PEPCO HOLDINGS, INC.
CHANGE-IN-CONTROL SEVERANCE PLAN
FOR CERTAIN EXECUTIVE EMPLOYEES

Section 1.                      INTRODUCTION

The Plan is intended to provide severance benefits to certain selected executive
employees of the Employer in the event that their employment is terminated under
certain circumstances following a Change in Control.  The Plan shall be
effective as of the Effective Date.

Section 2.                      DEFINITIONS

Except as may otherwise be specified or as the context may otherwise require,
the following terms shall have the respective meanings set forth below whenever
used herein:

a.           “Base Salary” shall mean the annual base rate of regular
compensation of a Participant immediately before a Change in Control, or if
greater, the highest annual such rate at any time during the 12-month period
immediately preceding the Change in Control.

b.           “Benefit Factor” shall mean the multiple (either 3.0, 2.0 or 1.5)
which has been assigned to each Participant pursuant to the recommendations of
the Chairman and the approval of the Committee for purposes of determining the
Participant’s benefit under Section 4.1(b).

c.           “Board” shall mean the Board of Directors of the Company.

d.           “Cause” shall mean (i) the willful and continued failure by a
Participant substantially to perform his or her duties with the Employer (other
than any such failure resulting from incapacity due to physical or mental
illness of the Participant, or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason), (ii) the willful engaging
by a Participant in conduct which is demonstrably and materially injurious to
the Employer, monetarily or otherwise or (iii) conviction of a felony (or the
entering into a plea of guilty or nolo contendere) in a matter which relates to
Employer’s business, which was conducted on the Employer’s premises or which was
conducted while conducting the Employer’s business.  For purposes hereof, no
act, or failure to act, on a Participant’s part, shall be deemed “willful”
unless done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that any act or omission was in the best interest of
the Employer.

e.           “Chairman” shall mean Chairman of the Board.

f.           “Change in Control” shall mean the first to occur, after the
Effective Date, of any of the following:

 
 

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(i)           if any Person is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Subsidiaries) representing 35% or more of the combined voting power of the
Company’s then outstanding securities;

(ii)           if during any period of 12 consecutive months during the
existence of the Plan commencing on or after the Effective Date, the individuals
who, at the beginning of such period, constitute the Board (the “Incumbent
Directors”) cease for any reason other than death to constitute at least a
majority thereof; provided that a director who was not a director at the
beginning of such 12-month period shall be deemed to have satisfied such
12-month requirement (and be an Incumbent Director) if such director was elected
by, or on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually (because
they were directors at the beginning of such 12-month period) or by prior
operation of this clause (ii);

(iii)           the consummation of a merger or consolidation of the Company
with any other corporation other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any parent thereof) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner, as
defined in clause (i), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Subsidiaries) representing 50% or more
of either the then outstanding shares of Stock of the Company or the combined
voting power of the Company’s then outstanding securities; or

(iv)           the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company, or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by Persons in
substantially the same proportion as their ownership of the Company immediately
prior to such sale.

Upon the occurrence of a Change in Control as provided above, no subsequent
event or condition shall constitute a Change in Control for purposes of the
Plan. with the result that there can be no more than one Change in Control
hereunder.

g.           “Code” shall mean the Internal Revenue Code of 1986, as amended.

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h.           “Committee” shall mean the Compensation/Human Resources Committee
of the Board.

i.           “Company” shall mean, subject to Section 8.1(a), Pepco Holdings,
Inc., a Delaware corporation.

j.           “Covered Termination” shall mean, with respect to a Participant,
if, within the one-year period immediately following a Change in Control, the
Participant (i) is terminated by the Employer without Cause (other than on
account of death or Disability), or (ii) terminates his or her employment with
the Employer for Good Reason.  A Participant shall not be deemed to have
terminated for purposes of the Plan merely because he or she ceases to be
employed by the Employer and becomes employed by a new employer involved in the
Change in Control provided that such new employer shall be bound by the Plan as
if it were the Employer hereunder with respect to such Participant.  It is
expressly understood that no Covered Termination shall be deemed to have
occurred merely because, upon the occurrence of a Change in Control, the
Participant ceases to be employed by the Employer and does not become employed
by a successor to the Employer after the Change in Control if the successor
makes an offer to employ the Participant on terms and conditions which, if
imposed by the Employer, would not give the Participant a basis on which to
terminate employment for Good Reason.

