Document:

ex10-22.htm

    Pepco Holdings,
Inc.

    

    Annual Executive Incentive
Compensation Plan

    

    Plan
Document

    

    Pepco Holdings, Inc. ("PHI"; the
"Company"), pursuant to authority granted by its Board of Directors, hereby
establishes and adopts the PHI Executive Incentive Compensation Plan (the
"Plan").

    

    1.           Purpose of the Plan.
The PHI Annual Executive Incentive Compensation Plan is a cash-based incentive
program designed to accomplish the following objectives:

    

    
      	
               
      

            	
              ·

            	
              Link
      annual corporate and business priorities and group performance
      goals.

            

    

    

    
      	
               
      

            	
              ·

            	
              Reinforce
      a high performance culture tying rewards to measurable accountabilities
      and achievement.

            

    

    

    
      	
               
      

            	
              ·

            	
              Recognize
      and reward individual performance and differentiate award levels based on
      absolute and relative
contributions.

            

    

    

    
      	
               
      

            	
              ·

            	
              Provide
      a variable award opportunity as part of total compensation that enables
      the Company to attract, retain and motivate key
  executives.

            

    

    

    2.           Definitions. The
following terms where used in this Plan, shall have the meanings set forth
below:

    

    
      	
               
      

            	
              "Award"
      shall mean an incentive payment made in accordance with the terms of this
      Plan.

            

    

    

    "Board of
Directors" or "Board" shall mean the Board of Directors of the
Company.

    

    "Business
Unit" shall mean a discrete segment of the Company which has a separate
incentive plan approved by the Committee.

    

    "Chairman"
shall mean Chairman of the Board of Directors of the Company.

    

    "Compensation/Human
Resources Committee" or "Committee" shall mean the Compensation/Human Resources
Committee of the Board of Directors of the Company.

    

    
      
         

      

      
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    "Maximum
Award Opportunity" shall mean an amount established annually for each
Participant in the Plan which represents the maximum incentive payment which may
be given under the Plan to that Participant for performance during the Plan
Year.

    

    "Participant"
shall mean an executive selected to participate in the Plan.

    

    "Performance
Goals" shall mean goals which are established for the purpose of assisting the
Chairman and the Committee in determining the amount, if any, of Awards to be
made for performance during a Plan year and may include:

    

    
      	
               
      

            	
              A.

            	
              Annual
      performance objectives for the Company as a whole ("Corporate Performance
      Goals");

            

    

    

    
      	
               
      

            	
              B.

            	
              Business
      unit performance objectives for the business units of the Company
      ("Business Unit Performance Goals");
and

            

    

    

    
      	
               
      

            	
              C.

            	
              Individual
      performance goals for individual executives participating in the Plan
      ("Individual Performance Goals").

            

    

    

    "Plan
Year" shall mean a calendar year during which the Plan is in
effect.

    

    "Target
Award Level" shall mean an amount established annually for each Participant in
the Plan which represents the incentive opportunity which may be available to
that Participant if all established Corporate, Business Unit and Individual
Performance Goals are met, expressed as a percentage of base earnings, including
deferred compensation (other than deferred Awards under the Plan).

    

    3.           Plan
Administration

    

    
      	
               
      

            	
              A.

            	
              The
      Plan shall be administered in accordance with the terms of this Plan
      Document by the Compensation/Human Resources Committee upon the
      recommendations of the Chairman. All decisions of the Committee shall be
      binding and conclusive on the Participants in the Plan, and upon any party
      claiming an interest in the Plan through or on behalf of a Participant or
      former Participant, or on any other basis. Notwithstanding any other
      provision of the Plan, the Committee shall have the discretion to adjust
      or eliminate awards within any Participant's Maximum Award Opportunity. A
      Participant's participation in the Plan shall not be deemed to create a
      contractual relationship or any other form of obligation between the
      Participant and the Company, and shall not establish entitlement to any
      Award.

            

    

    
      
         

      

      
         
2

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              B.

            	
              The
      Human Resources/Compensation Committee, upon recommendation of the
      Chairman, shall have the authority to do all such things as are
      appropriate to ensure the proper administration of this Plan according to
      its terms, including but not limited
to:

            

    

    

    (i)           Approval
of the Participants in the Plan;

    

    (ii)           Approval
of Corporate Performance Goals;

    

    (iii)           Approval
of Business Unit Performance Goals;

    

    
      	
               
      

            	
              (iv)

            	
              Approval
      of (a) Target Award Levels, (b) Maximum Award Opportunities, and (c)
      allocation of the proportion of Awards to be based on Corporate, Business
      Unit and Individual Goals;

            

    

    

    
      	
               
      

            	
              (v)

            	
              Determination
      of the Award, if any, that may be made to each Participant, such
      determination to be reported to the Board at its next regularly scheduled
      meeting after the determination is made;
and

            

    

    

    
      	
              (vi)  

            	
              Establishment
      of any policies, rules or regulations necessary for the proper
      administration of the Plan.

