EMPLOYMENT AGREEMENT

       This EMPLOYMENT AGREEMENT (the "Agreement") is made as of August 1,
2002 between PEPCO HOLDINGS, INC. (the "Company") and DENNIS R. WRAASE
(the "Executive").

                                                RECITALS:

          The Board of Directors of the Company (the "Board of Directors")
recognizes that
outstanding management of the Company is essential to advancing the best
interests of
the Company, its shareholders and its subsidiaries. The Board of Directors
believes that
it is particularly important to have stable, excellent management at the present
time. The
Board of Directors believes that this objective may be achieved by giving key
management employees assurances of financial security for a period of time, so
that they
will not be distracted by personal risks and will continue to devote their full
time and best
efforts to the performance of their duties.

          The Human Resources Committee of the Board of Directors (the
"Committee") has
recommended, and the Board of Directors has approved, entering into amended and
restated employment agreements with the Company's key management executives in
order to achieve the foregoing objectives. Accordingly, this Agreement amends,
restates
and supercedes the employment agreement previously entered into between the
Company
and the Executive, dated December 10, 1999 (the "Prior Agreement"). Upon
execution
of this Agreement, the Prior Agreement shall be of no further force or effect.
The
Executive is a key management executive of the Company and is a valuable member
of
the Company's management team. The Company acknowledges that the Executive's
contributions to the past and future growth and success of the Company have been
and
will continue to be substantial. The Company and the Executive are entering into
this
Agreement to induce the Executive to remain an employee of the Company and to
continue to devote his full energy to the Company's affairs. The Executive has
agreed to
continue to be employed by the Company under the terms and conditions
hereinafter set
forth.

          NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings contained in this Agreement, the parties agree as follows:

1.       Term of this Agreement. The term of this Agreement shall begin on the
date first
set forth above and shall end on the fifth anniversary thereof; provided,
however, that, on
such fifth anniversary, the term of this Agreement shall be automatically
extended until
the Executive's normal retirement date of April 1, 2009, unless either party
gives notice
to the other at least 6 months prior to such anniversary that the term of this
Agreement
shall not be extended (the initial 5 year term of this Agreement and, if
extended, the
extension thereof, shall hereinafter be referred to as the "Term of this
Agreement").
Notwithstanding the forgoing, if the Executive's employment is terminated during
the
Term of this Agreement and all of the Company's and the Executive's obligations
hereunder have been satisfied prior to the end of the Term of this Agreement,
this
Agreement shall expire upon satisfaction of all such obligations.

2.       Duties. The Company and the Executive agree that, while employed during
the
Term of this Agreement, the Executive will serve in a senior management position
with
the Company. The Executive (a) will devote his knowledge, skill and best efforts
on a
full-time basis to performing his duties and obligations to the Company (with
the
exception of absences on account of illness or vacation in accordance with the
Company's
policies and civic and charitable commitments not involving a conflict with the
Company's business), and (b) will comply with the directions and orders of the
Board of
Directors and Chief Executive Officer of the Company with respect to the
performance of
his duties.

3.       Affiliates. Employment by an Affiliate of the Company or a successor to
the
Company will be considered employment by the Company for purposes of this
Agreement, and the Executive's employment with the Company shall be considered
terminated only if the Executive is no longer employed by the Company or any of
its
Affiliates or successors. The term "Company" as used in this Agreement will be
deemed
to include Affiliates and successors. For purposes of this Agreement, the term
"Affiliate"
means the subsidiaries of the Company and other entities under common control
with the
Company.

4.       Compensation and Benefits.

           (a)      During the Term of this Agreement, while the Executive is
employed by the
Company, the Company will pay to the Executive the following salary and
incentive
awards for services rendered to the Company:

                      (i)     The Company will pay to the Executive an annual
salary in an amount
           not less than the base salary in effect for the Executive as of the
date on which this
           Agreement is executed (in the event the Executive's rate of annual
base salary is
           increased, such increased rate shall not be decreased during the Term
of this
           Agreement); and

                      (ii)    The Executive will be entitled to receive
incentive awards if and to the
            extent that the Board of Directors determines in good faith that the
Executive's
            performance merits payment of an award according to the terms of the
incentive
            compensation plans applicable to senior executives of the Company.

If the Executive is employed by an Affiliate or a successor (as described in
Section 3),
the term "Board of Directors" as used in this Section 4(a) and in Section 5(a)
means the
Board of Directors of the Executive's employer.

