$390,000,000
CREDIT AGREEMENT





BY AND
AMONG





PEPCO
HOLDINGS, INC.





as
Borrower





and





THE
LENDERS PARTY HERETO





and





BANK OF
AMERICA, N.A.





as
Administrative Agent and Swingline Lender








BANC OF
AMERICA SECURITIES LLC,





as Sole
Lead Arranger and Sole Book Runner





KEYBANK
NATIONAL ASSOCIATION


JPMORGAN
CHASE BANK, N.A.


SUNTRUST
BANK


THE BANK
OF NOVA SCOTIA


MORGAN
STANLEY BANK


CREDIT
SUISSE, CAYMAN ISLANDS BRANCH


WACHOVIA
BANK, NATIONAL ASSOCIATION





as
Co-Documentation Agents








Dated as
of November 7, 2008








TABLE
      OF CONTENTSPageARTICLE
      I DEFINITIONS
            11.1
            Definitions
            11.2
            Interpretation
            121.3
            Accounting
            12ARTICLE
      II THE LOANS
            132.1
            Commitments
            132.2
            Increase
      in Commitments
            152.3
            Required
      Payments; Termination
            152.4
            [Intentionally
      Omitted.]
            152.5
            Ratable
      Loans
            152.6
            Types
      of Advances
            152.7
            Commitment
      Fee; Reductions in Aggregate Commitment
            162.8
            Minimum
      Amount of Each Advance
            162.9
            Prepayments
            162.10
            Method
      of Selecting Types and Interest Periods for New Advances
            162.11
            Conversion
      and Continuation of Outstanding Advances
            172.12
            Changes
      in Interest Rate, etc.
            182.13
            Rates
      Applicable After Default
            182.14
            Method
      of Payment
            182.15
            Noteless
      Agreement; Evidence of Indebtedness
            182.16
            Telephonic
      Notices
            192.17
            Interest
      Payment Dates; Interest and Fee Basis
            192.18
            Notification
      of Advances, Interest Rates, Prepayments and Commitment
      Reductions
            192.19
            Lending
      Installations
            202.20
            Non-Receipt
      of Funds by the Agent
            20ARTICLE
      III YIELD PROTECTION; TAXES
            203.1
            Yield
      Protection
            203.2
            Changes
      in Capital Adequacy Regulations
            213.3
            Availability
      of Types of Advances
            213.4
            Funding
      Indemnification
            213.5
            Taxes
            223.6
            Mitigation
      of Circumstances; Lender Statements; Survival of Indemnity
            233.7
            Replacement
      of Lender
            24ARTICLE
      IV CONDITIONS PRECEDENT
            244.1
            Conditions
      Precedent to Closing and Borrowing
            244.2
            Each
      Credit Extension
            25ARTICLE
      V REPRESENTATIONS AND WARRANTIES
            255.1
            Existence
      and Standing
            255.2
            Authorization
      and Validity
            255.3
            No
      Conflict; Government Consent
            265.4
            Financial
      Statements
            265.5
            No
      Material Adverse Change
            265.6
            Taxes
            265.7
            Litigation
      and Contingent Obligations
            265.8
            Significant
      Subsidiaries
            265.9
            ERISA
            275.10
            Accuracy
      of Information
            27





i





5.11
            Regulation
      U
            275.12
            Material
      Agreements
            275.13
            Compliance
      With Laws
            275.14
            Plan
      Assets; Prohibited Transactions
            275.15
            Environmental
      Matters
            275.16
            Investment
      Company Act
            275.17
            Insurance
            285.18
            No
      Default
            285.19
            Ownership
      of Properties
            285.20
            OFAC
            28ARTICLE
      VI COVENANTS
            286.1
            Financial
      Reporting
            286.2
            Use
      of Proceeds
            306.3
            Notice
      of Default
            306.4
            Conduct
      of Business
            306.5
            Taxes
            306.6
            Insurance
            306.7
            Compliance
      with Laws
            306.8
            Maintenance
      of Properties
            316.9
            Inspection
            316.10
            Merger
            316.11
            Sales
      of Assets
            316.12
            Liens
            326.13
            Leverage
      Ratio
            34ARTICLE
      VII DEFAULTS
            347.1
            Representation
      or Warranty
            347.2
            Nonpayment
            347.3
            Certain
      Covenant Breaches
            347.4
            Other
      Breaches
            347.5
            Cross
      Default
            347.6
            Voluntary
      Bankruptcy, etc.
            357.7
            Involuntary
      Bankruptcy, etc.
            357.8
            Seizure
      of Property, etc.
            357.9
            Judgments
            357.10
            ERISA
            357.11
            Unenforceability
      of Loan Documents
            367.12
            Change
      in Control
            36ARTICLE
      VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
            368.1
            Acceleration
            368.2
            Amendments
            368.3
            Preservation
      of Rights
            37ARTICLE
      IX GENERAL PROVISIONS
            379.1
            Survival
      of Representations
            379.2
            Governmental
      Regulation
            379.3
            Headings
            379.4
            Entire
      Agreement
            379.5
            Several
      Obligations; Benefits of this Agreement
            379.6
            Expenses;
      Indemnification
            379.7
            Numbers
      of Documents
            389.8
            Disclosure
            389.9
            Severability
      of Provisions
            38





ii





9.10
            Nonliability
      of Lenders
            389.11
            Limited
      Disclosure
            399.12
            Nonreliance
            399.13
            USA
      PATRIOT ACT NOTIFICATION
            399.14
            Interest
      Rate Limitation
            39ARTICLE
      X THE AGENT
            4010.1
            Appointment;
      Nature of Relationship
            4010.2
            Powers
            4010.3
            General
      Immunity
            4010.4
            No
      Responsibility for Loans Recitals etc.
            4110.5
            Action
      on Instructions of Lenders
            4110.6
            Employment
      of Agents and Counsel
            4110.7
            Reliance
      on Documents; Counsel
            4110.8
            Agent’s
      Reimbursement and Indemnification
            4110.9
            Notice
      of Default
            4210.10
            Rights
      as a Lender
            4210.11
            Lender
      Credit Decision
            4210.12
            Successor
      Agent
            4210.13
            Agent’s
      Fee
            4310.14
            Delegation
      to Affiliates
            4310.15
            Other
      Agents
            43ARTICLE
      XI SETOFF; RATABLE PAYMENTS
            4311.1
            Setoff
            4311.2
            Ratable
      Payments
            44ARTICLE
      XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
            4412.1
            Successors
      and Assigns
            4412.2
            Participations
            4512.3
            Assignments
            4512.4
            Dissemination
      of Information
            4612.5
            Grant
      of Funding Option to SPC
            4612.6
            Tax
      Treatment
            47ARTICLE
      XIII NOTICES
            4712.1
            Notices
            47ARTICLE
      XIV COUNTERPARTS
            48ARTICLE
      XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
      TRIAL
            4815.1
            CHOICE
      OF LAW
            4815.2
            CONSENT
      TO JURISDICTION
            4915.3
            WAIVER
      OF JURY TRIAL;SERVICE OF PROCESS
            49





EXHIBITS
  EXHIBIT
      A
            COMPLIANCE
      CERTIFICATEEXHIBIT
      B
            ASSIGNMENT
      AGREEMENTEXHIBIT
      C
            NOTEEXHIBIT
      D
            FORM
      OF INCREASE NOTICE




SCHEDULES


SCHEDULE
      1
            PRICING
      SCHEDULESCHEDULE
      2
            COMMITMENTS
      AND PRO RATA SHARESSCHEDULE
      3
            SIGNIFICANT
      SUBSIDIARIESSCHEDULE
      4
            LIENS


iii


CREDIT
AGREEMENT





This
CREDIT AGREEMENT, dated as of November 7, 2008, is by and among Pepco Holdings,
Inc. (the “Borrower”), the Lenders (defined herein) and Bank of America N.A., as
administrative agent.





RECITALS





WHEREAS,
Borrower has requested and the Lenders have agreed to make available to
Borrower, on an unsecured basis, a revolving credit facility in the initial
principal amount of $390,000,000, upon the terms and conditions set forth
herein, for the purpose of supporting commercial paper obligations and other
general corporate purposes of Borrower.





NOW
THEREFORE, the parties hereto, intending to be legally bound, hereby agree as
follows:




ARTICLE
I


DEFINITIONS





1.1           Definitions.  As
used in this Agreement:





“ACE” means Atlantic
City Electric Company.





“Administrative
Questionnaire” means an administrative questionnaire, substantially in
the form supplied by the Agent, completed by a Lender and furnished to the Agent
in connection with this Agreement.





“Advance” means a
borrowing hereunder (i) made by the Lenders on the same Borrowing Date or (ii)
converted or continued by the Lenders on the same date of conversion or
continuation, consisting, in either case, of the aggregate amount of the several
Revolving Loans of the same Type and, in the case of Eurodollar Loans, for the
same Interest Period.  “Advance” shall
include the borrowing of Swingline Loans.





“Affected Lender” is
defined in Section
3.7.





“Affiliate” of any
Person means any other Person directly or indirectly controlling, controlled by
or under common control with such Person.  A Person shall be deemed to
control another Person if the controlling Person owns 10% or more of any class
of voting securities (or other ownership interests) of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of stock, by contract or otherwise.  For purposes of Section 5.20, no
person shall be an “Affiliate” of Borrower solely by reason of owning less than
a majority of any class of voting securities of Borrower.





“Agent” means Bank of
America in its capacity as contractual representative of the Lenders pursuant to
Article X, and
not in its individual capacity as a Lender, and any successor Agent appointed
pursuant to Article
X.





“Aggregate Commitment”
means the aggregate of the Commitments of all the Lenders, (a) as increased from
time to time pursuant to Section 2.2 or
(b) as reduced from time to time pursuant to the terms hereof.





1


“Agreement” means this
Credit Agreement as amended, restated, supplemented or otherwise modified from
time to time.





“Agreement Accounting
Principles” means generally accepted accounting principles as in effect
from time to time, applied, with respect to Borrower, in a manner consistent
with that used in preparing Borrower’s financial statements referred to in Section
5.4.





“Alternate Base Rate”
means, for any day, a rate of interest per annum equal to (a) the highest of (i)
the Prime Rate for such day, (ii) the sum of the Federal Funds Effective Rate
for such day plus 0.5% and (iii) one month Eurodollar Base Rate plus 1.0% plus (b) the
Applicable Margin.





“Applicable Governmental
Authorities” means, with respect to Borrower, the SEC or any other
federal or state governmental authority that has the power to regulate the
amount, terms or conditions of short-term debt of Borrower.





“Applicable Margin”
means, with respect to Eurodollar Advances or Floating Rate Advances, as
applicable, to Borrower at any time, the percentage rate per annum which is
applicable at such time with respect to Eurodollar Advances or Floating Rate
Advances, as applicable, to Borrower in accordance with the provisions of the
Pricing
Schedule.





“Arranger” means Banc
of America Securities LLC and its successors, in its capacity as sole lead
arranger and book runner.





“Assignment Agreement”
means an agreement substantially in the form of Exhibit
B.





“Authorized Officer”
means any of the President, any Senior Vice President, any Vice President, the
Chief Financial Officer, the Treasurer or any Assistant Treasurer of Borrower,
acting singly.  Any document delivered hereunder that is signed by an
Authorized Officer shall be conclusively presumed to have been authorized by all
necessary corporate and/or other action on the part of the Borrower and such
Authorized Officer shall be conclusively presumed to have acted on behalf of the
Borrower.





“Bank of America”
means Bank of America, N.A., a national banking association, and its
successors.





“Borrower” is defined
in the preamble.





“Borrowing Date” means
a date on which an Advance is made hereunder.





“Borrowing Notice” is
defined in Section
2.10.





“Business Day” means
(i) with respect to any borrowing, payment or rate selection of Eurodollar
Advances, a day (other than a Saturday or Sunday) on which banks generally are
open in New York, New York for the conduct of substantially all of their
commercial lending activities, interbank wire transfers can be made on the
Fedwire system and dealings in United States dollars are carried on in the
London interbank market and (ii) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in New York, New York for
the conduct of substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.





“Capitalized Lease” of
a Person means any lease of Property by such Person as lessee which would be
capitalized on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.


2





“Capitalized Lease
Obligations” of a Person means the amount of the obligations of such
Person under Capitalized Leases which would be shown as a liability on a balance
sheet of such Person prepared in accordance with Agreement Accounting
Principles.





“Change in Control”
means an event or series of events by which (a) any Person, or two or more
Persons acting in concert, acquire beneficial ownership (within the meaning of
Rule 13d-3 of the SEC under the Securities Exchange Act of 1934) of 30% or more
(by number of votes) of the outstanding shares of Voting Stock of Borrower; or
(b) individuals who on the Closing Date were directors of Borrower (the “Approved Directors”)
shall cease for any reason to constitute a majority of the board of directors of
Borrower; provided that any
individual becoming a member of such board of directors subsequent to such date
whose election or nomination for election by Borrower’s shareholders was
approved by a majority of the Approved Directors shall be deemed to be an
Approved Director, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors by any Person, or two or more Persons acting in concert, other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors.





“Closing Date” means
the date hereof.





“Code” means the
Internal Revenue Code of 1986.





“Commitment” means,
for each Lender, the obligation of such Lender to make Revolving Loans and to
participate in Swingline Loans, in an aggregate amount not exceeding the amount
set forth on Schedule
2 or as set forth in any Assignment Agreement relating to any assignment
that has become effective pursuant to Section 12.3(ii), as
such amount may be modified from time to time pursuant to the terms
hereof.





“Commitment Fee Rate”
means, at any time, the “Commitment Fee Rate”
applicable at such time in accordance with the provisions of the Pricing
Schedule.





“Contingent
Obligation” of a Person means any agreement, undertaking or arrangement
by which such Person assumes, guarantees, endorses, contingently agrees to
purchase or provide funds for the payment of, or otherwise becomes or is
contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including any comfort letter, operating agreement, take or pay
contract, application for a letter of credit or the obligations of any such
Person as general partner of a partnership with respect to the liabilities of
such partnership; provided that
Contingent Obligations shall not include endorsements of instruments for deposit
or collection in the ordinary course of business.  The amount of any
Contingent Obligation shall be deemed equal to the stated or determinable amount
of the primary obligation of such other Person or, if such amount is not stated
or is indeterminable, the maximum reasonably anticipated liability of such
Person in respect thereof.





“Controlled Group”
means all members of a controlled group of corporations or other business
entities and all trades or businesses (whether or not incorporated) under common
control which, together with Borrower or any of its Subsidiaries, are treated as
a single employer under Section 414 of the Code.





“Conversion/Continuation
Notice” is defined in Section
2.11.





“Credit Extension”
means the making of an Advance.


3





“Default” means an
event described in Article
VII.





“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Loans or
participations in Swingline Loans required to be funded by it hereunder within
one Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute, or (c) has been deemed
insolvent or become the subject of a bankruptcy or insolvency
proceeding.





“DPL” means Delmarva
Power & Light Company.





“Environmental Laws”
means any and all federal, state, local and foreign statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments, orders, decrees, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to (i) the protection of the
environment, (ii) the effect of the environment on human health, (iii)
emissions, discharges or releases of pollutants, contaminants, hazardous
substances or wastes into surface water, ground water or land, or (iv) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.





“ERISA” means the
Employee Retirement Income Security Act of 1974.





“Eurodollar Advance”
means an Advance which, except as otherwise provided in Section 2.13, bears
interest at the applicable Eurodollar Rate or, if such Advance is a Swingline
Loan, the Eurodollar Market Index Rate.





“Eurodollar Base Rate”
means, with respect to a Eurodollar Advance for the relevant Interest Period,
the applicable British Bankers’ Association Interest Settlement Rate for
deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period,
and having a maturity equal to such Interest Period, provided that (i) if
Reuters Screen FRBD is not available to the Agent for any reason, the applicable
Eurodollar Base Rate for the relevant Interest Period shall instead be the
applicable British Bankers’ Association Interest Settlement Rate for deposits in
U.S. dollars as reported by any other generally recognized financial information
service as of 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period, and having a maturity equal to such Interest Period,
and (ii) if no such British Bankers’ Association Interest Settlement Rate is
available to the Agent, the applicable Eurodollar Base Rate for the relevant
Interest Period shall instead be the rate determined by the Agent to be the rate
at which Bank of America or one of its Affiliate banks offers to place deposits
in U.S. dollars with first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period, in the approximate amount of Bank of America’s relevant
Eurodollar Loan and having a maturity equal to such Interest
Period.





“Eurodollar Loan”
means a Loan which, except as otherwise provided in Section 2.13, bears
interest at the applicable Eurodollar Rate or, if such Loan is a Swingline Loan,
the Eurodollar Market Index Rate.





“Eurodollar Market Index
Rate” means, with respect to a Swingline Loan, for any day, the sum of
(i) the quotient of (a) the Eurodollar Base Rate on such day for an Interest
Period of one (1) month, divided by (b) one
minus the Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (ii) the
Applicable Margin.


4





“Eurodollar Rate”
means, with respect to a Eurodollar Advance (other than a Swingline Loan) for
the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar
Base Rate applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Interest Period,
plus (ii) the Applicable Margin.





“Excluded Taxes”
means, in the case of each Lender or applicable Lending Installation, the
Swingline Lender and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Lender, the Swingline Lender or the Agent is incorporated or organized or
(ii) the jurisdiction in which such Lender’s, the Swingline Lender’s or the
Agent’s principal executive office or such Lender’s applicable Lending
Installation is located.





“Facility Termination
Date” means November 6, 2009, or any earlier date on which the Aggregate
Commitment is reduced to zero or the obligations of the Lenders to make Credit
Extensions to Borrower is terminated pursuant to Section
8.1.





“Federal Funds Effective
Rate” means, for any day, an interest rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 11:00 a.m. on such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent in its sole discretion.





“FERC” means the
Federal Energy Regulatory Commission.





“Floating Rate
Advance” means an Advance which, except as otherwise provided in Section 2.13, bears
interest at the Alternate Base Rate.





“Floating Rate Loan”
means a Loan which, except as otherwise provided in Section 2.13, bears
interest at the Alternate Base Rate.





“FRB” means the Board
of Governors of the Federal Reserve System and any successor
thereto.





“Granting Lender” is
defined in Section
12.5.





“Hybrid Securities”
means any trust preferred securities, or deferrable interest subordinated debt
with a maturity of at least 20 years, which provides for the optional or
mandatory deferral of interest or distributions, issued by Borrower, or any
business trusts, limited liability companies, limited partnerships or similar
entities (i) substantially all of the common equity, general partner or similar
interest of which are owned (either directly or indirectly through one or more
wholly owned Subsidiaries) at all times by Borrower or any of its Subsidiaries,
(ii) that have been formed for the purpose of issuing hybrid securities or
deferrable interest subordinated debt, and (iii) substantially all the assets of
which consist of (A) subordinated debt of Borrower or a Subsidiary of Borrower,
and (B) payments made from time to time on the subordinated debt.





“Impacted Lender”
means any Lender as to which (a) Agent has a good faith belief that the Lender
has defaulted in fulfilling its obligations under one or more other syndicated
credit facilities or (b) an entity that controls the Lender has been deemed
insolvent or become subject to a bankruptcy or other similar
proceeding.





5


“Increase Notice” is
defined in Section
2.2.