            

    

    

    
      	
               
      

            	
              (vii)

            	
              Establishment
      of any future service requirements which must be met as a condition to the
      full vesting of an Award.

            

    

     

    4.           Participation.
Participants in the Plan for a Plan Year shall be key executives of the Company,
selected by the Chairman and approved by the Compensation/Human Resources
Committee. The decision as to selection of participants shall normally be made
for a Plan Year prior to the beginning of that Plan Year. The Committee may,
however, upon the recommendation of the Chairman, add additional participants
during the Plan Year.

    

    If a Participant in the Plan retires,
dies or becomes disabled prior to the determination of Awards for a Plan Year,
the Participant, or his or her beneficiary, may be given an Award for that Plan
Year. If the retirement, death or disability took place during the Plan Year,
any such Award shall be made on a pro-rata basis. If a Participant's employment
is terminated for any other reason during a Plan Year, no Award shall be made to
or on behalf of that Participant for that Plan Year.

    

    At no time shall any person have a
right (i) to be selected as a Participant for any Plan Year, (ii) if so
selected, to be entitled to any Award, or (iii) having been selected
as

    
      
         

      

      
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    a
Participant for one Plan Year, to be selected as a Participant for any
subsequent Plan Year.

    

    5.           Performance
Goals.

    

    
      	
               
      

            	
              A.

            	
              Corporate Performance
      Goals. The Compensation/Human Resources Committee, upon the
      recommendation of the Chairman, shall establish in advance of each Plan
      Year Corporate Performance Goals designed to accomplish the purpose set
      forth in Section 1 of the Plan. The Committee, upon the recommendation of
      the Chairman, shall have the authority to amend Corporate Performance
      Goals at any time when, in the Committee's judgment, unforeseen
      circumstances exist which require modification in order to ensure that the
      purpose of the Plan is properly
served.

            

    

    

    
      	
               
      

            	
              B.

            	
              Business Unit
      Performance Goals. The Chairman, upon the recommendation of the
      senior officer of each of the business units of the Company shall
      establish in advance of each Plan Year Business Unit Performance Goals
      designed to accomplish the business plan of the business unit for the Plan
      Year. The Chairman, upon the recommendation of the senior officer of the
      business unit, shall have the authority to amend Business Unit Performance
      Goals at any time when, in the Chairman's judgment, unforeseen
      circumstances exist which require modification in order to ensure that the
      purpose of the Plan is properly
served.

            

    

    

    
      
        	
                 
      

              	
                C.

              	
                Individual Performance
      Goals. Individual Performance Goals for Participants in the Plan
      shall be established in advance for each Plan Year. These Goals will be
      developed mutually by the Participant and the Senior Officer to whom the
      Participant reports, and will be reviewed and approved by the Chairman.
      Individual Performance Goals shall be designed to encourage the
      accomplishment of such management objectives as are deemed appropriate in
      light of the purpose of the Plan. The Chairman and any other officer
      involved in setting Individual Performance Goals, shall ensure that they
      meet the following general criteria:

              
	 	 	 	 
	 	 	      
                (1)

              	      
                Business
      Unit and Individual Performance Goals shall not be established which
      conflict with the Corporate Performance Goals.

              
	 	 	 	 
	 	 	(2) 	Business
      Unit and Individual Performance Goals shall be considered so that the
      Goals of one Business Unit and/or Participant do not conflict
      inappropriately with the Goals of another Business Unit and/or
      Participant.

      

    

     

     

    
      
         

      

      
        4 

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              D.

            	
              Future Service
      Requirements.  The Chairman may condition any
      Participant’s right to receive all or any portion of an Award by
      establishing a future service requirement pursuant to which the
      Participant’s right to receive a designated portion of an Award will be
      forfeited if the Participant terminates employment for any reason other
      than death or disability after the Plan Year to which the Award relates
      and prior to the end of the designated service
  period.

