10-K

                            FORM 10-K
                  SECURITIES AND EXCHANGE COMMISSION

                     Washington, D.C. 20549

    (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
            THE SECURITIES EXCHANGE ACT OF 1934

          FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

                             OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from          to

              Registrant; State of               I.R.S.Employer
Commission    Incorporation; Address;            Identification
File No       and Telephone Number               Number

1-9760        ATLANTIC ENERGY, INC.                 22-2871471
              (a New Jersey Corporation)
              6801 BLACK HORSE PIKE, 
              EGG HARBOR TOWNSHIP, NEW JERSEY 08234
              609-645-4500

1-3559        ATLANTIC CITY ELECTRIC COMPANY        21-0398280
              (a New Jersey Corporation)
              6801 BLACK HORSE PIKE 
              EGG HARBOR TOWNSHIP, NEW JERSEY 08234 
              609-645-4100

Securities registered pursuant to Section 12(b) of the Act:

                                      Name of each exchange
Title of each class                   on which registered  

Common Stock, No Par Value            New York Stock Exchange 
of Atlantic Energy, Inc.              Philadelphia Stock Exchange
                                      Pacific Stock Exchange


Securities registered pursuant to Section 12(g) of the Act:  None

     Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X  No    


     Indicate by check mark if disclosure of delinquent filers
pursuant to Rule 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10K.  X 

     Estimated aggregate market value of the voting stock of
Atlantic Energy, Inc. held by non-affiliates at March 4, 1996,
was $1,003,338,045.00 based on a closing price of $19.125 per
share for the 52,462,120 outstanding shares at such date. 
Atlantic Energy, Inc. owns all of the 18,320,937 outstanding
shares of Common Stock of Atlantic City Electric Company.

Documents Incorporated by Reference:

     Certain sections of the Notice of Annual Meeting of
Shareholders and Proxy Statement in connection with the     
Annual Meeting of Shareholders, to be held April 24, 1996, have
been incorporated by reference to provide information required by
the following parts of this report:

Part III-Item 10, Directors and Executive Officers of the
Registrant; Item 11, Executive Compensation; Item 12, Security
Ownership of Certain Beneficial Owners and Management; Item 13,
Certain Relationships and Related Transactions.  

This combined Form 10-K is filed separately by Atlantic Energy,
Inc. and Atlantic City Electric Company.  Information contained
herein relating to any individual registrant is filed by such
registrant on its own behalf.  Atlantic City Electric Company
makes no representation as to information relating to Atlantic
Energy, Inc.

PART I
ITEM 1 BUSINESS                                             
General                                                   1 
Atlantic City Electric Company                            1      
Competition                                               2
Nonutility Subsidiaries                                   5
Construction and Financing                                7    
Rates                                                     9
Energy Requirements and Power Supply                     11  
Power Pool and Interconnection Agreements                12
Power Purchases and Sales                                13
Capacity Planning                                        13
Nonutility Generation                                    15       
Nuclear Generating Station Developments                  16
     Salem Station                                       19
     Hope Creek Station                                  24
     Peach Bottom                                        26
Fuel Supply                                              27
    Oil                                                  27
    Coal                                                 27
    Gas                                                  28
    Nuclear Fuel                                         28
Nuclear Decommissioning                                  30
Regulation                                               31
Environmental Matters                                    34
    General                                              34
    Air                                                  37
    Water                                                38
Executive Officers                                       41
ITEM 2   PROPERTIES                                      43
ITEM 3   LEGAL PROCEEDINGS                               43
ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY 
         HOLDERS                                         43
PART II                                                  43
ITEM 5   MARKET FOR REGISTRANT'S COMMON EQUITY AND 
         RELATED STOCKHOLDER MATTERS                     43
ITEM 6   SELECTED FINANCIAL DATA                         45
ITEM 7   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS   46
ITEM 8   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     57
ITEM 9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE          90
PART III                                                       
ITEM 10  DIRECTORS AND EXECUTIVE OFFICERS OF THE
         REGISTRANT                                      90
ITEM 11  EXECUTIVE COMPENSATION                          90
ITEM 12  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
         OWNERS AND MANAGEMENT                           90
ITEM 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  90
PART IV                                                  90
ITEM 14  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
         REPORTS ON FORM 8-K                             90
SIGNATURES                                               92

                                     i
PART I
ITEM 1   BUSINESS



General

     Atlantic Energy, Inc. (AEI or the Company), the principal
office of which is located at 6801 Black Horse Pike, Egg Harbor
Township, New Jersey, 08232-4130, telephone 609-645-4500 was
organized under the laws of New Jersey in August 1986. The
Company is a public utility holding company as defined in the
Public Utility Holding Company Act of 1935 (PUHCA), and has
claimed an exemption from substantially all of the provisions of
the 1935 Act. For a complete description of the Company and its
subsidiaries, see Note 1 of the accompanying Notes to Financial
Statements herein.
                                