k.           “Date of Termination” shall mean the date on which a Covered
Termination occurs.

l.           “Disability” shall mean the occurrence after a Change in Control of
the incapacity of a Participant due to physical or mental illness, whereby such
Participant shall have been absent from the full-time performance of his or her
duties with the Employer for six consecutive months.

m.           “Effective Date” shall mean the date signed herein.

n.           “Employer” shall mean the Company and each Subsidiary designated by
the Board to adopt the Plan (and which so adopts the Plan), or, where the
context so requires, the Company and such Subsidiaries collectively. The
adoption of the Plan by a Subsidiary may be revoked only with the consent of the
Board, any such revocation to be subject to Section 7; provided that a
Subsidiary which ceases to be, directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Company prior to a Change in Control (other than in connection with and as an
integral part of a series of transactions resulting in a Change in Control)
shall, automatically and without any further action, cease to be (or be a part
of) the Employer for purposes hereof (and the provisions of Section 7.3 shall
not apply in such a case).

o.           “Good Reason” shall mean, without the express written consent of
the Participant, the occurrence after a Change in Control of any of the
following circumstances, provided that the Participant provides written
notification of such circumstances to the Employer no later than ninety (90)
days from the original
 

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occurrence of such circumstances and the Employer fails to fully correct such
circumstances within thirty (30) days of receipt of such notification:
 
(i)           the assignment to the Participant of any duties inconsistent in
any materially adverse respect with his or her position, authority, duties or
responsibilities from those in effect immediately prior to the Change in
Control;

(ii)           a material reduction in the Participant’s base compensation, as
such term is used in Treas. Reg. §1.409A(n)(2), as in effect immediately before
the Change-in-Control;

(iii)           a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Participant is required to
report;

(iv)           a material diminution in the budget over which the Participant
retains authority;

(v)           the Company’s (or, if applicable, Subsidiary’s) requiring the
Participant to be based in any office or location more than 50 miles from that
location at which he or she performed his or her services immediately prior to
the occurrence of a Change in Control, except for travel reasonably required in
the performance of the Participant’s responsibilities or
 
(vi)           the failure of the Employer to obtain a reasonable agreement from
any successor to assume and agree to perform the Plan, as contemplated in
Section 8.1(a) or any other action or inaction that constitutes a material
breach by the Company of the agreement under which the Participant provides
services to the Company.

p.           “Notice of Termination” shall mean a notice given by the Employer
or Participant, as applicable, which shall indicate the specific termination
provision in the Plan relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Participant’s employment under the provisions so indicated.

q.           “Participant” shall have the meaning ascribed thereto by Section 3.

r.           “Person” shall have the meaning ascribed thereto by Section 3(a)(9)
of the Securities Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof (except that such term shall not include (i) the Company or any of its
Subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company, or (v) with respect to any particular
Participant, such Participant or any “group” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act) which includes such
Participant).

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s.           “Plan” shall mean this Pepco Holdings, Inc. Change-in-Control
Severance Plan for Certain Executive Employees, as it may from time to time be
amended in accordance with Section 7.

t.           “Potential Change in Control” shall mean the occurrence, before a
Change in Control, of any of the following:

(i)           if the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;

(ii)           if the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would constitute a
Change in Control;

(iii)           if any Person becomes the “beneficial owner” (as defined in Rule
13d-3 under the Securities Exchange Act), directly or indirectly, of securities
of the Company (not including in the securities beneficially owned by such
Persons any securities acquired directly from the Company or its Subsidiaries)
representing 15% or more of either the then outstanding shares of Stock of the
Company or the combined voting power of the Company’s then outstanding
securities; or

(iv)           if the Board adopts a resolution to the effect that, for purposes
of the Plan, a Potential Change in Control has occurred.

u.           “Securities Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.

v.           “Service Factor” shall mean the number of months of additional
service credit (18, 24 or 36) which as been assigned to each Participant
pursuant to the recommendations of the Chairman and the approval of the
Committee for purposes of determining the Participant’s benefit under Sections
4.1(c) and (i).

w.           “Stock” shall mean the common stock, $.01 par value, of the
Company.

