PEPCO HOLDINGS, INC.
REVISED AND RESTATED
EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION PLAN

I.
INTRODUCTION

 
Potomac Electric Power Company (“Pepco”) established the Potomac Electric Power
Company Executive Deferred Compensation Plan (the “Pepco plan”), effective
November 18, 1982, to enable certain executives to supplement their retirement
income by deferring the receipt of compensation for services performed while the
plan was in effect.  The Pepco plan was amended from time to time thereafter,
including an amendment to make Directors eligible to participate in the
plan.  On March 13, 2002, further amendments were authorized to the Pepco plan
to recognize the intent to consummate a transaction (the “Merger”) by which
Pepco and Conectiv, Inc. (“Conectiv”) will become wholly owned subsidiaries of
Pepco Holdings, Inc. (the “Company” or “Pepco Holdings”) and, for the near term
future, to maintain for the benefit of the executives of Pepco Holdings and its
subsidiaries, the level of benefits provided to such executives prior to the
Merger.  Such amendments include authorization to name Pepco Holdings as the
sponsor of the plan; to change the name of the Pepco plan to reflect the change
in plan sponsorship to amend the definition of “executive” eligible to
participate in the plan; to add an in-service withdrawal feature to the plan;
and to provide an investment option which credits a participant’s account with
increases or decreases in value attributable to phantom units of Pepco Holdings
Common Stock, together with any dividends or stock reinvestment rights
associated with the designated units.  The plan was thereafter amended to comply
with Section 409A of the Internal Revenue Code and regulations issued
thereunder.  The Plan is restated herein and is

 
 
 

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known as the Pepco Holdings, Inc. Executive and Director Deferred Compensation
Plan. (the “Plan”).
 
II.
DEFINITIONS

 
2.01           “Account” means the bookkeeping account maintained by the Company
(i) for each participating Executive and (ii) for each participating Director,
which is credited with the Executive’s or the Director’s Deferred Compensation,
as the case may be, and with additional amounts in the nature of interest and
which is debited to reflect benefit distributions.  Effective as of January 1,
2005, each Account shall be divided into two (2) subaccounts.  The first
subaccount shall reflect the vested balance of such Account as of December 31,
2004, adjusted to reflect (i) subsequent earnings or losses attributable to the
hypothetical investment options in which such subaccount is deemed invested and
(ii) any distributions made from such subaccount.  The second subaccount shall
reflect (i) all contributions made to the account on and after January 1, 2005,
(ii) any amounts which had been credited to the account prior to January 1, 2005
but which first became vested on or after January 1, 2005, (iii) all earnings or
losses attributable to the hypothetical investment options in which such
subaccount is deemed vested, and (iv) any distributions made from such
subaccount.
 
2.02           “Agreement” means the Participation Agreement executed by the
Company and an Executive or a Director, as the case may be, which designates the
amount of the Executive’s or the Director’s Deferred Compensation, the time and
manner of benefit distributions, and the Executive’s or the Director’s
Beneficiary.
 
2.03           “Beneficiary” means any person designated by a participating
Executive or a participating Director to receive benefits under the Plan in the
event of the Executive’s or the Director’s death prior to the completion of all
benefit payments under the Plan. An Executive’s

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or a Director’s Agreement, as the case may be, may designate more than one
Beneficiary or may designate primary and contingent Beneficiaries.
 
2.04           “Board of Directors” means the Board of Directors of Pepco
Holdings, Inc.
 
2.05           “Deferred Compensation” means any remuneration which would
otherwise be currently payable to the Executive or the Director, but which the
Executive or the Director irrevocably agrees to receive on a deferred basis in
accordance with the terms of the Plan.
 
2.06           “Director” means a member of the Board of Directors.
 
2.07           “Executive” means such employee of any Pepco Holdings subsidiary
as designated by the Chief Executive Officer of Pepco Holdings (the Chief
Executive Officer to be designated by the Board).
 
2.08           “Human Resources Committee” shall mean that Committee comprised
of members of the Board of Directors, which governs the development of personnel
policies for the Company.
 