            

    

    

    6.           Target Award Levels and
Maximum Award Opportunities. The Compensation/Human Resources Committee
shall establish in advance for each Plan Year the Target Awards Levels and
Maximum Award Opportunities applicable to Participants in the Plan. Target Award
Levels shall be expressed as a percentage of base salary including deferred
compensation (other than deferred Awards under this Plan) earned during the Plan
Year and may vary among individual Participants or among classes of
Participants. Target Award Levels may also be allocated as between Corporate
Performance Goals, Business Unit Performance Goals and Individual Performance
Goals, by Participant or by classes of Participants. Maximum Award Opportunities
shall be expressed as a percentage of Target Award Level and may vary among
individual Participants or among classes of Participants.

    

    7.           Determination of
Awards. The Compensation/Human Resources Committee shall determine the
Awards, if any, to be made for each Plan Year as soon after the end of the Plan
Year and is practicable, considering the purpose of the Plan, the Performance
Goals and Target Award Levels previously established for that Plan Year, the
actual performance of the Company and of each Business Unit and Participant
during the Plan Year, and any other factor or circumstance the Committee, in its
sole discretion determines to take into consideration.

    

    8.           Payment of Awards.
Awards determined for each Plan Year shall be paid as soon as is practicable
after both (i) such determination has been made and (ii) if applicable, any
applicable future service requirement has been satisfied.  In all
events, such Award shall be paid prior to the expiration of two and one-half
months following (i) the close of the Plan Year to which such Awards relate or
(ii) if later, the close of the Plan Year during which any applicable future
service requirement was satisfied.  Payment will be made in a lump
cash sum, except, if a Participant is otherwise eligible to participate in any
executive deferred compensation plan of the Company, the Participant may elect
to defer payment of any Award in whole or in part under the terms of that
plan.  Such election must have been exercised prior to the beginning
of the Plan Year for which the Award is made unless the Participant first became
a Participant after the beginning of the Plan Year.

     

    9.           Other Plans. Amounts
received by Participants under this Plan shall not be considered compensation
for the purpose of any other benefit plan maintained by the Company, unless the
terms of such other benefit plan so provide.

    

    
      
         

      

      
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    10.           Nothing
contained in this Plan, and no action taken hereunder, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Company and any executive, any beneficiary or any other person. To the extent
that any person acquires a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Company.

    

    11.           The
right of any Participant, beneficiary, or other person to receive benefits under
the Plan may not be assigned, transferred, pledged or encumbered except by will
or by the laws of descent and distribution, nor shall it be subject to
attachment or other legal process of whatever nature.

    

    12.           If
the Company finds that any person to whom any payment is payable under this Plan
is unable to care for his or her affairs because of illness or accident, or is a
minor, any payment due (unless a prior claim therefore shall have been made by a
fully appointed guardian, committee or other legal representative) may be paid
to the spouse, a parent, or a brother or sister, or to any person deemed by the
Company to have incurred expenses for the person who is otherwise entitled to
payment, in such manner and proportions as the Company may determine. Any such
payment will serve to discharge any liability of the Company under this Plan to
make payment to the person who is otherwise entitled to payment.

    

    13.           To
the extent required by law, the Company shall withhold federal or state income
or payroll taxes from benefit payments hereunder and shall furnish the recipient
and the applicable governmental agency or agencies with such reports, statements
or information as may be legally required in connection therewith.

    

    14.           This
Plan shall be construed in accordance with and governed by the laws of the
District of Columbia.

    

    IN WITNESS WHEREOF, the Company has
caused this restated version of the Plan to be signed on this 9th day of
February, 2009.

    

    
      	 
      	 
      	 
      	
              PEPCO
      HOLDINGS, INC.

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              By:

            	
              /s/
      D. R. WRAASE

            
	 
      	 
      	 
      	 
      	
              Chairman
      of the Board

                and
      Chief Executive Officer

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	
               /s/
      ELLEN S. ROGERS

            	 
      	 
      	 
      
	 
      	
              Secretaryex10-25.htm

    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:

    

    
      
        
        

         

      

      
         

        
          

        

      

      
         

      

    

    (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.

    
      
        
          - 2 -

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    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

     

    
      
        
          - 3 -

        

         

      

      
         

        
          

        

      

      
         

      

    

    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).

    
      
        
          - 4 -

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    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.

    
      
        
          - 5 -

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    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

    
      
        
          - 12 -

        

         

      

      
         

        
          

        

      

      
         

      

    

    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.

    

    
      
        
          - 13 -

        

         

      

      
         

        
          

        

      

      
         

      

    

    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

            

    

    

    
      
        
          - 14 -

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