           (b)      During the Term of this Agreement, while the Executive is
employed by the
Company, the Executive will be eligible to participate in a similar manner as
other senior
executives of the Company in retirement plans, fringe benefit plans,
supplemental benefit
plans and other plans and programs provided by the Company for its executives or
employees from time to time.

5.       Termination of Employment.

          (a)       If, during the Term of this Agreement, the Company
terminates the
Executive's employment other than for Cause (as defined in Section 7), the
Company will
pay to the Executive in cash within 30 days after the Executive's termination of
employment

                     (i)     a lump sum payment equal to three (3) times the sum
of: (A) the
          highest annual base salary rate in effect for the Executive at any
time during the
          three-year period preceding employment termination, plus (B) the
highest of (1) the
          annual bonus for the year in which the termination of employment
occurs, or (2)
          the highest annual bonus received by the Executive during the three
calendar years
          preceding the calendar year in which the termination of employment
occurs; and
          any unpaid salary through the date of employment termination, unpaid
annual
          bonus for the prior year and a pro-rated portion of the annual bonus
for the year in
          which termination of employment occurs.

                     (ii)    For purposes of Sections 5(a)(i)(B)(1), 5(a)(ii),
and 5(b)(ii), the annual
          bonus for the year in which termination of employment occurs will be
the "target"
          annual bonus for such year unless, before the Executive's termination
of
          employment, the Board of Directors made a good faith final
determination of the
          amount of the Executive's actual annual bonus for such year. If the
Board of
          Directors made such a determination, the applicable award will be
computed based
          on the Board of Directors' determination, rather than on the "target"
amount for
          such year.

          (b)       If, during the Term of this Agreement, the Company
terminates the
Executive's employment other than for Cause (as defined in Section 7), the
Executive
will be entitled to receive the following additional benefits determined as of
the date of
his termination of employment:

                      (i)     Any outstanding restricted stock that would become
vested (that is,
          transferable and nonforfeitable) if the Executive remained an employee
through the
          Term of this Agreement will become vested as of the date of the
Executive's
          termination of employment (or as of the date described in the next
sentence, if
          applicable). In addition, if the Company has agreed to award the
Executive
          restricted stock at the end of a performance period, subject to the
Company's
          achievement of performance goals, and the date as of which the
restricted stock is
          to become vested falls within the Term of this Agreement, the stock
will be
          awarded and become vested at the end of the performance period if and
to the
          extent that the performance goals are met.

                      (ii)     A supplemental retirement benefit payable in cash
in a lump sum
          equal to the difference between (A) the present value of the vested
retirement
          benefits that the Executive had accrued at the time of termination of
employment
          under the Company's qualified defined benefit retirement plan (the
"Retirement
          Plan"), any excess or supplemental retirement plans in which the
Executive
          participates and/or other supplemental retirement benefits to which
the Executive is
          entitled under any contract or agreement (together, the "SERPs"),
assuming for this
          purpose that the Executive would begin receiving benefits at the first
early
          retirement date provided under the applicable plan or, if the
Executive is eligible to
          receive retirement benefits upon termination of employment under the
applicable
          plan, assuming the Executive will begin receiving benefits at the time
of
          termination of employment, and (B) the benefit the Executive would be
entitled to
          receive under the Retirement Plan and the SERPs, assuming for all such
benefit
          determinations: (1) that the Executive's Final Average Earnings are
equal to the
          Executive's annual rate of base salary in effect in accordance with
this Agreement
          immediately before the employment termination, plus the highest annual
bonus
          awarded to the Executive for the three years preceding the year in
which the
          termination occurs or, if higher, the annual bonus for the year in
which the
          termination occurs, and (2) that the Executive had reached age 62 and
had
          completed 40 years of service (or, if greater, the age and years of
service the
          Executive would have reached at the end of the Term of this Agreement
in effect at
          the time of the employment termination). For purposes of the
calculations required
          under this Section 5(b)(ii), the same actuarial assumptions that are
used under the
          Company's qualified retirement plan shall be used.

                      (iii)     The Executive will be provided any other
benefits provided to
          retirees (i.e., medical and other welfare benefits) on the same terms
as any retiree
          who has attained age 62 and completed 40 years of service (or, if
greater, the
          Executive's actual age and the actual number of years of service the
Executive had
          completed at the time of the employment termination).