2.09           “Internal Revenue Code” shall mean the Internal Revenue Code of
1986, as amended.
 
2.10           “Normal Compensation” with respect to an Executive means the
amount of salary that would be payable to an Executive for the twelve (12) month
period commencing on the first day of any Plan Year if the Executive were not
participating hereunder.  “Normal Compensation” with respect to a Director means
the amount of retainer/fees that would be payable to a Director for the twelve
(12) month period commencing on the first day of any Plan Year if the Director
were not participating hereunder.
 
2.11           “Plan Year” means the twelve-month period commencing on July 1 of
each calendar year and ending on June 30 of the following calendar
year.  Notwithstanding the above,

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the time period between July 1, 2005 and December 31, 2005 shall be treated as a
separate Plan Year and effective as of January 1, 2006, the Plan Year shall
constitute the calendar year.
 
2.12           “Retirement” with respect to an Executive means the date
following an Executive’s Separation from Service on which the payment of
benefits to the Executive commences under the principal tax-qualified defined
benefit pension plan of Pepco Holdings or one of its subsidiaries in which the
Executive participates (the “Applicable Defined Benefit Pension Plan”) by reason
of the Executive having attained normal or early retirement age under that
plan.  In the event that an Executive is not entitled to receive benefits under
that plan following Separation from Service, “Retirement” means Separation from
Service and attainment of age sixty-five (65). “Retirement” with respect to a
Director means Separation from Service and attainment of age sixty-five (65).
 
2.13           “Separation from Service” means an Executive’s termination of
employment with the Company and any of its subsidiaries or a Director’s
cessation of participation on the Board of Directors.  An Executive who
terminates regular employment or a Director who discontinues participation on
the Board of Directors and who thereafter performs consulting services for the
Company on a part-time basis will nonetheless be deemed to have had a Separation
from Service at the date of termination of regular employment or the date of
discontinuance of participation on the Board of Directors, as the case may be.
 
2.14           “Unforeseen Financial Emergency” means a severe financial
hardship to the Executive or Director resulting from an illness or accident of
the Executive or Director, the Executive or Director’s spouse, or a dependent
(as defined in Section 152(a) of the Internal Revenue Code) of the Executive or
Director, loss of the Executive or Director’s property due to

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casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Executive or Director.
 
III.
PARTICIPATION

 
3.01           An Executive or a Director may execute an Agreement and become a
participant in the Plan prior to the first day of any Plan Year. Except as set
forth in Section 5.02, an Executive’s or a Director’s Agreement for a Plan Year
may not be amended or revoked once that Plan Year has commenced, provided that a
participating Executive or a participating Director may at any time change his
Beneficiary designation by providing written notice of such change to the
Company.  Notwithstanding the above, any election to participate in the Plan in
respect of the short Plan Year beginning July 1, 2005 and ending December 31,
2005 must be made prior to March 15, 2005.
 
3.02           An Executive’s or a Director’s Agreement shall relate to (i)
compensation for services performed during the Plan Year to which it relates,
(ii) benefit entitlements otherwise payable in connection with prior deferrals
pursuant to Section 5.01 of the Potomac Electric Power Company Director and
Executive Deferred Compensation Plan, (iii) other remuneration approved by the
Board of Directors as eligible to be deferred under the Plan, provided that such
Agreement shall be entered into prior to payment of such compensation to the
Executive or the Director, as the case may be, or (iv)other remuneration
approved by the Board of Directors as eligible to be credited under the Plan by
way of a transfer of a deferred compensation entitlement to this Plan from any
other nonqualified deferred compensation program maintained by the
Company.  Notwithstanding the above, any Agreement entered into on or after
January 1, 2005 shall be structured so as to comply with the timing of election
rules contained in Section

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409A(a)(4) of the Internal Revenue Code, as interpreted by the Internal Revenue
Service through any proposed or final Regulation or other guidance.
 