    Principal cash inflows of the Company include the receipt of
dividends from ACE and loans outstanding from a revolving credit
and term loan facility established by AEI in September 1995. As
of December 31, 1995, AEI has $34.5 million outstanding under
such facility.  Principal cash outflows of the Company in 1995
included capital contributions and advances to its subsidiaries,
the payment of dividends to common shareholders and the
repurchase of outstanding common stock.

Atlantic City Electric Company

     ACE, which has a wholly-owned subsidiary, Deepwater
Operating Company, is the principal subsidiary of the Company and
is engaged in the generation, transmission, distribution, and
sale of electric energy in the southern part of New Jersey. 
ACE's principal office is located at 6801 Black Horse Pike, Egg
Harbor Township, New Jersey, 08232-4130, telephone 609-645-4100,
and was organized under the laws of New Jersey on April 28, 1924,
by merger and consolidation of several utility companies.  ACE is
subject to regulation by the New Jersey Board of Public Utilities
(BPU) and the Federal Energy Regulatory Commission (FERC).  At
December 31, 1995, ACE had over 473,000 customers and employed
1,455 persons, of which 622 were affiliated with a national labor
organization.  With the exception of a municipal electric system
providing electric service within the municipal boundaries of the
City of Vineland, New Jersey, ACE supplies electric service to
the southern one-third of the State of New Jersey.  

     ACE is a utility whose peak load has occurred during the
summer months, and approximately 32% of 1995 revenues were
recorded during the quarter ended September 30, 1995.   


Competition
     
     The electric utility industry continues to undergo a
fundamental transformation that is creating a power market
governed more by market forces than regulation.  Trends toward
open competition will continue to effect ACE's financial and
operational performance.  Specific competitive issues affecting
ACE include: the unbundling of energy supply services; an
increasingly competitive energy supply market; open access to
transmission facilities; heightened customer demand for
competitive services; the advancement of new technologies and
changes in utility regulation. 

     Significant changes in Federal and state regulations have
fostered an increase in competition among power generators and
have encouraged new entrants to the generation industry.  The
Public Utility Regulatory Policy Act (PURPA) created a new class
of generating facilities, operated by independent power producers
(IPPs), and required electric utilities to purchase the excess
power from each IPP.  As a direct result of PURPA, ACE is under
long-term contracts with four such IPP's for the purchase of 579
megawatts of capacity and energy.  ACE has experienced a
significant decline in its sales to industrial customers, three
of which contracted with IPP's for their power supply.  ACE has
subsequently regained one such customer through contract
renegotiation and expects to regain a second in 1996.
  
     The Energy Policy Act of 1992 (the Act) represented another
significant step toward deregulation of the electric utility
industry. The Act facilitated development of the wholesale power
market and increased competition between utility and non-utility
generators (NUGs).  The Act created a class of NUGs called exempt
wholesale generators that would be exempt from certain PUHCA
regulations.  The Act also gave FERC the authority to order open
access to the transmission facilities of electric utilities and
the wheeling of wholesale electric power.
  
     In response to the Act, in October of 1994, FERC issued a
pricing policy statement that became effective upon issue. The
statement is designed to provide the framework for developing
transmission pricing tariffs and contains several principles for
evaluation of proposals.  In March 1995 FERC issued a Notice of
Proposed Rulemaking (NOPR) that could impact several key
regulatory principles, including transmission access,
transmission pricing and recovery guidelines for stranded costs
stemming from wholesale transactions.  According to the NOPR,
within 60 days of passage of a final rule, nondiscriminatory
open-access transmission tariffs must be filed by ACE and all
other affected electric utilities.  The tariffs would be
applicable to all participants in the wholesale power market,
including utilities, NUGs, power marketers, municipalities and
cooperatives.  The NOPR requires utilities to offer transmission
service to eligible users, comparable to the service they provide
themselves and to take service under the tariffs for their own
wholesale sales and purchases of power. ACE expects to file an
open access tariff in compliance with FERC's proposed rules in
late March 1996.  A final FERC rulemaking is expected in the
second half of 1996.   