x.           “Subsidiary” shall mean any entity, directly or indirectly, through
one or more intermediaries, controlled by the Company, and which has duly
adopted the Plan.

y.           “Target Annual Bonus” shall mean a Participant’s annual bonus for
the Employer’s fiscal year in which the Date of Termination occurs, which bonus
would be paid or payable if the Participant and the Employer were to satisfy all
conditions to the Participant’s receiving the annual bonus at target (although
not necessarily the maximum annual bonus); provided that such amount shall be
annualized for any fiscal year consisting of less than 12 full months; and
provided, further, that if at the time of a Change in Control it is
substantially certain that a bonus at a level beyond target will be paid or
payable for the fiscal year, then the bonus which is substantially certain to be
paid or payable, rather than the target bonus, shall be used for these purposes.

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Section 3.                      PARTICIPATION

The employees of the Employer who shall be “Participants” for purposes hereof
shall be, subject to Section 7, those employees of the Employer as shall be
proposed by the Chairman for coverage hereby and approved by the
Committee.  Such proposal and approval process shall also include the
determination of the Benefit Factor and Service Factor attributable to each
Participant.  The initial Participants and their respective Benefit Factors and
Service Factors shall be as listed on Exhibit A hereto (which is hereby
incorporated herein by reference) as in effect as of the Effective Date.  The
Company shall cause such Exhibit A to be amended to reflect the Participants
participating in the Plan from time to time and their respective Benefit Factors
and Service Factors.

Section 4.                      BENEFITS

4.1.           If a Covered Termination occurs with respect to a Participant,
then such Participant shall be entitled hereunder to the following:

(a)           the product of (i) the Participant’s Target Annual Bonus for the
year in which the Date of Termination occurs (or, if higher, as in effect at the
time of the Change in Control) and (ii) a fraction, the numerator of which is
the number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365;

(b)           an amount equal to the product of (i) the Participant’s Benefit
Factor for the year in which the Date of Termination occurs (or, if higher, as
in effect at the time of the Change in Control), multiplied by (ii) the sum of
(A) the Participant’s annual Base Salary for the year in which the Date of
Termination occurs (or, if higher, as in effect at the time of the Change in
Control) and (B) the Participant’s Target Annual Bonus for the year in which the
Date of Termination occurs (or, if higher, as in effect at the time of the
Change in Control);

(c)           for a period of time after such termination equal to the
Participant’s Service Factor for the year in which the Date of Termination
occurs (or, if higher, as in effect at the time of the Change in Control), the
Employer shall arrange to make available to such Participant medical, dental,
group life and disability benefits that are at least at a level (and cost to the
Participant) that is substantially similar in the aggregate to the level of such
benefits which was available to such Participant immediately prior to the Change
in Control; provided that (i) the Employer shall be required to provide group
life and disability benefits only to the extent it is able to do so on
reasonable terms and at a reasonable cost, (ii) the Employer shall not be
required to provide benefits under this Section 4.1 (c) upon and after the
Change in Control which are in excess of those provided to a significant number
of employees of similar status who are employed by the Employer from time to
time upon and after the Change in Control, (iii) no type of benefit otherwise to
be made available to a Participant pursuant to this Section 4.1(c) shall be
required to be made available to the extent that such type of benefit is made
available to the Participant by any subsequent employer of such Participant and
(iv) in the case of any payments or reimbursements to be made to such
Participant, all such payments and

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reimbursements must be paid to such Participant prior to the last day of the
third calendar year following the calendar year in which the Date of Termination
occurs; and (v)to the extent necessary to avoid having any medical or dental
benefits provided under this Paragraph treated as subject to the requirements of
Section 409A of the Code, any medical or dental coverage relating to a period of
time beyond the period of time during which the Participant would be entitled
(or would, but for this Plan, be entitled) to continuation coverage under a
group health plan of the Company under Section 4980B of the Code (COBRA) if the
Participant elected such coverage and paid the applicable premiums, shall be
provided through an insurance policy rather than a self-funded program

(d)           in addition to the benefits to which a Participant is entitled
under the Company’s tax-qualified defined benefit retirement plan in which the
Participant participates (the “Retirement Plan”) and, if applicable, defined
benefit supplemental executive retirement plan (the “SERP”), including any
successor plans thereto, the Employer shall pay to each Participant in cash at
the time and in the manner provided in Section 4.2:

(i)           the present value of the retirement benefits (or, if available,
the lump-sum retirement benefits) which would have accrued under the terms of
the Retirement Plan and the SERP (without regard to any amendment to the
Retirement Plan or the SERP made subsequent to a Change in Control and prior to
the Date of Termination, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if such
Participant was the number of months older than his or her actual age at the
Date of Termination and had accumulated (after the Date of Termination) the
number of additional months of service credit - both as established by such
Participant’s Service Factor for the year in which the Date of Termination
occurs (or, if higher, as in effect at the time of the Change in Control).  Such
number of additional months of service credit shall be applied for vesting,
benefit accrual and eligibility purposes thereunder at his or her highest annual
rate of compensation during the 12 months immediately preceding the Date of
Termination (or, if higher, as in effect at the time of the Change in Control)
and as if any benefit indexing factors continued at the rate applicable at the
Date of Termination, minus

(ii)           the present value of the vested retirement benefits (or, if
available, the lump-sum retirement benefits) which had then accrued pursuant to
the provisions of the Retirement Plan and the SERP; provided, however, that any
payment otherwise provided for under this Section 4. 1. (d) shall be reduced by
the present value of any retirement (including early retirement) incentives
offered for a limited time to, and accepted by, the Participant (whether or not
under a tax-qualified plan).

4.2.           (a)           The payments provided for in Section 4.1 shall
(except as otherwise expressly provided therein or as provided in Section
4.2(b), or Section 4.2(c) or as otherwise expressly provided hereunder) be made
as soon as practicable, but in no event later than 30 days, following the Date
of Termination.

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(b)           Notwithstanding any other provision of the Plan to the contrary,
no payment or benefit otherwise provided for under or by virtue of the foregoing
provisions of the Plan shall be paid or otherwise made available unless and
until the Employer shall have first received from the applicable Participant (no
later than 60 days after the Employer has provided to the Participant estimates
relating to the payments to be made under the Plan) (i) a valid, binding and
irrevocable general release and non-disparagement agreement, in form and
substance acceptable to the Employer in its discretion; (ii) and a valid,
binding and irrevocable covenant against competition and solicitation, in form
and substance acceptable to the Employer, provided that the Employer shall be
permitted to defer any payment or benefit otherwise provided for in the Plan to
the 15th day after its receipt of such release, covenant and time at which they
have become valid, binding and irrevocable.  The Employer may require that any
such release contain an agreement of the Participant to notify the Employer of
any benefit made available by a subsequent employer as contemplated by clause
(iii) of the proviso to Section 4.1(c).

(c)           Notwithstanding the above, if an individual who then qualifies as
a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code
becomes entitled to a distribution from this Plan, as a result of a Covered
Termination or otherwise becomes entitled to a payment under Section 6 of this
Plan, then, to the extent and only to the extent required under  Section
409A(a)(2)(B) of the Code, no distribution otherwise payable to such specified
employee during the first six months after the date of such Covered Termination
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 Covered Termination (or,
if earlier, the date of death of the specified employee).

4.3.           Notwithstanding any other provision of the Plan to the contrary,
to the extent permitted by the Worker Adjustment and Retraining Notification Act
(“WARN’), any benefit payable hereunder to a Participant as a consequence of the
Participant’s Covered Termination shall be reduced by any amounts required to be
paid under Section 2104 of WARN to such Participant in connection with such
Covered Termination.

Section 5.                      ADMINISTRATION

The Plan shall be administered by the Committee appointed by the Board,
consisting of one or more individuals employed by the Employer or otherwise
serving as a Director of the Company prior to the Change in Control.  The acts
of a majority of the members present at any meeting of the Committee at which a
quorum is present, or acts approved in writing by a majority of the entire
Committee, shall be the acts of the Committee for purposes of the Plan. If and
to the extent applicable, no member of the Committee may act as to matters under
the Plan specifically relating to such member.  If any member of the Committee
is to be replaced or otherwise ceases to be a member thereof upon or after a
Change in Control, then the Chief Executive Officer of the Company (or, if he or
she fails to act, the President, the Chief Operating Officer and the Chief
Financial Officer, in that order) immediately prior to the Change in Control,
and no other person, shall be permitted to designate a successor member.  If at
any time there is no Committee, the Chief Executive Officer shall have the
rights and responsibilities of the Committee hereunder.  The Committee shall
have the full authority to employ and

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rely on such legal counsel, actuaries and accountants (which may also be those
of the Employer), and other agents, designees and delegatees, as it may deem
advisable to assist in the administration of the Plan.  The Employer hereby
indemnifies each member of the Committee for any liability or expense relating
to the administration of the Plan, to the maximum extent permitted by law.