“Indebtedness” of a
Person means, without duplication, such Person’s (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person’s business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, bonds, debentures, acceptances or
similar instruments, (v) obligations of such Person to purchase accounts,
securities or other Property arising out of or in connection with the sale of
the same or substantially similar accounts, securities or Property, (vi)
Capitalized Lease Obligations, (vii) net liabilities under interest rate swap,
exchange or cap agreements, obligations or other liabilities with respect to
accounts or notes, (viii) obligations under any Synthetic Lease which, if such
Synthetic Lease were accounted for as a Capitalized Lease, would appear on a
balance sheet of such Person, (ix) unpaid reimbursement obligations in respect
of letters of credit issued for the account of such Person and (x) Contingent
Obligations in respect of Indebtedness of the types described
above.





“Intangible Transition
Property” means assets described as “bondable transition
property” in the New Jersey Transition Bond Statute.





“Interest Period”
means, with respect to a Eurodollar Advance (other than a Swingline Loan), a
period of one, two, three or six months commencing on a Business Day selected by
Borrower for an Advance pursuant to this Agreement; provided, that with respect
to any period during the period commencing September 1, 2009 and ending on the
Facility Termination Date, Borrower may select a period of one or two weeks, if
available, commencing on a Business Day selected by Borrower for an Advance
pursuant to this Agreement.  Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided that if
there is no such numerically corresponding day in such next, second, third or
sixth succeeding month, such Interest Period shall end on the last Business Day
of such next, second, third or sixth succeeding month.  If an Interest
Period would otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next succeeding Business Day, provided that if said
next succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.  Borrower may not
select an Interest Period which ends after the scheduled Facility Termination
Date.





“Lenders” means each
of the Persons identified as a “Lender” on the signature pages hereto and their
successors and assigns and, as the context requires, the Swingline
Lender.





“Lending Installation”
means, with respect to a Lender, the office, branch, subsidiary or affiliate of
such Lender specified as such in its Administrative Questionnaire or otherwise
selected by such Lender pursuant to Section
2.19.





“Lien” means any lien
(statutory or other), mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including the
interest of a vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement, but excluding the interest of a lessor under
any operating lease).





“Loans” means the
collective reference to the Revolving Loans and the Swingline
Loans.





“Loan Documents” means
this Agreement and the Notes.





6


“Material Adverse
Effect” means, with respect to Borrower, a material adverse effect on (i)
the business, Property, financial condition or results of operations of Borrower
and its Subsidiaries taken as a whole, (ii) the ability of Borrower to perform
its obligations under the Loan Documents or (iii) the validity or enforceability
of any of the Loan Documents or the rights or remedies of the Agent, the
Swingline Lender or the Lenders against Borrower thereunder; provided that in no
event shall any Permitted PEPCO Asset Sale, Permitted ACE Asset Sale, Permitted
PHI Asset Sale, or Permitted DPL Asset Sale, individually or in the aggregate,
be deemed to cause or result in a Material Adverse Effect.





“Material
Indebtedness” is defined in Section
7.5.





“Maturity Date” means,
the Facility Termination Date or such earlier date on which the Obligations of
Borrower become due and payable pursuant to Section
8.1.





“Moody’s” means
Moody’s Investors Service, Inc.





“Multiemployer Plan”
means a Plan maintained pursuant to a collective bargaining agreement or any
other arrangement to which Borrower or any other member of the Controlled Group
is a party to which more than one employer is obligated to make
contributions.





“Net Worth” means, at
any time, the sum, without duplication, at such time of (a) Borrower’s
stockholders’ equity plus (b) all Preferred Stock of Borrower (excluding any
Preferred Stock which is mandatorily redeemable on or prior to the scheduled
Facility Termination Date).





“New Jersey Transition Bond
Statute” means the New Jersey Electric Discount and Energy Corporation
Act as in effect on the date hereof.





“Nonrecourse
Indebtedness” means, with respect to Borrower, Indebtedness of Borrower
or any Subsidiary of Borrower (excluding Nonrecourse Transition Bond Debt)
secured by a Lien on the Property of Borrower or such Subsidiary, as the case
may be, the sole recourse for the payment of which is such Property and where
neither Borrower nor any of its Subsidiaries is liable for any deficiency after
the application of the proceeds of such Property.





“Nonrecourse Transition Bond
Debt” means obligations evidenced by Transition Bonds rated investment
grade or better by S&P or Moody’s, representing a securitization of
Intangible Transition Property as to which obligations Borrower or any
Subsidiary of a Borrower (other than a Special Purpose Subsidiary) has no direct
or indirect liability (whether as primary obligor, guarantor, surety, provider
of collateral security, through a put option, asset repurchase agreement,
capital maintenance agreement or debt subordination agreement, or through any
other right or arrangement of any nature providing direct or indirect assurance
of payment or performance of any such obligation in whole or in part), except
for liability to repurchase Intangible Transition Property conveyed to the
securitization vehicle, on terms and conditions customary in receivables
securitizations, in the event such Intangible Transition Property violates
representations and warranties of scope customary in receivables
securitizations.





“Non-U.S. Lender” is
defined in Section
3.5(iv).





“Note” means any
promissory note substantially in the form of Exhibit C issued at
the request of a Lender or the Swingline Lender pursuant to Section
2.15.





“Obligations” means
all unpaid principal of the Loans, all accrued and unpaid interest on such
Loans, all accrued and unpaid fees payable by Borrower and all expenses,
reimbursements, indemnities


7


and other
obligations payable by Borrower to the Agent, the Swingline Lender, any other
Lender or any other Indemnified Party arising under any Loan
Document.





“OFAC” means the U.S.
Department of the Treasury’s Office of Foreign Assets Control.





“Other Taxes” is
defined in Section
3.5(ii).





“Outstanding Credit
Extensions” means, with respect to Borrower, the sum of the aggregate
principal amount of all outstanding Loans to Borrower.





“Participants” is
defined in Section
12.2(i).





“Payment Date” means
the last Business Day of each March, June, September and December.





“PBGC” means the
Pension Benefit Guaranty Corporation, or any successor thereto.





“PCI” means Potomac
Capital Investment Corporation.





“PEPCO” means Potomac
Electric Power Company.





“Permitted ACE Asset
Sale” means the sale of the capital stock or assets of any Subsidiary of
ACE other than a Significant Subsidiary of ACE, provided that the
fair market value of all such sales shall not exceed $10,000,000 in the
aggregate during the term of this Agreement.





“Permitted ACE Liens”
means the Lien of the Mortgage and Deed of Trust dated January 15, 1937
between ACE and The Bank of New York Mellon.





“Permitted DPL Asset
Sale” means the sale of the capital stock or assets of any Subsidiary of
DPL other than a Significant Subsidiary of DPL, provided that the
fair market value of all such sales shall not exceed $10,000,000 in the
aggregate during the term of this Agreement.





“Permitted DPL Liens”
means the Lien of the Mortgage and Deed of Trust dated October 1, 1943
between DPL and Bank of New York Mellon Trust Company (formerly known as The
Chase Manhattan Bank), as trustee.





“Permitted PEPCO
Liens” means (a) the Lien of the Mortgage and Deed of Trust dated
July 1, 1936 from PEPCO to The Bank of New York Mellon; and (b) the Lien
created by the $152,000,000 sale/leaseback on November 30, 1994 of PEPCO’s
control center.





“Permitted PEPCO Asset
Sale” means the sale of the capital stock or assets of any Subsidiary of
PEPCO other than a Significant Subsidiary of PEPCO, provided that the
fair market value of all such sales shall not exceed $10,000,000 in the
aggregate during the term of this Agreement.





“Permitted PHI Asset
Sale” means the sale of (a) the centralized steam and chilled water
production facility located on an approximately three-quarter acre site on the
northeastern corner of the intersection of Atlantic and Ohio Avenues in Atlantic
City, New Jersey and related distribution facilities; (b) ownership interests in
cross-border leveraged leases and related assets owned by PCI and its
Subsidiaries in an aggregate amount not exceeding a book value of $200,000,000;
and (c) any Permitted ACE Asset Sale, Permitted DPL Asset Sale or Permitted
PEPCO Asset Sale.





8


“Permitted PHI Liens”
means (a) Liens on assets of Conectiv Energy Supply, Inc. or any other
Subsidiary of Borrower (other than ACE, DPL or PEPCO or any Subsidiary thereof)
which is engaged primarily in the energy trading business (a “Trading Subsidiary”)
to secure obligations arising under energy trading agreements entered into in
the ordinary course of business consistent with the past practice of DPL prior
to September of 1999 and Liens on cash collateral to secure guaranties by
Borrower of the obligations of any Trading Subsidiary under such energy trading
agreements, provided that the
aggregate amount of all such cash collateral granted by Borrower shall not at
any time exceed $100,000,000; (b) Liens on the interests of (i) Conectiv
Services, Inc., or any other Subsidiary of Borrower (other than ACE, DPL or
PEPCO or any Subsidiary thereof) which may hereafter own the stock of CTS (the
“CTS Parent”),
in the capital stock of Conectiv Thermal Systems, Inc. (“CTS”), (ii) CTS in
Atlantic Jersey Thermal Systems, Inc. (“AJTS”), Thermal
Energy Limited Partnership I (“TELP I”) and ATS
Operating Services, Inc. and (iii) AJTS in TELP I, in each case securing
Indebtedness of CTS for which neither Borrower nor any of its Subsidiaries
(other than CTS and its Subsidiaries and, solely with respect to the pledge of
its interest in the capital stock of CTS, the CTS Parent) has any liability
(contingent or otherwise); (c) Liens granted by a bankruptcy remote Subsidiary
(the “SPV”) of
Borrower to facilitate a structured financing in an amount not exceeding
$200,000,000; (d) Liens on the stock or assets of one or more Subsidiaries of
Borrower, other than ACE, DPL or PEPCO, in favor of the SPV; and (e) Liens
on the assets of Conectiv Pennsylvania Generation, LLC (“CPG”) and/or on the
capital stock of CPG, or its successor, to finance the development and
construction of a mid-merit electric generating facility in the State of
Pennsylvania (the “CPG
Project”), provided that (i) the
aggregate principal amount of the Indebtedness secured by such Liens shall not
exceed $400,000,000 and (ii) such Liens (other than Liens granted by CPG and its
Subsidiaries) shall only be granted on assets related to the CPG
Project.





“Person” means any
natural person, corporation, firm, joint venture, partnership, limited liability
company, association, enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or instrumentality
thereof.





“Plan” means an
employee pension benefit plan which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Code as to which
Borrower or any other member of the Controlled Group may have any
liability.





“Preferred Stock”
means, with respect to any Person, equity interests issued by such Person that
are entitled to a preference or priority over any other equity interests issued
by such Person upon any distribution of such Person’s property and assets,
whether by dividend or upon liquidation.





“Pricing Schedule”
means Schedule
1 hereto.





“Prime Rate” means a
rate per annum equal to the prime rate of interest publicly announced by Bank of
America, from time to time, changing when and as such prime rate
changes.  The Prime Rate is an index or base rate and shall not
necessarily be the lowest or best rate charged to its customers or other
banks.





“Property” of a Person
means any and all property, whether real, personal, tangible, intangible, or
mixed, of such Person, or other assets owned, leased or operated by such
Person.





“Pro Rata Share”
means, with respect to any Lender, the percentage which such Lender’s Commitment
constitutes of the Aggregate Commitment (and/or, to the extent the Commitments
have terminated, the percentage which such Lender’s Revolving Loans and
participation in Swingline Loans constitutes of the aggregate principal amount
of all Loans).  The initial Pro Rata Share of each Lender is set forth
on Schedule 2,
or in the Assignment Agreement pursuant to which such Lender becomes a party
hereto, as applicable.


9




“Public Reports” means
Borrower’s (i) annual report on Form 10-K for the year ended December 31,
2007, (ii) quarterly report on Form 10-Q for the quarter ended
September 30, 2008, (iii) current report filed on Form 8-K on
November 3, 2008 and (iv) current report filed on Form 8-K on
November 6, 2008.





“Purchasers” is
defined in Section
12.3(i).





“Register” is defined
in Section
12.3(iii).





“Reportable Event”
means a reportable event, as defined in Section 4043 of ERISA, with respect to a
Plan, excluding, however, such events as to which the PBGC has by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, provided that a
failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waiver of the notice requirement in accordance with either Section
4043(a) of ERISA or Section 412(d) of the Code.





“Requested Commitment
Increase” is defined in Section
2.2.





“Required Lenders”
means Lenders in the aggregate having more than 50% of the Aggregate Commitment
or, if the Aggregate Commitment has been terminated, Lenders in the aggregate
holding more than 50% of the aggregate unpaid principal amount of the
Outstanding Credit Extensions to the Borrower.





“Reserve Requirement”
means, with respect to an Interest Period, the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves)
which is imposed under Regulation D of the FRB on Eurocurrency
liabilities.





“Revolving Loan”
means, with respect to a Lender, any revolving loan made by such Lender pursuant
to Article II
(or any conversion or continuation thereof), but excluding any Swingline
Loan.





“S&P” means
Standard and Poor’s Ratings Services, a division of The McGraw Hill Companies,
Inc.





“SEC” means the
Securities and Exchange Commission.





“Securitization
Transaction” means any sale, assignment or other transfer by Borrower or
a Subsidiary thereof of accounts receivable or other payment obligations owing
to Borrower or such Subsidiary or any interest in any of the foregoing, together
in each case with any collections and other proceeds thereof, any collection or
deposit accounts related thereto, and any collateral, guaranties or other
property or claims in favor of Borrower or such Subsidiary supporting or
securing payment by the obligor thereon of, or otherwise related to, any such
receivables.





“Significant
Subsidiary” means, with respect to Borrower, a “significant
subsidiary” (as defined in Regulation S-X of the SEC as in effect on the
date of this Agreement) of such Borrower; provided that each of PEPCO, DPL and
ACE shall at all times be a Significant Subsidiary of Borrower.





“Single Employer Plan”
means a Plan maintained by Borrower or any member of the Controlled Group for
employees of Borrower or any member of the Controlled Group.





“SPC” is defined in
Section
12.5.


10





“SPV” is defined in
the definition of Permitted PHI Liens.





“Special Purpose
Subsidiary” means a direct or indirect wholly owned corporate Subsidiary
of ACE, substantially all of the assets of which are Intangible Transition
Property and proceeds thereof, formed solely for the purpose of holding such
assets and issuing Transition Bonds and, which complies with the requirements
customarily imposed on bankruptcy-remote corporations in receivables
securitizations.





“Subsidiary” of a
Person means (i) any corporation more than 50% of the outstanding securities
having ordinary voting power of which shall at the time be owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, or (ii) any partnership,
limited liability company, association, business trust, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.





“Substantial Portion”
means, at any time with respect to the Property of any Person, Property which
represents more than 10% of the consolidated assets of such Person and its
Subsidiaries as shown in the consolidated financial statements of such Person
and its Subsidiaries as at the last day of the preceding fiscal year of such
Person.





“Swingline Lender”
means Bank of America in its capacity as swingline lender
hereunder.





“Swingline Loan” means
any swingline loan made by the Swingline Lender to Borrower pursuant to Section
2.1(b).





“Swingline Sublimit”
means an amount equal to 10% of the Aggregate Commitment.  The
Swingline Sublimit is part of, and not in addition to, the Aggregate
Commitment.





“Synthetic Lease”
means (a) a so-called synthetic, off-balance sheet or tax retention lease or (b)
any other agreement pursuant to which a Person obtains the use or possession of
property and which creates obligations that do not appear on the balance sheet
of such Person but which, upon the insolvency or bankruptcy of such Person,
would be characterized as indebtedness of such Person (without regard to
accounting treatment).





“Taxes” means any and
all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and any and all liabilities with respect to the foregoing which
arise from or relate to any payment made hereunder or under any Note, but
excluding Excluded Taxes and Other Taxes.





“Total Capitalization”
means, at any time, the sum of the Total Indebtedness of Borrower plus the Net
Worth of Borrower, each calculated at such time.





“Total Indebtedness”
means, at any time, all Indebtedness of Borrower and its Subsidiaries at such
time determined on a consolidated basis in accordance with Agreement Accounting
Principles, excluding, to the
extent otherwise included in Indebtedness of Borrower or any of its
Subsidiaries, (a) any Nonrecourse Transition Bond Debt; (b) to the extent it
constitutes Nonrecourse Indebtedness, any Indebtedness secured by liens
described in clause
(e) of the definition of Permitted PHI Liens; (c) any other Nonrecourse
Indebtedness of Borrower and its Subsidiaries (excluding ACE, DPL and PEPCO and
their Subsidiaries) to the extent that the aggregate amount of such Nonrecourse
Indebtedness does not exceed $200,000,000; and (d) all Indebtedness of PCI and,
without duplication, of Borrower the proceeds of which were used to make loans
or advances to PCI, in an aggregate amount not exceeding the lesser
of


11


(i) the
fair market value of the equity collateral accounts in PCI’s energy leveraged
lease portfolio or (ii) $700,000,000.





“Transferee” is
defined in Section
12.4.





“Transition Bonds”
means bonds described as “transition bonds” in
the New Jersey Transition Bond Statute.





“Type” means, with
respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar
Advance.





“Unmatured Default”
means an event which but for the lapse of time or the giving of notice, or both,
would constitute a Default.





“Voting Stock” means,
with respect to any Person, voting stock of any class or kind ordinarily having
the power to vote for the election of directors, managers or other voting
members of the governing body of such Person.





1.2           Interpretation.





(a)           The
meanings of defined terms are equally applicable to the singular and plural
forms of such terms.





(b)           Article, Section, Schedule and Exhibit references
are to this Agreement unless otherwise specified.





(c)           The
term “including” is not
limiting and means “including without
limitation.”





(d)           In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including”;
the words “to”
and “until”
each mean “to but
excluding”, and the word “through” means “to and
including.”





(e)           Unless
otherwise expressly provided herein, (i) references to agreements (including
this Agreement) and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of this
Agreement; and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such statute or
regulation.





(f)           Unless
otherwise expressly provided herein, references herein shall be references to
Eastern time (daylight or standard as applicable).





1.3           Accounting.





(a)           Except
as provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with Agreement Accounting Principles, except that any calculation or
determination which is to be made on a consolidated basis shall be made for
Borrower and all of its Subsidiaries, including those Subsidiaries of Borrower,
if any, which are unconsolidated on Borrower’s audited financial
statements.





12


(b)           If
at any time any change in Agreement Accounting Principles would affect the
computation of any financial ratio or requirement set forth herein with respect
to Borrower and either Borrower or the Required Lenders shall so request, the
Agent, the Lenders and Borrower shall negotiate in good faith to amend such
ratio or requirement to preserve the original intent thereof in light of such
change in Agreement Accounting Principles (subject to the approval of the
Required Lenders); provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with Agreement Accounting Principles as in effect prior to such
change and (ii) Borrower shall provide to the Agent and the Lenders financial
statements and other documents required under this Agreement setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in Agreement Accounting
Principles.





