EXECUTION COPY

FIRST AMENDMENT TO CREDIT AGREEMENT

           THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), is made
and entered into as of April 11, 2006 (the "Effective Date"), by and among PEPCO
HOLDINGS, INC. ("PHI"), POTOMAC ELECTRIC POWER COMPANY ("PEPCO"), DELMARVA POWER
& LIGHT COMPANY ("DPL"), ATLANTIC CITY ELECTRIC COMPANY ("ACE", and together
with PHI, PEPCO and DPL, the "Borrowers" and, each individually, a "Borrower"),
the financial institutions identified on the signature pages hereof (the
"Lenders") and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent (the
"Agent").

Statement of Purpose

           The Borrowers, the Lenders, the Agent and Citicorp USA, Inc., as
Syndication Agent, are parties to the Credit Agreement dated as of May 5, 2005
(the "Credit Agreement").

           The Borrowers have requested that the Lenders agree to amend the
Credit Agreement to (a) amend the pricing grid set forth in the Pricing
Schedule, (b) extend the current Facility Termination Date and (c) make certain
other amendments as described herein and such related amendments necessary for
such purposes. Subject to the terms and conditions of this Amendment, the Agent
and the Lenders hereby agree to the requested amendments.

           NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

           SECTION       1.        Certain Definitions. All capitalized,
undefined terms used in this Amendment shall have the meanings assigned thereto
in the Credit Agreement.

           SECTION      2.        Amendments to Credit Agreement. Effective as
of Effective Date, the Credit Agreement is hereby amended as follows:

           (a)       Existing Defined Term. The definition of "Facility
Termination Date" set forth in Section 1.1 of the Credit Agreement is hereby
amended by replacing the date "May 5, 2010" with the date "May 5, 2011".

           (b)       Pricing Schedule. The pricing grid set forth in the Pricing
Schedule is hereby amended to read in its entirety as follows:

 

Level I
Status

Level II
Status

Level III
Status

Level iv
Status

Level v
Status

Level VI
Status

Applicable Margin/LC Fee Rate

0.150%

0.190%

0.270%

0.350%

0.425%

0.525%

Facility Fee Rate

0.050%

0.060%

0.080%

0.100%

0.125%

0.175%

Utilization Fee Rate

0.050%

0.050%

0.050%

0.050%

0.100%

0.100%

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           (c)       Section 5.3 (No Conflict; Government Consent). Section 5.3
of the Credit Agreement is hereby amended to read in its entirety as follows:

   

            "5.3     No Conflict; Government Consent. Neither the execution and
delivery by such Borrower of the Loan Documents to which it is a party, nor the
consummation of the transactions therein contemplated, nor compliance with the
provisions thereof, will violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on such Borrower or any of its
Subsidiaries or (ii) such Borrower's or any of its Subsidiary's articles or
certificate of incorporation, partnership agreement, certificate of partnership,
articles or certificate of organization, bylaws, or operating or other
management agreement, as the case may be, or (iii) the provisions of any
indenture, instrument or agreement to which such Borrower or any of its
Significant Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on any
Property of such Borrower or any of its Significant Subsidiaries pursuant to the
terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority (including the Federal Energy
Regulatory Commission), or any subdivision thereof (any of the foregoing, an
"Approval"), is required to be obtained by such Borrower or any of its
Subsidiaries in connection with the execution and delivery by such Borrower of
the Loan Documents to which it is a party, the borrowings and obtaining of
Letters of Credit by such Borrower under this Agreement, the payment and
performance by such Borrower of its Obligations or the legality, validity,
binding effect or enforceability against such Borrower of any Loan Document to
which such Borrower is a party, except for such Approvals which have been issued
or obtained by such Borrower and which are in full force and effect."

   

           (d)       Section 5.17 (Public Utility Holding Company Act). Section
5.17 of the Credit Agreement is hereby amended to read in its entirety:
"Intentionally Omitted."