IV.
DEFERRAL OF COMPENSATION - EXECUTIVE AND DIRECTOR RULES

 
4.01      The deferral of compensation for an Executive shall be made in
accordance with the following provisions.
 
             A.          Each Plan Year, the Executive may elect any or all of
the following five options for deferring compensation, to the extent applicable:
 
 
Option 1 – The Executive may elect to defer an amount of Normal
Compensation.  The Agreement may specify that the Executive’s salary will be
reduced by the amount of the Deferred Compensation on a ratable basis throughout
the Plan Year or that the Executive’s salary will be reduced by a specified
amount or amounts in a specified month or months of the Plan Year.
 

 
Option 2.
 

 
A. -
The Executive may elect to defer the difference between (i) the lesser of (a)
the dollar limitation then in effect pursuant to Section 402(g)(1)(B) of the
Internal Revenue Code and (b) six percent (6%) of his compensation, as defined
in the principal tax-qualified defined contribution savings plan of Pepco
Holdings or one of its subsidiaries in which the Executive participates (the
“Applicable Savings Plan”), and (ii) the amount of pre-tax contributions he is
permitted to make under the Applicable Savings Plan.  Under this Option 2A., the
Executive’s salary will be reduced by the amount of Deferred Compensation at the
same time and in the same amounts as if such reduction

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   was governed by the election then in effect for the Executive under the
Applicable Savings Plan.
 
 
B. -
Under this Option 2B., the Executive may also elect to defer up to the
difference between (i) six percent (6%) of his compensation and (ii) the dollar
limitation then in effect pursuant to Section 402(g)(1)(B) of the Internal
Revenue Code.  For the 2005 Plan Year, any election made by a Participant which
involves Option 2 will be construed and applied by reference to these two
subelection formats.

 
Option 3 - The Executive may elect to defer such other compensation which would
otherwise be paid to the Executive during the Plan Year provided such
compensation has been approved by the Board of Directors in its sole discretion
as eligible to be deferred under the Plan.
 
Option 4 - Subject to the prior approval of the Board of Directors, which
approval may be granted or withheld in the sole discretion of the Board of the
Directors, the Executive may elect to have the Executive’s Account under this
Plan credited with a deferred compensation entitlement attributable to any other
nonqualified deferred compensation program maintained by the Company, provided
that such transfer will be accompanied by a corresponding elimination of the
Company’s obligation under such other deferred compensation arrangement and
provided further that no such transfer will be permitted with respect to any
deferred compensation entitlement which would otherwise become payable to the
Executive under the terms of such other nonqualified deferred compensation
program within the same calendar year as the year of the proposed

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transfer.  Each Executive who elects Deferred Compensation with respect to a
Plan Year shall specify in his Agreement for such Plan Year the Option or
Options which shall apply for such Plan Year.
 
B.           The Company will credit the Deferred Compensation to the Account of
each participating Executive as of the day such amount would have been paid to
the Executive if the Executive’s Agreement had not been in effect.  The
Executive may elect to have the Company credit, on a monthly basis all Deferred
Compensation into the Executive’s Account with an amount in the nature of
interest at either (i) the prime rate quoted by the Chase Manhattan Bank, N.A.
(the “Prime Rate”), as of the last day of the month; (ii) a rate equal to the
rate of return with respect to any one or a combination of the investment funds
selected by the Human Resources Committee (an “Investment Fund Rate”), or (iii)
a combination of the Prime Rate and an Investment Fund Rate.  The Prime Rate or
the appropriate Investment Fund Rate(s) shall be credited to the Executive’s
Account as of the last day of each calendar month based on the daily balances in
the Account which are to be adjusted with respect to the Prime Rate or each
designated Investment Fund, as the case may be.  The crediting of such interest
on a monthly basis shall continue until such balance in the Executive’s Account
has been reduced to zero by reason of benefit payments under the Plan.
 