ARTICLE
II


THE
LOANS





2.1           Commitments.





(a)           Revolving
Loans.  Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Loans to Borrower and
to participate in Swingline Loans made to Borrower, in amounts not to exceed in
the aggregate at any one time outstanding the amount of such Lender’s
Commitment; provided that, after giving
effect to any Credit Extension hereunder, (i) the aggregate principal amount of
all Revolving Loans by such Lender to Borrower plus such Lender’s
Pro Rata Share of the aggregate principal amount of all Swingline Loans to
Borrower shall not exceed such Lender’s Commitment and (ii) the Outstanding
Credit Extensions to Borrower shall not at any time exceed the Aggregate
Commitment.  Within the foregoing limits, Borrower may from time to
time borrow, prepay pursuant to Section 2.9 and
reborrow hereunder prior to the Facility Termination Date.





(b)           Swingline
Loans.





(i)           Subject
to the terms and conditions set forth in this Agreement, the Swingline Lender
may, in its discretion and in reliance upon the agreements of the other Lenders
set forth in this Section 2.01(b) make
Swingline Loans to Borrower from time to time from the Closing Date through, but
not including, the Facility Termination Date; provided, that (i) the
aggregate principal amount of all outstanding Swingline Loans (after giving
effect to any amount requested), shall not exceed the Swingline Sublimit and
(ii) the aggregate principal amount of all Revolving Loans by such Lender to
Borrower plus
such Lender’s Pro Rata Share of the aggregate principal amount of all Swingline
Loans to Borrower shall not exceed such Lender’s Commitment; provided, further, that, subject to
Section
2.1(b)(ii), Borrower shall not use the proceeds of any Swingline Loan to
refinance any outstanding Swingline Loan.  To request a Swingline
Loan, Borrower shall notify the Agent in accordance with Section 2.10
hereof.  Borrower shall be entitled to borrow, repay and reborrow
Swingline Loans in accordance with the terms and subject to the conditions of
this Agreement.





(ii)           The
Swingline Lender may, at any time and from time to time, give written notice to
the Agent (a “Swingline Borrowing
Notice”), on behalf of Borrower (and Borrower hereby irrevocably
authorizes and directs the Swingline Lender to act on its behalf), requesting
that the Lenders (including the Swingline Lender) make Revolving Loans to
Borrower in an amount equal to the unpaid principal amount of any Swingline
Loan. The Swingline Borrowing Notice shall include the information with respect
to each Revolving Loan set forth in Section
2.10.  The Swingline Lender shall provide a copy of any such
notice to Borrower.  Each Lender shall make a Revolving Loan in same
day funds in an amount equal to its respective Pro Rata Share of Revolving Loans
as required to repay the Swingline Loan outstanding to the
Swingline


13






Lender
promptly upon receipt of a Swingline Borrowing Notice but in no event later than
1:00 p.m. on the next succeeding Business Day after such Swingline Borrowing
Notice is received.  On the date of such Revolving Loan, the Swingline
Loan (including the Swingline Lender’s Pro Rata Share thereof, in its capacity
as a Lender) shall be deemed to be repaid with the proceeds thereof and shall
thereafter be reflected as a Revolving Loan on the books and records of the
Agent.  No Lender’s obligation to fund its respective Pro Rata Share
of a Swingline Loan shall be affected by any other Lender’s failure to fund its
Pro Rata Share of any Swingline Loan, nor shall any Lender’s Pro Rata Share be
increased as a result of any such failure of any other Lender to fund its Pro
Rata Share of any Swingline Loan.




(iii)           If
not repaid earlier, Borrower shall pay to the Swingline Lender the amount of
each Swingline Loan within seven days of receipt of such Swingline
Loan.  If any portion of any such amount paid to the Swingline Lender
shall be recovered by or on behalf of Borrower from the Swingline Lender in
bankruptcy or otherwise, the loss of the amount so recovered shall be ratably
shared among all the Lenders in accordance with their respective Pro Rata Share
(unless the amounts so recovered by or on behalf of Borrower pertain to a
Swingline Loan extended after the occurrence and during the continuance of a
Default of which the Agent has received notice in the manner required pursuant
to Section 10.9
and which such Event of Default has not been waived pursuant to the terms
hereof).  If any payment received by the Swingline Lender under any of
the circumstances described in Section 11.3
(including pursuant to any settlement entered into by the Swingline Lender in
its discretion), each Lender shall pay to the Swingline Lender its Pro Rata
Share thereof on demand of the Agent, plus interest thereon
from the date of such demand to the date such amount is returned, at a rate per
annum equal to the Federal Funds Effective Rate.  The Agent will make
such demand upon the request of the Swingline Lender.  The obligations
of the Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.





(iv)           Each
Lender acknowledges and agrees that its obligation to repay Swingline Loans in
accordance with the terms of this Section is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including, without
limitation, non-satisfaction of the conditions set forth in Article
IV.  Further, each Lender agrees and acknowledges that if prior
to the repayment of any outstanding Swingline Loans pursuant to this Section,
one of the events described in Section 7.6 or 7.7 shall have
occurred, or if a Revolving Loan may not be (as determined in the reasonable
discretion of the Agent), or is not, made in accordance with the foregoing
provisions, each Lender will, on the date the applicable Revolving Loan would
have been made, purchase an undivided participating interest in such Swingline
Loan in an amount equal to its Pro Rata Share of the aggregate amount of such
Swingline Loan.  Each Lender will immediately transfer to the
Swingline Lender, in immediately available funds, the amount of its
participation and upon receipt thereof the Swingline Lender will deliver to such
Lender a certificate evidencing such participation dated the date of receipt of
such funds and for such amount, such certificate to be conclusive absent
manifest error.  Whenever, at any time after the Swingline Lender has
received from any Lender such Lender’s participating interest in a Swingline
Loan, the Swingline Lender receives any payment on account thereof, the
Swingline Lender will distribute to such Lender (including pursuant to a
participation made by the Swingline Lender) its participating interest in such
amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s participating interest was outstanding
and funded).





(v)           The
Swingline Lender shall be responsible for invoicing the Borrower for interest on
the Swingline Loans.  Until each Lender funds its Revolving Loans or
participations pursuant


14


to this
Section 2.1(b)
to refinance such Lender’s Pro Rata Share of any Swingline Loan, interest in
respect of such Pro Rata Share shall be solely for the account of the Swingline
Lender.





(vi)           The
Borrower shall make all payments of principal and interest in respect of the
Swingline Loans directly to the Swingline Lender.





2.2           Increase in
Commitments.





(a)           At
any time prior to the Facility Termination Date, Borrower shall have the
ability, in consultation with the Agent and through written notice to the Agent,
substantially in the form of Exhibit D (the “Increase Notice”), to
request increases in the Aggregate Commitment (each, a “Requested Commitment
Increase”); provided that (i) no
Lender shall have any obligation to participate in any Requested Commitment
Increase, (ii) the aggregate principal amount of all such increases shall not
exceed $10,000,000, (iii) each such Requested Commitment Increase shall be in a
minimum principal amount of $10,000,000 or, if less, the maximum remaining
amount permitted pursuant to clause (ii) above, and (iv) no Default or Unmatured
Default shall have occurred and be continuing or would result from the proposed
Requested Commitment Increase.





(b)           The
Agent shall promptly give notice of such Requested Commitment Increase to the
Lenders.  Each Lender shall notify the Agent within ten (10) Business
Days (or such longer period of time which may be agreed upon by the Agent and
Borrower and communicated to the Lenders) from the date of delivery of such
notice to the Lenders whether or not it offers to increase its Commitment and,
if so, by what amount.  Any Lender not responding within such time
period shall be deemed to have declined to offer to increase its
Commitment.  The Agent shall notify Borrower of the Lenders’ responses
to each request made hereunder.  Borrower shall have the right in its
sole discretion to accept or reject in whole or in part any offered Commitment
increase or at its own expense to solicit a Commitment from any third party
financial institution reasonably acceptable to the Agent.  Any such
financial institution (if not already a Lender hereunder) shall become a party
to this Agreement, as a Lender pursuant to a joinder agreement in form and
substance reasonably satisfactory to the Agent and Borrower.





(c)           Upon
the completion of each Requested Commitment Increase, (i) entries in the
accounts maintained pursuant to Section 2.15 will be
revised to reflect the revised Commitments and Pro Rata Shares of each of the
Lenders (including each new Lender becoming a party to this Agreement pursuant
to clause (b) above) and (ii) the outstanding Revolving Loans will be
reallocated on the effective date of such increase among the Lenders in
accordance with their revised Pro Rata Shares and the Lenders (including each
new Lender becoming a party to this Agreement pursuant to clause (b) above)
agree to make all payments and adjustments necessary to effect such reallocation
and Borrower shall pay any and all costs required in connection with such
reallocation as if such reallocation were a prepayment.





2.3           Required Payments;
Termination.  All outstanding Advances to Borrower and all
other unpaid Obligations of such Borrower shall be paid in full by Borrower on
the Maturity Date.





2.4           Intentionally
Omitted.





2.5           Ratable
Loans.  Each Advance (other than Swingline Loans) hereunder
shall be made by the Lenders ratably in accordance with their Pro Rata
Shares.





2.6           Types of
Advances.  The Advances (other than Swingline Loans) to
Borrower may be Floating Rate Advances or Eurodollar Advances, or a combination
thereof, as selected by Borrower in accordance with Sections 2.10 and
2.11.





15


2.7           Commitment Fee; Reductions
in Aggregate Commitment.





(a)           Borrower
agrees to pay to the Agent for the account of the Lenders according to their Pro
Rata Shares a commitment fee at a per annum rate equal to the Commitment Fee
Rate on the average daily unused portion of the Aggregate
Commitment.  Commitment fees payable by Borrower shall accrue from the
Closing Date to the Facility Termination Date (or, if later, to the date all of
Borrower’s Obligations have been paid in full) and shall be payable on each
Payment Date and on the Facility Termination Date (and, if applicable,
thereafter on demand).  For purposes of clarification, Swingline Loans
shall not be considered outstanding for purposes of determining the unused
portion of the Aggregate Commitment in calculating commitment fees.





(b)           Borrower
may permanently reduce the Aggregate Commitment ratably among the Lenders in
accordance with their Pro Rata Shares, and in integral multiples of $10,000,000,
upon at least five Business Days’ written notice to the Agent, which notice
shall specify the amount of any such reduction, provided that the
Aggregate Commitment may not be reduced below the amount of the Outstanding
Credit Extensions on the date of such notice.  All fees in respect of
the Aggregate Commitment accrued until the effective date of any termination of
the Aggregate Commitment shall be paid on the effective date of such
termination.





2.8           Minimum Amount of Each
Advance.  Each Advance shall be in the amount of $5,000,000 or
a higher integral multiple of $1,000,000 (or, in the case of a Swingline Loan,
in the amount of $500,000 or a higher integral multiple of $100,000); provided that any
Floating Rate Advance may be in the amount of the unused Aggregate
Commitment.





2.9           Prepayments.





(a)           Mandatory.  If
at any time Borrower’s Outstanding Credit Extensions exceed the Aggregate
Commitment, Borrower shall immediately prepay Loans in an amount (rounded
upward, if necessary, to an integral multiple of $1,000,000) sufficient to
eliminate such excess.  If at any time the aggregate principal amount
of all outstanding Swingline Loans exceeds the Swingline Sublimit (including,
without limitation, after giving effect to any reduction of the Aggregate
Commitment pursuant to Section 2.7), Borrower shall immediately prepay Swingline
Loans in an amount sufficient to eliminate such excess.





(b)           Voluntary.  Borrower
may from time to time prepay, without penalty or premium, all outstanding
Floating Rate Advances to such Borrower, or any portion of the outstanding
Floating Rate Advances to such Borrower in the amount of $5,000,000 or a higher
integral multiple of $1,000,000, upon one Business Day’s prior notice to the
Agent.  Borrower may from time to time prepay, without penalty or
premium, all outstanding Swingline Loans, or any portion of the outstanding
Swingline Loans in the amount of $500,000 or a higher integral multiple of
$100,000, on any Business Day if notice is given to the Agent by 1:00 p.m. on
such Business Day.  Borrower may from time to time prepay, all
outstanding Eurodollar Advances (other than Swingline Loans), or any portion of
the outstanding Eurodollar Advances in the amount of $5,000,000 or a higher
integral multiple of $1,000,000, upon three Business Days’ prior notice to the
Agent.  Any prepayment of Eurodollar Advances shall be without premium
or penalty but shall be subject to the payment of any funding indemnification
amounts covered by Section
3.4.





2.10         Method of Selecting Types
and Interest Periods for New Advances.  Borrower shall select
the Type of Advance and, in the case of each Eurodollar Advance (other than a
Swingline Loan), the Interest Period applicable thereto from time to
time.  All Swingline Loans shall bear interest at the Eurodollar
Market Index Rate.  Borrower shall give the Agent irrevocable notice
(a “Borrowing
Notice”)


16


not later
than 11:00 a.m. on the Borrowing Date of each Floating Rate Advance and each
Swingline Loan and three Business Days before the Borrowing Date for each
Eurodollar Advance (other than a Swingline Loan), specifying:





(i)           the
Borrowing Date, which shall be a Business Day, of such Advance,





(ii)           the
aggregate amount of such Advance,





(iii)           the
Type of Advance selected, and





(iv)           in
the case of each Eurodollar Advance (other than a Swingline Loan), the Interest
Period applicable thereto.





Not later
than 1:00 p.m. on each Borrowing Date for each Revolving Loan, each Lender shall
make available its Revolving Loan or Revolving Loans in funds immediately
available to the Agent at its address specified pursuant to Article
XIII.  The Agent will promptly make the funds so received from
the Lenders available to Borrower at the Agent’s aforesaid
address.  Not later than 1:00 p.m. on each Borrowing Date for each
Swingline Loan, the Swingline Lender shall make available its Swingline Loan in
funds immediately available to Borrower at the Agent’s aforesaid
address.  If the Borrower fails to specify a Type of Advance in a
Borrowing Notice, then the applicable Advance shall be made as a Floating Rate
Advance.  If the Borrower requests a Eurodollar Advance but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.





2.11         Conversion and Continuation
of Outstanding Advances.  Floating Rate Advances shall continue
as Floating Rate Advances unless and until such Floating Rate Advances are
converted into Eurodollar Advances pursuant to this Section 2.11 or are
repaid in accordance with Section
2.9.  Each Eurodollar Advance (other than Swingline Loans)
shall continue as a Eurodollar Advance until the end of the then applicable
Interest Period therefor, at which time such Eurodollar Advance shall be
automatically converted into a Floating Rate Advance unless (x) such Eurodollar
Advance is or was repaid in accordance with Section 2.9 or (y)
Borrower shall have given the Agent a Conversion/Continuation Notice requesting
that, at the end of such Interest Period, such Eurodollar Advance continue as a
Eurodollar Advance for a subsequent Interest Period.  Subject to the
terms of Section
2.8 Borrower may elect from time to time to convert all or any part of a
Floating Rate Advance into a Eurodollar Advance.  Borrower shall give
the Agent irrevocable notice (a “Conversion/Continuation
Notice”) of each conversion of a Floating Rate Advance into a Eurodollar
Advance or continuation of a Eurodollar Advance not later than 11:00 a.m. at
least three Business Days prior to the date of the requested conversion or
continuation, specifying:





(i)           the
requested date, which shall be a Business Day, of such conversion or
continuation,





(ii)           the
aggregate amount and Type of the Advance which is to be converted or continued,
and





(iii)           the
amount of such Advance which is to be converted into or continued as a
Eurodollar Advance and the duration of the Interest Period applicable
thereto.





After
giving effect to all Advances, all conversions and all continuations, there
shall be no more than 8 Interest Periods in effect with respect to all
Loans.





17


2.12         Changes in Interest Rate,
etc.  Each Floating Rate Advance shall bear interest on the
outstanding principal amount thereof, for each day from the date such Advance is
made or is converted from a Eurodollar Advance into a Floating Rate Advance
pursuant to Section
2.11 to the date it is paid or is converted into a Eurodollar Advance
pursuant to Section
2.11, at a rate per annum equal to the Alternate Base Rate for such
day.  Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate.  Each Eurodollar Advance (other
than Swingline Loans) shall bear interest on the outstanding principal amount
thereof from the first day of each Interest Period applicable thereto to the
last day of such Interest Period at the Eurodollar Rate applicable to such
Eurodollar Advance based upon Borrower’s selections under Sections 2.10 and
2.11 and
otherwise in accordance with the terms hereof.  Each Swingline Loan
shall bear interest on the outstanding principal amount thereof at the
Eurodollar Market Index Rate and otherwise in accordance with the terms
hereof.





2.13         Rates Applicable After
Default.  Notwithstanding anything to the contrary contained in
Section 2.10 or
2.11, during
the continuance of a Default or Unmatured Default, (a) the Required Lenders may,
at their option, by notice to Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Advance may be made as, converted into or continued as a Eurodollar Advance and
(b) the Swingline Lender may, at its option, declare that no Swingline Loans
shall be made to Borrower.  During the continuance of a Default, the
Required Lenders may, at their option, by notice to Borrower (which notice may
be revoked at the option of the Required Lenders notwithstanding any provision
of Section 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that (i) each Eurodollar Advance shall bear interest for the remainder
of the applicable Interest Period at the rate otherwise applicable to such
Interest Period plus 2% per annum and (ii) each Floating Rate Advance and each
Swingline Loan shall bear interest at a rate per annum equal to the Alternate
Base Rate in effect from time to time plus 2% per annum, provided that during
the continuance of a Default under Section 7.6 or 7.7, the interest
rates set forth in clauses (i) and
(ii) above
shall be applicable to all Outstanding Credit Extensions to Borrower without any
election or action on the part of the Agent or any Lender.





2.14         Method of
Payment.  Except as otherwise expressly provided herein, all
payments of the Obligations hereunder shall be made, without setoff, deduction,
or counterclaim, in immediately available funds to the Agent at the Agent’s
address specified pursuant to Article XIII, or at
any other office of the Agent specified in writing by the Agent to Borrower, by
1:00 p.m. on the date when due and shall be applied ratably by the Agent among
the Lenders.  Each payment delivered to the Agent for the account of
any Lender shall be delivered promptly by the Agent to such Lender in the same
type of funds that the Agent received at its address specified pursuant to Article XIII or at
any Lending Installation specified in a notice received by the Agent from such
Lender.





2.15         Noteless Agreement; Evidence
of Indebtedness.





(a)           Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of Borrower to such Lender resulting from
each Loan made by such Lender to Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time hereunder.





(b)           The
Agent shall also maintain accounts in which it will record (i) the amount of
each Loan to Borrower made hereunder, the Type thereof and the Interest Period
with respect thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from Borrower to each Lender hereunder, and
(iii) the amount of any sum received by the Agent hereunder from Borrower and
each Lender’s share thereof.


18





(c)           The
entries maintained in the accounts maintained pursuant to clauses (a) and
(b) above shall
be prima facie evidence of the existence and amounts of the Obligations therein
recorded; provided that the
failure of the Agent or any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of Borrower to repay the
Obligations in accordance with their terms.





(d)           Any
Lender may request that its Loans to Borrower be evidenced by a
Note.  In such event, Borrower shall prepare, execute and deliver to
such Lender a Note payable to the order of such Lender.  Thereafter,
the Loans evidenced by such Note and interest thereon shall at all times
(including after any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee named therein
or any assignee pursuant to Section 12.3, except
to the extent that any such Lender or assignee subsequently returns any such
Note for cancellation and requests that such Loans once again be evidenced as
described in clauses
(a) and (b)
above.