                      (iv)     If the split dollar insurance arrangement between
the Company and
          the Executive is in effect at the time of the Executive's employment
termination,
          the Company shall continue to pay all premium amounts with respect to
the
          Executive's policy under the Company's split dollar insurance program
for the
          lesser of ten (10) years from the date of termination of employment or
the period of
          time remaining until the Executive's "Roll Out Qualification Date,"
(as defined in
          the split dollar program) whichever first occurs.

          (c)        If the Executive voluntarily terminates employment with the
Company
during the Term of this Agreement under circumstances described in this
subsection (c),
the Executive will be entitled to receive the benefits described in subsections
(a) and (b)
above as if the Company had terminated the Executive's employment other than for
Cause. Subject to the provisions of this subsection (c), these benefits will be
provided if
the Executive voluntarily terminates employment after (i) the Company reduces
the
Executive's base salary (except a reduction consistent and proportional with an
overall
reduction, due to extraordinary business conditions, in the compensation of all
other
senior executives of the Company), (ii) the Executive is not in good faith
considered for
incentive awards as described in Section 4(a)(ii), (iii) the Company fails to
provide
benefits as required by Section 4(b), (iv) the Company relocates the Executive's
place of
employment to a location further than 50 miles from Washington, DC, (v) the
Company
demotes the Executive to a position that is not a senior management position
(other than
on account of the Executive's disability, as defined in Section 6 below), or
(vi) the
Company notifies the Executive pursuant to Section 1 hereof that the Term of
this
Agreement shall not be extended beyond its initial five (5) year term. In order
for this
subsection (c) to be effective: (1) the Executive must give written notice to
the Company
indicating that the Executive intends to terminate employment under this
subsection (c),
(2) the Executive' s voluntary termination under this subsection must occur
within 60
days after the Executive knows or reasonably should know of an event described
in
clause (i), (ii), (iii), (iv), (v), or (vi) above, or within 60 days after the
last in a series of
such events, and (3) the Company must have failed to remedy the event described
in
clause (i), (ii), (iii), (iv), (v), or (vi), as the case may be, within 30 days
after receiving the
Executive's written notice. If the Company remedies the event described in
clause (i),
(ii), (iii), (iv), or (v), as the case may be, within 30 days after receiving
the Executive's
written notice, the Executive may not terminate employment under this subsection
(c) on
account of the event specified in the Executive's notice. Termination under the
circumstances above shall be deemed an involuntary termination without Cause for
purposes of non-qualified benefit plans.

          (d)        Notwithstanding subsection (a), (b), and (c) of this
Section 5, if the
independent public accountants for the Company (the "Accountants") determine
that if
the payments and/or benefits to be provided under subsections (a), (b), and (c)
of this
Section 5 (and/or any other payments and/or benefits provided or to be provided
to the
Executive under any applicable plan, program, agreement or arrangement
maintained,
contributed to or entered into by the Company or any group or entity whose
actions result
in a change of ownership or effective control (as those terms are defined in
Code Section
280G and regulations promulgated thereunder) or any affiliate of the Company) (a
"Payment" or collectively "Payments") were provided to the Executive (x) the
Executive
would incur an excise tax under Section 4999 of the Internal Revenue Code of
1986, as
amended (the "Code") (such excise tax, together with any interest and penalties,
are
hereinafter collectively referred to as the "Excise Tax"), and (y) the net after
tax benefits
to the Executive attributable to the Payments would not be at least $10,000
greater than
the net after tax benefits that would accrue to the Executive if the Payments
that would
otherwise cause the Executive to be subject to the Excise Tax were not provided,
the
Payments shall be reduced so that the Payments provided to the Executive are the
greatest
(as determined by the Accountants) that may be provided without any such Payment
being subject to the Excise Tax. If the Payments are to be reduced under this
subsection
5(d), the Executive shall be given the opportunity to designate which Payments
shall be
reduced and in what order of priority.

