Document:

Prepared by R.R. Donnelley Financial -- Severance Agreement with Howard Cosgrove

  EXHIBIT 10-B  
  CHANGE IN CONTROL SEVERANCE AGREEMENT – HOWARD COSGROVE 

  CHANGE-IN-CONTROL 
  SEVERANCE AGREEMENT 
                         This Agreement, dated as of June 18, 2002, by and between Conectiv, with its principal place of
business at 800 King Street, P.O. Box 231, Wilmington, Delaware, 19899 (the “Company”), and Howard E. Cosgrove (the “Executive”), which is a substitution and replacement of a prior Agreement by and between Company and the
Executive dated January 15, 1999.
                         WHEREAS, the Company considers it
essential to the best interests of its stockholders to foster the continuous employment of key management personnel, and recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that
such possibility, and the uncertainty and questions which it may raise among management, may result in the distraction or departure of management personnel to the detriment of the Company and its stockholders; and
                         WHEREAS, the Board of Directors of the Company has determined that appropriate steps should be
taken to reinforce and encourage the Executive’s continued attention and dedication to the Executive’s assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is presently known to be contemplated.
                         NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
 Section 1
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:
                         “Base Salary” shall mean the annual base rate of regular compensation of the Executive
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.
                         “Board” shall mean the Board of Directors of the Company.
                         “Cause” shall mean (i) the willful and continued failure by the Executive
substantially to perform his duties with the Employer (other than any such failure resulting from incapacity due to physical or mental illness of the Executive, or any such actual or anticipated failure after the issuance of a Notice of Termination
for Good Reason) or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Employer, monetarily or otherwise. For purposes hereof, no act, or failure to act, on the Executive’s part,
shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that any act or omission was in the best interest of the Employer.

   
                         “Change in
Control” shall mean the first to occur, after the date hereof, of any of the following:
                                        
                (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 25% 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;
                                        
                (ii)   if during any period of 24 consecutive months during the existence of this Agreement commencing on or after the date hereof, 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 24-month period shall be deemed to have satisfied such 24-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 24-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 60% 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 40% 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 60% 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 this Agreement, with the result that there can be no more than one Change in Control hereunder.
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                          It is understood that the consummation of the
merger by and among Conectiv, New RC, and Potomac Electric Power Co. as proposed in a written agreement (the “Merger Agreement”) shall be a Change in Control for purposes of this Agreement.
                         “Code” shall mean the Internal Revenue Code of 1986, as amended.
                         “Company” shall mean, subject to Section 4.1(a), Conectiv, a Delaware
corporation.
                         “Covered Termination” shall mean if, within
the one-year period immediately following a Change in Control, the Executive (i) is terminated by the Employer without Cause (other than on account of death or Disability), or (ii) terminates his employment with the Employer for Good
Reason. The Executive shall not be deemed to have terminated for purposes of this Agreement 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 this Agreement as if it were the Employer hereunder with respect to the Executive. 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 Executive 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 Executive on terms and conditions which, if imposed
by the Employer, would not give the Executive a basis on which to terminate employment for Good Reason.
                         “Date of Termination” shall mean the date on which a Covered Termination
occurs.
                         “Disability” shall mean the occurrence after a
Change in Control of the incapacity of the Executive due to physical or mental illness, whereby the Executive shall have been absent from the full-time performance of his duties with the Employer for six consecutive months.
                         “Employer” shall mean the Company (if and for so long as the Executive
is employed thereby) and each Subsidiary which may now or hereafter employ the Executive or, where the context so requires, the Company and such Subsidiaries collectively. 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 part of) the Employer for purposes hereof. 
                         “Good Reason” shall mean, without the express written consent of the Executive, the
occurrence after a Change in Control of any of the following circumstances, unless such circumstances are fully corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:
                                        
                (i)   assignment to the Executive of any duties inconsistent in any materially adverse respect with his position, authority, duties or
responsibilities from those in effect immediately prior to the Change in Control;
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                (ii)   a reduction in the Executive’s Base Salary as in effect immediately before the Change in Control;
                                        