2.16         Telephonic
Notices.  Borrower hereby authorizes the Lenders and the Agent
to extend, convert or continue Advances, to effect selections of Types of
Advances and to transfer funds based on telephonic notices made by any person
the Agent or any Lender in good faith believes to be acting on behalf of
Borrower, it being understood that the foregoing authorization is specifically
intended to allow Borrowing Notices and Conversion/Continuation Notices to be
given telephonically.  Borrower agrees that upon the request of the
Agent or any Lender, Borrower will deliver promptly to the Agent a written
confirmation signed by an Authorized Officer of Borrower, of each telephonic
notice given by Borrower pursuant to the preceding sentence.  If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error.





2.17          Interest Payment Dates;
Interest and Fee Basis.  Interest accrued on each Floating Rate
Advance and each Swingline Loan shall be payable on each Payment Date, on any
date on which such Floating Rate Advance is prepaid, whether due to acceleration
or otherwise, and at maturity.  Interest accrued on that portion of
the outstanding principal amount of any Floating Rate Advance converted into a
Eurodollar Advance (other than Swingline Loans) on a day other than a Payment
Date shall be payable on the date of conversion.  Interest accrued on
each Eurodollar Advance shall be payable on the last day of its applicable
Interest Period (and, in the case of a six-month Interest Period, on the day
which is three months after the first day of such Interest Period), on any date
on which such Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity.  Interest on Floating Rate Advances which
are bearing interest at the Prime Rate shall be calculated for actual days
elapsed on the basis of a 365-day year or, when appropriate, 366-day
year.  All other interest and all fees shall be calculated for actual
days elapsed on the basis of a 360-day year.  Interest shall be
payable for the day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to 1:00 p.m. at the place of
payment.  If any payment of principal of or interest on an Advance
shall become due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest in
connection with such payment.  Each determination by the Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.





2.18         Notification of Advances,
Interest Rates, Prepayments and Commitment
Reductions.  Promptly after receipt thereof, the Agent will
notify each Lender of the contents of each notice of reduction in the Aggregate
Commitment, Swingline Borrowing Notice, Borrowing Notice,
Conversion/Continuation Notice, notice of repayment and Increase Notice received
by the Agent hereunder.  The Agent will notify each Lender of the
interest rate applicable to each Eurodollar Advance promptly upon determination
of such interest rate and will give each Lender prompt notice of each change in
the Alternate Base Rate.


19





2.19         Lending
Installations.  Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time.  All terms of this Agreement shall apply to any
such Lending Installation and the Loans and any Notes issued hereunder shall be
deemed held by each Lender for the benefit of any such Lending
Installation.  Each Lender may, by written notice to the Agent and
Borrower in accordance with Article XIII,
designate replacement or additional Lending Installations through which Loans
will be made by it and for whose account Loan payments are to be
made.





2.20         Non-Receipt of Funds by the
Agent.  Unless Borrower or a Lender, as the case may be,
notifies the Agent prior to the date on which it is scheduled to make payment to
the Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the
case of Borrower, a payment of principal, interest or fees to the Agent for the
account of the Lenders, that it does not intend to make such payment, the Agent
may assume that such payment has been made.  The Agent may, but shall
not be obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption.  If a Lender or Borrower,
as the case may be, has not in fact made such payment to the Agent, the
applicable Lender and the Borrower severally agree to, on demand by the Agent,
pay to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (x) in the case of payment by a Lender, the Federal
Funds Effective Rate for such day for the first three days and, thereafter, the
interest rate applicable to the relevant Loan or (y) in the case of payment by
Borrower, the interest rate applicable to the relevant Obligation.


ARTICLE
III


YIELD PROTECTION;
TAXES





3.1           Yield
Protection.  If, on or after the date of this Agreement, the
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Swingline Lender,
any other Lender or any applicable Lending Installation with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:





(i)           subjects
the Swingline Lender, any other Lender or any applicable Lending Installation to
any Taxes, or changes the basis of taxation of payments (other than with respect
to Excluded Taxes) to the Swingline Lender or any Lender in respect of its
Eurodollar Loans, or





(ii)           imposes
or increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, the Swingline Lender, any other Lender or
any applicable Lending Installation (other than reserves and assessments taken
into account in determining the interest rate applicable to Eurodollar
Advances), or





(iii)           imposes
any other condition the result of which is to increase the cost to the Swingline
Lender, any other Lender or any applicable Lending Installation of making,
funding or maintaining its Eurodollar Loans or reduces any amount receivable by
the Swingline Lender, any other Lender or any applicable Lending Installation in
connection with its Eurodollar Loans, or requires the Swingline Lender, any
other Lender or any applicable Lending Installation to make any payment
calculated by reference to the amount of Eurodollar Loans held or interest
received


20





by it, in
each case by an amount deemed material by such Lender, and the result of any of
the foregoing is to increase the cost to the Swingline Lender, such other Lender
or such applicable Lending Installation of making or maintaining its Eurodollar
Loans or Commitment or to reduce the return received by the Swingline Lender,
such other Lender or such applicable Lending Installation in connection with its
Eurodollar Loans or Commitment, then, within 15 days of demand by the Swingline
Lender or such other Lender, Borrower shall pay the Swingline Lender or such
other Lender such additional amount or amounts as will compensate the Swingline
Lender or such Lender for such increased cost or reduction in amount
received.




3.2           Changes in Capital Adequacy
Regulations.  If the Swingline Lender or another Lender
determines the amount of capital required or expected to be maintained by the
Swingline Lender or such Lender, any Lending Installation of such Lender or any
corporation controlling, the Swingline Lender or such Lender is increased as a
result of a Change, then, within 15 days of demand by the Swingline Lender or
such Lender, Borrower shall pay the Swingline Lender or such other Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which, the Swingline Lender or such other
Lender determines is attributable to this Agreement, Loans outstanding hereunder
(or participations therein) or its Commitment to make Loans (after taking into
account such Lender’s policies as to capital adequacy).  “Change” means (i) any
change after the date of this Agreement in the Risk Based Capital Guidelines (as
defined below) or (ii) any adoption of or change in any other law, governmental
or quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by the Swingline Lender, any other Lender or any Lending Installation
or any corporation controlling any Lender.  “Risk Based Capital
Guidelines” means (i) the risk based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled “International Convergence of
Capital Measurements and Capital Standards,” including transition rules,
and any amendments to such regulations adopted prior to the date of this
Agreement.





3.3           Availability of Types of
Advances.  If any Lender or the Swingline Lender notifies the
Agent that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if any governmental authority has
imposed material restrictions on the authority of such Lender or Swingline
Lender to purchase or sell, or take deposits of, U.S. Dollars in the London
interbank market, or if the Required Lenders determine that (i) deposits of a
type and maturity appropriate to match fund Eurodollar Advances are not
available, (ii) the interest rate applicable to Eurodollar Advances does not
accurately reflect the cost of making or maintaining Eurodollar Advances or
(iii) adequate reasonable means do not exist for determining the Eurodollar Rate
for any requested Interest Period with respect to a proposed Eurodollar Advance,
then the Agent shall suspend the availability of Eurodollar Advances and require
any affected Eurodollar Advances to be repaid or converted to Floating Rate
Advances, subject to the payment of any funding indemnification amounts required
by Section
3.4.





3.4           Funding
Indemnification.  If any payment of a Eurodollar Advance (other
than a Swingline Loan) occurs on a day which is not the last day of an Interest
Period therefor, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance (other than a Swingline Loan) is not made on the date
specified by Borrower for any reason other than default by the Lenders, Borrower
shall indemnify each Lender for any loss or cost incurred by it resulting
therefrom, including any loss or cost in liquidating or employing deposits
acquired to fund or maintain such Eurodollar Advance.





21


3.5           Taxes.





(i)           All
payments by Borrower to or for the account of the Swingline Lender, any other
Lender or the Agent hereunder or under any Note shall be made free and clear of
and without deduction for any and all Taxes.  If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Swingline Lender, any other Lender or the Agent, (a) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section
3.5), the Swingline Lender, such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (b) Borrower shall make such deductions, (c) Borrower
shall pay the full amount deducted to the relevant authority in accordance with
applicable law and (d) Borrower shall furnish to the Agent the original copy of
a receipt evidencing payment thereof within 30 days after such payment is
made.





(ii)           In
addition, Borrower hereby agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, charges or similar
levies which arise from any payment made by it hereunder or under any Note or
from its execution or delivery of, or otherwise attributable to Borrower in
connection with, this Agreement or any Note (“Other
Taxes”).





(iii)           Borrower
hereby agrees to indemnify the Swingline Lender, each other Lender and the Agent
for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed on amounts payable under this Section 3.5) paid by
the Swingline Lender, such Lender or the Agent and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto.  Payments due under this indemnification shall be made within
30 days of the date the Swingline Lender, such Lender or the Agent makes demand
therefor pursuant to Section
3.6.





(iv)           Each
Lender that is not incorporated under the laws of the United States of America
or a state thereof (each a “Non-U.S. Lender”)
agrees that it will, not less than ten Business Days after the date of this
Agreement, (i) deliver to Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form W-8BEN or W-8ECI certifying in
either case that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes, and (ii) deliver to Borrower and the Agent a United States Internal
Revenue Form W-8BEN or W-9, as the case may be, and certify that it is entitled
to an exemption from United States backup withholding tax.  Each
Non-U.S. Lender further undertakes to deliver to Borrower and the Agent (x)
renewals or additional copies of such form (or any successor form) on or before
the date that such form expires or becomes obsolete, and (y) after the
occurrence of any event requiring a change in the most recent forms so delivered
by it, such additional forms or amendments thereto as may be reasonably
requested by Borrower or the Agent.  All forms or amendments described
in the preceding sentence shall certify that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, unless an event (including any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which
would prevent such Lender from duly completing and delivering any such form or
amendment with respect to it and such Lender advises Borrower and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax.





(v)           For
any period during which a Non-U.S. Lender has failed to provide Borrower with an
appropriate form pursuant to clause (iv) above
(unless such failure is due to a change in treaty, law or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, occurring subsequent to the date on which a form originally was
required to be provided), Borrower shall not be required to increase any amount
payable to such Non-U.S. Lender pursuant to Section 3.5(i)(a) or
to otherwise indemnify such Lender under this Section 3.5 with
respect to Taxes imposed by the United


22


States;
provided that,
should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced
rate of withholding tax become subject to Taxes because of its failure to
deliver a form required under clause (iv) above,
Borrower shall take such steps as such Non-U.S. Lender shall reasonably request
to assist such Non-U.S. Lender to recover such Taxes.





(vi)           Any
Lender that is entitled to an exemption from or reduction of withholding tax
with respect to payments under this Agreement or any Note pursuant to the law of
any relevant jurisdiction or any treaty shall deliver to Borrower (with a copy
to the Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate.





(vii)           If
the U.S. Internal Revenue Service or any other governmental authority of the
United States or any other country or any political subdivision thereof asserts
a claim that the Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not delivered or
properly completed, because such Lender failed to notify the Agent of a change
in circumstances which rendered its exemption from withholding ineffective, or
for any other reason), such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax, withholding therefor,
or otherwise, including penalties and interest, and including taxes imposed by
any jurisdiction on amounts payable to the Agent under this subsection, together
with all costs and expenses related thereto (including attorneys fees and time
charges of attorneys for the Agent, which attorneys may be employees of the
Agent).  The obligations of the Lenders under this Section 3.5(vii)
shall survive the payment of the Obligations and termination of this
Agreement.





3.6           Mitigation of Circumstances;
Lender Statements; Survival of Indemnity.  Each Lender
(including the Swingline Lender) shall promptly notify Borrower and the Agent of
any event of which it has knowledge which will result in, and will use
reasonable commercial efforts available to it (and not, in such Lender’s good
faith judgment, otherwise disadvantageous to such Lender) to mitigate or avoid,
(i) any obligation of Borrower to pay any amount pursuant to Section 3.1, 3.2 or 3.5 and (ii) the
unavailability of Eurodollar Advances under Section 3.3 (and, if
any Lender (including the Swingline Lender) has given notice of any such event
described above and thereafter such event ceases to exist, such Lender shall
promptly so notify Borrower and the Agent).  Without limiting the
foregoing, each Lender (including the Swingline Lender) shall, to the extent
reasonably possible, designate an alternate Lending Installation with respect to
its Eurodollar Loans to reduce any liability of Borrower to such Lender under
Sections 3.1,
3.2 and 3.5 or to avoid the
unavailability of Eurodollar Advances under Section 3.3, so long
as such designation is not, in the judgment of such Lender, disadvantageous to
such Lender.  Any Lender (including the Swingline Lender) claiming
compensation under Section 3.1, 3.2, 3.4, or 3.5 shall deliver a
written statement to Borrower (with a copy to the Agent) as to the amount due
under the applicable Section, which statement shall set forth in reasonable
detail the calculations upon which such Lender determined such amount and shall
be final, conclusive and binding on Borrower in the absence of manifest
error.  Determination of amounts payable under any such Section in
connection with a Eurodollar Loan shall be calculated as though each Lender
(including the Swingline Lender) funded its Eurodollar Loan through the purchase
of a deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate or Eurodollar Market Index Rate
applicable to such Loan, whether in fact that is the case or
not.  Unless otherwise provided herein, the amount specified in the
written statement of any Lender (including the Swingline Lender) shall be
payable on demand after receipt by Borrower of such written
statement.  Notwithstanding any other provision of this Article III, if any
Lender (including the Swingline Lender) fails to notify Borrower of any event or
circumstance which will entitle such Lender to compensation from Borrower
pursuant to Section
3.1, 3.2
or 3.5 within
60 days after such Lender obtains knowledge of such event or circumstance, then
Borrower will not be responsible for any such compensation arising prior to the
60th day before Borrower receives notice from


23


such
Lender of such event or circumstance.  The obligations of Borrower
under Sections
3.1, 3.2, 3.4 and 3.5 shall survive
payment of the Obligations and termination of this Agreement.





3.7           Replacement of
Lender.  If any Lender makes a demand for compensation under
Section 3.1,
3.2 or 3.5 or a notice of
the type described in Section 3.3 (any such
Lender, an “Affected
Lender”), then Borrower may replace such Affected Lender as a party to
this Agreement with one or more other Lenders and/or Purchasers which are
willing to accept an assignment from such Lender, and upon notice from Borrower
such Affected Lender shall assign, without recourse or warranty, its Commitment,
its Loans and all of its other rights and obligations hereunder to such other
Lenders and/or Purchasers for a purchase price equal to the sum of the principal
amount of the Loans so assigned, all accrued and unpaid interest thereon, such
Affected Lender’s ratable share of all accrued and unpaid fees, any amount
payable pursuant to Section 3.4 as a
result of such Affected Lender receiving payment of any Eurodollar Loan prior to
the end of an Interest Period therefor (assuming for such purpose that receipt
of payment pursuant to such assignment constitutes payment of each outstanding
Eurodollar Loan) and all other obligations owed to such Affected Lender
hereunder.





ARTICLE
IV


CONDITIONS
PRECEDENT





4.1           Conditions Precedent to
Closing andInitial
Advance.  The effectiveness of this Agreement is subject to the
conditions precedent that the Agent has received (a) evidence, reasonably
satisfactory to the Agent, that all fees and (to the extent billed) expenses
which are payable on or before the date hereof to the Arranger, the Agent or any
Lender hereunder or in connection herewith have been (or concurrently with the
execution of this Agreement by the parties will be) paid in full; and (b) each
of the following documents (with sufficient copies for each
Lender):





(i)           A
copy of each of the certificate of incorporation, together with all amendments
thereto, and the bylaws of Borrower, certified by the Secretary or Assistant
Secretary of Borrower.





(ii)           An
incumbency certificate from Borrower, executed by the Secretary or Assistant
Secretary of Borrower, which shall identify by name and title and bear the
signatures of the officers of Borrower authorized to sign this Agreement, any
Notes and any Borrowing Notice, upon which certificate the Agent shall be
entitled to rely until informed of any change in writing by
Borrower.





(iii)           A
copy of a certificate of good standing of Borrower, certified by the appropriate
governmental officer in the jurisdiction of incorporation of
Borrower.





(iv)           A
copy, certified by the Secretary or Assistant Secretary of Borrower, of
resolutions of Borrower’s Board of Directors authorizing the execution, delivery
and performance of the Loan Documents.





(v)           A
certificate, signed by an Authorized Officer of Borrower, stating that on the
Closing Date, no Default or Unmatured Default has occurred and is continuing
with respect to Borrower.





(vi)           Any
Notes requested by a Lender pursuant to Section 2.15 payable
to the order of such requesting Lender.





24


(vii)           Copies
of all governmental approvals, if any, necessary for Borrower to enter into the
Loan Documents and to obtain Credit Extensions hereunder.





(viii)           Such
other documents as any Lender or its counsel may reasonably request, including,
without limitation, opinions of legal counsel to the Borrower, addressed to the
Agent and each Lender, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Agent.





4.2           Each Credit
Extension.  Neither the Lenders nor the Swingline Lender shall
be required to make any Credit Extension to Borrower unless on the date of such
Credit Extension:





(i)           No
Default or Unmatured Default exists or will result from such Credit
Extension.





(ii)           The
representations and warranties of Borrower contained in Article V, (with the
exception of the representations and warranties contained in Sections 5.5, 5.7. and 5.15 which shall only
be made as of the Closing Date), are true and correct in all material respects
as of the date of such Credit Extension except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct in
all material respects on and as of such earlier date.





(iii)           After
giving effect to such Credit Extension, Borrower’s Outstanding Credit Extensions
will not exceed Borrower’s borrowing authority as allowed by Applicable
Governmental Authorities.





(iv)           All
legal matters incident to the making of such Credit Extension shall be
reasonably satisfactory to the Lenders and their counsel.





Each
request for a Credit Extension by Borrower shall constitute a representation and
warranty by Borrower that the conditions contained in Sections 4.2(i),
(ii) and (iii) have been
satisfied.  Any Lender may require a duly completed compliance
certificate in substantially the form of Exhibit A from
Borrower as a condition to the making of a Credit Extension.





ARTICLE
V


REPRESENTATIONS AND
WARRANTIES





Borrower
represents and warrants to the Lenders that:





5.1           Existence and
Standing.  Borrower is a corporation, and each of its
Subsidiaries is a corporation, partnership or limited liability company, duly
and properly incorporated or organized, as the case may be, validly existing and
(to the extent such concept applies to such entity) in good standing under the
laws of its jurisdiction (or, if applicable, jurisdictions) of incorporation or
organization and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted, except where failure to do so
could not reasonably be expected to have a Material Adverse Effect.





5.2           Authorization and
Validity.  Borrower has the power and authority and legal right
to execute and deliver Loan Documents and to perform its obligations
thereunder.  The execution and delivery by Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, the Loan Documents constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their terms, except as


25


enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally.





5.3           No Conflict; Government
Consent.  Neither the execution and delivery by such Borrower
of the Loan Documents, 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 Borrower or any of its Subsidiaries or (ii) 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 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 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 FERC), or
any subdivision thereof (any of the foregoing, an “Approval”), is
required to be obtained by Borrower or any of its Subsidiaries in connection
with the execution and delivery by Borrower of the Loan Documents, the
borrowings by Borrower under this Agreement, the payment and performance by
Borrower of its Obligations or the legality, validity, binding effect or
enforceability against Borrower of any Loan Document, except for such Approvals
which have been issued or obtained by Borrower and which are in full force and
effect.