     Regarding the issue of stranded commitments and investments
that could arise from wholesale wheeling, the NOPR states that
utilities should be entitled to full recovery of legitimate and
verifiable stranded costs and that such costs should be assigned
to departing customers. The NOPR further states that stranded
costs due to any eventual retail wheeling should be addressed on
a state level, while stranded costs due to wholesale wheeling,
municipalization or a change from retail to wholesale customer
class are within FERC's jurisdiction.  Such stranded commitments
and investments could result from the development of market-based
wholesale or retail electric prices that do not support the full
recovery of investments such as generating and transmission
assets, regulatory assets or long-term purchase power contracts
with QFs that were placed into rates under traditional cost based
regulation.   
     
     The effects of an increasingly competitive utility
marketplace on ACE will also be determined by the timing of and
extent to which New Jersey utility regulations are modified to
reflect competitive industry trends.  The pace and degree of New
Jersey deregulation could also be influenced by competitive
regulatory developments in other state jurisdictions. The BPU's
on-going Energy Master Plan (EMP) proceeding's Phase I report,
issued  in March 1995, provides a framework for managing the
transition of the states's natural gas and electric power
industries from markets guided by regulation to those guided by
market-based principles and competition.  Phase II of the
proceeding is currently underway and is examining possible
structural changes to the state's electric utility industry. 
Phase II is evaluating the issues surrounding potential stranded
investment, direct access, retail wheeling, tax policies and
generation divestiture.  Reports are expected by late March 1996
to be followed by public hearings and a final report from the BPU
in the second quarter of 1996.  Phase III of the EMP will include
an assessment of prices, supply and use of various sources of
energy, including renewables and energy conservation, and will
assess energy usage by various sectors of the economy.  

     Legislation signed into law in New Jersey in July 1995,
allows the BPU, upon petition from any electric or gas utility,
to adopt a plan of regulation other than the traditional rate
base/rate of return regulation.  In addition, on a case by case
basis, the law allows utilities to petition the BPU for the right
to offer customers, who meet certain conditions, off-tariff,
discounted rates. The law provides for the recovery of up to 50
percent of the value of discounts in a subsequent base rate case
if it can be adequately demonstrated that the discount benefits
all ratepayers.  Specific off-tariff pricing arrangements with
ACE's customers will be limited by the resources available in the
Company's business plan.  For further information, refer to
"Rates" herein.
     
     Other proposed regulatory and accounting changes have been
suggested relating to matters at the state and Federal level
which could have operating and financial implications for ACE. 
See "Regulation" and "Environmental Controls" herein for
additional information and Note 10 of the accompanying Notes to
Financial Statements herein. 

     In response to the continuing competitive trends, the
Company has undertaken a number of initiatives to better position
its businesses for an open retail marketplace.  ACE and AEE are
carrying-out strategic plans designed to increase the
competitiveness of the core utility business while creating new
revenue and profit opportunities through the development of non-
regulated energy businesses and markets.  ACE is focusing on cost
and rate control measures as well as expanding its energy-related
product and service offers to enhance customer satisfaction and
loyalty.  AEE is investing in a number of energy-related markets
to further expand the Company's presence in the energy services
industry while enhancing total shareholder value.  During the
transition to a competitive industry the Company will actively
monitor and participate in regulatory initiatives that could
advance a more open marketplace.  In addition, the Company will
continually evaluate its strategies, structure and market
position with respect to competitive trends and developments in
the industry.  For further information regarding the Company's
competitive strategy refer to Item 7-Management's Discussion and
Analysis of Financial Condition and Results of Operation -
Outlook.                                                          
                                                                  
                                                                  
                                                                  
                                                                  
                                          
Nonutility Subsidiaries

Atlantic Energy Enterprises, Inc. (AEE)

     On January 1, 1995, the Company formed a subsidiary,
Atlantic Energy Enterprises, Inc., a holding company, to which
ownership of the existing non-utility businesses was transferred. 
AEE's business plan projects an investment of approximately $400
million over the next five years in these businesses.  
     