The Executive may also elect to have the investment return applicable to all or
part of any Deferred Compensation credited to the Executive’s Account determined
by reference to phantom shares of Pepco Holdings Common Stock (“Common
Stock”).  In order to initially determine the number of shares of Common Stock
which will serve as the basis for adjusting the value of an Executive’s account,
the full amount of Deferred Compensation to be credited with an investment
return based upon phantom shares shall be divided by the average of the high and

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low sales prices of the Common Stock on the New York Stock Exchange, Inc. on the
second business day prior to the date upon which the Executive’s Account is to
be credited with such Deferred Compensation.  The resulting number will
represent the number of phantom shares to be credited to such Executive’s
Account. For purposes of determining the value of the Executive’s Account which
is attributable to phantom shares, each phantom share shall be deemed to have a
value of one share of Common Stock and any time a dividend payment is made with
respect to a share of Common Stock, an equivalent amount shall be added to the
account of the Executive with respect to each phantom share then credited to the
Account.  All such dividend equivalent amounts added to the Executive’s Account
shall be expressed in the form of phantom shares or fractions thereof.
 
C.           If the Executive elects Option 2A., the Company shall credit the
Executive’s Account with a Matching Company Credit equal in value to the
percentage of Deferred Compensation elected by the Executive under Option 2A.
which would have been matched by the Company if the Executive had contributed
such Deferred Compensation to the Applicable Savings Plan.  The Matching Company
Credit shall be made to the Executive’s Account at the same time as the
corresponding Deferred Compensation is credited to the Executive’s Account
pursuant to Option 2A. provided that the aggregate match credited to the
Executive’s Account due to Deferred Compensation elected by the Executive under
Option 2A. plus the match credited to the Executive under the Applicable Savings
Plan shall not exceed the dollar limitation then in effect pursuant to Section
402(g)(1)(B) of the Internal Revenue Code.
 
In addition, if the Executive elects Option 2B., the Company shall credit the
Executive’s Account with a Matching Company Credit equal in value to the
percentage of

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Deferred Compensation elected by the Executive under Option 2B., based upon the
matching rate then being applied in the Applicable Savings Plan.
 
D.           The Company shall furnish each participating Executive with an
annual report showing the balance in the Executive’s Account as of June 30 of
each year.  Effective as of December 31, 2005, the annual report will be
prepared as of the December 31st of each calendar year.
 
4.02           The deferral of Normal Compensation for a Director shall be made
in accordance with the following provisions:
 
A.           Each Plan Year or until the Director provides written notification
of cancellation of a previous election, each Director may elect to defer an
amount of retainer/fees constituting such Director’s Normal Compensation.  The
Agreement may specify that the Director’s retainer/fees will be reduced by the
elected amount of the Deferred Compensation on a ratable basis throughout the
Plan Year or that the Director’s retainer/fees will be reduced by a specified
amount or amounts in a specified month or months of the Plan Year.  In addition,
subject to the prior approval of the Board of Directors. which approval may be
granted or withheld in the sole discretion of the Board of Directors, a Director
may elect to have the Director’s Account under this Plan credited with a
deferred compensation entitlement attributable to any other nonqualified
deferred compensation program maintained by the Company, provided that such
transfer will be accompanied by a corresponding elimination of the Company’s
obligation under such other deferred compensation arrangement and provided
further that no such transfer will be permitted with respect to an deferred
compensation entitlement which would otherwise become payable to the Director
under the terms of such other

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nonqualified deferred compensation program within the same calendar year as the
year of the proposed transfer.
 
B.           The Company will credit the Deferred Compensation to the Account of
each participating Director as of the day such amount would have been paid to
the Director if the Director’s Agreement had not been in effect.  All retainer
fees and other Director fees which would have been paid to the Director in the
form of shares of Company Stock had no deferral election been made will be
credited to the Director’s Account in the form of phantom stock. In addition, a
Director may elect to have any Deferred Compensation which would otherwise have
been paid to the Director in the form of cash had no deferral election been made
also expressed in the form of phantom stock by so advising the Human Resources
Committee as part of the Director’s Agreement.  The full amount of Deferred
Compensation to be credited in the form of phantom shares shall be divided by
the average of the high and low sale prices of the Common Stock on the New York
Stock Exchange. Inc. on the second business day prior to the date upon which the
Director’s Account is to be credited with such Deferred Compensation.  The
resulting number will represent the number of phantom shares to be credited to
such Director’s Account.  For purposes of determining the value of the
Director’s Account which is attributable to phantom shares, each phantom share
shall be deemed to have a value of one share of Common Stock and any time a
dividend payment is made with respect to a share of Common Stock, an equivalent
amount shall be added to the account of the Director with respect to each
phantom share then credited to the Account.  All such dividend equivalent
amounts added to the Director’s Account shall be expressed in the form of
phantom shares or fractions thereof.
 