5.4           Financial
Statements.  The financial statements included in Borrower’s
Public Reports were prepared in accordance with Agreement Accounting Principles
and fairly present the consolidated financial condition and operations of
Borrower and its Subsidiaries at the dates thereof and the consolidated results
of their operations for the periods then ended.





5.5           No Material Adverse
Change.  Since December 31, 2007, there has been no change from
that reflected in the Public Reports in the business, Property, financial
condition or results of operations of Borrower and its Subsidiaries taken as a
whole which could reasonably be expected to have a Material Adverse
Effect.





5.6           Taxes.  Borrower
and its Subsidiaries have filed all United States federal tax returns and all
other material tax returns which are required to be filed and have paid all
taxes due pursuant to said returns or pursuant to any assessment received by
Borrower or any of its Subsidiaries, except (a) such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided in
accordance with Agreement Accounting Principles and (b) taxes and governmental
charges (in addition to those referred to in clause (a)) in an
aggregate amount not exceeding $1,000,000.  The charges, accruals and
reserves on the books of Borrower and its Subsidiaries in respect of any taxes
or other governmental charges are adequate.





5.7           Litigation and Contingent
Obligations.  Except as disclosed in the Public Reports, there
is no litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of Borrower, threatened against or affecting
Borrower or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect or which seeks to prevent, enjoin or delay the making of
any Loans.  Other than any liability incident to any litigation,
arbitration or proceeding which could not reasonably be expected to have a
Material Adverse Effect, Borrower has no material contingent obligations not
provided for or disclosed in the Public Reports.





5.8           Significant
Subsidiaries.  Schedule 3 contains
an accurate list of all Significant Subsidiaries of Borrower as of the Closing
Date setting forth their respective jurisdictions of
organization


26


and the
percentage of their respective capital stock or other ownership interests owned
by Borrower or other Subsidiaries of Borrower.  All of the issued and
outstanding shares of capital stock or other ownership interests of such
Significant Subsidiaries have been (to the extent such concepts are relevant
with respect to such ownership interests) duly authorized and issued and are
fully paid and nonassessable.





5.9           ERISA.  Each
Plan complies in all material respects with all applicable requirements of law
and regulations, no Reportable Event has occurred with respect to any Plan,
neither Borrower nor any other member of the Controlled Group has withdrawn from
any Plan or initiated steps to do so, and no steps have been taken to reorganize
or terminate any Plan.





5.10         Accuracy of
Information.  No written information, exhibit or report
furnished by Borrower or any of its Subsidiaries to the Agent or to any Lender
in connection with the negotiation of, or compliance with the Loan Documents
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not
misleading.





5.11         Regulation
U.  Neither Borrower nor any of its Subsidiaries is engaged
principally or as one of its primary activities in the business of extending
credit for the purpose of purchasing or carrying any "margin stock" (as defined
in Regulation U of the FRB).





5.12         Material
Agreements.  Neither Borrower nor any Subsidiary thereof is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse
Effect.





5.13         Compliance With
Laws.  Borrower and its Subsidiaries have complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material Adverse
Effect.





5.14         Plan Assets; Prohibited
Transactions.  Borrower is not an entity deemed to hold “plan
assets” within the meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan
(as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or
any plan (within the meaning of Section 4975 of the Code).





5.15         Environmental
Matters.  In the ordinary course of its business, the officers
of Borrower consider the effect of Environmental Laws on the business of
Borrower and its Subsidiaries, in the course of which they identify and evaluate
potential risks and liabilities accruing to Borrower and its Subsidiaries due to
Environmental Laws.  On the basis of this consideration, Borrower has
concluded that Environmental Laws are not reasonably expected to have a Material
Adverse Effect.  Except as disclosed in the Public Reports, neither
Borrower nor any Subsidiary thereof has received any notice to the effect that
its operations are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
noncompliance or remedial action could reasonably be expected to have a Material
Adverse Effect.





5.16         Investment Company
Act.  Neither Borrower nor any Subsidiary thereof is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940.





27


5.17         Insurance.  Borrower
and its Significant Subsidiaries maintain insurance with financially sound and
reputable insurance companies on all their Property of a character usually
insured by entities in the same or similar businesses similarly situated against
loss or damage of the kinds and in the amounts, customarily insured against by
such entities, and maintain such other insurance as is usually carried by such
entities.





5.18         No
Default.  No Default or Unmatured Default exists.





5.19         Ownership of
Properties.  As of the Closing Date, Borrower and its
Subsidiaries have valid title, free of all Liens other than those permitted by
Section 6.12,
to all the Property reflected as owned by Borrower and its Subsidiaries in the
financial statements of Borrower referred to in Section 5.4, other
than Property used, sold, transferred or otherwise disposed of since such date
(a) in the ordinary course of business or (b) which are not material to the
business of Borrower and its Subsidiaries taken as a whole.





5.20         OFAC.  None
of Borrower, any Subsidiary of Borrower or any Affiliate of Borrower: (i) is a
person named on the list of Specially Designated Nationals or Blocked Persons
maintained by the U.S. Department of the Treasury’s Office of Foreign Assets
Control available at
http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise
published from time to time; or (ii) is (A) an agency of the government of a
country, (B) an organization controlled by a country, or (C) a person resident
in a country that is subject to a sanctions program identified on the list
maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html, or as
otherwise published from time to time, as such program may be applicable to such
agency, organization or person; or (iii) derives more than 10% of its assets or
operating income from investments in or transactions with any such country,
agency, organization or person; and (iv) none of the proceeds from the Loans
will be used to finance any operations, investments or activities in, or make
any payments to, any such country, agency, organization, or person.





ARTICLE
VI


COVENANTS





During
the term of this Agreement, unless the Required Lenders shall otherwise consent
in writing:




6.1           Financial
Reporting.  Borrower will maintain, for itself and each of its
Subsidiaries, a system of accounting established and administered in accordance
with Agreement Accounting Principles, and furnish to the Agent (in such number
of copies as the Agent may reasonably request):
 
 (i)           Within
100 days after the close of its fiscal year, an audit report, which shall be
without a “going
concern” or similar qualification or exception and without any
qualification as to the scope of the audit, issued by independent certified
public accountants of recognized national standing and reasonably acceptable to
the Agent, prepared in accordance with Agreement Accounting Principles on a
consolidated and consolidating basis (consolidating statements need not be
certified by such accountants) for itself and its Subsidiaries, including
balance sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows, accompanied
by (a) any management letter prepared by said accountants, and (b) a certificate
of said accountants that, in the course of their examination necessary for their
certification of the foregoing, they have obtained no knowledge of any Default
or Unmatured Default with respect to Borrower, or if, in the opinion of such
accountants, any such Default or Unmatured Default shall exist, stating the
nature and status thereof; provided that if
Borrower is then a “registrant” w-ithin the meaning of Rule 1-01 of Regulation
S-X of the SEC
  28
  and
required to file a report on Form 10-K with the SEC, a copy of Borrower’s annual
report on Form 10-K (excluding the exhibits thereto, unless such exhibits are
requested under clause
(viii) of this Section) or any successor form and a manually executed
copy of the accompanying report of Borrower’s independent public accountant, as
filed with the SEC, shall satisfy the requirements of this clause
(i);


(ii) Within 60
days after the close of the first three quarterly periods of each of Borrower’s
fiscal years commencing during the term of this Agreement, for itself and its
Subsidiaries, either (i) consolidated and consolidating unaudited balance sheets
as at the close of each such period and consolidated and consolidating profit
and loss and reconciliation of surplus statements and a statement of cash flows
for the period from the beginning of such fiscal year to the end of such
quarter, all certified by its chief financial officer or (ii) if Borrower is
then a “registrant” within the meaning of Rule 1-01 of Regulation S-X of the SEC
and required to file a report on Form 10-Q with the SEC, a copy of Borrower’s
report on Form 10-Q for such quarterly period, excluding the exhibits thereto,
unless such exhibits are requested under clause (viii) of this
Section.





(iii)           Together
with the financial statements (or reports) required under Sections 6.1(i) and
(ii), a
compliance certificate in substantially the form of Exhibit A signed by
an Authorized Officer of Borrower showing the calculations necessary to
determine Borrower’s compliance with Section 6.13 of this
Agreement and stating that, to the knowledge of such officer, no Default or
Unmatured Default with respect to Borrower exists, or if any such Default or
Unmatured Default exists, stating the nature and status thereof.





(iv)           As
soon as possible and in any event within 30 days after receipt by Borrower, a
copy of (a) any notice or claim to the effect that Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the release by
Borrower, any of its Subsidiaries, or any other Person of any toxic or hazardous
waste or substance into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental, health or safety law or
regulation by Borrower or any of its Subsidiaries, which, in either case, could
be reasonably expected to have a Material Adverse Effect.





(v)           Promptly
upon Borrower’s furnishing thereof to its shareholders generally, copies of all
financial statements, reports and proxy statements so furnished.





(vi)           Promptly
upon the filing thereof, copies of all registration statements and annual,
quarterly, monthly or other regular reports which Borrower or any of its
Subsidiaries files with the SEC.





(vii)           As
soon as Borrower obtains knowledge of an actual Change in Control or publicly
disclosed prospective Change in Control, written notice of same, including the
anticipated or actual date of and all other publicly disclosed material terms
and conditions surrounding such proposed or actual Change in
Control.





(viii)           Such
other information (including nonfinancial information) as the Agent or any
Lender may from time to time reasonably request.





Documents
required to be delivered pursuant to clause (i), (ii), (v) or (vi) above may be
delivered electronically and, if so delivered, shall be deemed to have been
delivered on the date (i) on which Borrower posts such documents, or provides a
link thereto, on a website on the internet at a website address previously
specified to the Agent and the Lenders; or (ii) on which such documents are
posted on


29


Borrower’s
behalf on IntraLinks or another relevant website, if any, to which each of the
Agent and each Lender has access; provided that (i)
upon request of the Agent or any Lender, Borrower shall deliver paper copies of
such documents to the Agent or such Lender (until a written request to cease
delivering paper copies is given by the Agent or such Lender) and (ii) Borrower
shall notify (which may be by facsimile or electronic mail) the Agent and each
Lender of the posting of any documents.  The Agent shall have no
obligation to request the delivery of, or to maintain copies of, the documents
referred to above or to monitor compliance by Borrower with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery to
it or maintaining its copies of such documents.





6.2           Use of
Proceeds.  Borrower will use the proceeds of the Advances to it
for general corporate purposes.  Borrower will not, nor will it permit
any Subsidiary to, use any of the proceeds of the Advances to purchase or carry
any “margin stock” (as defined in Regulation U of the FRB).





6.3           Notice of
Default/Rating
Change.  Borrower will give prompt notice in writing to the
Lenders of the occurrence of (i) any Default or Unmatured Default (it being
understood and agreed that Borrower shall not be required to make separate
disclosure under this Section 6.3 of
occurrences or developments which have previously been disclosed to the Lenders
in any financial statement or other information delivered to the Lenders
pursuant to Section
6.1) or (ii) any change in a Rating (as defined on Schedule
1).





6.4           Conduct of
Business.  Borrower will, and will cause each of its
Significant Subsidiaries (or, in the case of clause (ii) below,
each of its Subsidiaries) to, (i) carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted and (ii) do all things necessary to remain duly
incorporated or organized, validly existing and (to the extent such concept
applies to such entity) in good standing as a domestic corporation, partnership
or limited liability company in its jurisdiction of incorporation or
organization, as the case may be, and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted,
except to the extent, in the case of all matters covered by this clause (ii) other
than the existence of Borrower, that failure to do so would not reasonably be
expected to have a Material Adverse Effect.





6.5           Taxes.  Borrower
will, and will cause each of its Subsidiaries to, timely file complete and
correct United States federal and applicable foreign, state and local tax
returns required by law and pay when due all taxes, assessments and governmental
charges and levies upon it or its income, profits or Property, except (a) those
that are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been set aside in accordance with
Agreement Accounting Principles and (b) taxes, governmental charges and levies
(in addition to those referred to in clause (a)) in an
aggregate amount not exceeding $1,000,000.





6.6           Insurance.  Borrower
will, and will cause each of its Significant Subsidiaries to, maintain with
financially sound and reputable insurance companies insurance on all of its
Property in such amounts and covering such risks as is consistent with sound
business practice, and Borrower will furnish to any Lender such information as
such Lender may reasonably request as to the insurance carried by Borrower and
its Significant Subsidiaries.





6.7           Compliance with
Laws.  Borrower will, and will cause each of its Subsidiaries
to, comply with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, including all
Environmental Laws, where failure to do so could reasonably be expected to have
a Material Adverse Effect.





30


6.8           Maintenance of
Properties.  Borrower will, and will cause each of its
Subsidiaries to, do all things necessary to (a) maintain, preserve, protect and
keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times, where
failure to do so could reasonably be expected to have a Material Adverse Effect;
and (b) keep proper books and records in which full and correct entries shall be
made of all material financial transactions of Borrower and its
Subsidiaries.





6.9           Inspection.  Borrower
will, and will cause each of its Significant Subsidiaries to, permit the Agent
and the Lenders upon reasonable notice and at such reasonable times and
intervals as the Agent or any Lender may designate by their respective
representatives and agents, to inspect any of the Property, books and financial
records of Borrower and each such Significant Subsidiary, to examine and make
copies of the books of accounts and other financial records of Borrower and each
such Significant Subsidiary, and to discuss the affairs, finances and accounts
of Borrower and each such Significant Subsidiary with, and to be advised as to
the same by, their respective officers.





6.10         Merger.  Borrower
will not, nor will it permit any of its Significant Subsidiaries to, merge or
consolidate with or into any other Person, except that, so long as both
immediately prior to and after giving effect to such merger or consolidation, no
Default or Unmatured Default shall have occurred and be continuing, (i) any
Significant Subsidiary of Borrower may merge with Borrower or a wholly-owned
Subsidiary of Borrower and (ii) Borrower may merge or consolidate with any other
Person so long as Borrower is the surviving entity.





6.11         Sales of
Assets.  Borrower will not, nor will it permit any of its
Subsidiaries to, lease, sell or otherwise dispose of any of its assets (other
than in the ordinary course of business), or sell or assign with or without
recourse any accounts receivable, except:





(i)           Any
Subsidiary of Borrower may sell, transfer or assign any of its assets to
Borrower or another Subsidiary of Borrower.





(ii)           The
sale, assignment or other transfer of accounts receivable or other rights to
payment pursuant to any Securitization Transaction.





(iii)           Any
Permitted PHI Asset Sale so long as, at the time thereof and immediately after
giving effect thereto, no Default or Unmatured Default exists.





(iv)           Any
Permitted ACE Asset Sale so long as, at the time thereof and immediately after
giving effect thereto, no Default or Unmatured Default exists.





(v)           Any
Permitted DPL Asset Sale so long as, at the time thereof and immediately after
giving effect thereto, no Default or Unmatured Default exists.





(vi)           Any
Permitted PEPCO Asset Sale so long as, at the time thereof and immediately after
giving effect thereto, no Default or Unmatured Default exists.





(vii)           So
long as no Default or Unmatured Default exists or would result therefrom, the
sale of Intangible Transition Property to a Special Purpose Subsidiary in
connection with such Special Purpose Subsidiary’s issuance of Nonrecourse
Transition Bond Debt.





(viii)           Borrower
and its Subsidiaries may sell or otherwise dispose of assets so long as the
aggregate book value of all assets sold or otherwise disposed of in any fiscal
year of Borrower


31





(other
than assets sold or otherwise disposed of in the ordinary course of business or
pursuant to clauses
(i) through (vii) above) does not
exceed a Substantial Portion of the Property of Borrower.





6.12         Liens.  Borrower
will not, nor will it permit any of its Significant Subsidiaries to, create,
incur, or suffer to exist any Lien in, of or on the Property of Borrower or any
such Significant Subsidiary, except:





(i)           Liens
for taxes, assessments or governmental charges or  levies on its
Property if  the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and
by appropriate proceedings and for which adequate reserves in accordance with
Agreement Accounting Principles shall have been set aside on its
books.





(ii)           Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ liens and other
similar liens arising in the ordinary course of business which secure payment of
obligations not more than 90 days past due or which are being contested in good
faith by appropriate proceedings and for which adequate reserves shall have been
set aside on its books.





(iii)           Liens
arising out of pledges or deposits under worker’s compensation laws,
unemployment insurance, old age pensions, or other social security or retirement
benefits, or similar legislation.





(iv)           Utility
easements, building restrictions, zoning laws or ordinances and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of Borrower and its Significant
Subsidiaries.





(v)           Liens
existing on the date hereof and described in Schedule 4 (including
Liens on after-acquired property arising under agreements described in Schedule 4 as such
agreements are in effect on the date hereof).





(vi)           Judgment
Liens which secure payment of legal obligations that would not constitute a
Default with respect to Borrower under Article
VII.





(vii)           Liens
on Property acquired by Borrower or a Significant Subsidiary after the date
hereof, existing on such Property at the time of acquisition thereof (and not
created in anticipation thereof), provided that in any
such case no such Lien shall extend to or cover any other Property of Borrower
or such Significant Subsidiary, as the case may be.





(viii)           Deposits
and/or similar arrangements to secure the performance of bids, fuel procurement
contracts or other trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business by
Borrower or any of its Significant Subsidiaries.





(ix)           Liens
on assets of Borrower and its Significant Subsidiaries arising out of
obligations or duties to any municipality or public authority with respect to
any franchise, grant, license, permit or certificate.


(x)           Rights
reserved to or vested in any municipality or public authority to control or
regulate any property or asset of Borrower or any of its Significant
Subsidiaries or to use such
  32
  property
or asset in a manner which does not materially impair the use of such property
or asset for the purposes for which it is held by Borrower or such Significant
Subsidiary.


(xi)           Irregularities
in or deficiencies of title to any Property which do not materially affect the
use of such property by Borrower or any of its Significant Subsidiaries in the
normal course of its business.





(xii)           Liens
securing Indebtedness of Borrower and its Subsidiaries incurred to finance the
acquisition of fixed or capital assets, provided that (i)
such Liens shall be created substantially simultaneously with the acquisition of
such fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness, (iii) the
principal amount of Indebtedness secured thereby is not increased and (iv) the
principal amount of Indebtedness secured by any such Lien shall at no time
exceed 100% of the original purchase price of such property at the time it was
acquired.





(xiii)           Any
Lien on any property or asset of any corporation or other entity existing at the
time such corporation or entity is acquired, merged or consolidated or
amalgamated with or into Borrower or any Significant Subsidiary thereof and not
created in contemplation of such event.





(xiv)           Liens
arising out of the refinancing, extension, renewal or refunding of any
Indebtedness secured by any Lien permitted by Section 6.12 (v),
(vii), (xii) or (xiii), provided that
such Indebtedness is not increased and is not secured by any additional
assets.





(xv)           Rights
of lessees arising under leases entered into by Borrower or any of its
Significant Subsidiaries as lessor, in the ordinary course of
business.





(xvi)           Permitted
PEPCO Liens.





(xvii)          Permitted
DPL Liens.





(xviii)         Permitted
ACE Liens.





(xix)           Permitted
PHI Liens.