                (iii)   a material reduction in the Executive’s aggregate compensation opportunity, comprised only of (A) the Executive’s
Base Salary, (B) bonus opportunity, if any, and (C) long-term or other incentive compensation opportunity, if any (taking into account, in the case of such bonus and incentive opportunities, without limitation, any target, minimum and
maximum amounts payable and the attainability and otherwise the reasonability of any performance hurdles, goals and other measures);
                                        
                (iv)   the Company’s requiring the Executive to be based at any office or location more than 50 miles from that location at which the
Executive performed his services immediately prior to the occurrence of a Change in Control, except for travel reasonably required in the performance of the Executive’s responsibilities; or
                                        
                (v)   the failure of the Employer to obtain a reasonable agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 4.1(a).
                         “Notice of Termination”
shall mean a notice given by the Employer or Executive, as applicable, which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provisions so indicated.
                         “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) such Executive or any “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act) which includes the
Executive).
                         “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 
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  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 this Agreement, a Potential Change in Control has
occurred.
                         “Securities Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.
                         “Stock”
shall mean the common stock, $.01 par value, of the Company. 
                         “Subsidiary” shall mean any entity, directly or indirectly, through one or more
intermediaries, controlled by the Company.
                         “Target Annual
Bonus” shall mean the Executive’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 Executive and the Employer were to satisfy all conditions to the
Executive’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.
 Section 2
BENEFITS
                         2.1.   If a Covered Termination occurs, then 
                                      (a)  
 for a period of three years after such termination, the Employer shall arrange to make available to the Executive medical, dental, vision, group life and disability benefits that are at least at a level (and cost to the Executive) that is
substantially similar in the aggregate to the level of such benefits which was available to the Executive 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 2.1(a) upon and after the Change in Control which are in excess of those
provided to a significant number of executives of similar status who are employed by the Employer from time to time upon and after the Change in Control, and (iii) no type of benefit otherwise to be made available to the Executive pursuant to
this Section 2.1(a) shall be required to be made available to the extent that such type of benefit is made available to the Executive by any subsequent employer of the Executive; and
                                      (b)  
 The Company shall pay, at the time and manner provided in Section 2.2(a), the product of (i) the Executive’s Target Annual Bonus for the year in which the Date of
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  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.
                         2.2.   (a)   The payments provided for in Section 2.1 shall (except
as otherwise expressly provided therein or as provided in Section 2.2(b) 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.
                                      (b)  
 Notwithstanding any other provision of this Agreement to the contrary, no payment or benefit otherwise provided for under or by virtue of the foregoing provisions of this Agreement shall be paid or otherwise made available unless and until the
Employer shall have first received from the Executive (no later than 60 days after the Employer has provided to the Executive estimates relating to the payments to be made under this Agreement) a valid, binding and irrevocable general release, in
form and substance acceptable to the Employer in its discretion; provided that the Employer shall be permitted to defer any payment or benefit otherwise provided for in this Agreement to the 15th day after its receipt of such release and time at
which it has become valid, binding and irrevocable. The Employer may require that any such release contain an agreement of the Executive to notify the Employer of any benefit made available by a subsequent employer as contemplated by clause (iii) of
the proviso to Section 2.1(c).
                         2.3.   Notwithstanding any other provision of this Agreement to the contrary, to
the extent permitted by the Worker Adjustment and Retraining Notification Act (“WARN”), any benefit payable hereunder to the Executive as a consequence of the Executive’s Covered Termination shall be reduced by any amounts required to
be paid under Section 2104 of WARN to the Executive in connection with such Covered Termination.
                         2.4.   In consideration of the promises contained herein, the Executive hereby
waives the provisions of the Incentive Compensation Plan that would provide for immediate vesting of the restricted stock granted to him during 1998, 1999, 2000, 2001, and 2002 prior to the date of this Agreement upon the consummation of the pending
Agreement and Plan of Merger dated as of February 9, 2001 pursuant to which Conectiv and Potomac Electric Power Co. will become wholly-owned subsidiaries of Pepco Holdings, Inc., and further agrees to surrender and waive any