With respect to any Deferred Compensation credited to the Account of a Director
which is not credited in the form of phantom shares, the Company will, in
addition, credit the

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Director’s Account on a monthly basis with an amount in the nature of interest
at a rate equal to the rate of return with respect to any one or a combination
of the investment funds selected by the Human Resources Committee (an investment
Fund Rate”).  The appropriate rate or rates of interest shall be credited to the
Director’s Account as of the last day of each calendar month based on the daily
balances in the Account attributable to each designated investment fund, and the
crediting of such interest on a monthly basis shall continue until such balance
in the Director’s Account has been reduced to zero by reason of benefit payments
under the Plan.
 
C.           The Company shall furnish each participating Director with an
annual report showing the balance in the Director’s Account as of June 30 of
each year.  Effective as of December 31, 2005, the annual report will be
prepared as of the December 31st of each calendar year.
 
D.           The Company may establish and may amend, from time to time, a
procedure pursuant to which a Director may prospectively modify the manner in
which his Account is credited with an investment return, as between the
alternatives of phantom shares and such other investments as may be provided for
by the Plan from time to time.
 
V.
PAYMENT OF BENEFITS

 
5.01           Except as otherwise provided in this Article V. the payment of
benefits to a participating Executive shall commence as of the date specified by
the Executive in the Executive’s Agreement under one of the following options:
(i) on the date of commencement of benefits under the Applicable Defined Benefit
Pension Plan in which the Executive participates; (ii) on January 31 of the
calendar year following the year of the Executive’s Retirement: (iii) on the
first day of the month following the Executive’s Separation from Service; (iv)
on January 31 of calendar year following Separation from Service; (v) on January
31 of the calendar year
 

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following the later of the year of the Executive’s Separation from Service or
attainment of an age specified in the Agreement; or (vi) on January 31 of the
calendar year specified in the Agreement, which may not be earlier than the
second calendar year following the calendar year which includes the first day of
the Plan Year for which the Agreement is made.  Except as otherwise provided in
this Article V, the payment of benefits to a participating Director shall
commence as of the date specified by the Director in the Director’s Agreement
under one of the following options: (i) on the first day of the month following
the Director’s Separation from Service; (ii) on January’ 31 of the calendar year
following the year of the Director’s Separation from Service; (iii) on January
31 of the calendar year following the later of the year of the Director’s
Separation from Service or attainment of an age specified in the Agreement; or
(iv) on January 31 of the calendar year specified in the Agreement, which may
not be earlier than the second calendar year following the calendar year which
includes the first day of the Plan Year for which the Agreement is
made.  Notwithstanding the above, if an individual who then qualifies as a
“specified employee”, as defined in Section 409A(a)(2)(B)(i) of the Internal
Revenue Code, incurs a Separation from Service for any reason other than death
and becomes entitled to a distribution from this Plan, as a result of such
Separation from Service, no distribution otherwise payable to such specified
employee during the first six (6) months after the date of such Separation from
Service, shall be paid to such specified employee until the date which is one
day after the date which is six (6) months after the date of such Separation
from Service (or, if earlier, the date of death of the specified employee).  No
amount of a participating Executive’s benefits which are subject to the
provisions of Section 409A of the Internal Revenue Code shall be payable in
accordance with Option (1) above which refers to the date of commencement of
benefits under the Applicable Defined Benefit Pension Plan.  Instead, such

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amounts subject to the provisions of Section 409A of the Internal Revenue Code
shall instead be paid pursuant to such other Option as may have been elected by
the participating Executive and, in the absence of the election of another such
Option, shall be paid as of the first day of the month following the Executive’s
Separation from Service.
 