(xx)           Purchase
money mortgages or other purchase money liens or conditional sale,
lease-purchase or other title retention agreements upon or in respect of
property acquired or leased for use in the ordinary course of its business by
Borrower or any of its Significant Subsidiaries.





(xxi)           Liens
granted by a Special Purpose Subsidiary to secure Nonrecourse Transition Bond
Debt of such Special Purpose Subsidiary.





(xxii)           Liens,
in addition to those permitted by clauses (i) through
(xxi), granted
by Borrower and its Subsidiaries (other than ACE, DPL or PEPCO and their
Subsidiaries) to secure Nonrecourse Indebtedness incurred after the date hereof,
provided that
the aggregate amount of all Indebtedness secured by such Liens shall not at any
time exceed $200,000,000.





(xxiii)          Liens,
if any, in favor of the Swingline Lender to cash collateralize or otherwise
secure the obligations of a Defaulting Lender or an Impacted Lender to fund risk
participations hereunder.


33





(xxiv)          Other
Liens, in addition to those permitted by clauses (i) through
(xxiii),
securing Indebtedness or arising in connection with Securitization Transactions,
provided that
the sum (without duplication) of all such Indebtedness, plus the aggregate
investment or claim held at any time by all purchasers, assignees or other
transferees of (or of interests in) receivables and other rights to payment in
all Securitization Transactions (excluding any Nonrecourse Transition Bond
Debt), shall not at any time exceed $700,000,000 for Borrower and its
Significant Subsidiaries.





6.13         Leverage
Ratio.  Borrower will not permit the ratio, determined as of
the end of each of its fiscal quarters, of (i) the Total Indebtedness of
Borrower to (ii) the Total Capitalization of Borrower to be greater than 0.65 to
1.0.  For purposes of this Section, the aggregate outstanding
Indebtedness evidenced by Hybrid Securities up to an aggregate amount of 15% of
Total Capitalization as of the date of determination, shall be excluded from
Total Indebtedness, but the entire aggregate outstanding Indebtedness evidenced
by such Hybrid Securities shall be included in the calculation of Total
Capitalization.





ARTICLE
VII


DEFAULTS





The
occurrence of any one or more of the following events shall constitute a Default
with respect to Borrower:





7.1           Representation or
Warranty.  Any representation or warranty made, or deemed made
pursuant to Section
4.2 by Borrower to the Swingline Lender, the Lenders or the Agent under
or in connection with this Agreement or any certificate or information delivered
in connection with this Agreement or any other Loan Document shall be materially
false on the date as of which made.





7.2           Nonpayment.  Nonpayment
of the principal of any Loan when due or nonpayment of any interest on any Loan,
or of any commitment fee, or other obligation payable by Borrower under any of
the Loan Documents, within five days after the same becomes due.





7.3           Certain Covenant
Breaches.  The breach by Borrower of any of the terms or
provisions of Section
6.2, 6.4
(as to the existence of Borrower), 6.10, 6.11, 6.12 or 6.13.





7.4           Other
Breaches.  The breach by Borrower (other than a breach which
constitutes a Default under another Section of this Article VII) of any
of the terms or provisions of this Agreement which is not remedied within 15
days (or, in the case of Section 6.9, five
Business Days) after the chief executive officer, the chief financial officer,
the President, the Treasurer or any Assistant Treasurer of Borrower obtains
actual knowledge of such breach.





7.5           Cross
Default.  Failure of Borrower or any of its Significant
Subsidiaries to pay when due any Indebtedness aggregating in excess of
$50,000,000 (“Material
Indebtedness”); or the default by Borrower or any of its Significant
Subsidiaries in the performance (beyond the applicable grace period with respect
thereto, if any) of any term, provision or condition contained in any agreement
under which any such Material Indebtedness was created or is governed, or any
other event shall occur or condition exist, the effect of which default or event
is to cause, or to permit the holder or holders of such Material Indebtedness to
cause, such Material Indebtedness to become due prior to its stated maturity; or
any Material Indebtedness of Borrower or any of its Significant Subsidiaries
shall be declared to be due and payable or required to be prepaid or repurchased
(other than by a regularly scheduled payment) prior to the stated maturity
thereof; or Borrower or any of its Significant Subsidiaries shall not pay, or
admit in writing its inability to pay, its debts generally as they become
due.


34





7.6           Voluntary Bankruptcy,
etc.  Borrower or any of its Significant Subsidiaries shall (i)
have an order for relief entered with respect to it under the federal bankruptcy
laws as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or a Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate, partnership or limited liability
company action to authorize or effect any of the foregoing actions set forth in
this Section
7.6 or (vi) fail to contest in good faith any appointment or proceeding
described in Section
7.7.





7.7           Involuntary Bankruptcy,
etc.  Without the application, approval or consent of Borrower
or any of its Significant Subsidiaries, as applicable, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for Borrower or any
of its Significant Subsidiaries or a Substantial Portion of its Property, or a
proceeding described in Section 7.6(iv) shall
be instituted against Borrower or any of its Significant Subsidiaries and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 30 consecutive days.





7.8           Seizure of Property,
etc.  Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control of, all or
any portion of the Property of Borrower and its Significant Subsidiaries which,
when taken together with all other Property of Borrower and its Significant
Subsidiaries so condemned, seized, appropriated, or taken custody or control of,
constitutes a Substantial Portion of its Property.





7.9           Judgments.  Borrower
or any of its Significant Subsidiaries shall fail within 60 days to pay, bond or
otherwise discharge one or more (i) judgments or orders for the payment of money
in excess of $50,000,000 (or the equivalent thereof in currencies other than
U.S. Dollars) in the aggregate or (ii) nonmonetary judgments or orders which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and, in any such case, there is a period of five
consecutive days during which a stay of enforcement of such judgment(s) or
order(s) is not in effect (by reason of pending appeal or
otherwise).





7.10         ERISA.  (i)
Any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of Borrower or any other member of the
Controlled Group, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any other
member of the Plan shall terminate for purposes of Title IV of ERISA, (v)
Borrower or any other member of the Controlled Group shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the insolvency or reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case referred to in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect.





35


7.11         Unenforceability of Loan
Documents.  Any Loan Document shall cease to be in full force
and effect (other than, in the case of a Note, as contemplated hereby), any
action shall be taken by or on behalf of Borrower to discontinue or to assert
the invalidity or unenforceability of any of its obligations under any Loan
Document, or Borrower or any Person acting on behalf of Borrower shall deny that
Borrower has any further liability under any Loan Document or shall give notice
to such effect.





7.12         Change in
Control.  Any Change in Control shall occur, or PHI shall fail
to own, directly or indirectly, 100% of the Voting Stock of each of ACE, DPL and
PEPCO.





ARTICLE
I


ACCELERATION, WAIVERS,
AMENDMENTS AND REMEDIES





8.1           Acceleration.  If
any Default described in Section 7.6 or 7.7 occurs, the
obligations of the Lenders (including the Swingline Lender) to make Credit
Extensions to Borrower hereunder shall automatically terminate and the
Obligations of Borrower shall immediately become due and payable without any
election or action on the part of the Agent or any Lender.  If any
other Default occurs, the Required Lenders (or the Agent with the consent of the
Required Lenders) may (i) terminate or suspend the obligations of the Lenders
(including the Swingline Lender) to make Credit Extensions to Borrower
hereunder, or declare the Obligations of Borrower to be due and payable, or
both, whereupon such obligations of the Lenders (including the Swingline Lender)
shall terminate and/or the Obligations of Borrower shall become immediately due
and payable, without presentment, demand, protest or notice of any kind, all of
which Borrower hereby expressly waives and/or (ii) exercise all rights and
remedies available to the Agent and the Lenders under the Loan
Documents.





If,
within 30 days after termination of the obligations of the Lenders to make
Credit Extensions to Borrower hereunder or acceleration of the maturity of the
Obligations as a result of any Default (other than any Default as described in
Section 7.6 or
7.7) and before
any judgment or decree for the payment of the Obligations due shall have been
obtained or entered, the Required Lenders (in their sole discretion) shall so
direct, the Agent shall, by notice to Borrower, rescind and annul such
termination and/or acceleration.





8.2           Amendments.  Subject
to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to this Agreement changing in any
manner the rights of the Lenders or Borrower hereunder or waiving any Default or
Unmatured Default hereunder; provided that no such
supplemental agreement shall, without the consent of all of the
Lenders:





(i)           Extend
the final maturity of any Loan or the Facility Termination Date or forgive all
or any portion of the principal amount of any Loans or reduce the rate or extend
the time of payment of interest thereon or on any commitment fees.





(ii)           Reduce
the percentage specified in the definition of Required Lenders.





(iii)           Other
than as provided in Section 2.2, increase
the amount of the Commitment of any Lender hereunder or permit Borrower to
assign its rights under this Agreement.





(iv)           Amend
this Section
8.2.





No
amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent.  No amendment of
this Agreement relating to the Swingline Lender shall be


36


effective
without the written consent of the Swingline Lender.  The Agent may
waive payment of the fee required under Section 12.3(ii)
without obtaining the consent of any other party to this Agreement.





8.3           Preservation of
Rights.  No delay or omission of the Agent, the Swingline
Lender or the other Lenders to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or Unmatured
Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or Unmatured Default or the inability
of Borrower to satisfy the conditions precedent to such Credit Extension shall
not constitute any waiver or acquiescence.  Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of any Loan Document whatsoever shall be
valid unless in writing signed by the parties required pursuant to Section 8.2 and then
only to the extent in such writing specifically set forth.  All
remedies contained in the Loan Documents or by law afforded shall be cumulative
and all shall be available to the Agent, the Swingline Lender and the other
Lenders until the Obligations have been paid in full.





ARTICLE
IX


GENERAL
PROVISIONS





9.1           Survival of
Representations.  All representations and warranties of
Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.





9.2           Governmental
Regulation.  Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.





9.3           Headings.  Section
headings in the Loan Documents are for convenience of reference only, and shall
not govern the interpretation of any of the provisions of the Loan
Documents.





9.4           Entire
Agreement.  The Loan Documents embody the entire agreement and
understanding among Borrower, the Agent and the Lenders and supersede all prior
agreements and understandings among Borrower, the Agent and the Lenders relating
to the subject matter thereof.





9.5           Several Obligations;
Benefits of this Agreement.  The respective obligations of the
Lenders hereunder are several and not joint and no Lender shall be the partner
or agent of any other (except to the extent to which the Agent is authorized to
act as such).  The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder.  This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns, provided that the
parties hereto expressly agree that the Arranger shall enjoy the benefits of the
provisions of Sections
9.6, 9.10 and 10.11 to the extent
specifically set forth therein and shall have the right to enforce such
provisions on its own behalf and in its own name to the same extent as if it
were a party to this Agreement.





9.6           Expenses;
Indemnification.





(i)           Borrower
shall reimburse the Agent and the Arranger for all reasonable costs, internal
charges and out of pocket expenses including reasonable expenses of and fees for
attorneys for the Agent and the Arranger who are employees of the Agent or the
Arranger and of a single outside counsel for all of the Agent and the Arranger
paid or incurred by the Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, syndication, review, amendment,
modification and


37


administration
of the Loan Documents.  Borrower agrees to reimburse the Agent, the
Arranger and the Lenders for (A) all reasonable costs, internal charges and out
of pocket expenses (including reasonable attorneys’ fees and time charges of
attorneys for the Agent, the Arranger and the Lenders, which attorneys may be
employees of the Agent, the Arranger or a Lender) paid or incurred by the Agent,
the Arranger or any Lender in connection with the collection and enforcement of
the Obligations of Borrower under the Loan Documents (including in any
“work-out” or restructuring of the Obligations resulting from the occurrence of
a Default) and (B) any civil penalty or fine assessed by OFAC against, and all
reasonable costs and expenses (including reasonable counsel fees and
disbursements) incurred in connection with defense thereof, by the Agent or any
Lender as a result of conduct by Borrower that violates a sanction enforced by
OFAC.





(ii)           Borrower
agrees to indemnify the Agent, the Arranger, each Lender, their respective
affiliates, and each of the directors, officers and employees of the foregoing
Persons (each such Person an “Indemnified Party”
and collectively, the “Indemnified Parties”)
against all losses, claims, damages, penalties, judgments, liabilities and
reasonable expenses (including all reasonable expenses of litigation or
preparation therefor whether or not any Indemnified Party is a party thereto)
which any of them may pay or incur arising out of or relating to this Agreement,
the other Loan Documents, the transactions contemplated hereby, or the direct or
indirect application or proposed application of the proceeds of any Credit
Extension hereunder, except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Indemnified Party seeking
indemnification.  The obligations of Borrower under this Section 9.6 shall
survive the termination of this Agreement.





9.7           Numbers of
Documents.  All statements, notices, closing documents and
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.





9.8           Disclosure.  Borrower
and the Lenders hereby (i) acknowledge and agree that Bank of America and/or its
Affiliates from time to time may hold investments in, make other loans to or
have other relationships with Borrower and their Affiliates and (ii) waive any
liability of Bank of America or any of its Affiliates to Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or
relationships other than liabilities arising out of the gross negligence or
willful misconduct of Bank of America or its Affiliates.





9.9           Severability of
Provisions.  Any provision in any Loan Document that is held to
be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.





9.10         Nonliability of
Lenders.  The relationship between Borrower on the one hand and
the Lenders and the Agent on the other hand shall be solely that of borrower and
lender.  None of the Agent, the Arranger or any Lender shall have any
fiduciary responsibility to Borrower.  None of the Agent, the Arranger
or any Lender undertakes any responsibility to Borrower to review or inform
Borrower of any matter in connection with any phase of Borrower’s business or
operations.  Borrower agrees that none of the Agent, the Arranger or
any Lender shall have liability to Borrower (whether sounding in tort, contract
or otherwise) for losses suffered by Borrower in connection with, arising out
of, or in any way related to, the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable judgment
by a court of competent jurisdiction that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery is
sought.  None of the Agent, the  Arranger or
any


38


Lender
shall have any liability with respect to, and Borrower hereby waives, releases
and agrees not to sue for, any special, indirect or consequential damages
suffered by Borrower in connection with, arising out of, or in any way related
to the Loan Documents or the transactions contemplated thereby.





9.11         Limited
Disclosure.





(i)           None
of the Agent, the Swingline Lender nor any other Lender shall disclose to any
Person any Specified Information (as defined below) except to its, and its
Affiliates’, officers, employees, agents, accountants, legal counsel, advisors
and other representatives who have a need to know such Specified Information in
connection with this Agreement or the transactions contemplated
hereby.  “Specified
Information” means information that Borrower has furnished or in the
future furnishes to the Agent, the Swingline Lender or any other Lender in
confidence, but does not include any such information that (a) is published in a
source or otherwise becomes generally available to the public (other than
through the actions of the Agent, the Swingline Lender, any other Lender or any
of their Affiliates, officers, employees, agents, accountants, legal counsel,
advisors and other representatives in violation of this Agreement) or that is or
becomes available to the Agent, the Swingline Lender or such other Lender from a
source other than Borrower,  (b) without duplication with clause (b)
above, is otherwise a matter of general public knowledge, (c) that is required
to be disclosed by law, regulation or judicial order (including pursuant to the
Code), (d) that is requested by any regulatory body with jurisdiction over the
Agent, the Swingline Lender or any other Lender, (e) that is disclosed to legal
counsel, accountants and other professional advisors to the Agent, the Swingline
Lender or such other Lender, in connection with the exercise of any right or
remedy hereunder or under any Note or any suit or other litigation or proceeding
relating to this Agreement or any Note or to a rating agency if required by such
agency in connection with a rating relating to Credit Extensions hereunder, (f)
that is disclosed to assignees or participants or potential assignees or
participants who agree to be bound by the provisions of this Section 9.11 or (g)
that is disclosed to any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to Borrower and its obligations who
agrees to be bound by the provisions of this Section
9.11.





(ii)           The
provisions of this Section 9.11
supersede any confidentiality obligations of any Lender, the Swingline Lender or
the Agent relating to this Agreement or the transactions contemplated hereby
under any agreement between Borrower and any such party.





9.12         Nonreliance.  Each
Lender hereby represents that it is not relying on or looking to any margin
stock (as defined in Regulation U of the FRB) for the repayment of the Credit
Extensions provided for herein.





9.13         USA PATRIOT ACT
NOTIFICATION.  The following notification is provided to Borrower
pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section
5318:





IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government
fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify and record information
that identifies each person or entity that opens an account, including any
deposit account, treasury management account, loan, other extension of credit or
other financial services product.  What this means for
Borrower:  When a borrower opens an account, if such borrower is an
individual, the Agent and the Lenders will ask for such borrower’s name,
residential address, tax identification number, date of birth and other
information that will allow the Agent and the Lenders to identify such borrower,
and, if a borrower is not an individual, the Agent and the Lenders will ask for
such borrower’s name, tax identification number, business address and other
information that will allow the Agent and the Lenders to identify such
borrower.  The Agent and the Lenders may also ask, if a borrower is an
individual, to see such borrower’s driver’s license or other


39


identifying
documents, and, if the borrower is not an individual, to see the borrower’s
legal organizational documents or other identifying documents.





9.14     Interest Rate
Limitation.





Notwithstanding
anything to the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable law (the “Maximum
Rate”).  If the Agent or any Lender shall receive interest in
an amount that exceeds the Maximum Rate, the excess interest shall be applied to
the principal of the Loans or, if it exceeds such unpaid principal, refunded to
the Borrower.  In determining whether the interest contracted for,
charged, or received by the Agent or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by applicable law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.





ARTICLE
X


THE
AGENT





10.1         Appointment; Nature of
Relationship.  Bank of America is hereby appointed by each of
the Lenders as its contractual representative (herein referred to as the “Agent”) hereunder and
under each other Loan Document, and each of the Lenders irrevocably authorizes
the Agent to act as the contractual representative of such Lender with the
rights and duties expressly set forth herein and in the other Loan
Documents.  The Agent agrees to act as such contractual representative
upon the express conditions contained in this Article
X.  Notwithstanding the use of the defined term “Agent,” it is
expressly understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents.  In its capacity as the
Lenders’ contractual representative, the Agent (i) does not hereby assume any
fiduciary duties to any of the Lenders, (ii) is a “representative” of the
Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and
(iii) is acting as an independent contractor, the rights and duties of which are
limited to those expressly set forth in this Agreement and the other Loan
Documents.  Each of the Lenders hereby agrees to assert no claim
against the Agent on any agency theory or any other theory of liability for
breach of fiduciary duty, all of which claims each Lender hereby
waives.





10.2         Powers.  The
Agent shall have and may exercise such powers under the Loan Documents as are
specifically delegated to the Agent by the terms of each thereof, together with
such powers as are reasonably incidental thereto.  The Agent shall
have no implied duties to the Lenders, or any obligation to the Lenders to take
any action hereunder or under any other Loan Document except any action
specifically provided by the Loan Documents to be taken by the
Agent.  Except as expressly set forth herein and in the other Loan
Documents, the Agent shall not be liable for the failure to disclose any
information relating to the Borrower or its Affiliates that is communicated to
or obtained by the Person serving as the Agent or any of its Affiliates in any
capacity.





10.3         General
Immunity.  Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to Borrower or any Lender for any
action taken or omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith except to the extent such
action or inaction is determined in a final non-appealable judgment by a court
of competent jurisdiction to have arisen from the gross negligence or willful
misconduct of such Person.