ownership rights to such restricted stock upon the consummation of such Agreement and Plan of Merger.
 Section 3
PARACHUTE TAX PROVISIONS
                         3.1.   If all, or any portion, of the payments and benefits provided under this
Agreement, if any, either alone or together with other payments and benefits which the Executive receives or is entitled to receive from the Company or its affiliates, would constitute an excess 
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  “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 Executive of an excise tax under Section 4999 of the Code, then, in addition to any other benefits to which the Executive is entitled under this Agreement or otherwise, the
Executive shall be paid an amount in cash equal to the sum of the excise taxes payable by the Executive by reason of receiving Parachute Payments plus the amount necessary to place the Executive 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 3.1)) 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 3.1 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 3.1 shall be made whether or not there is a Change in Control,
whether or not payments or benefits are payable under this Agreement, 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 Executive’s employment with
the Employer shall have been terminated. 
                         3.2.   Except as may otherwise be agreed to by the Company and the Executive, the
amount or amounts (if any) payable under this Section 3 shall be conclusively determined by the Company’s independent auditors (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 Executive hereby agrees to utilize such determination or determinations, as applicable, in filing all of the Executive’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 this Agreement to the contrary, as a condition to receiving any Parachute Gross-up payment, the Executive hereby agrees to be bound by and comply with the provisions of this Section 3.2.
                         3.3.   In all respects, and notwithstanding the foregoing, any Parachute Gross-up
shall be paid pursuant to, and the Executive shall comply with the terms of, the Gross-up and Legal Fee Plan which has previously been adopted by the Company.
 Section 4
MISCELLANEOUS
                         4.1.   (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 this Agreement 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 this
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   Agreement. Failure of the Company to obtain such assumption and agreement with respect to the Executive prior to the effectiveness of any such succession shall be a breach of the terms of
this Agreement with respect to the Executive and shall entitle the Executive to compensation from the Employer (as constituted prior to such succession) in the same amount and on the same terms as the Executive would be entitled to hereunder were
the Executive’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 this Agreement, “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 this Agreement.
Nothing in this Section 4.1(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 4.1(a), the Company shall remain liable to the Executive upon a Covered Termination after a Change in Control if (i) the Executive is not offered continuing employment by a successor to the Employer or (ii) the
Executive declines such an offer and the Executive’s resulting termination of employment otherwise constitutes a Covered Termination hereunder.
                                      (c)  
 This Agreement, and the Executive’s and the Company’s rights and obligations hereunder, may not be assigned by the Executive or, except as provided in Section 4.1(a), the Company, respectively; any purported assignment by the
Executive or the Company in violation hereof shall be null and void.
                                      (d)  
 The terms of this Agreement shall inure to the benefit of and be enforceable by the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall
die while an amount would still be payable to the Executive hereunder if they had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee,
legatee or other designee or, if there is no such designee, the Executive’s estate.
                         4.2.   Except as expressly provided in Section 2.1, the Executive shall not be
required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments or benefits hereunder be subject to offset in the event the Executive does
mitigate.
                         4.3.   The Employer shall pay all legal
fees and expenses incurred in a legal proceeding by the Executive in seeking to obtain or enforce any right or benefit provided by this Agreement. Such payments are to be made within five days after the Executive’s request for payment
accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require; provided that if the Executive institutes a proceeding and the judge or other decision-maker presiding over the proceeding affirmatively finds that
the Executive has failed to prevail substantially, the Executive shall pay his own costs and expenses (and, if applicable, return any amounts theretofore paid on the Executive’s behalf under this Section 4.3).
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                          4.4.   (a)   The
Executive may file a claim for benefits under this Agreement by written communication to the Board. A claim is not considered filed until such communication is actually received by the Board. 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 Board 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 Executive 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 this Agreement 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 Board, a reference to such rule, a copy of which shall be provided to the Executive; (C) a description of any additional material or information necessary for the Executive to perfect the claim and