     The amount of capital invested by AEE in its non-utility
subsidiaries will be affected, to a large degree, by the rate of
development of the respective businesses, by the business
opportunities which may exist and by the opportunities for
external financings by such subsidiaries themselves.  For further
information, refer to Note 6 of the accompanying Notes to
Financial Statements herein.   

Atlantic Generation, Inc. (AGI)

     At December 31, 1995, AGI's activities were represented by
partnership interests in three cogeneration power projects:  
Project        Fuel       Capacity       Commercial     Ownership
Location       Type     Megawatt (MW)     Operation      Interest

Binghamton,    
New York        gas          50              1992      one-third
Pedricktown,
New Jersey      gas          117             1992      one-half
Vineland,
New Jersey      gas         46.5             1994      one-half

     Subsidiaries of Tristar Ventures Corporation, a subsidiary
of The Columbia Gas System, Inc. have partnership interests in
the Pedricktown, Binghamton and Vineland projects; subsidiaries
of Stone & Webster Development Corporation have a one-third
partnership interest in the Binghamton project.  The Binghamton
facility is hosted by a large paper manufacturer and supplies New
York State Gas and Electric with up to 40 MW of capacity and
related energy under a 15 year power purchase agreement.  The
Pedricktown facility is hosted by a chemical manufacturer and
during 1995 supplied 106 MW of capacity and related energy to ACE
under a 30 year contract.  In 1995, the BPU-approved an amendment
to this contract re-establishing the project host as a retail
customer of ACE and assigning an additional 10 MW of generating
capacity to ACE.  The Vineland facility is hosted by a food
processor and provides 46.5 MW of capacity and related energy to
the City of Vineland under a 25 year contract.  
     
     At December 31, 1995, total equity in AGI amounted to $26.1
million, the funding of which has been through capital
contributions and advances from the Company.  

ATE Investment, Inc. (ATE)

     ATE commenced activities in 1988.  At December 31, 1995, ATE
has invested $79 million in leveraged leases of three commercial
aircraft and two containerships.  ATE has issued $15 million
principal amount of long term debt and has utilized a revolving
credit and term loan agreement with a bank to finance a portion
of its investment in leveraged leases and other investment
activities.  The remainder is provided by capital contributions
from the Company.  At December 31, 1995, total equity amounted to
$9.4 million. 

Atlantic Southern Properties, Inc. (ASP) 

     ASP owns and manages a 280,000 square-foot commercial
property located in southern New Jersey.  Portions of the office
space are presently under lease to ACE and AEE.  At December 31,
1995, ASP's assets consisted primarily of this real estate site
at a net book value of $10.1 million.  Financing of ASP's
operations has been accomplished through capital contributions
and advances from the Company and loans from ATE.  At December
31, 1995, equity totalled $2.3 million.

Atlantic Energy Technology, Inc. (AET)

     AET has ceased operations and is currently concluding the
affairs of its wholly-owned subsidiary, which is its sole
investment. 

Atlantic Thermal Systems, Inc. (ATS)

     Formed in 1994, ATS and its wholly-owned subsidiaries
develop, own and operate thermal heating and cooling systems and
have invested $12 million as of December 31, 1995.  ATS is
currently developing a district heating and cooling system in
Atlantic City, New Jersey, construction of which is expected to
begin in 1996.  ATS has obtained funds for its project
development through advances and loans from the Company. 
Additional funds for the project, currently held in trust, are
expected through loans of proceeds from $12.5 million principal
amount of bonds issued by the New Jersey Economic Development
Authority.  At December 31, 1995, equity totalled $2.2 million.

CoastalComm, Inc. (CCI) 

     In November 1995, CCI was formed to pursue investments and
business opportunities in the telecommunications industry.  At
December 31, 1995, CCI had committed $5.2 million in a venture
pursuing markets in the personal communications systems business. 
 

Atlantic CNRG Services, LLC 

     In addition to the existing non-utility subsidiaries, AEE
has a 50% ownership interest in Atlantic CNRG Services, LLC,
(ACNRG) a limited liability company that provides energy
management services, including natural gas procurement,
transportation and marketing.  On February 1, 1996, ACNRG
acquired certain assets of Interstate Gas Marketing Co., a
privately held company headquartered in Scranton, Pennsylvania. 
Assets purchased by ACNRG consisted primarily of gas marketing
contracts of commercial and industrial customers located
primarily in Pennsylvania.  The duration of acquired contracts
varies from one to five years. 
     