                      (i)       If the Executive receives reduced Payments
pursuant to subsection
          5(d), or if it had been determined that no such reduction was
required, but it
          nonetheless is established pursuant to the final determination of a
court or an
          Internal Revenue Service proceeding that, notwithstanding the good
faith of the
          Executive and the Company in applying the terms of subsection 5(d),
the aggregate
          Payments to the Executive would result in any Payment being subject to
the Excise
          Tax, and that a reduction pursuant to subsection 5(d) should have
occurred, then
          the Executive shall be deemed for all purposes to have received a loan
made on the
          date of the receipt of the Payments in an amount such that, after
taking into
          consideration such loan, no portion of the aggregate Payments would be
subject to
          the Excise Tax. The Executive shall have an obligation to repay such
loan to the
          Company on demand, together with interest on such amount at the
applicable
          Federal rate (as defined in Section 1274(d) of the Code) from the date
of the
          Executive's receipt of such loan until the date of such repayment.

                       (ii)     If the Executive's Payments are reduced or are
to be reduced
          pursuant to subsection 5(d), and it is determined that the Payments
were or are to
          be reduced pursuant to subsection 5(d) to a greater extent than was or
is necessary
          to avoid the Excise Tax or it is determined that the Executive's
Payments should
          not be or should not have been reduced pursuant to subsection 5(d),
then the
          Company shall promptly pay to the Executive the amount necessary so
that, after
          such adjustment, the Executive will have received or be entitled to
receive the
          maximum payments payable under this subsection 5(d), together with
interest at
          the applicable Federal rate (as defined in Section 1274(d) of the
Code) on amounts
          that were incorrectly reduced pursuant to subsection 5(d).

                       (ii)     Gross-Up Payment.

                                 (A)     Anything in this Agreement to the
contrary notwithstanding, if
                                            it shall be determined that any
Payments would be subject to
                                            the Excise Tax or any interest or
penalties are incurred, and it
                                            is determined that the Payments
should not be reduced
                                            pursuant to subsection 5(d), then
the Executive shall be
                                            entitled to receive an additional
payment (a "Gross-Up
                                            Payment") in an amount such that
after payment by the
                                            Executive of all taxes (including
any interest or penalties
                                            imposed with respect to such taxes),
including, without
                                            limitation, any income taxes,
employment taxes (and any
                                            interest and penalties imposed with
respect thereto) and
                                            Excise Taxes imposed upon the
Gross-Up Payment, the
                                            Executive retains an amount of the
Gross-Up Payment equal
                                            to the Excise Tax imposed upon the
Payments.

                                 (B)     All determinations required to be made
under this subsection
                                            5(d)(iii), including whether and
when a Gross-Up Payment is
                                            required and the amount of such
Gross-up Payment and the
                                            assumptions to be utilized in
arriving at such determination,
                                            shall be made by the Accountants,
who shall provide detailed
                                            supporting calculations both to the
Company and the
                                            Executive within 15 business days of
the receipt of notice
                                            from the Executive that there has
been a Payment, or such
                                            earlier time as is requested by the
Company. All fees and
                                            expenses of the Accountants shall be
borne solely by the
                                            Company. Any Gross-Up Payment, as
determined pursuant
                                            to this subsection 5(d)(iii), shall
be paid by the Company to
                                            the Executive within five days of
the receipt of the
                                            Accountants' determination. Any
determination made
                                            independently and in good faith by
the Accountants shall be
                                            binding upon the Company and the
Executive. As a result of
                                            the uncertainty in the application
of Sections 280G and 4999
                                            of the Code, at the time of the
initial determination by the
                                            Accountants hereunder, it is
possible that Gross-Up
                                            Payments which will not have been
made by the Company
                                            should have been made
("Underpayment") consistent with
                                            the calculations required to be made
hereunder. In the event
                                            that the Company exhausts its
remedies pursuant to
                                            subsection 5(d)(iii)(C) and the
Executive thereafter is
                                            required to make a payment of any
Excise Tax, the
                                            Accountants shall determine the
amount of the
                                            Underpayment that has occurred and
any such Underpayment
                                            shall be promptly paid by the
Company to or for the benefit
                                            of the Executive.