an explanation of the reasons why such material or information is necessary; and (D) a reference to this Section 4.4.
                         4.5.   For the purposes of this Agreement, notice and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand delivered or mailed by United States certified or registered express mail, return receipt requested, postage prepaid, if to the Executive,
addressed to the Executive at his or her respective address on file with the Secretary of the Company; if to the Company, addressed to Conectiv, 800 King Street, P.O. Box 231, Wilmington, Delaware 19899-0231, and directed to the attention of its
General Counsel; if to the Board, addressed to the Board of Directors, c/o Conectiv, 800 King Street, P.O. Box 231, Wilmington, Delaware, 19899-0231, and directed to the Company’s General Counsel; or to such other address as any party may have
furnished to the others in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 
                         4.6.   Unless otherwise determined by the Employer in an applicable plan or
arrangement, no amounts payable hereunder upon a Covered Termination shall be 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.
                         4.7.   This Agreement is the exclusive arrangement with the Executive 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, Delmarva
Power & Light Company and Atlantic Energy, Inc.) relating to changes in control (whether or not Changes in Control). This Agreement shall not limit any right of the Executive to receive any payments or benefits under an employee benefit or
executive compensation plan of the Employer, initially adopted as of or after the date hereof, or otherwise listed in Exhibit A 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 the
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   Executive be entitled to any payment or benefit under this Agreement which duplicates a payment or benefit received or receivable by the Executive under any severance or similar plan or
policy of the Employer.
                         4.8.   Any payments
hereunder shall be made out of the general assets of the Employer. The Executive shall have the status of general unsecured creditor of the Employer, and this Agreement constitutes a mere promise by the Employer to make payments under this Agreement
in the future as and to the extent provided herein.
                         4.9.   Nothing in this Agreement shall confer on the Executive 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 Executive’s employment at any
time.
                         4.10.   The Employer shall be entitled to
withhold from any payments or deemed payments any amount of tax withholding required by law.
                         4.11.   Any controversy or claim arising out of or relating to this Agreement or
the breach of this Agreement that is not resolved by the Employer and the Executive shall be submitted to arbitration in Wilmington, Delaware, in accordance with Delaware law and the procedures of the American Arbitration Association. The
determination of the arbitrator(s) shall be conclusive and binding on the Employer and Executive and judgment may be entered on the arbitrator(s)’ award in any court having jurisdiction.
                         4.12.   (a)   This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof
or the exercise of any other such right, power or privilege.
                                      (b)  
 Without limiting the generality of Section 4.12(a), the Board, on written notice to the Executive, may unilaterally terminate this Agreement with respect to Changes in Control occurring after the later of (i) December 31, 2000 or
(ii) the first anniversary of the date of such notice. Notwithstanding the foregoing, in the event of a Potential Change in Control, until such time as the transaction or transactions contemplated in connection with such 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], this Agreement may not be terminated under this Section 4.12(b) with respect to
any Change in Control which ultimately results directly from facts and circumstances constituting such Potential Change in Control if such Potential Change in Control occurs on or before the later of (i) December 31, 2000 or (ii) one
year after the first anniversary of the date of the notice referred to in the foregoing sentence.
                                      (c)  
 Without limiting the generality of Section 4.12(a), if material negotiations involving the Board or the Chief Executive Officer of the Company have
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   commenced regarding a transaction which, if consummated, would constitute a Change in Control, and this Agreement is terminated while such negotiations are continuing and actively being
pursued by the Board or the Chief Executive Officer, then such termination of this Agreement shall be null and void as applied with respect to the Change in Control (if any) which ultimately results directly from such negotiations; it being
expressly understood that this Section 4.12(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)].
                         4.13.   The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement which shall remain in full force and effect.
                         4.14.   The use of captions in this Agreement is for convenience. The captions are
not intended to and do not provide substantive rights.
                         4.15.   THIS AGREEMENT 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.
                         IN WITNESS WHEREOF, the parties hereto have signed their names, effective as of the date first
above written.