Construction and Financing

     ACE maintains a continuous construction program, principally
for electric generation, transmission and distribution
facilities.  The construction program, including the estimates of
construction expenditures, as well as the timing of construction
additions, is under continuous review.  ACE's construction
expenditures will depend upon factors such as long term load and
customer growth, general economic conditions, the ability of ACE
to raise the necessary capital, regulatory and environmental
requirements, the availability of capacity and energy from
utility and nonutility sources and the Company's return on such
investments.  Although deferrals in construction timing may
result in near-term expenditure reductions, changes in capacity
plans and general inflationary price trends could increase
ultimate construction costs.  Reference is made to "Energy
Requirements and Power Supply" herein for information with
respect to ACE's estimates of future load growth and capacity
plans.  The table below presents ACE's estimated cash
construction costs for utility plant for the years 1996 through
1998:
 
 (Millions of Dollars)       1996      1997     1998      Total
Nuclear Generating           $ 14      $  8     $  6       $ 28
Fossil Steam
 Generating                    11         6        9         26
Transmission and
 Distribution                  43        44       41        128
General Plant                  21        22       14         57
Combustion Turbine              3         5        8         16
Total Cash                  
 Construction Costs          $ 92      $ 85     $ 78      $ 255
                             ====      ====    =====       ====

     See "ATS" herein for additional information regarding
construction of a district heating and cooling facility in
Atlantic City, New Jersey.  For further information, see Note 5
of the accompanying Notes to Financial Statements herein.  

     On an interim basis, ACE finances that portion of its
construction costs and other capital requirements in excess of
its internally generated funds through the issuance of unsecured
short term debt, consisting of bank loans and commercial paper. 
ACE undertakes permanent financing through the issuance of long
term debt, preferred stock and/or capital contributions from the
Company.  Costs associated with ACE's share of nuclear fuel
requirements for the jointly-owned Peach Bottom, Salem and Hope
Creek generating stations have been financed by a non-affiliated
company which generally recovers its investment costs as nuclear
fuel is consumed for power generation.

     At December 31, 1995, ACE had available for use various bank
committed lines of credit totaling $150 million, which are
subject to continuing review and to termination by the banks
involved.  On December 31, 1995, ACE had short term borrowings of
$30.5 million outstanding.  Based on the above level of
construction expenditures, ACE currently estimates that during
the three-year period 1996-1998, it will issue, excluding amounts
issued for refunding purposes, approximately $150 million in
debt, including First Mortgage Bonds.  ACE also undertakes
refundings of existing securities to reduce its overall cost of
funds.  During 1995, ACE refunded and retired approximately $54.7
million principal amount of its First Mortgage Bonds.  Funds for
such redemptions were obtained through the issuance and sale by
ACE of $105 million of First Mortgage Bonds, designated as Medium
Term Notes (MTN).  Additional funds obtained from the sale of
MTNs were used for construction purposes.  Reference is made to
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Notes 6 and 7 of the Notes to
Financial Statements, incorporated by reference herein as Exhibit
28(a), for information relating to ACE's financing activities for
the 1993-1995 period and for 1996-1998.  

     ACE's debt securities are currently rated "A-/A3" by two
major rating agencies.  Its preferred stock is rated "BBB+/Baa1"
and its commercial paper is rated "A-2/P2."  

     One rating agency has recently revised its outlook on ACE
from "stable" to "negative" to reflect the heightened concern
over the potentially adverse impact on credit quality of recently
discovered tube cracks in the steam generators at Unit 1 of the
two-unit Salem Nuclear Station.  See "Salem Station" for
additional information.   
  
     No assurances can be given that the ratings of ACE's
securities will be maintained or continue at their present
levels, or be withdrawn if such credit rating agency should, in
its opinion, take such action.  Downward revisions or changes in
ratings of a company's securities could have an adverse effect on
the market price of such securities and could increase a
company's cost of capital.  

Rates

     ACE's rates for retail electric service are subject to the
approval of the BPU.  For information concerning changes in base
rates and the levelized energy clause (LEC) for the years 1993
through 1995 and certain other proceedings relating to rates, see
"Purchased Power" herein and Notes 1, 3 and 8 of ACE's Notes to
Financial Statements, incorporated by reference herein as Exhibit
28(a). 

