

8.           Non-Disparagement.  It is understood that the retirement of the
Executive is an amicable separation, and any oral or written communications made
by the Executive and the Company concerning one another relating to the
Executive’s termination of employment shall be consistent with an amicable
separation.

9.           Assistance and Post-Employment Cooperation.

(a)           The Executive agrees to assist the Company subsequent to the date
of this Agreement and through the Retirement Date in the efficient transfer of
the Executive’s responsibilities.

(b)           For a period of three years following the Retirement Date, the
Executive agrees to be available, upon the reasonable request of the Company, to
consult with the Company with regard to matters that were within the scope of
Executive’s responsibilities while employed by the Company, including, without
limitation, cooperating with and assisting the Company in pursuing or defending
any litigation, claims, grievances, arbitrations or disputes involving the
Company or any of its subsidiaries.  In connection with the assistance provided
by the Executive under this Section 9, the Company shall (i) reimburse the
Executive for out-of-pocket expenses reasonably incurred (including, but not
limited to, meals, accommodations, travel and other incidental expenses) and
(ii) beginning on June 1, 2014, compensation the Executive at the hourly rate of
$200.

10.            Return of Company Property.  The Executive shall return to the
Company any and all Company property and documents in the Executive’s possession
or control on or before the Retirement Date.  Following the Retirement Date, the
Executive shall take reasonable steps to protect from disclosure to others any
confidential or proprietary information concerning the Company that the
Executive received during the Executive’s employment.
 
                11.           Release of Claims.
 
(a)           Except as otherwise provided in paragraph (b), the Executive, on
behalf of himself and his heirs, agents, attorneys, assigns and anyone else
claiming for or through the Executive, hereby knowingly, voluntarily and fully
waives, unconditionally releases and forever discharges, all claims, damages,
causes of action, suits, controversies, cross-claims, counter-claims, demands,
debts and liabilities of any nature whatsoever in law or in equity (“Claims”)
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 the Executive now has or may have against the Company, its
affiliates, subsidiaries, successors and assigns, its and their present, past
and future directors, officers, shareholders, agents, representatives and
employees (in their individual and representative capacities), and any past,
present or successor Company benefit plans and their trustees, administrators,
fiduciaries, insurers and agents (collectively, "the Releasees"), including
without any limitation on the general nature of the foregoing release: (i) any
Claims relating to the Executive’s employment and termination of 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.  The Executive agrees not to sue, 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 of the Releasees in any federal, state,
District of Columbia, local or other court, administrative agency or other forum
concerning any Claims released hereby, and the Executive represents that no such
complaint or charge by the Executive or on the Executive’s behalf is
pending.  The Executive agrees that if any person, organization or other entity
should bring a Claim against any of the Releasees involving any matter occurring
at any time in the past up to and including the date of execution of this
Agreement or involving any continuing effects of any acts or practices which may
have arisen or occurred prior to the execution of this Agreement, the Executive
will not accept any personal relief in any such action. Executive warrants that
this is a general release and that there has been no assignment or transfer of
any Claim covered hereby. The Executive 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.
 
 
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(b) Notwithstanding the provisions of paragraph (a), the Executive acknowledges
and agrees that he is not waiving and is not being required to waive (i) any
claim for the benefits provided for in this Agreement, (ii) any claim for vested
benefits under any employee benefit plan in which Executive was a participant on
or prior to the date of this Agreement as those benefits may be modified under
the terms of this Agreement, (iii) any rights or claims that the  Executive may
have that first arise after the date the Executive executes this Agreement, (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 the Executive disclaims and waives 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 charge the Executive may file
under this clause (iv), and (v) any claim that the Executive may have to
indemnification and reimbursement of expenses under applicable law or the
Company’s Certificate of Incorporation or Bylaws.
 
(c) The Executive further understands and acknowledges that: (i) he has twenty
one (21) days to consider this release of Claims, (ii) that if he signs this
Agreement, he may revoke it within seven (7) days after signing, and (iii) this
Agreement shall not be enforceable until the seven-day revocation period has
expired without revocation.  The Executive acknowledges and agrees that, if he
revokes this Agreement during the revocation period and has received any
benefits under this Agreement during the revocation period, 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
Ernest L. Jenkins, Vice President, People Strategy and Human Resources, 701
Ninth St., N.W., Washington, D.C. 20068, with a copy to the Corporate
Secretary.  For such revocation to be effective, notice must be received no
later than 5:00 p.m. on the seventh calendar day after the Executive signs this
Agreement.
 