40


10.4         No Responsibility for Loans
Recitals etc.  Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (a) any statement, warranty or representation
made in connection with any Loan Document or any borrowing hereunder; (b) the
performance or observance of any of the covenants or agreements of any obligor
under any Loan Document, including any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any condition
specified in Article
IV, except to confirm receipt of items expressly required to be delivered
solely to the Agent; (d) the existence or possible existence of any Default or
Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency
or genuineness of any Loan Document or any other instrument or writing furnished
in connection therewith; or (f) the contents of any certificate, report or other
document delivered hereunder or under any other Loan Document.  The
Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by Borrower to the Agent at such time, but is
voluntarily furnished by Borrower to the Agent (either in its capacity as Agent
or in its individual capacity).





10.5         Action on Instructions of
Lenders.  The Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and under any other Loan
Document in accordance with written instructions signed by the Required Lenders
(or, when expressly required hereunder, all of the Lenders), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders.  The Lenders hereby acknowledge that
the Agent shall be under no duty to take any discretionary action permitted to
be taken by it pursuant to the provisions of this Agreement or any other Loan
Document unless it shall be  requested in writing to do so by the
Required Lenders.  The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document unless
it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.





10.6         Employment of Agents and
Counsel.  The Agent may execute any of its duties as Agent
hereunder and under any other Loan Document by or through employees, agents and
attorneys in fact and shall not be answerable to the Lenders, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys in fact selected by it with
reasonable care.  The Agent shall be entitled to advice of counsel
concerning the contractual arrangement between the Agent and the Lenders and all
matters pertaining to the Agent’s duties hereunder and under any other Loan
Document.





10.7         Reliance on Documents;
Counsel.  The Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any Note, notice, consent,
certificate, affidavit, letter, telegram, statement, paper or document
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and correct and to have been signed
or sent by the proper person or persons, and, in respect to legal matters, upon
the opinion of counsel selected by the Agent, which counsel may be employees of
the Agent.





10.8         Agent’s Reimbursement and
Indemnification.  The Lenders agree to reimburse and indemnify
the Agent ratably in proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to their Commitments immediately
prior to such termination) (i) for any amounts not reimbursed by Borrower for
which the Agent is entitled to reimbursement by Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents (including for any expenses incurred by
the Agent in connection with any dispute between the Agent and any Lender or
between two or more of the Lenders) and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any document delivered in connection therewith or
the


41


transactions
contemplated thereby (including for any such amounts incurred by or asserted
against the Agent in connection with any dispute between the Agent and any
Lender or between two or more of the Lenders), or the enforcement of any of the
terms of the Loan Documents or of any such other documents, provided that (i) no
Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Agent and (ii) any indemnification required pursuant to Section 3.5(vii)
shall, notwithstanding the provisions of this Section 10.8, be paid
by the relevant Lender in accordance with the provisions thereof.  The
obligations of the Lenders under this Section 10.8 shall
survive payment of the Obligations and termination of this
Agreement.





10.9         Notice of
Default.  The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Unmatured Default hereunder (except
for failure of Borrower to pay any amount required to be paid to the Agent
hereunder for the account of the Lenders) unless the Agent has received written
notice from a Lender or Borrower referring to this Agreement, describing such
Default or Unmatured Default and stating that such notice is a “notice of
default”.  In the event that the Agent receives such a notice,
the Agent shall give prompt notice thereof to all Lenders.





10.10       Rights as a
Lender.  In the event the Agent is a Lender, the Agent shall
have the same rights and powers hereunder and under any other Loan Document with
respect to its Commitment, its Loans and its participation in the Swingline
Loans as any Lender and may exercise the same as though it were not the Agent,
and the term “Lender” or “Lenders” shall, at
any time when the Agent is a Lender, unless the context otherwise indicates,
include the Agent in its individual capacity.  The Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with Borrower or any
of its Subsidiaries in which Borrower or such Subsidiary is not restricted
hereby from engaging with any other Person.  The Agent in its
individual capacity is not obligated to remain a Lender.





10.11       Lender Credit
Decision.  Each Lender acknowledges that it has, independently
and without reliance upon the Agent, the Arranger, any other Lender or any of
their respective Affiliates, partners, directors, officers, employees, agents,
trustees and advisors and based on the financial statements prepared by Borrower
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other Loan
Documents.  Each Lender also acknowledges that it will, independently
and without reliance upon the Agent, the Arranger, any other Lender or any of
their respective Affiliates, partners, directors, officers, employees, agents,
trustees and advisors and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan
Documents.





10.12       Successor
Agent.  The Agent may resign at any time by giving written
notice thereof to the Lenders and Borrower, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign.  The Agent may be removed at any time with or
without cause by written notice received by the Agent from the Required Lenders,
such removal to be effective on the date specified by the Required
Lenders.  Upon any such resignation or removal, the Required Lenders
shall have the right (with, so long as no Default or Unmatured Default exists,
the consent of Borrower, which shall not be unreasonably withheld or delayed) to
appoint, on behalf of Borrower and the Lenders, a successor Agent.  If
no successor Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Agent’s giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of Borrower and the
Lenders, a successor Agent.  Notwithstanding the previous sentence,
the Agent may at any time without the consent of any Lender but with the consent
of Borrower, not to be unreasonably


42


withheld
or delayed, appoint any of its Affiliates which is a commercial bank as a
successor Agent hereunder.  If the Agent has resigned or been removed
and no successor Agent has been appointed, the Lenders may perform all the
duties of the Agent hereunder and Borrower shall make all payments in respect of
their respective Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders.  No successor Agent shall be
deemed to be appointed hereunder until such successor Agent has accepted the
appointment.  Any such successor Agent shall be a commercial bank with
an office in the United States having capital and retained earnings of at least
$100,000,000.  Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning or removed Agent.  Upon the effectiveness of the resignation
or removal of the Agent, the resigning or removed Agent shall be discharged from
its duties and obligations hereunder and under the Loan
Documents.  After the effectiveness of the resignation or removal of
an Agent, the provisions of this Article X shall
continue in effect for the benefit of such Agent in respect of any actions taken
or omitted to be taken by it while it was acting as the Agent hereunder and
under the other Loan Documents.  In the event that there is a
successor to the Agent (by merger or resignation or removal), or the Agent
assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then
the term “Prime
Rate” as used in this Agreement shall mean the prime rate, base rate or
other analogous rate of the new Agent.  Notwithstanding the foregoing
provisions of this Section 10.12, the
Agent may not be removed by the Required Lenders unless the Agent (in its
individual capacity) is concurrently removed from its duties and
responsibilities as the Swingline Lender.  Any resignation by Bank of
America as Agent pursuant to this Section shall also constitute its resignation
as Swingline Lender.





10.13       Agent’s
Fee.  Borrower agrees to pay to each of the Agent and the
Arranger, for the Agent’s or the Arranger’s own account, the fees agreed to by
Borrower and the Agent or the Arranger, as applicable.





10.14       Delegation to
Affiliates.  Borrower and the Lenders agree that the Agent may
delegate any of its duties under this Agreement to any of its
Affiliates.  Any such Affiliate (and such Affiliate’s directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver
and other protective provisions to which the Agent is entitled under Articles IX and X.





10.15       Other
Agents.  None of the Lenders identified on the cover page or
signature pages of this Agreement or otherwise herein as being the “Syndication Agent” or
a “Documentation
Agent” (collectively, the “Other Agents”) shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders.  Each Lender
acknowledges that it has not relied, and will not rely, on any of the Other
Agents in deciding to enter into this Agreement or in taking or refraining from
taking any action hereunder or pursuant hereto.





ARTICLE
II


SETOFF; RATABLE
PAYMENTS





11.1         Setoff.  In
addition to, and without limitation of, any rights of the Lenders and the
Swingline Lender under applicable law, if Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
the Swingline Lender or any Affiliate of any Lender or the Swingline Lender to
or for the credit or account of  Borrower may be offset and applied
toward the payment of the Obligations of Borrower owing to such Lender or the
Swingline Lender, whether or not the Obligations, or any part thereof, shall
then be due and irrespective of whether or not such Lender shall have made any
demand under this Agreement or any other Loan Document.


43





11.2         Ratable
Payments.  If any Lender, whether by setoff or otherwise, has
payment made to it upon the Outstanding Credit Extensions owed to it by Borrower
(other than (i) payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5, (ii) payments
made to the Swingline Lender in respect of Swingline Loans so long as the
Lenders have not funded their participations therein and (iii) any amounts
received by the Swingline Lender to secure the obligations of a Defaulting
Lender or an Impacted Lender to fund risk participations hereunder) in a greater
proportion than that received by any other Lender, such Lender agrees, promptly
upon demand, to purchase a portion of the Outstanding Credit Extensions owed by
Borrower to the other Lenders so that after such purchase each Lender will hold
its ratable proportion of all of Borrower’s Outstanding Credit
Extensions.  If any Lender, whether in connection with setoff or
amounts which might be subject to setoff or otherwise, receives collateral or
other protection for the Outstanding Credit Extensions owed to it by Borrower or
such amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to the Outstanding Credit
Extensions owed to each of them by Borrower.  In case any such payment
is disturbed by legal process, or otherwise, appropriate further adjustments
shall be made.





11.3         Payments Set
Aside.  To the extent that any payment by or on behalf of the
Borrower is made to the Agent or any Lender, or the Agent or any Lender
exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding under
any debtor relief law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each Lender severally agrees to pay to the
Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Agent, plus interest thereon
from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Effective Rate from time to time in
effect.  The obligations of the Lenders under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.





ARTICLE
XII


BENEFIT OF AGREEMENT;
ASSIGNMENTS; PARTICIPATIONS





12.1         Successors and
Assigns.  The terms and provisions of the Loan Documents shall
be binding upon and inure to the benefit of Borrower and the Lenders and their
respective successors and assigns, except that (i) Borrower shall not have the
right to assign its rights or obligations under the Loan Documents and (ii) any
assignment by any Lender must be made in compliance with Section
12.3.  The parties to this Agreement acknowledge that clause (ii) of the
preceding sentence relates only to absolute assignments and does not prohibit
assignments creating security interests, including any pledge or assignment by
any Lender of all or any portion of its rights under this Agreement and any Note
to a Federal Reserve Bank; provided that no such
pledge or assignment creating a security interest shall release the transferor
Lender from its obligations hereunder unless and until the parties thereto have
complied with the provisions of Section
12.3.  The Agent may treat the Person which made any Loan or
which holds any Note as the owner thereof for all purposes hereof unless and
until such Person complies with Section 12.3; provided that the
Agent may in its discretion (but shall not be required to) follow instructions
from the Person which made any Loan or which holds any Note to direct payments
relating to such Loan or Note to another Person.  Any assignee of the
rights to any Loan or any Note agrees by acceptance of such assignment to be
bound by all the terms and provisions of the Loan Documents.  Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the owner of the rights to any
Loan (whether or not a Note has been issued in


44


evidence
thereof), shall be conclusive and binding on any subsequent holder or assignee
of the rights to such Loan.





12.2         Participations.





(i)           Permitted Participants;
Effect.  Upon giving notice to but without obtaining the
consent of Borrower, any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time sell to one or more Persons
(other than a natural person or the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (“Participants”)
participating interests in any Obligations owing to such Lender, any Note held
by such Lender, any Commitment of such Lender or any other interest of such
Lender under the Loan Documents.  In the event of any such sale by a
Lender of participating interests to a Participant, such Lender’s obligations
under the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the owner of the Obligations owing to such Lender and
the holder of any Note issued to it for all purposes under the Loan Documents,
all amounts payable by Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and Borrower, the
Swingline Lender and the Agent shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under the
Loan Documents.





(ii)           Voting
Rights.  Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver which extends the Facility Termination Date or the final maturity of any
Loan in which such Participant has an interest or forgives all or any portion of
the principal amount thereof, or reduces the rate or extends the time of payment
of interest thereon or on any commitment fees.





(iii)           Benefit of
Setoff.  Borrower agrees that each Participant shall be deemed
to have the right of setoff provided in Section 11.1 in
respect of its participating interest in amounts owing under the Loan Documents
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each
Participant.  The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section 11.1, agrees
to share with each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section 11.2 as if
each Participant were a Lender.





12.3         Assignments.





(i)           Permitted
Assignments.  Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more Persons (other than a natural person or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (“Purchasers”) all or
any part of its rights and obligations under the Loan Documents.  Such
assignment shall be substantially in the form of Exhibit B or in such
other form as may be agreed to by the parties thereto.  The consent of
Borrower, the Swingline Lender and the Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a Lender
or an Affiliate thereof; provided that if a
Default exists, the consent of Borrower shall not be required.  Any
such consent shall not be unreasonably withheld or delayed.  Each such
assignment with respect to a Purchaser which is not a Lender or an Affiliate
thereof shall (unless each of Borrower and the Agent otherwise consent) be in an
amount not less than the lesser of (i) $5,000,000 or (ii) the remaining amount
of the assigning Lender’s Commitment (calculated as at the date of
such


45





assignment)
or outstanding Loans and participations in Swingline Loans (to the extent such
Commitment has been terminated).  Each assignment shall be of a
constant, and not a varying, percentage of all of the assigning Lender’s
interests in the Obligations of, and Commitment to, Borrower.




(ii)           Effect; Effective
Date.  Upon (i) delivery to the Agent of an Assignment
Agreement, together with any consents required by Section 12.3(i), and
(ii) payment of a $3,500 fee to the Agent for processing such assignment (unless
such fee is waived by the Agent), and subject to acceptance and recording of
such Assignment Agreement pursuant to Section 12.3(iii),
such Assignment Agreement shall become effective on the effective date specified
in such Assignment Agreement.  On and after the effective date of such
Assignment Agreement, such Purchaser shall for all purposes be a Lender party to
this Agreement and any other Loan Document executed by or on behalf of the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto, and no
further consent or action by Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the percentage of the
Aggregate Commitment and Obligations assigned to such Purchaser.  Any
Person that is at any time a Lender and that thereafter ceases to be a Lender
pursuant to the terms of this Section 12.3(ii)
shall continue to be entitled to the benefit of those provisions of this
Agreement that, pursuant to the terms hereof,  survive the termination
hereof.  Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3(ii), the
transferor Lender, the Agent and Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser.





(iii).           Register.  The
Agent, acting solely for this purpose as an agent of the Borrower, shall
maintain at its United States office a copy of each Assignment Agreement
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitments of, and principal amounts of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The
entries in the Register shall be conclusive, and Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.  The Register shall be
available for inspection by Borrower and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.





12.4         Dissemination of
Information.  Borrower authorizes each Lender to disclose to
any Participant or Purchaser or any other Person acquiring an interest in the
Loan Documents by operation of law (each a “Transferee”) and any
prospective Transferee any and all information in such Lender’s possession
concerning the creditworthiness of Borrower and its Subsidiaries, including any
information contained in any Public Reports; provided that each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of this
Agreement.





12.5         Grant of Funding Option to
SPC.  Notwithstanding anything to the contrary contained
herein, any Lender (a “Granting Lender”) may
grant to a special purpose funding vehicle (an “SPC”), identified as
such in writing from time to time by the Granting Lender to the Agent and
Borrower, the option to provide to Borrower all or any part of any Loan that
such Granting Lender would otherwise be obligated to make pursuant to this
Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof.  The making of a Loan by an
SPC hereunder shall utilize the


46


Commitment
of the Granting Lender to the same extent, and as if, such Loan were made by
such Granting Lender.  Each party hereto agrees that no SPC shall be
liable for any indemnity or similar payment obligation under this Agreement (all
liability for which shall remain with the Granting Lender).  In
furtherance of the foregoing, each party hereto agrees (which agreement shall
survive the termination of this Agreement) that, prior to the date that is one
year and one day after the payment in full of all outstanding commercial paper
or other senior indebtedness of any SPC, it will not institute against, or join
any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under the laws
of the United States or any State thereof.  In addition,
notwithstanding anything to the contrary contained in this Section 12.5, any SPC
may (a) with notice to, but without the prior written consent of, Borrower and
the Agent and without paying any processing fee therefor, assign all or a
portion of its interests in any Loan to the Granting Lender or to any financial
institution (consented to by Borrower and the Agent) providing liquidity and/or
credit support to or for the account of such SPC to support the funding or
maintenance of Loans and (b) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC.





12.6         Tax
Treatment.  If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section
3.5(iv).





ARTICLE
XIII


NOTICES





13.1         Notices.  (a)
Except as otherwise permitted by Section 2.16, all
notices, requests and other communications to any party hereunder shall be in
writing (including facsimile transmission or electronic mail or posting on a
website) and shall, subject to the last paragraph of Section 6.1, be given
to such party at (i) in the case of Borrower or the Agent, its address,
facsimile number or electronic mail address set forth below or such other
address, facsimile number or electronic mail address as it may hereafter specify
for such purpose by notice to the other parties hereto; and (ii) in the case of
any Lender, at the address, facsimile number or electronic mail address set
forth on Schedule
2 or such other address, facsimile number or electronic mail address as
such Lender may hereafter specify for such purpose by notice to Borrower and the
Agent.  Subject to the last paragraph of Section 6.1, each
such notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified
pursuant to this Section and confirmation of receipt is received, (ii) if given
by mail, three Business Days after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered (or, in the case of electronic mail, received)
at the address specified pursuant to this Section; provided that notices
to the Agent under Article II shall not
be effective until received.





(b)           Notices
to any party shall be sent to it at the following addresses, or any other
address as to which all the other parties are notified in writing.




If
      to Borower:
                Pepco Holdings,
      Inc.701
      Ninth Street NWFifth
      FloorWashington,
      DC  20068Attention:  Anthony
      J.  KamerickTelephone:  (202)
      872-2056Fax:  (202)
      872-3015E-mail:  tjkamerick@pepco.com




47





If
      to Agent:
              For
      Borrowings/Requests for Credit Extensions and
      Repayments:David
      A. Cochran, Credit Services RepresentativeBank of America,
      N.A.One Independence Center101 N. Tryon StreetMail Code:
      NC1-001-04-39Charlotte, NC  28255-0001Telephone: (980)
      386-8201Facsimile: (704) 719-5440Electronic Mail:  david.a.cochran@bankofamerica.comWire
      Instructions:Bank of America, New York, N.Y.ABA #
      026009593Account # 1366212250600Attn: Corporate Credit
      ServicesReference: Pepco Holdings Inc.For
      Financial Reporting Requirements, Bank Group Communications:Roberto
      O. Salazar, Agency Management OfficerBank of America,
      N.A.231 South LaSalle StreetMail Code: IL1-231-10-41Chicago,
      IL  60604Telephone: (312) 828-3185Facsimile: (877)
      207-2382Electronic Mail: roberto.o.salazar@bankofamerica.com




ARTICLE
XIV


COUNTERPARTS





This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart.  This
Agreement shall be effective when it shall have been executed by the Agent and
when the Agent shall have received counterparts that, when taken together, bear
the signatures of each of the other parties hereto.  Delivery of an
executed counterpart of a signature page of this Agreement by telecopy or other
electronic imaging means shall be effective as delivery of a manually executed
counterpart of this Agreement.





ARTICLE
XV


CHOICE OF LAW; CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL





15.1         CHOICE OF
LAW.  THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (INCLUDING SECTIONS 5.1401 AND 5.1402 OF THE GENERAL
OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO THE


48


CONFLICT
OF LAWS PROVISIONS THEREOF) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.