     A performance standard for ACE's five jointly-owned nuclear
units was adopted in 1987 by the BPU, with certain aspects of the
performance standards revised, effective January 1, 1990.  Under
the standard, the composite target capacity factor for such units
is 70%, based upon the maximum dependable capacity of the units. 
The zone of reasonable performance (deadband) is between 65% and
75%.  Penalties or rewards are based on graduated percentages of
estimated costs of replacement power.  Such amount is calculated
monthly, utilizing the average PJM monthly billing rate as the
cost basis for replacement power, to the boundaries of the
deadband, with penalties calculated incrementally in steps.  Any
penalties incurred are not permitted to be recovered from
customers and are required to be charged against income. 
Adjustments to rates based on the nuclear unit performance
standard is done through ACE's annually adjusted LEC.  

     The 1995 composite capacity factor for ACE's jointly-owned
nuclear units was 57.9%, resulting in an estimated penalty of
$1.3 million.  (See "Nuclear Generating Station Developments"
herein for additional information.)

     In February 1995, ACE filed a petition with the BPU
requesting approval of a pilot economic development power
contract program for large commercial and industrial customers
that would permit ACE to offer contracts for electric service on
a negotiated basis.  No formal action was taken by the BPU
regarding this filing.  The requested terms of the filing were
superseded by the regulations established through legislation
enacted in July 1995 that authorizes the BPU to approve alternate
forms of economic regulation and allows utilities to provide
discounted rates in order to retain large customers.  The law
provides for the recovery of up to 50 percent of the value of the
discount in a subsequent base rate case if it can be adequately
demonstrated that the discount benefits all ratepayers.  On
October 27, 1995, the BPU issued a summary decision to consider
and implement standards for off-tariff rate agreements which
incorporate, among other things, certain tests and conditions to
be satisfied prior to entering into such agreements.  Specific
off-tariff pricing arrangements with ACE's customers will be
limited by the resources available in the Company's business
plan.   
     
     On March 13, 1996, the BPU issued its decision making final
the provisional $37 million increase in LEC rates requested in 
April 1995.  For further information, see Note 3 of ACE's Notes
to Financial Statements, incorporated by reference herein as
Exhibit 28(a).

     ACE expects to file its LEC request for the period June 1,
1996 through May 31, 1997 with the BPU in April 1996.  ACE
expects to reflect in its filing a nuclear performance penalty of
$1.3 million associated with 1995 nuclear performance, which
amount would not be recovered from customers and has already been
charged against 1995 earnings.  At this time, the amount of its
LEC request for 1996/1997 has not been finalized.  

     By Order dated March 14, 1996, the BPU ordered ACE's base
rates related to Salem Unit 1 interim and subject to refund,
effective immediately, pending a full hearing as to whether Salem
I is currently used and useful.  The BPU ordered ACE to file
briefs within fifteen business days with regard to why the BPU
should not, after hearings, immediately declare base rates
related to Salem Unit 2 interim and subject to refund pending
hearings to determine if Salem Unit 2 is used and useful.  ACE is
also required to furnish, within fifteen business days, the
actual level of net plant investment associated with each of the
Salem units, based on ACE's last base rate case, the amount of
operating and maintenance expenses included in current base rates
for each unit, the level of replacement power costs associated
with the Salem outage to date and the amount of projected monthly
replacement power costs for the duration of the outage.  Separate
hearings will be held by the BPU regarding the issue as to
whether or not Salem Unit 1 and Salem Unit 2 are no longer used
and useful and the actual level of any appropriate rate
reduction.  For further information, see "Salem Station" herein.
 
     On January 16, 1996 Public Service Electric & Gas Company
(PS) filed a petition with the BPU requesting approval for an
alternate rate making methodology.  Included in PS's plan is a
proposal to implement an immediate rate reduction and a plan for
an indexed price cap mechanism, effective January 1, 1997.  PS's
plan also outlines certain categories of costs not subject to the
price cap index as well as certain economic development program
proposals, a mechanism to share productivity gains with customers
and depreciation changes affecting utility plant assets.  PS's
plan also proposes the elimination of PS' Nuclear Performance
Standard.  On January 25, 1996, ACE filed a motion to intervene
in the proceeding based on the effect the outcome of the PS
proceeding could have on ACE, including: tariff and rate matters;
depreciation, ownership and operation of jointly-held nuclear
generating facilities and flexible utility pricing.  At this time
ACE cannot predict the outcome of this proceeding.