Section 6.                      PARACHUTE TAX PROVISIONS

6.1.           If all, or any portion, of the payments and benefits provided
under the Plan, if any, either alone or together with other payments and
benefits which a Participant receives or is entitled to receive from the Company
or its affiliates, would constitute an excess “parachute payment” within the
meaning of Section 280G of the Code (whether or not under an existing plan,
arrangement or other agreement) (each such parachute payment, a “Parachute
Payment”), and would result in the imposition on the Participant of an excise
tax under Section 4999 of the Code, then, in addition to any other benefits to
which the Participant is entitled under the Plan or otherwise, the Participant
shall be paid an amount in cash equal to the sum of the excise taxes payable by
the Participant by reason of receiving Parachute Payments plus the amount
necessary to place the Participant in the same after-tax position (taking into
account any and all applicable federal, state and local excise, income or other
taxes at the highest possible applicable rates on such Parachute Payments
(including, without limitation, any payments under this Section 6.1) as if no
excise taxes had been imposed with respect to Parachute Payments (the “Parachute
Gross-up”).  Any Parachute Gross-up otherwise required by this Section 6.1 shall
not be made later than the time of the corresponding payment or benefit
hereunder giving rise to the underlying Section 4999 excise tax, even if the
payment of the excise tax is not required under the Code until a later time. Any
Parachute Gross-up otherwise required under this Section 6.1 shall be made
whether or not there is a Change in Control, whether or not payments or benefits
are payable under the Plan, whether or not the payments or benefits giving rise
to the Parachute Gross-up are made in respect of a Change in Control and whether
or not the Participant’s employment with the Employer shall have been
terminated.

6.2.           Except as may otherwise be agreed to by the Company and the
Participant, the amount or amounts (if any) payable under this Section 6 shall
be as conclusively determined by the Company’s independent auditors, or other
independent advisor (who served in such capacity immediately prior to the Change
in Control), whose determination or determinations shall be final and binding on
all parties.  The Participant shall agree to utilize such determination or
determinations, as applicable, in filing all of the Participant’s tax returns
with respect to the excise tax imposed by Section 4999 of the Code.  If such
independent auditors refuse to make the required determinations, then such
determinations shall be made by a comparable independent accounting firm of
national reputation reasonably selected by the Company.  Notwithstanding any
other provision of the Plan to the contrary, as a condition to receiving any
Parachute Gross-up payment, the Participant shall agree, in form and substance
acceptable to the Company, to be bound by and comply with the provisions of this
Section 6.2.

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Section 7.                      AMENDMENT AND TERMINATION

7.1.           Subject to Section 7.2, the Board shall have the right in its
discretion at any time to amend the Plan in any respect or to terminate the Plan
prior to a Change in Control; provided that Exhibit A hereto may be amended from
time to time as provided in Section 7.3 (b) below.

7.2.           Notwithstanding any other provision of the Plan to the contrary:

(a)           The Plan (including, without limitation, this Section 7.2) as
applied to any particular Participant may not be amended or terminated at any
time on or after the occurrence of a Change in Control in any manner adverse to
the interests of such Participant, without the express written consent of such
Participant.

(b)            The Plan (including, without limitation, this Section 7.2) as
applied to any particular Participant may not be amended or terminated at any
time on or after the occurrence of a Potential Change in Control in any manner
adverse to the interests of such Participant, without the prior written consent
of such Participant, until such time as the transaction or transactions
contemplated in connection with the Potential Change in Control, and all related
negotiations, are abandoned in their entirety as determined in good-faith and
reflected in writing (before a Change in Control) by the Board.

