PEPCO HOLDINGS, INC.

Restricted Stock Agreement

          THIS AGREEMENT is made this ___ day of __________, _____ (hereinafter
referred to as the "Date of Grant") by and between Pepco Holdings, Inc. (the
"Company"), and _________________, an employee of the Company (the
"Participant").

          WHEREAS, the Company has adopted the Pepco Holdings, Inc. Long-Term
Incentive Plan (the "Plan") which is incorporated in this Agreement by
reference.

          WHEREAS, the Company desires to grant to Participant a Restricted
Stock Award on the terms and conditions hereinafter set forth.

          NOW, THEREFORE, In consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the Company and
Participant agree as follows:

1.

          Restricted Stock Award. The Company hereby grants to Participant a
Restricted Stock Award consisting of a total of ________________________
__________________________________ (_________) shares of Stock upon the terms
and conditions set forth herein. Any dividends declared with respect to these
shares shall by payable to Participant from the Date of Grant.

2.

          Restriction Period. The maximum Restricted Period applicable to the
Restricted Stock award granted hereunder is ________ years, as follows:

 

(a)

          On the _____________ (____) anniversary of the Date of Grant, ________
percent (___%) of the shares of Stock initially subject to the Restricted Stock
Award shall be released from restriction.

 

(b)

          In the event Participant attains the age of sixty-five (65) while in
the employment of the Company and prior to the ___________ (____) anniversary of
the date of this Agreement, all remaining shares subject to the Restricted Stock
Award shall be released from restriction upon the date of retirement from active
employment.

 

(c)

          Notwithstanding any other provision of this Agreement, all shares
subject to restriction shall be released from restriction in the event that a
Participant is terminated or suffers a diminution of responsibility, authority,
position or salary following an event described in (i) through (iii) following:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Security and Exchange Act of 1934, as amended (the "Exchange Act"), other than a
trustee or

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other fiduciary holding securities under an employment benefit plan of the
Company or a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities: or (ii) during the period of twenty-four (24)
consecutive months (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in
clauses (i) or (iii) of the Section) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either was directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof:
or (iii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of surviving entity) at
least 70% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, stockholders of the Company approve a plan of complete
liquidation of the Company, or the stockholders of the Company approve an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets.

3.

          Nontransferability of Award. Participant's Restricted Stock Award is
not assignable or transferable except by will or pursuant to the laws of descent
and distribution, and shall not be subject to attachment or other legal process
of whatever nature.

4.

          Terms and Conditions. The terms and conditions included in the Plan
are incorporated herein by reference, and to the extent that any conflict may
exist between the terms and conditions included in this Agreement and the terms
and conditions included in the Plan, the terms and conditions included in the
Plan shall control. By execution of this Agreement, the Participant acknowledges
receipt of a copy of the Plan and further agrees to be bound thereby and by the
actions of the Committee and/or the Board pursuant to the Plan.

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5.

          No Section 83(b) Election. In consideration of the grant of the
Restricted Stock Award hereunder, Participant acknowledges that Participant
shall not make an election under Section 83(b) of the Internal Revenue Code of
1986, as amended, to treat any portion of the Restricted Stock Award as taxable
compensation prior to the time the restrictions are removed from the stock
subject to the Restricted Stock Award.

6.

          Delivery of Stock. Participant shall be provided with the certificate
or certificate numbers evidencing ownership of the shares of Stock subject to
the Restricted Stock Award. Whenever shares of Stock subject to the Restricted
Stock Award are released from restriction, the Company shall, subject to the
implementation of an arrangement with the Participant to effectuate all
necessary tax withholding, release to Participant the certificate representing
such unrestricted shares. Such certificate may, however, reflect the fact that
the unrestricted shares have not been registered under the Securities Act of
1933 and may not be sold or transferred unless such shares are registered in the
future or unless the Participant meets an exemption from registration under the
Securities Act of 1933. The Company shall follow all requisite procedures to
deliver such certificates to Participant; provided, however, that such delivery
may be postponed to enable the Company to comply with any applicable procedures,
regulations or listing requirements of any government agency, stock exchange or
regulatory agency.

7.

          Tax Withholding. The Participant agrees to use shares of Stock subject
to the Restricted Stock Award as full payment of taxes due at the time
Participant's Restricted Stock Award is released from restrictions.

8.

          Other Plans and Agreements. Any gain realized by the Participant
pursuant to this agreement shall not be taken into account as compensation in
the determination of the Participant's benefits under any pension, savings,
group insurance, or other benefit plan maintained by the Company or a
Subsidiary, except as determined by the board of directors of such company. The
Participant acknowledges that receipt of this Agreement or any prior agreement
under the Plan shall not entitle the Participant to any other benefits under the
Plan or any plans maintained by the Company or a Subsidiary.

9.

          Committee Authority. The Committee shall have complete discretion in
the exercise of its rights, powers, and duties under this Agreement and the
Plan. Any interpretation or construction of any provision of, and the
determination of any question arising under, this Agreement shall be made by the
Committee in its

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sole discretion and shall be final, conclusive, and binding. The Committee may
designate any individual or individuals to perform any of its functions
hereunder.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers, under its corporate seal and the
Participant has hereunder set his hand and seal, all as of the date first above
written.

ATTEST:

PEPCO HOLDINGS, INC.

______________________________
(Corporate Seal)

________________________________

PARTICIPANT

________________________________

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