	

	 	 CONECTIV 

	 	 	By:  	/s/ Donald E. Cain
		 	 	

	 	 	Name: 	Donald E. Cain
	 	 	Title: 	VP HRPI

	

	 	 	

	 	 	   	/s/ Howard E. Cosgrove
		 	 	

	 	 	 	Howard E. Cosgrove

  -12-Prepared by R.R. Donnelley Financial -- Van Roden, Jr. Agreement

  EXHIBIT 10-C  
  NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY AGREEMENT 
 BY AND BETWEEN CONECTIV AND JOHN C.
VAN RODEN, JR. 
  

   NON-COMPETITION, NON-SOLICITATION, 
 AND CONFIDENTIALITY AGREEMENT 
             THIS NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY AGREEMENT (the “ Agreement ”), is made on this 18th day of June, 2002 by and between
Conectiv, with its principal place of business at 800 King Street, P.O. Box 231, Wilmington, Delaware, 19899, including, unless the context clearly otherwise requires, its subsidiaries and affiliates (together, “Conectiv”),and John C. van
Roden, Jr. (the “Executive”).
             WHEREAS, the Executive is employed by Conectiv as Senior Vice President and Chief Financial Officer
and in such capacity, had, has, and will continue to have access to Conectiv’s employees, customers, vendors, trade secrets, and proprietary information; and
             WHEREAS, Conectiv has entered into a Agreement and Plan of Merger, dated as of February 9, 2001, with Potomac Electric Power Company (“PEPCO”) and New RC, Inc.
by which Conectiv and PEPCO will become wholly-owned subsidiaries of New RC, Inc. (together with its affiliates and subsidiaries, “the Company”); and
             WHEREAS, by virtue of the years of valuable service the Executive has provided to Conectiv in a position in which the Executive has made significant policy decisions and
contributed to the establishment of the strategic direction and compensation policies of Conectiv, the Executive possesses significant knowledge of and experience in connection with the business of Conectiv, including specifics regarding the
compensation and benefits of its key executives that would place him in a position to recruit such executives if he were to engage in a competing or similar business; and
             WHEREAS, Conectiv is prepared to make a substantial cash payment to the Executive in the event the Merger is consummated, as set forth in Section 2 below, provided that
the Executive makes certain assurances that he will not be in a position that is potentially adverse to, or that otherwise would harm, the business interests of Conectiv or the Company; and
             WHEREAS, the Executive desires to enter into this Agreement in exchange for such cash payment.
             NOW THEREFORE, in consideration of these premises and intending to be legally bound hereby, Conectiv and the Executive hereby agree as follows:
 SECTION 1.    Definitions . Capitalized terms used herein will have the meanings set forth in the preamble of this Agreement, or as set forth below:
             1.1.   “ Competing Business ” means (a) any electric or gas energy supplier or distributor located in or servicing the eastern third of
the United States (north of Georgia) and (b) any other corporation, or unincorporated entity, engaged in the same business in which Conectiv or PEPCO (or any affiliate thereof) is engaged at the time of this Agreement or at the time the Executive

  terminates employment with Conectiv or the Company, marketing to the same or similar customers or in the same geographic area.
             1.2.   “ Proprietary Information ” means confidential, proprietary, business and technical information or trade secrets of Conectiv or the
Company. Such Proprietary Information shall include, but shall not be limited to, the following items and information relating to the following items: (a) computer codes or instructions (including source and object code listings, program logic
algorithms, subroutines, modules or other subparts of computer programs and related documentation, including program notation), computer processing systems and techniques, all computer inputs and outputs (regardless of the media on which stored or
located), hardware and software configurations, designs, architecture and interfaces, (b) business research, studies, procedures and costs, (c) financial data, (d) distribution methods, (e) marketing data, methods, plans and efforts, (f) the
identities of Conectiv’s or the Company’s relationship(s) with actual and prospective customers, contractors and suppliers, (g) the terms of contracts and agreements with customers, contractors and suppliers, (h) the needs and requirements
of, and course of dealing with, actual or prospective customers, contractors and suppliers, (i) personnel information, including but not limited to benefit programs, pay scales, and incentive programs, and (j) customer and vendor credit information.
Failure by Conectiv or the Company to mark any of the Proprietary Information as confidential or proprietary shall not affect its status as Proprietary Information under the terms of this Agreement.
             1.4.   “ Restricted Period ” means the entire period of the Executive’s employment by Conectiv or the Company and the 12 calendar
months following the termination of such employment. 
             1.5.   “ Restrictive Covenants ” means the provisions
contained in  Section 3.1  of this Agreement. 
 SECTION 2.    Transaction and Signing Bonus . Within 15 days following the consummation of the Merger, Conectiv will make a single sum
cash payment to the Executive of $2,180,093, less any required tax withholding. 
 SECTION 3.    Non-Compete; Confidentiality; Non-Solicitation . In consideration of the payment described
above in  Section 2 , the Executive agrees to be bound by the Restrictive Covenants set forth in this  Section 3 .
             3.1.    Restrictive Covenants . 
                         (a)   During the Restricted Period, the Executive will not do any of the following,
directly or indirectly, in the eastern third of the United States (north of the state of Georgia) or any other place where Conectiv or the Company has conducted business during the tenure of Executive’s employment with Conectiv or the Company
(except with respect to lines of business in which the Company no longer engages), without the prior written consent of Conectiv or the Company, as applicable: 
 -3- 