5.02           As specified in the Executive’s or the Director’s Agreement, as
the case may be, benefits shall be paid (i) in a lump sum amount equal to the
Executive’s or the Director’s Account balance as of the benefit commencement
date, or (ii) in a series of approximately equal monthly or annual installments,
as computed by the Company, over a period of between two (2) and fifteen (15)
years with the final payment equaling the then remaining balance in the
Executive’s or the Director’s Account.  If annual installments are elected by
the Executive or the Director, such annual installments shall be payable on the
benefit commencement date and each succeeding January 31 during the payment
period. Notwithstanding a specification of installment payments in an
Executive’s or Director’s Agreement, as the case may be, if the balance in the
Executive’s or the Director’s Account as of the benefit commencement date is
less than one thousand dollars ($1,000.00), the Company shall instead make a
lump sum payment of that amount on that date.  The time for payment of benefits
to an Executive or a Director may be modified by the Executive or Director by
the filing of a written election prior to the beginning of the calendar year in
which benefits would otherwise become payable under the existing
Agreement.  Notwithstanding the above, any delay in the time and any change in
the form of a distribution from this Plan of an amount which is subject to
Section 409A (i) may not take effect until at least 12 months after the date the
election is made, (ii) must involve a further deferral of not less than five (5)
years from the date such payment would otherwise be made (except for a payment
made due to the death, disability or Unforeseen Financial Emergency of the
electing
 

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Executive or Director, as the case may be, and (iii) must be made, in the case
of payments otherwise scheduled to be made at a specified time or pursuant to a
fixed schedule, at least 12 months prior to the date such payments were
originally scheduled to be made.
 
5.03           An Executive may apply to the Human Resources Committee for early
distribution of all or any part of his Account which is not subject to Section
409A.  Any such early distribution shall be made in a single lump sum, provided
that ten percent (10%) of the amount withdrawn in such early distribution shall
be forfeited prior to payment of the remainder to the Executive.  An Executive
may not elect an early distribution hereunder if he has received an early
distribution or a distribution under Section 5.05 within the previous twelve
(12) months. In the event an Executive’s early distribution is submitted within
sixty (60) days after a Change in Control (as may be defined in an agreement
between the Executive and the Company or in a plan in which the Executive
participates) or an elimination of an investment alternative under the Plan that
the Human Resources Committee determines is a substantial detriment to the
Executive, the forfeiture penalty shall be reduced to five percent (5%).
 
5.04           In the event that a participating Executive or a participating
Director dies before the benefit commencement date, the Company shall make
benefit payments to the Executive’s or the Director’s Beneficiary or
Beneficiaries in an aggregate amount equal to twice the balance credited to the
Account of the participating Executive or participating Director, as the case
may be, immediately prior to such individual’s death.  An amount equal to
Account balance will be paid on the first of the month following the Executive’s
or the Director’s death and the remaining amount of the death benefit will
commence as of January 31 of the calendar year following the Executive’s or the
Director’s death in accordance with the method of payment under Section 5.02
specified in the Executive’s or the Director’s Agreement.  In the event that a
participating
 

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Executive or a participating Director dies after the benefit commencement date,
any remaining benefit payments shall be paid to the Executive’s or the
Director’s Beneficiary or Beneficiaries.  In the event that no Beneficiary
survives the Executive or the Director, an amount equal to the remaining balance
in the Executive’s or Director’s Account (or two times the Account balance if
death occurs prior to the benefit commencement date) shall be paid to the estate
of the Executive or the Director, as the case may be, in a lump sum within
thirty (30) days following the date on which the Company is notified of the
Beneficiary’s death.
 