 
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                12.           Warranties and Covenants of Executive.  The
Executive warrants and covenants that he (i) personally has read this Agreement,
(ii) has been advised to consult with legal counsel at the Executive’s expense
with regard to this Agreement, (iii) has had sufficient time to consider this
Agreement and fully understands the contents of this Agreement, including the
fact that this Agreement contains a release and covenant not to sue for any and
all claims that the Executive may have against the Company, both known and
unknown, even though there may be facts and consequences unknown to the
Executive and (iv) has freely and voluntarily entered into this Agreement.
 
13.           Entire Agreement.  This Agreement constitutes the entire agreement
and understanding between the Company and Executive with regard to Executive’s
retirement and supersedes any prior or contemporaneous negotiations or
agreements, written or oral, with respect to Executive’s retirement.
 
14.           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 and the Executive, to the fullest extent permitted by
applicable law, the benefits intended by this Agreement and the Release.

15.           Amendments and Waivers.
 
(a)           This Agreement can be modified or waived only by a written
agreement signed by the Company and the Executive.
 
 
(b)           The Company and the 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.
 
 
                16.         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).
 
17.         Section 409A.  This Agreement shall be interpreted to ensure that
the payments contemplated hereby to be made by Company to Executive are exempt
from, or comply with, Section 409A of the Code (“Section 409A”); provided,
however, that nothing in this Agreement shall be interpreted or construed to
transfer any liability for any tax (including a tax or penalty due as a result
of a failure to comply with Section 409A) from the Executive to the Company or
to any other individual or entity.
 
                18.         Section Headings.  The section headings in this
Agreement are for convenience of reference only and shall not be taken into
account in the interpretation of this Agreement.
 
 
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19.         Successors and Assigns.  This Agreement shall be binding upon, and
shall accrue to the benefit of, any successor or assign of the respective
parties, except that neither party may assign its rights or obligation under
this Agreement without the prior written consent of the other party.
 
 
20.         Facsimile Signatures and Counterparts.  This Agreement may be
executed by facsimile signatures, and in multiple 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 the Executive has executed this Agreement, each as
of the date first above written.
 

     
Pepco Holdings, Inc.
                                        /s/ Kirk J. Emge   By: /s/ Joseph M.
Rigby     Kirk J. Emge     Joseph M. Rigby           President and Chief
Executive           Officer  

 
 
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ELECTION TO EXECUTE PRIOR TO EXPIRATION OF
TWENTY ONE DAY CONSIDERATION PERIOD
 
                      I, Kirk J. Emge, understand that I have twenty one (21)
days within which to consider and execute the foregoing Retirement
Agreement.  However, after having had an opportunity to consult counsel, I have
freely and voluntarily elected to execute it before the twenty one (21) day
period has expired.
 
 
September 6, 2012
Date
 
 
/s/ Kirk J. Emge                
Kirk J. Emge

 

 
 
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Attachment A
 
 

 
 
RELEASE OF CLAIMS
 
 
                       I, Kirk J. Emge, in consideration of the mutual promises
set forth in that certain Retirement Agreement (the "Agreement") executed by me
and Pepco Holdings Inc. (together with its subsidiaries and affiliates, the
"Company") on __________, 2013, including the Severance Payment (as defined in
Section 3 thereof), and intending to be legally bound, hereby agree as follows:
 
 
I understand that the Severance Payment 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 and 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, its affiliates, subsidiaries, successors and
assigns, its and their present, past and future directors, officers,
shareholders, agents, representatives and employees (in their individual and
representative capacities), and any past, present or successor Company benefit
plans and their trustees, administrators, fiduciaries, insurers and agents
(collectively, "the Releasees"), 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, 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 of the Releasees 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 further
agree that if any person, organization or other entity should bring a Claim
against any of the Releasees involving any matter occurring at any time in the
past up to and including the date of execution of this Release of Claims or
involving any continuing effects of any acts or practices which may have arisen
or occurred prior to the execution of this Release of Claims, I will not accept
any personal relief in any such action.  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.  (c)
 
 
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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 Retirement Date (as defined
by the Agreement) as those benefits may be modified under the terms 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 charge I may file under this clause (iv), and (v) any claim
that I may have to indemnification and reimbursement of expenses under
applicable law or the Company’s Certificate of Incorporation or Bylaws.
 
 
I further understand and acknowledge that: (i) I have twenty-one (21) days to
consider this release of 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 further acknowledge that
(i) revocation can be made by delivering a written notice of revocation to
Ernest L. Jenkins, Vice President, People Strategy and Human Resources, 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.
 
 
                        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.
 
 
                               
Date
 
 
                            
Kirk J. Emge

 

 
 
 
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ELECTION TO EXECUTE PRIOR TO EXPIRATION OF
TWENTY ONE CONSIDERATION PERIOD
 
 
                      I, Kirk J. Emge, understand that I have twenty one (21)
days within which to consider and execute the foregoing Release of
Claims.  However, after having had 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.
 
 
                               
Date
 
 
                            
Kirk J. Emge

 

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