                                       (i)  
  Non-Competion . Engage or participate in any Competing Business;
                                      (ii) 
   Restrictions on Ownership. Become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent or consultant) any person, firm, corporation, association or other entity engaged in any
Competing Business. Notwithstanding the foregoing, the Executive may hold up to 2% of the outstanding securities of any class of any publicly-traded securities of any company;
                                      (iii)
    Non-Solicitation of Business . Solicit or call on, either directly or indirectly, (A) for purposes of selling goods or products competitive with goods or products sold by Conectiv or the Company, any customer with whom
Conectiv or the Company shall have dealt or any prospective customer that Conectiv or the Company shall have identified and solicited at any time during the Executive’s employment, or engagement as a consultant, by Conectiv or the Company; or
(B) for the purposes of purchasing goods or products competitive with goods or products purchased by Conectiv or the Company for resale by Conectiv or the Company, any supplier with whom Conectiv or the Company shall have dealt at any time during
the Executive’s employment, or engagement as a consultant, by Conectiv or the Company;
                                      (iv) 
   Non-Interference with Business . Influence or attempt to influence any supplier, customer or potential customer of Conectiv or the Company to terminate or modify any written or oral agreement or course of dealing with Conectiv or
the Company; or
                                      (v)  
  Non-Solicitation of Employees . Influence or attempt to influence any person to either (A) terminate or modify any employment, consulting, agency, distributorship or other arrangement with Conectiv or the Company, or (B) employ or
retain, or arrange to have any other person or entity employ or retain, any person who has been employed or retained by Conectiv or the Company as an employee, consultant, agent or distributor of Conectiv or the Company at any time during the
Restricted Period. It is understood that this sub-paragraph (v) does not prevent the Executive from responding truthfully to requests by prospective employers or recruiters for recommendations or information concerning any such person’s
performance as an employee of Conectiv or the Company, provided that Executive did not initiate such request or refer such person for the employment or retention that is the subject of the request, and further provided that Executive shall not
receive any compensation in any form as a result of any hiring or retention of such person.
                         (b)    Confidentiality . The Executive recognizes and acknowledges that the
Proprietary Information is a valuable, special and unique asset of the business of Conectiv or the Company. As a result, both during the period of the Executive’s employment with Conectiv or the Company and thereafter, the Executive shall not,
without the prior written consent of Conectiv or the Company, as applicable, for any reason either directly or indirectly divulge to any third-party or use for his own benefit, or for any purpose other than the exclusive benefit of Conectiv or the
Company, any Proprietary Information revealed, obtained or developed in the course of his employment, or engagement as a consultant, by Conectiv or the Company;  provided, however , that nothing herein contained shall restrict the
Executive’s ability to make 
  -4- 