Energy Requirements and Power Supply

     ACE's 1995 kilowatt-hour sales decreased by approximately
1.4% over 1994 sales.  Commercial sales grew by 1.4%, offset by
declines in residential and industrial sales of 2.0% and 7.4%,
respectively.  The 1995 utility systems' peak demand of 2,042 MW
occurred on July 15, 1995 and was 4.1% above the previous peak
demand recorded on July 10, 1993 of 1,962 MW.  

     For the five-year period of 1996 through 2000, ACE's
estimate of projected annual sales growth is 3.0% and peak load
growth (adjusted for weather) is 2.1%.  These include the
estimated effects of load-reducing cogeneration and demand-side
management programs.

     ACE has generally been able to provide for the growth of
energy requirements through the construction of additional
generating capacity, joint ownership in larger units and through
capacity purchases from other utilities and nonutilities.  The
net summer installed capacity, in kilowatt-hours (KW), of ACE at
December 31, 1995, consisted of the following:

                                       Year(s)     Net
Station and             Primary        Unit(s)     Capability
   Location              Fuels        Installed    (KW)       

Deepwater
 Salem Co., N.J.     Oil/Coal/Gas      1930/         54,000 
                                       1954-1958    166,000 
B.L. England
 Cape May Co., N.J.  Coal/Oil          1962-1964/   284,000
                                       1974         155,000
Keystone
  Indiana Co., PA.   Coal              1967-1968     42,000 (1)
Conemaugh
  Indiana Co., PA.   Coal              1970-1971     65,000 (1)
Peach Bottom
 York Co., PA.       Nuclear           1974         164,000 (1)
Salem
 Salem Co., N.J.     Nuclear           1977-1981    164,000 (1)
Hope Creek
 Salem Co., N.J.     Nuclear           1987          52,000 (1)
Combustion Turbine
   Units             Oil/Gas           1967-1991    524,000
(various locations)

Diesel Units         Oil               1961-1970      8,700

Firm Capacity Purchases and Sales-Net               670,000 (2)

   Total Generating Capability                    2,348,700
                                                  ==========

Notes
(1) ACE's share of jointly-owned stations.  See Note 5 of ACE's
Notes to Financial Statements, incorporated by reference herein
as Exhibit 28(a).  (2) 125,000 KW from thirteen coal-fired units
of Pennsylvania Power & Light Company (PP&L), 579,000 KW from
four nonutility suppliers, and the sale of 34,000 KW to another
electric utility.

     Certain of ACE's units at the Deepwater and B. L. England
Stations and certain combustion turbine units have the capability
of using more than one primary fuel type.  In such instances, the
use of a particular fuel type depends upon relative cost,
availability and applicable environmental regulations and
requirements.  See Note 5 of the accompanying Notes to Financial
Statements for additional information regarding capital and
operating expenses of ACE's jointly-owned nuclear facilities.  

Power Pool and Interconnection Agreements

     ACE is a member of the Pennsylvania-New Jersey-Maryland
Interconnection Association (PJM), an integrated power pool which
coordinates the bulk power supply of eleven member utilities in
Pennsylvania, New Jersey, Delaware, Maryland, Virginia and the
District of Columbia, and is interconnected with other major
utilities in the northeastern United States.  As a member of PJM,
ACE is required to plan for reserve capacity based on estimated
aggregate PJM requirements allocated to member companies.  ACE
periodically files its capacity addition plans with PJM which are
intended to meet forecast capacity and reserve obligations.  PJM
member companies make use of a planning year concept in reviewing
capacity and reserve requirements.  Each planning year commences
on June 1 and ends on the succeeding May 31.  PJM provides for
after-the-fact accounting by its members for differences between
forecast and actual load experience.  ACE is also a party to the
Mid-Atlantic Area Coordination Agreement, which provides for
coordinated planning of generation and transmission facilities by
the companies included in PJM.  Further coordination of short
term power supply planning is provided by inter-area agreements
with adjacent power pools.  