(c)            If material negotiations involving the Board or the Chief
Executive Officer of the Company have commenced regarding a transaction which,
if consummated, would constitute a Change in Control, and the Plan is amended or
terminated while such negotiations  are continuing and actively being pursued by
the Board or the Chief Executive Officer, then such  amendment or termination of
the Plan (including, without limitation, this Section 7.2), to the extent
adverse to the interests of any particular Participant, shall be null and void
as applied to such Participant with respect to the Change in Control (if any)
which ultimately results directly from such negotiations, unless the written
consent of such Participant to the amendment or termination is or has been
obtained; it being expressly understood that this Section 7.2(c) shall not apply
with respect to any negotiations which at any time prior to a Change in Control
have ceased as determined in good faith and reflected in writing (prior to a
Change in Control) by the Board or Chief Executive Officer (or which otherwise
have ceased at a time prior to a Change in Control).

7.3.           (a)           If a Subsidiary, with the consent of the Board,
purports to revoke its adoption of the Plan in accordance with the other terms
of the Plan, such revocation shall be considered to constitute a Plan amendment
for purposes of Section 7.2, and, therefore, any such purported revocation shall
be subject to the restrictions of Section 7.2.

(b)           If after an individual has become a Participant, any attempt is
made in accordance with the other terms of the Plan not to include such
individual as one of the Participants hereunder, then such exclusion shall be
considered to constitute an amendment to the Plan for purposes of Section 7.2,
and, therefore, any such purported exclusion shall be subject to the
restrictions of Section 7.2.

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Section 8.                      MISCELLANEOUS

8.1.           (a)           The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform under the terms of the Plan in the same manner and to the
same extent that the Company and its affiliates would be required to perform it
if no such succession had taken place (provided that such a requirement to
perform which arises by operation of law shall be deemed to satisfy the
requirements for such an express assumption and agreement), and in such event
the Company (as constituted prior to such succession) shall have no further
obligation under or with respect to the Plan. Failure of the Company to obtain
such assumption and agreement with respect to any particular Participant prior
to the effectiveness of any such succession shall be a breach of the terms of
the Plan with respect to such Participant and shall entitle each such
Participant to compensation from the Employer (as constituted prior to such
succession) in the same amount and on the same terms as the Participant would be
entitled to hereunder were the Participant’s employment terminated for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Plan, “Company” shall mean the
Company as hereinbefore defined and any successor to its business or assets as
aforesaid which assumes and agrees (or is otherwise required) to perform the
Plan. Nothing in this Section 8. 1 (a) shall be deemed to cause any event or
condition which would otherwise constitute a Change in Control not to constitute
a Change in Control.

(b)           Notwithstanding Section 8.1 (a), the Company shall remain liable
to those Participants who have a Covered Termination upon a Change in Control
because (i) they are not offered continuing employment by a successor to the
Employer or (ii) the Participant declines such an offer and the Participant’s
resulting termination of employment otherwise constitutes a Covered Termination
hereunder.

(c)           To the maximum extent permitted by law, the right of any
Participant or other person to any amount under the Plan may not be subject to
voluntary or involuntary anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment or garnishment by creditors of the Participant
or such other person.

(d)           The terms of the Plan shall inure to the benefit of and be
enforceable by the personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees of each Participant. If a
Participant shall die while an amount would still be payable to the Participant
hereunder if they had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of the Plan to the
Participant’s devisee, legatee or other designee or, if there is no such
designee, their estate.

8.2.           Except as expressly provided in Section 4.1, Participants shall
not be required to mitigate damages or the amount of any payment provided for
under the Plan by seeking other employment or otherwise, nor will any payments
or benefits hereunder be subject to offset in the event a Participant does
mitigate.

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8.3.           The Employer shall pay all legal fees and expenses incurred in a
legal proceeding by a Participant in seeking to obtain or enforce any right or
benefit provided by the Plan. Such payments are to be made within five days
after a Participant’s request for payment accompanied with such evidence of fees
and expenses incurred as the Employer reasonably may require; provided that if
the Participant institutes a proceeding and the judge or other decision-maker
presiding over the proceeding affirmatively finds that such Participant has
failed to prevail substantially, he or she shall pay his or her own costs and
expenses (and, if applicable, return any amounts theretofore paid on his or her
behalf under this Section 8.3)

8.4.           (a)           A Participant may file a claim for benefits under
the Plan by written communication to the Committee or its designee. A claim is
not considered filed until such communication is actually received by the
Committee or such designee. Within 90 days ( or, if special circumstances
require an extension of time for processing, 180 days, in which case notice of
such special circumstances shall be provided within the initial 90-day period)
after the filing of the claim, the Committee shall:

 (i)           approve the claim and take appropriate steps for satisfaction of
the claim; or

 (ii)           if the claim is wholly or partially denied, advise the claimant
of such denial by furnishing to him or her a written notice of such denial
setting forth (A) the specific reason or reasons for the denial; (B) specific
reference to pertinent provisions of the Plan on which the denial is based and,
if the denial is based in whole or in part on any rule of construction or
interpretation adopted by  the Committee, a reference to such rule, a copy of
which shall be provided to the claimant; (C) a description of any additional
material or information necessary for the claimant to perfect the claim and an
explanation of the reasons why such material or information is necessary; and
(D) a reference to this Section 8.4.

(b)           The claimant may request a review of any denial of his or her
claim by
written application to the Committee within 60 days after receipt of the notice
of denial of such claim. Within 60 days (or, if special circumstances require an
extension of time for processing, 120 days, in which case notice of such special
circumstances shall be provided within the initial 60-day period) after receipt
of written application for review, the Committee shall provide the claimant with
its decision in writing, including, if the claimant’s claim is not approved,
specific reasons for the decision and specific references to the Plan’s
provisions on which the decision is based.

8.5.           All notices under the Plan shall be in writing, and if to the
Company or the Committee, shall be delivered to the General Counsel of the
Company, or mailed to the Company’s principal office, addressed to the attention
of the General Counsel of the Company; and if to a Participant (or the estate or
beneficiary thereof), shall be delivered personally or mailed to the Participant
at the address appearing in the records of the Company.

8.6.           Unless otherwise determined by the Employer in an applicable plan
or arrangement, no amounts payable hereunder upon a Covered Termination shall be

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deemed salary or compensation for the purpose of computing benefits under any
employee benefit plan or other arrangement of the Employer for the benefit of
its employees unless the Employer shall determine otherwise.

8.7.           With respect to each Participant, the Plan is the exclusive
arrangement applicable to payments and benefits in connection with a change in
control of the Company (whether or not a Change in Control), and supersedes any
prior arrangements involving the Company or its predecessors or affiliates
(including, without limitation, Conectiv and Pepco) relating to changes in
control (whether or not Changes
in Control). Participation in the Plan shall not limit any right of a
Participant to receive any payments or benefits under an employee benefit or
executive compensation plan of the Employer, initially adopted as of or after
the Effective Date, or otherwise listed on Exhibit B hereto, which are expressly
contingent thereunder upon the occurrence of a change in control (including, but
not limited to, the acceleration of any rights or benefits thereunder); provided
that in no event shall any Participant be entitled to any payment or benefit
under the Plan which duplicates a payment or benefit received or receivable by
the Participant under any severance or similar plan or policy of the Employer.

8.8.            Any payments hereunder shall be made out of the general assets
of the Employer. Each Participant shall have the status of general unsecured
creditors of the Employer, and the Plan constitutes a mere promise by the
Employer to make payments under the Plan in the future as and to the extent
provided herein.

8.9.            Nothing in the Plan shall confer on any individual any right to
continue in the employ of the Employer or interfere in any way (other than by
virtue of requiring payments or benefits as may expressly be provided herein)
with the right of the Employer to terminate the individual’s employment at any
time.

8.10.          The Employer shall be entitled to withhold from any payments or
deemed payments any amount of tax withholding required by law.

8.11.          The invalidity or unenforceability of any provision of the Plan
shall not affect the validity or enforceability of any other provision of the
Plan which shall remain in full force and effect.

8.12.          The use of captions in the Plan is for convenience. The captions
are not intended to and do not provide substantive rights.

8.13           The Plan shall be construed, administered and enforced according
to the laws of the State of Delaware, without regard to principles of conflicts
of law, except to the extent preempted by federal law.

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IN WITNESS WHEREOF, the Company has caused this Plan to be signed effective this
3rd day of November 2008 which version reflects all modifications made to the
Plan through such date of execution.

ATTEST
 
PEPCO HOLDINGS, INC.
         
By:
 /s/ ELLEN S. ROGERS
 
By:
/s/ D. R. WRAASE
 
Corporate Secretary
   
Chief Executive Officer

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