           SECTION      3.        Effect of Amendment. Except as expressly
amended hereby, the Credit Agreement and the other Loan Documents shall remain
in full force and effect. This Amendment shall not be deemed (i) to be a
modification or amendment of any other term or condition of the Credit Agreement
or any other Loan Document or (ii) to be a waiver of, or consent to, a
modification or amendment to any term or provision of any Loan Document
specifically consented to, waived, amended or modified by this Amendment on any
other occasion, or (iii) to prejudice any other right or rights which the
Borrowers, Agent or the Lenders may now have or may have in the future under or
in connection with the Credit Agreement or the other Loan Documents or any of
the instruments or agreements referred to therein, as the same may be amended or
modified from time to time. References in the Credit Agreement to "this
Agreement" (and indirect references such as "hereunder", "hereby", "herein", and
"hereof") and references in any Loan Document to the "Credit Agreement" shall be
deemed to be references to the Credit Agreement as modified hereby.

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           SECTION      4.        Representations and Warranties/No Default.

           (a)        Each Borrower hereby represents and warrants that (i) each
of the representations and warranties contained in Article V of the Credit
Agreement as amended hereby (with the exception of the representations and
warranties contained in Sections 5.5, 5.7 and 5.15 of the Credit Agreement) is
true and correct in all material respects as of the date hereof as if fully set
forth herein, except for any representation and warranty made as of an earlier
date, which representation and warranty shall remain true and correct in all
material respects as of such earlier date and (ii) since December 31, 2005,
there has been no change from that reflected in such Borrower's Annual Report on
Form 10-K for the year ended December 31, 2005 in the business, Property,
financial condition or results of operations of such Borrower and its
Subsidiaries taken as a whole which could reasonably be expected to have a
Material Adverse Effect with respect to such Borrower.

           (b)        Each Borrower hereby represents and warrants that it has
the right, power and authority and has taken all necessary corporate and company
action to authorize the execution, delivery and performance of this Amendment.

           (c)        Each Borrower hereby represents and warrants that this
Amendment has been duly executed and delivered by its duly authorized officer,
and this Amendment constitutes the legal, valid and binding obligation of such
Borrower, enforceable in accordance with its terms except as such enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.

           (d)        Each Institution hereby represents to the Agent that it
has, independently and without reliance upon the Agent or any other Institution,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, Property,
financial and other condition and creditworthiness of the Borrowers and made its
own decision to enter into this Amendment.

           SECTION      5.        Governing Law. This Amendment shall be
governed by, construed and enforced in accordance with the internal laws
(including Section 5.1401.7 of the General Obligations Law, but otherwise
without regard to the conflict of laws provisions thereof) of the State of New
York, but giving effect to Federal laws applicable to national banks.

           SECTION      6.        Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.

           SECTION      7.        Fax Transmission. A facsimile, telecopy or
other reproduction of this Amendment may be executed by one or more parties
hereto, and an executed copy of this Amendment may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen,  and  such  execution  and  delivery  shall  be  considered  valid,  binding  and  effective  for
all

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purposes. At the request of any party hereto, all parties hereto agree to
execute an original of this Amendment as well as any facsimile, telecopy or
other reproduction hereof.

[Signature Pages Follow]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date and year first above written.  

BORROWERS

:  

PEPCO HOLDINGS, INC.

 

By:

 /s/ KAREN G. ALMQUIST                

Name:  Karen G. Almquist
Title:    Assistant Treasurer  

POTOMAC ELECTRIC POWER COMPANY

 

By:

 /s/ KAREN G. ALMQUIST                

Name:  Karen G. Almquist
Title:    Assistant Treasurer  

DELMARVA POWER & LIGHT COMPANY

 

By:

 /s/ KAREN G. ALMQUIST                

Name:  Karen G. Almquist
Title:    Assistant Treasurer  

ATLANTIC CITY ELECTRIC COMPANY

 

By:

 /s/ KAREN G. ALMQUIST                

Name:  Karen G. Almquist
Title:    Assistant Treasurer

[First Amendment - Pepco Credit Agreement]

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AGENTS AND LENDERS

:  

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent, Issuer and Lender

 

By: /s/ SHANNON TOWNSEND          
       Name:  Shannon Townsend
       Title:    Director

[First Amendment - Pepco Credit Agreement]

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CITICORP USA, INC., as Syndication Agent and Lender

 

By: /s/ KEVIN EGE                                     
       Name: Kevin Ege
       Title:   Vice President

[First Amendment - Pepco Credit Agreement]

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THE ROYAL BANK OF SCOTLAND, PLC,
as Documentation Agent and Lender

 

By: /s/ EMILY FREEDMAN                           
       Name: Emily Freedman
       Title:  Vice President

[First Amendment - Pepco Credit Agreement]

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THE BANK OF NOVA SCOTIA, as Documentation Agent and Lender

 

By: /s/ THANE RATTEW                  
       Name: Thane Rattew
       Title:  Managing Director

[First Amendment - Pepco Credit Agreement]

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JPMORGANCHASE BANK, N.A.,
as Documentation Agent and Lender

 

By: /s/ GABRIEL J. SIMON  4/10/06  
       Name: Gabriel J. Simon
       Title:   Underwriter

[First Amendment - Pepco Credit Agreement]

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KEYBANK NATIONAL ASSOCIATION, as Lender

 

By: /s/ SHERRIE I. MANSON               
       Name: Sherrie I. Manson
       Title:   Senior Vice President

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MERRILL LYNCH BANK USA, as Lender

 

By: /s/ LOUIS ALDER                
       Name: Louis Alder
       Title:   Director

[First Amendment - Pepco Credit Agreement]

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SUNTRUST BANK, as Lender

 

By: /s/ MARK A. FLATIN          
       Name: Mark A. Flatin
       Title:  Managing Director

[First Amendment - Pepco Credit Agreement]

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CREDIT SUISSE, Cayman Islands Branch, as Lender

 

By: /s/ CALDWELL                    
       Name: Brian T. Caldwell
       Title:  Director

 

By:   /s/ GR                                            
        Name: Gregory S. Richards
        Title:   Associate

[First Amendment - Pepco Credit Agreement]

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MIZUHO CORPORATE BANK, LTD., as Lender

 

By: /s/ MAKOTO MURATA         
       Name: Makoto Murata
       Title:  Deputy General Manager

[First Amendment - Pepco Credit Agreement]

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BANK OF TOKYO-MITSUBISHI TRUST
COMPANY, as Lender

 

By: /s/ MARY COSEO                    
       Name: Mary Coseo
       Title:  Assistant Vice President

[First Amendment - Pepco Credit Agreement]

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THE BANK OF NEW YORK, as Lender

 

By: /s/ JOHN WATT                             
       Name: John N. Watt
       Title:  Vice President

[First Amendment - Pepco Credit Agreement]

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MORGAN STANLEY BANK, as Lender

 

By: /s/ DANIEL TWENGE        
       Name: Daniel Twenge
       Title:  Vice President
               Morgan Stanley Bank

[First Amendment - Pepco Credit Agreement]

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MANUFACTURERS AND TRADERS TRUST COMPANY, as Lender

 

By: /s/ JOHN H> LEWIS                 
       Name: John H. Lewis
       Title:  Vice President

[First Amendment - Pepco Credit Agreement]

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THE NORTHERN TRUST COMPANY, as Lender

 

By: /s/ MICHAEL J. KINGSLEY         
       Name: Michael J. Kingsley
       Title:  Vice President

[First Amendment - Pepco Credit Agreement]

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PNC BANK, NATIONAL ASSOCIATION, as Lender

 

By: /s/ CHRISTINE E. WHITNEY              
       Name: Christine E. Whitney
       Title:  Vice President

[First Amendment - Pepco Credit Agreement]

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