                                 (C)      The Executive shall notify the Company
in writing of any
                                             claim by the Internal Revenue
Service that, if successful,
                                             would require the payment by the
Company of the Gross-Up
                                             Payment. Such notification shall be
given as soon as
                                             practicable but no later than
thirty business days after the
                                             Executive is informed in writing of
such claim and shall
                                             apprise the Company of the nature
of such claim and the date
                                             on which such claim is requested to
be paid. The Executive
                                             shall not pay such claim prior to
the expiration of the 30-day
                                             period following the date on which
it gives such notice to the
                                             Company (or such shorter period
ending on the date that any
                                             payment of taxes with respect to
such claim is due). If the
                                             Company notifies the Executive in
writing prior to the
                                             expiration of such period that it
desires to contest such claim,
                                             the Executive shall:

                                             (1)    give the Company any
information reasonably
                                                      requested by the Company
relating to such claim,

                                             (2)   take such action in
connection with contesting such
                                                     claim as the Company shall
reasonably request in
                                                     writing from time to time,
including, without
                                                     limitation, accepting legal
representation with respect
                                                     to such claim by an
attorney reasonably selected by
                                                     the Company,

                                             (3)    cooperate with the Company
in good faith in order
                                                     effectively to contest such
claim, and

                                             (4)    permit the Company to
participate in any proceedings
                                                      relating to such claim;

                                             provided, however, that the Company
shall bear and pay
                                             directly all costs and expenses
(including additional interest
                                             and penalties) incurred in
connection with such contest and
                                             shall indemnify and hold the
Executive harmless, on an after-
                                             tax basis, for any Excise Tax or
income tax (including
                                             interest and penalties with respect
thereto) imposed as a
                                             result of such representation and
payment of costs and
                                             expenses. Without limitation on the
foregoing provisions of
                                             this subsection 5(d)(iii), the
Company shall control all
                                             proceedings taken in connection
with such contest and, at its
                                             sole option, may pursue or forego
any and all administrative
                                             appeals, proceedings, hearings and
conferences with the
                                             taxing authority in respect of such
claim and may, at its sole
                                             option, either direct the Executive
to pay the tax claimed and
                                             sue for a refund or contest the
claim in any permissible
                                             manner, and the Executive agrees to
prosecute such contest
                                             to a determination before any
administrative tribunal, in a
                                             court of initial jurisdiction and
in one or more appellate
                                             courts, as the Company shall
determine; provided, further,
                                             that if the Company directs the
Executive to pay such claim
                                             and sue for a refund, the Company
shall advance the amount
                                             of such payment to the Executive,
on an interest-free basis
                                             and shall indemnify and hold the
Executive harmless, on an
                                             after-tax basis, from any Excise
Tax or income tax (including
                                             interest or penalties with respect
thereto) imposed with
                                             respect to such advance or with
respect to any imputed
                                             income with respect to such
advance; and provided, further,
                                             that any extension of the statute
of limitations relating to
                                             payment of taxes for the taxable
year of the Executive with
                                             respect to which such contested
amount is claimed to be due
                                             is limited solely to such contested
amount. Furthermore, the
                                             Company's control of the contest
shall be limited to issues
                                             with respect to which a Gross-Up
Payment would be payable
                                             hereunder and the Executive shall
be entitled to settle or
                                             contest, as the case may be any
other issue raised by the
                                             Internal Revenue Service or any
other taxing authority.

                                 (D)       If, after the receipt by the
Executive of an amount advanced
                                             by the Company pursuant to
subsection 5(d)(iii)(C), the
                                             Executive becomes entitled to
receive any refund with
                                             respect to such claim, the
Executive shall (subject to the
                                             Company's complying with the
requirements of subsection
                                             5(d)(iii)) promptly pay to the
Company the amount of such
                                             refund (together with any interest
paid or credited thereon
                                             after taxes applicable thereto). If
after the receipt by the
                                             Executive of an amount advanced by
the Company pursuant
                                             to subsection 5(d)(iii), a
determination is made that the
                                             Executive shall not be entitled to
any refund with respect to
                                             such claim and the Company does not
notify the Executive in
                                             writing of its intent to contest
such denial of refund prior to
                                             the expiration of 30 days after
such determination, then such
                                             advance shall be forgiven and shall
not be required to be
                                             repaid and the amount of such
advance shall offset, to the
                                             extent thereof, the amount of
Gross-Up Payment required to
                                             be paid.

6.         Disability or Death. Upon the Executive's death or disability, the
provisions of
Sections 1, 2, 4, and 5 of this Agreement will terminate. This contract provides
no
benefits due to disability or death in addition to any death, disability and
other benefit
provided under the Company benefit plans in which the executive participates.
The
Executive shall be considered disabled if the Executive is entitled to long-term
disability
benefits under the Company's disability plan or policy.