5.05           Notwithstanding the foregoing, the Company may at any time make a
lump sum payment to an Executive or Director (or surviving Beneficiary) equal to
part or all of the balance in the Executive’s or Director’s Account, as the case
may be, upon a showing of a financial emergency caused by circumstances beyond
the control of the Executive or Director (or surviving Beneficiary) which would
result in serious financial hardship if such payment were not made.  The
determination whether such emergency exists shall be made in the sole discretion
of the Board of Directors of the Company, the amount of the payment shall be
limited to the amount necessary to meet the financial emergency, and any
remaining balance in the Executive’s or Director’s Account shall be paid at the
time and in the manner otherwise set forth in the Executive’s or Director’s
Agreement, as the case may be.
 
5.06           In the event that a participating Executive or Director ceases to
be an employee or Director of the Company and becomes a proprietor, officer,
partner, employee, or otherwise becomes affiliated with any business or entity
that is in competition with the Company, or becomes employed by any governmental
agency’ having jurisdiction over the affairs of the Company, the Company
reserves the right in the sole discretion of its Board of Directors to make an
immediate lump sum payment to the Executive or the Director in an amount equal
to the
 

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balance in the Executive’s or the Director’s Account at that time, to the extent
that such payment is permitted under Section 409A of the Code.
 
5.07           If an Executive or a Director has entered into two (2) or more
Agreements with respect to different Plan Years which specify different benefit
commencement dates under Section 5.01 or different methods of payment under
Section 5.02, the Company will separately account for the Deferred Compensation
attributable to each such Agreement and distribute the amounts covered by each
Agreement in accordance with the terms thereof.
 
VI.
RIGHTS OF PARTICIPATING OFFICERS AND BENEFICIARIES

 
6.01           Nothing contained in this Plan or any Agreement and no action
taken hereunder shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Executive, any Director, any
Beneficiary or any other person; provided the Company has established a grantor
trust (Trust No. 3 originally executed on November 28, 2001) to hold assets to
secure the Company’s obligations to participants under the Plan if the
establishment of such a trust does not result in the Plan being “funded” for
purposes of the Internal Revenue Code.  Except to the extent provided through a
grantor trust established under the provisions of the preceding sentence, any
compensation deferred under the Plan shall continue for all purposes to be a
part of the general funds of the Company and to the extent that any person
acquires a right to receive payments from the Company under this Plan, such
right shall be no greater than the right of any unsecured general creditor of
the Company.
 
6.02           The right of any Executive, Director, Beneficiary, or other
person to receive benefits under the Plan may not be assigned, transferred,
pledged or encumbered except by will or the laws of descent and distribution,
nor shall it be subject to attachment or other legal process of whatever nature.
 

 
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6.03           If the Company finds that an person to whom any payment is
payable under the Plan is unable to care for his or her affairs because of
illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee or other
legal representative) may be paid to the spouse, a parent, or a brother or
sister, or to any person deemed by the Company to have incurred expense for the
person who is otherwise entitled to payment.
 
VII.
MISCELLANEOUS

 
7.01           This Plan may be amended, suspended or terminated at any time by
the Company provided, however, that no amendment, suspension or termination
shall have the effect of impairing the rights of (i) participating Executives or
their Beneficiaries or (ii) participating Directors or their Beneficiaries with
respect to amounts credited to their Accounts before the date of the amendments,
suspension or termination.
 
7.02           To the extent required by law, the Company’ shall withhold
federal or state income or payroll taxes from benefit payments hereunder and
shall furnish the recipient and the applicable governmental agency or agencies
with such reports, statements, or information as may be legally required in
connection with such benefit payments.
 
7.03           This Plan and all Agreements hereunder shall be construed in
accordance with and governed by the laws of the District of Columbia.
 
IN WITNESS WHEREOF, the Company has caused this version of the Plan to be signed
on October 31, 2008 which version reflects all modifications made to the Plan
through such date of execution.
 
 
ATTEST
   
Pepco Holdings, Inc.
       
By:  
/s/ ELLEN S. ROGERS
 
/s/ D. R. WRAASE
 
Secretary
 
Chief Executive Officer

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