  such disclosures during the Executive’s period of employment or engagement with Conectiv or the Company as may be necessary or appropriate to the effective and efficient discharge of
his duties as an employee or consultant or as such disclosures may be required by law. If the Executive or any of his representatives becomes legally compelled to disclose any of the Proprietary Information, the Executive will provide Conectiv or
the Company with prompt written notice so that the Company may seek a protective order or other appropriate remedy. 
                         (c)    Property .All right, title and interest in and to Proprietary
Information shall be and remain the sole and exclusive property of Conectiv or the Company. During the period of employment, and engagement as a consultant, by Conectiv or the Company, the Executive shall not remove from Conectiv or the
Company’s offices or premises any documents, records, notebooks, files, correspondence, reports, memoranda or similar materials of or containing Proprietary Information, or other materials or property of any kind belonging to Conectiv or the
Company unless necessary or appropriate in accordance with the duties and responsibilities required by or appropriate for his position and, in the event that such materials or property are removed, all of the foregoing shall be returned to their
proper files or places of safekeeping as promptly as possible after the removal shall serve its specific purpose. The Executive shall not make, retain, remove and/or distribute any copies of any of the foregoing for any reason whatsoever except as
may be necessary in the discharge of his assigned duties and shall not divulge to any third person the nature of and/or contents of any of the foregoing or of any other oral or written information to which he may have access or with which for any
reason he may become familiar, except as disclosure shall be necessary in the performance of his duties; and upon the termination of his employment with Conectiv or the Company, he shall leave with or return to Conectiv or the Company all originals
and copies of the foregoing then in his possession, whether prepared by the Executive or by others.
                         (d)    Duty to Keep Company Informed . In order to ensure that the Conectiv
and the Company may retain the benefit of the Restrictive Covenants, the Executive agrees to notify Conectiv (or after the Merger, the Company) of any employment or retention as consultant that he may enter into, and to provide specific information
upon request regarding the Executive’s activities. In the event Executive provides such notice and information at least 30 days prior to the commencement of such employment or consultancy, Conectiv or the Company shall respond to such Executive
within 30 days (or if later, within 30 days after additional information has been submitted by the Executive in response to a request for such information) regarding the Company’s initial determination regarding whether such employment or
consultancy falls within the scope of the Restrictive Covenants.
             3.2.    Acknowledgments . The Executive acknowledges
that the Restrictive Covenants are reasonable and necessary to protect the legitimate interests of Conectiv or the Company and its affiliates and that, in the absence of such restrictions, Conectiv would not enter into this Agreement. Therefore, the
Executive acknowledges that the Restrictive Covenants are entered into in order to induce Conectiv to make the payment described in  Section 2 . The Executive further acknowledges that the duration and geographic scope of  Section 3.1(a)
 are reasonable 
  -5- 

  given the nature of Conectiv’s business and the position of authority and responsibility that the Executive holds within Conectiv or may hold within the Company.
             3.3.    Rights and Remedies Upon Breach . 
                         (a)    Specific Enforcement . The Executive acknowledges that any breach by
him, willfully or otherwise, of the Restrictive Covenants will cause continuing and irreparable injury to Conectiv or the Company for which monetary damages would not be an adequate remedy. The Executive shall not, in any action or proceeding to
enforce any of the provisions of this Agreement, assert the claim or defense that such an adequate remedy at law exists. In the event of any such breach by the Executive, Conectiv or the Company shall have the right to enforce the Restrictive
Covenants by seeking injunctive or other relief in any court, without any requirement that a bond or other security be posted, and this Agreement shall not in any way limit remedies of law or in equity otherwise available to Conectiv or the Company.
If an action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover, in addition to any other relief, reasonable attorneys’ fees, costs and disbursements.

                         (b)    Extension of Restrictive Period . If
the Executive breaches any of the Restrictive Covenants contained in  Section 3.1(a) , then the Restricted Period shall be extended for a period of time equal to the period of time that the Executive is in breach of such restriction.

                         (c)    Return of Payment and Accounting . If
the Executive engages in a material breach of any of the Restrictive Covenants, the Executive will be required to return the payment described in  Section 2  above, plus interest accruing from the date of payment to the Executive to the date
of such repayment at a rate of 2% above the prime rate, as determined by the Company, to Conectiv or the Company, as applicable, and Conectiv or the Company will have the right and remedy to require the Executive to account for and pay over to the
Company all compensation, profits, monies, accruals, increments or other benefits derived or received by the Executive as the result of any action constituting a breach of the Restrictive Covenants. These rights and remedies will be in addition to,
and not in lieu of, any other rights and remedies available to Conectiv or the Company under law or in equity. Notwithstanding the foregoing, no return of payment will be required unless (i) the damages caused by the breach are
significant and proportionate to the penalty hereunder, or (ii) the Executive fails to cease and remedy the breaching activity within thirty (30) days after receiving notice from Conectiv or the Company indicating the manner in which the breach has
occurred and demanding such cessation and remediation.
             3.4.    Judicial Modification . If any court determines that
the Restrictive Covenants, or any part thereof, is unenforceable because of the duration or geographical scope of such provision, such court shall have the power to modify such provision and, in its modified form, such provision shall then be
enforceable.
             3.5.    Disclosure of Restrictive Covenants . The Executive agrees to disclose the existence and terms
of the restrictive covenants set forth in this  Section 3  to any employer that the Executive may work for during the Restricted Period. 
  -6- 