15.2         CONSENT
TO JURISDICTION.   BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT, AND BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.  ANY JUDICIAL PROCEEDING BY BORROWER AGAINST THE AGENT
OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW
YORK.





15.3         WAIVER OF
JURY TRIAL; SERVICE
OF PROCESS.





(i)           BORROWER,
THE AGENT AND THE LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.





(ii)           BORROWER,
THE AGENT AND THE LENDERS IRREVOCABLY CONSENT TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 13.1;
PROVIDED THAT SUCH SERVICE OF PROCESS SHALL NOT BE EFFECTIVE UNTIL ACTUALLY
RECEIVED.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW.





[Signatures
Follow]





49


IN
WITNESS WHEREOF, Borrower, the Lenders and the Agent have executed this
Agreement as of the date first above written.





PEPCO
      HOLDINGS, INC.By:
            /s/
      A. J. KAMERICKName:
            Anthony
      J. KamerickTitle:
            Vice
      President and Treasurer





50





BANK
      OF AMERICA, N.A.,
              as
      AgentBy:
            /s/
      ROBERTO O. SALAZARName:
            Roberto
      O. SalazarTitle:
            Assistant
      Vice President








51





BANK
      OF AMERICA, N.A.,
              as
      a LenderBy:
            /s/
      ERIC H. WILLIAMSName:
            Eric
      H. WilliamsTitle:
            Vice
      President








52





JPMORGAN
      CHASE BANK, N.A.,
              as
      a LenderBy:
            /s/
      H. D. DAVISName:
            Helen
      D. DavisTitle:
            Vice
      President





53





KEYBANK
      NATIONAL ASSOCIATION,
              as
      a LenderBy:
            /s/
      SHERRIE I. MANSONName:
            Sherrie
      I. MansonTitle:
            Senior
      Vice President





54





SUNTRUST
      BANK,
              as
      a LenderBy:
            /s/
      ANDREW JOHNSONName:
            Andrew
      JohnsonTitle:
            Director


55





THE
      BANK OF NOVA SCOTIA,
              as
      a LenderBy:
            /s/
      THANE RATTEWName:
            Thane
      RattewTitle:
            Managing
      Director


56





CREDIT
      SUISSE, Cayman Islands Branch,
              as
      a LenderBy:
            /s/
      M. FAYBUSOVICHName:
            Mikhail
      FaybusovichTitle:
            Vice
      PresidentBy:
            /s/
      S. MALIKName:
            Shaheen
      MalikTitle:
            Associate





57





WACHOVIA
      BANK, NATIONAL ASSOCIATION,
              as
      a LenderBy:
            /s/
      SHANNAN TOWNSENDName:
            Shannan
      TownsendTitle:
            Director





58





MORGAN
      STANLEY BANK,
              as
      a LenderBy:
            /s/
      DANIEL TWENGEName:
            Daniel
      TwengeTitle:
            Authorized
      Signatory








59


SCHEDULE
1





PRICING
SCHEDULE





Level
      I Status
              Level
      II status
              Level
      III StatusApplicable
      Margin
              2.50%
              3.00%
              3.50%Commitment
      Fee Rate
              0.50%
              0.625%
              0.75%





For the
purposes of this Schedule, the following terms have the following meanings,
subject to the other provisions of this Schedule:





“Level I Status”
exists with respect to Borrower on any date if, on such date, Borrower’s Moody’s
Rating is Baa2 or better, Borrower’s S&P Rating is BBB or better or such
Borrower’s Fitch Rating is BBB or better.





“Level II Status”
exists with respect to Borrower on any date if, on such date, (i) Borrower has
not qualified for Level I Status and (ii) Borrower’s Moody’s Rating is Baa3 or
better, Borrower’s S&P Rating is BBB- or better or Borrower’s Fitch Rating
is BBB- or better.





“Level III Status”
exists with respect to Borrower on any date if, on such date, Borrower has not
qualified for Level I Status or Level II Status.





“Fitch Rating” means,
at any time, the ratings issued by Fitch Ratings and then in effect with respect
to Borrower’s unsecured long-term debt securities without third-party credit
enhancement.





“Moody’s Rating”
means, at any time, the rating issued by Moody’s and then in effect with respect
to Borrower’s senior unsecured long term debt securities without third party
credit enhancement.





“Rating” means the
Fitch Rating, the Moody’s Rating or the S&P Rating.





“Rating Agency” shall
mean Fitch, Moody’s or S&P.





“S&P Rating”
means, at any time, the rating issued by S&P and then in effect with respect
to Borrower’s senior unsecured long term debt securities without third party
credit enhancement.





“Status” means Level I
Status, Level II Status or Level III Status.





For
purposes of this Schedule, the Moody’s Rating, the S&P Rating and the Fitch
Rating in effect for Borrower on any date are that in effect at the close of
business on such date.





The
Applicable Margin and the Commitment Fee Rate shall be determined in accordance
with the above based on Borrower’s Status as determined from its then current
Moody’s Rating, S&P Rating and Fitch Rating.  If Borrower is
split-rated and all three (3) ratings fall in different Levels, the Applicable
Margin and the Commitment Fee Rate shall be based upon the Level indicated by
the middle rating.  If Borrower is split-rated and two (2) of the
ratings fall in the same Level, (the “Majority Level”) and
the third rating is in a different Level, the Applicable Margin and the
Commitment Fee Rate shall be based upon the Majority Level.





Any
change in the Applicable Margin by reason of a change in the Moody’s Rating, the
S & P Rating or the Fitch Rating shall become effective on the date of
announcement or publication by the respective Rating Agency of a change in such
Rating or, in the absence of such announcement or publication, on the effective
date of such changed Rating.


Sch-1





SCHEDULE
2





COMMITMENTS
AND PRO RATA SHARES





Lender
            
            Amount
      of
              Commitment
            
            Pro
      Rata ShareBank
      of America, N.A.
            
            $50,000,000
            
            12.820512821%JPMorgan
      Chase Bank, N.A.
            
            $49,000,000
            
            12.564102564%KeyBank
      National Association
            
            $49,000,000
            
            12.564102564%SunTrust
      Bank
            
            $49,000,000
            
            12.564102564%The
      Bank of Nova Scotia
            
            $49,000,000
            
            12.564102564%Morgan
      Stanley Bank
            
            $48,000,000
            
            12.307692308%Credit
      Suisse, Cayman Islands Branch
            
            $48,000,000
            
            12.307692308%Wachovia
      Bank, National Association
            
            $48,000,000
            
            12.307692308%TOTAL:
            
            $390,000,000
            
            100%





Sch-2


SCHEDULE
3





SIGNIFICANT
SUBSIDIARIES




Name
      of Company Controlled
            
            Owned
      By
            
            Percent
      OwnershipPotomac
      Electric Power Company
              (a
      D.C. and Virginia corporation)
            
            Pepco
      Holdings, Inc
            
            100%Conectiv
              (a
      Delaware corporation)
            
            Pepco
      Holdings, Inc.
            
            100%Delmarva
      Power & Light Company
              (a
      Delaware and Virginia corporation)
            
            Conectiv
            
            100%Atlantic
      City Electric Company
              (a
      New Jersey corporation)
            
            Conectiv
            
            100%Conectiv
      Energy Holding Company
              (a
      Delaware corporation)
            
            Conectiv
            
            100%Conectiv
      Delmarva Generation, Inc
              (a
      Delaware corporation)
            
            Conectiv
      Energy
              Holding
      Company
            
            100%Potomac
      Capital Investment Corp
              (a
      Delaware corporation)
            
            Pepco
      Holdings, Inc
            
            100%Conectiv
      Energy Supply, Inc.
              (a
      Delaware corporation)
            
            Conectiv
      Energy
              Holding
      Company
            
            100%





Sch-3


SCHEDULE
4




LIENS







Incurred
      By
                  Owed
      To
                  Property
                    Encumbered
                  Maturity
                  Amount
      of
                    IndebtednessPotomac
      Electric Power Co.
                  GE
      Bankers Leasing
                  Vehicles,
      Office
                    Equip.,
      Computers
                  Master
      Agreement
                  $9,454,017
      *PHI
      Service Company
                  GE
      Bankers Leasing
                  Office
      Equip., Computers
                  Master
      Agreement
                  $14,021,973
      *Atlantic
      City Electric Co.
                  GE
      Bankers Leasing
                  Vehicles,
      Office
                    Equip.,
      Computers
                  Master
      Agreement
                  $9,843,869
      *Delmarva
      Power & Light Co.
                  GE
      Bankers Leasing
                  Vehicles,
      Office
                    Equip.,
      Computers
                  Master
      Agreement
                  $15,028,581
      *Potomac
      Electric Power Co.
                    (Pepco
      Energy Services)
                  Hannon
      Armstrong
                    Pepco
      Funding Corp.
                  Contract
      Payments Receivable
                  Master
      Agreement
                  $1,783,222
      *Potomac
      Electric Power Co.
                    (Pepco
      Energy Services)
                  Citizen
      Leasing Corp.
                  Contract
      Payments Receivable
                  Master
      Agreement
                  $7,707,156
      *Potomac
      Electric Power Co.
                    (Pepco
      Energy Services)
                  National
      City Commercial Capital
                  Contract
      Payments Receivable
                  Master
      Agreement
                  $11,837,389
      **The
      amount of this lien fluctuates with the amount of accounts receivable
      created by this program.  The amount listed is as of September
      30, 2008.
                    
                    The
      Hannon Armstrong balance receives sale treatment accounting and is not
      reflected on the balance sheet.








Sch-4





EXHIBIT
A





COMPLIANCE
CERTIFICATE





To:
            The
      Agent and the Lenders under the
              Credit Agreement referred to
      below




This
Compliance Certificate is furnished pursuant to that certain Credit Agreement
dated as of November 7, 2008 (as amended, restated or otherwise modified from
time to time, the “Credit Agreement”)
among Pepco Holdings, Inc. (“Borrower”), the
Lenders from time to time party thereto and Bank of America, N.A., as
Agent.  Unless otherwise defined herein, capitalized terms used in
this Compliance Certificate have the respective meanings ascribed thereto in the
Credit Agreement.





THE
UNDERSIGNED HEREBY CERTIFIES THAT:





1.           I
am the duly elected __________________of Borrower.





2.           I
have reviewed the terms of the Credit Agreement and I have made, or have caused
to be made under my supervision, a detailed review of the transactions and
conditions of Borrower and its Subsidiaries during the accounting period covered
by the attached financial statements.





3.           The
examinations described in paragraph 2 did not
disclose, and I have no knowledge of, the existence of any condition or event
which constitutes a Default or Unmatured Default with respect to Borrower during
or at the end of the accounting period covered by the attached financial
statements or as of the date of this Compliance Certificate, except as set forth
below:





[Describe
any exceptions by listing, in detail, the nature of the condition or event, the
period during which it has existed and the action taken or proposed to be taken
with respect to each such condition or event.]





4.           Schedule 1 attached
hereto sets forth true and accurate computations of certain covenant ratios in
the Credit Agreement which are applicable to Borrower.





The
foregoing certifications, together with the computations set forth in Schedule 1 hereto and
the financial statements delivered with this Compliance Certificate in support
hereof, are made and delivered this ___ day of ________, 200_.








Ex-A1


SCHEDULE
1 TO COMPLIANCE CERTIFICATE





Compliance
as of _________ with


provisions
of Section 6.13
of


the
Credit Agreement





[INSERT
FORMULA FOR CALCULATION]





Ex-A2


EXHIBIT
B





ASSIGNMENT
AGREEMENT





This
Assignment Agreement (this “Assignment
Agreement”) is dated as of the Effective Date set forth below and is
entered into by and between [Insert name of Assignor] (the “Assignor”) and
[Insert name of Assignee] (the “Assignee”).  Capitalized
terms used but not defined herein have the meanings provided in the Credit
Agreement identified below, receipt of a copy of which is hereby acknowledged by
the Assignee.  The Standard Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment Agreement as if set forth herein in
full.





For an
agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the Agent as
contemplated below (i) all of the Assignor’s rights and obligations as a
Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
the Assignor under the respective facilities identified below (including,
without limitation, the Swingline Loans included in such facilities) and
(ii) to the extent permitted to be assigned under applicable law, all
claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including, but not
limited to, contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as, the “Assigned
Interest”).  Such sale and assignment is without recourse to
the Assignor and, except as expressly provided in this Assignment Agreement,
without representation or warranty by the Assignor.





1.
              Assignor:2.
              Assignee:
              
              [and
      is anAffiliate
      of [identify Lender]]3.
              Borrower:
              Pepco
      Holdings, Inc., a Delaware corporation4.
              Agent:
              Bank
      of America, N.A., as the administrative agent under the Credit
      Agreement5.
              Credit
      Agreement:
              Credit
      Agreement dated as of November 7, 2008 (as amended, modified, supplemented
      or extended from time to time, the “Credit
      Agreement”) among the Borrower, the Lenders from time to time party
      thereto and Bank of America, N.A., as Agent and Swingline
      Lender.





Ex-B1





6.           Assigned
Interest:





Aggregate
      Amount of Commitment/Loans
                          for
      all Lenders
                        Amount
      of
                          Commitment/Loans
                          Assigned1
                        Pro
      Rata Share of Commitment/Loans2





7.
            Trade
      Date:8.
            Effective
      Date:





The terms
set forth in this Assignment Agreement are hereby agreed to:





ASSIGNOR:
                [NAME
      OF ASSIGNOR]By:Name:Title:ASSIGNEE:
                [NAME
      OF ASSIGNEE]By:Name:Title:




1 Amount
to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective Date.
 2 Set
forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all
Lenders thereunder.
  Ex-B2










[Consented
      to and]3 
      Accepted:BANK
      OF AMERICA, N.A.,
                  as
      AgentBy:Name:Title:[Consented
      to]4:PEPCO
      HOLDINGS, INC.,
                  a
      Delaware corporationBy:Name:Title:[Consented
      to]5:BANK
      OF AMERICA, N.A.,
                  as
      Swingline LenderBy:Name:Title:








1 Amount
to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective
Date.


2 Set
forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all
Lenders thereunder.


3To
be added only if the consent of the Agent is required by the terms of the Credit
Agreement.


4 To be
added only if the consent of the Borrower is required by the terms of the Credit
Agreement.


5 To be
added only if the consent of the Borrower is required by the terms of the Credit
Agreement.


Ex-B3


Annex 1 to Assignment
Agreement





STANDARD
TERMS AND CONDITIONS





1.  Representations and
Warranties.





1.1.  Assignor.  The
Assignor (a) represents and warrants that (i) it is the legal and beneficial
owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of
any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment Agreement and to consummate the transactions contemplated hereby; and
(b) assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.





1.2.  Assignee.  The
Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment
Agreement and to consummate the transactions contemplated hereby and to become a
Lender under the Credit Agreement, (ii) it meets the requirements to be an
assignee under Section 12.3(i) of the Credit Agreement (subject to such
consents, if any, as may be required under Section 12.3(i) of the Credit
Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Lender thereunder, (iv)
it is sophisticated with respect to decisions to acquire assets of the type
represented by the Assigned Interest and either it, or the Person exercising
discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the
Credit Agreement, and has received or has been accorded the opportunity to
receive copies of the most recent financial statements delivered pursuant to
Section 6.1 thereof, as applicable, and such other documents and information as
it deems appropriate to make its own credit analysis and decision to enter into
this Assignment Agreement and to purchase the Assigned Interest, (vi) it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Assignment Agreement and to
purchase the Assigned Interest, (vii) if applicable, attached hereto are the
forms prescribed by the Internal Revenue Service of the United States certifying
that the Assignee is entitled to receive payments under the Loan Documents
without deduction or withholding of any United States federal income taxes and
(viii) none of the funds, monies, assets or other consideration being used to
make the purchase and assumption hereunder are “plan assets” as defined under
ERISA and that its rights, benefits and interests in and under the Loan
Documents will not be “plan assets” under ERISA; and (b) agrees that (i) it
will, independently and without reliance on the Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.  The Assignee hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Loan Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto.





2.   Payments.  From
and after the Effective Date, the Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.





Ex-B4


3.  General Provisions.
This Assignment Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns.  This
Assignment Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Assignment Agreement by signing any such
counterpart.  Delivery of an executed counterpart of a signature page
of this Assignment Agreement by telecopy or other electronic imaging means shall
be effective as delivery of a manually executed counterpart of this Assignment
Agreement.  This Assignment Agreement shall be construed in accordance
with the internal laws (including Sections 5.1401 and 5.1402 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 all federal laws
applicable to national banks.








Ex-B5


EXHIBIT
C





NOTE





[Date]





Pepco
Holdings, Inc. (the “Borrower”) promises
to pay to ________________ (the “Lender”) the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to the Credit Agreement (as defined below), at the office of
the Agent, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Credit Agreement.  The
Borrower shall pay the principal of and accrued and unpaid interest on the Loans
in full on the Facility Termination Date.





The
Lender shall, and is hereby authorized to, record on the schedule attached
hereto, or to otherwise record in accordance with its usual practice, the date
and amount of each Loan and the date and amount of each principal payment
hereunder.





This Note
is one of the Notes issued pursuant to, and is entitled to the benefits of, that
certain Credit Agreement dated as of November 7, 2008 (as amended or otherwise
modified from time to time, the “Credit Agreement”),
among the Borrower, the lenders party thereto, including the Lender, and Bank of
America, N.A., as Agent, to which Credit Agreement reference is hereby made for
a statement of the terms and conditions governing this Note, including the terms
and conditions under which this Note may be prepaid or its maturity date
accelerated.  Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Credit
Agreement.





All
payments hereunder shall be made in lawful money of the United States of America
and in immediately available funds.





THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING SECTIONS
5.1401 AND 5.1402 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.





PEPCO
      HOLDINGS, INC.By:Name:Title:
















Ex-C1


SCHEDULE
OF LOANS AND PAYMENTS OF PRINCIPAL


TO


NOTE OF
PEPCO HOLDINGS, INC.





DATED
____________________





Date
                            Principal
      Amount of Loan
                            Maturity
      of Interest Period
                            Principal
      Amount Paid
                            Unpaid
      Balance





Ex-C2


EXHIBIT
D





INCREASE
NOTICE


________
__, 20__





To:
            The
      Agent and the Lenders under the
                Credit
      Agreement referred to
below








This
Increase Notice is furnished pursuant to Section 2.2(a) of
that certain Credit Agreement dated as of November 7, 2008 (as amended, restated
or otherwise modified from time to time, the “Credit Agreement”)
among Pepco Holdings, Inc., the Lenders from time to time party thereto and Bank
of America, N.A., as Agent.  Unless otherwise defined herein,
capitalized terms used in this Increase Notice have the respective meanings
ascribed thereto in the Credit Agreement.





1.           The
Borrower hereby requests a Requested Commitment Increase in the aggregate
principal amount of $__________.  (Complete with an amount in
accordance with Section 2.2(a) of the
Credit Agreement.)





2.           The
aggregate principal amount of all commitment increases as of the date hereof
(including the Requested Commitment Increase requested hereby) does not exceed
the maximum amount permitted pursuant to the terms of the Credit
Agreement.





3.           No
Default or Unmatured Default has occurred or is continuing or would result from
the proposed Requested Commitment Increase.








PEPCO
      HOLDINGS, INC.By:Name:Title:





EX-D1