This EMPLOYMENT AGREEMENT (the" Agreement") is made as of August 1, 2002 between
PEPCO HOLDINGS, INC. (the "Company") and JAMES P. LAVIN (the "Executive").
WHEREAS, the Company desires to retain the employment of the Executive as a key member of
the Company's management team, and the Executive desires to serve the Company in such capacity; and
WHEREAS, the parties hereto desire to set forth their agreement with respect to the terms and
provisions of the Executive's employment with the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements of the parties set forth in this Agreement, and of other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. Term of this Agreement .
The Company hereby agrees to employ the Executive and the Executive hereby agrees to continue
to serve the Company, in accordance with the terms and conditions set forth herein, for a period of three
(3) years, commencing as of the date set forth above, subject, however, to earlier termination as expressly
At the expiration of the three (3) year period of employment, this contract shall expire and the
employment of Executive by the Company shall be subject to similar terms and conditions as other
similarly situated key members of the Company's management team with similar levels of responsibility as
Executive and, as such, shall continue on an at-will basis.
Any obligations of the Company or the Executive hereunder which have not been satisfied as of
the last day of the Term of this Agreement shall survive the expiration of the Term of this Agreement and
shall remain in effect until such time as all such obligations have been satisfied. No additional payments are
required by the termination of this Agreement.