7.         Cause. For purposes of this Agreement, the term "Cause" means (i)
intentional
fraud or material misappropriation with respect to the business or assets of the
Company,
(ii) persistent refusal or willful failure of the Executive to perform
substantially his duties
and responsibilities to the Company, other than an asserted responsibility which
would
give rise under Section 5(c) above to a right to terminate and have such
termination
considered an involuntary termination without Cause, which continues after the
Executive receives notice of such refusal or failure, (iii) conduct that
constitutes
disloyalty to the Company, and that materially damages the property, business or
reputation of the Company, or (iv) conviction of a felony involving moral
turpitude.

8.         Termination. This Agreement shall terminate upon the successful
completion of
the Term of this Agreement; provided, however, that if the Executive's
employment is
terminated during the Term of this Agreement and the Company's and the
Executive's
obligations under Sections 5, 9 or 10 hereof have not been satisfied as of the
last day of
the Term of this Agreement, such obligations 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. The Executive, if he has remained an employee during the Term of this
Agreement and has attained a minimum of age 55, shall be considered vested in
the
benefits provided under the Company's Supplemental Executive Retirement Plan,
Executive Performance Supplemental Retirement Plan and Supplemental Benefit
Plan.

9.          Fees and Expenses. The Company will pay all reasonable fees and
expenses, if
any, (including, without limitation, legal fees and expenses) that are incurred
by the
Executive to enforce this Agreement and that result from a breach of this
Agreement by
the Company, unless such fees and expenses result from a claim made by the
Executive
that is deemed by an arbitrator, mediator, or court, as applicable, to be
frivolous or made
in bad faith, in which case each party shall pay its own fees and expenses.

10.        Tax Withholding. The Company may withhold from all amounts payable
under
this Agreement an amount necessary to satisfy its income and payroll tax
withholding
obligations.

11.        Assignment. The rights and obligations of the Company under this
Agreement
will inure to the benefit of and will be binding upon the successors and assigns
of the
Company. If the Company is consolidated or merged with or into another
corporation, or
if another entity purchases all or substantially all of the Company's assets,
the surviving
or acquiring corporation will succeed to the Company's rights and obligations
under this
Agreement. The Executive's rights under this Agreement may not be assigned or
transferred in whole or in part, except that the personal representative of the
Executive's
estate will receive any amounts payable under this Agreement after the death of
the
Executive.

12.        Rights Under this Agreement. The right to receive benefits under the
Agreement
will not give the Executive any proprietary interest in the Company or any of
its assets.
Benefits under the Agreement will be payable from the general assets of the
Company,
and there will be no required funding of amounts that may become payable under
the
Agreement. The Executive will for all purposes be a general creditor of the
Company.
The interest of the Executive under the Agreement cannot be assigned,
anticipated, sold,
encumbered or pledged and will not be subject to the claims of the Executive's
creditors.

13.        Notice. For purposes of this Agreement, notices and all other
communications to
the Executive must be in writing addressed to the Executive or his personal
representative
at his last known address. All notices to the Company must be directed to the
attention of
the Chief Executive Officer. Such other addresses may be used as either party
may have
furnished to the other in writing. Notices are effective when mailed if sent by
United
States registered mail, return receipt requested, postage prepaid. Notices sent
otherwise
are effective when received. Notwithstanding the forgoing, notices of change of
address
are effective only upon receipt.

14.        Miscellaneous. To the extent not governed by federal law, this
Agreement will
be construed in accordance with the law of the State of Maryland without
reference to its
conflict of laws rules. No provisions of this Agreement may be modified, waived
or
discharged unless such waiver, modification or discharge is agreed to in writing
and the
writing is signed by the Executive and the Company. A waiver of any breach of or
compliance with any provision or condition of this Agreement is not a waiver of
similar
or dissimilar provisions or conditions. The invalidity or unenforceability of
any
provision of this Agreement will not affect the validity or enforceability of
any other
provision of this Agreement, which will remain in full force and effect. This
Agreement
may be executed in one or more counterparts, all of which will be considered one
and the
same agreement. As of the date first above written, the Prior Agreement shall be
amended, restated and superceded in its entirety and shall no longer be of any
force or
effect.

          WITNESS the following signatures.

PEPCO HOLDINGS, INC.                                              EXECUTIVE

By:   JOHN M. DERRICK, JR.                                             D. R.
WRAASE          
      Chairman of the Board and Chief                               Dennis R.
Wraase
      Executive Officer