              3.6.    Enforceability . If any court holds the Restrictive Covenants unenforceable by reason of
their breadth or scope or otherwise, it is the intention of the parties hereto that such determination not bar or in any way affect the right of Conectiv or the Company to the relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants.
 SECTION 4.    Miscellaneous  
             4.1.    Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon Conectiv, the Company, and the Executive and their
respective successors, executors, administrators, heirs and/or permitted assigns;  provided, however , that neither the Executive nor Conectiv or the Company may make any assignments of this Agreement or any interest herein, by operation of
law or otherwise, without the prior written consent of the other party, except that, without such consent, Conectiv or the Company may assign this Agreement to any successor to all or substantially all of its assets and business by means of
liquidation, dissolution, merger, consolidation, transfer of assets, or otherwise.
             4.2.    Notice . Any notice or
communication required or permitted under this Agreement shall be made in writing and (a) sent by overnight courier, (b) mailed by certified or registered mail, return receipt requested or (c) sent by telecopier, addressed as follows:
                         If to the Executive: 
                                      1439 Lanes End

                                     Villanova, PA 19085

                         If to Company: 
                                      Before Merger:

                                      Conectiv

                                     800
King Street
                                      P.O Box 231

                                     Wilmington, DE
19899
                                      Attn: General
Counsel 
                                      After Merger:

                                      PEPCO Holdings
Inc.
                                      Legal Department

                                     701
Ninth St. N.W.
                                      Washington, D.C.
20068
  -7- 

                                       Attn: General
Counsel 
                         with a copy to: 
                                      Pepper Hamilton
LLP
                                      3000 Two Logan
Square
                                      18th & Arch
Streets
                                      Philadelphia, PA
19103 
                                      Attention: Susan K.
Hoffman, Esquire
                                      Fax:
215-981-4750
 or to such other address as either party may from time to time duly specify by notice given to the other party in the manner specified above.
             4.3.    Entire Agreement; Amendments . This Agreement contains the entire agreement and understanding of the parties hereto relating to the subject
matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature relating to the subject matter hereof. This Agreement may not be changed or modified, except by an Agreement in writing
signed by each of the parties hereto.
             4.4.    Waiver . Any waiver by either party of any breach of any term or
condition in this Agreement shall not operate as a waiver of any other breach of such term or condition or of any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other
provision hereof or constitute or be deemed a waiver or release of any other rights, in law or in equity.
             4.5.   
Governing Law . This Agreement shall be governed by, and enforced in accordance with, the laws of the State of Delaware without regard to the application of the principles of conflicts of laws.
             4.6.    Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other
provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained
herein.
             4.7.    Section Headings . The section headings in this Agreement are for convenience only; they form no part
of this Agreement and shall not affect its interpretation.
             4.8.    Consent to Suit; Fees . Any legal proceeding
arising out of or relating to this Agreement shall be instituted in the United States District Court for the District of Delaware, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general

-8- 

   jurisdiction in Wilmington, Delaware, and the Executive and Conectiv hereby consent to the personal and exclusive jurisdiction of such court and hereby waive any objection that the
Executive or Conectiv or the Company may have to personal jurisdiction, the laying of venue of any such proceeding and any claim or defense of inconvenient forum. In the event of any legal proceeding arising out of or relating to the enforcement or
interpretation of this Agreement, the party prevailing in such proceeding shall be entitled to payment from the other party of all reasonable attorneys’ fees, costs and disbursements incurred by the prevailing party in connection with such
proceeding.
             4.9.    Counterparts and Facsimiles . This Agreement may be executed, including execution by facsimile
signature, in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.
                         IN WITNESS WHEREOF, Conectiv has caused this Agreement to be executed by its duly authorized
officers, and the Executive has executed this Agreement, in each case as of the date first above written.

	

	 	 CONECTIV 

	 	 	By:  	/s/ Howard Cosgrove
		 	 	

	 	 	Title: 	 

	

	 	 	 JOHN C. VAN RODEN, JR. 

	 	 	   	/s/ John C. Van Roden, Jr
		 	 	

	 	 	 	 

  -9-

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