     PJM currently operates on the basis of reliability of
service and operating economy.  To meet the goals outlined by
FERC in its open access NOPR, PJM has developed a comprehensive
proposal under which current members of PJM and other load-
serving entities will purchase regional "network" transmission
rights that are intended to enable them to reliably and
economically integrate generation and load.  Generators selling
power to serve pool load will not have to purchase transmission
service independently, which is intended to create a regional
wholesale power market.  In order to meet the requirements to
functionally unbundle transmission, PJM has proposed to
reorganize into an Independent System Operator (ISO) with
responsibility for operating the bulk power system, administering
the regional transmission service tariffs and managing the pool's
competitive energy market.  PJM will replace the existing system
of cost-based centralized dispatch with an expanded, hourly
bid/price pool in which all sellers will be able to bid their
energy into the pool and all load-serving entities will be able
to buy energy from the pool.  Further, under the proposal, PJM
will create new contractual mechanisms to ensure participation by
all entities responsible for serving load in decisions affecting
reliability.  Each load-serving entity that chooses to operate in
the PJM control area will be required to execute an agreement to
maintain adequate generation reserves and to share those reserves
on a reciprocal basis.   PJM will establish an enhanced regional
planning process, under the supervision of the ISO, to meet Mid-
Atlantic Area Reliability Council reliability requirements
applicable to both generation and transmission.  The PJM proposal
is subject to FERC approval and is expected to be filed with FERC
in 1996. 
  
Power Purchases and Sales

     ACE is currently purchasing 125 MW of capacity and energy
from PP&L coal-fired sources.  By letter dated March 16, 1995,
the Company notified PPL that this capacity and energy sales
agreement will be terminated effective March 1998.  To replace
the PPL arrangement, the Company has signed a letter of intent
with PECO Energy (PECO) for the purchase of 125 MWs for the
period beginning March 16, 1998 through May 31, 2000.  ACE also
has agreements with certain other electric utilities for the
purchase of short term generating capacity, energy and
transmission capacity on an as-needed basis, which are utilized
to the extent they are economic and available.  

     ACE has agreed to sell 34 MW of firm capacity to Baltimore
Gas & Electric Co. for the period June 1, 1995 through May 31,
1996.   

Capacity Planning

     New generating capacity built by a utility is subject to a
Certificate of Need (CON) process.  A CON is required prior to
constructing a new generating facility in excess of 100 MW, or
adding either 100 MW or 25% of capacity, whichever is smaller, to
an existing site.  In addition, New Jersey utilities are required
to comply with a stipulation of settlement approved by the BPU in
July 1988.  The purpose of the stipulation of settlement is to
procure future capacity and energy from qualified cogeneration
and small power production facilities through an annual
competitive bidding process, based on a long-term capacity plan. 
The amount to be bid upon is subject to BPU review and will be
based upon such factors as a utility's five year projected
capacity needs and its current generating capacity, service life
extension plans for existing units, new construction, power
purchases and commitments from other utilities and non-utility
sources.  In general, the procedures provide that each utility
will procure non-utility power when needed through an evaluation
system which ranks proposed projects on price and non-price
factors.  The price of such power is capped at the utility's
avoided cost, which avoided cost is subject to BPU review, with a
floor price of 25% of such avoided cost.  Non-price factors in
the evaluation process include project status and viability, fuel
source and efficiency, project location and environmental
effects.

     The stipulation of settlement referred to above was due to
expire on September 15, 1993.  The BPU ordered an extension of
the current filing requirements consistent with PURPA
requirements through February 18, 1995.  Similarly, the CON was
set to expire on January 30, 1994.  Since no processes were in
place to replace the CON, the New Jersey Department of
Environmental Protection (NJDEP) readopted the legislation and
extended it through January 28, 1999.  ACE, pursuant to the terms
of the July 1988 stipulation, filed data with the BPU in October
1995 covering the 15 year period from 1995 through 2009.  The
filing indicated that ACE did not require additional capacity
until 1999 when the need would be met with combined cycle units
and/or power purchases using the pre-described evaluation system. 
Subsequent updates to the load forecast and the recent
negotiations to purchase 175 MW of capacity and associated energy
from another utility commencing in 1999 delays the need for
additional capacity until the year 2000.
  
     ACE's ability to meet its planned capacity obligations and
its projected load growth will depend upon the continued
availability of currently owned and purchased generating
capability, on the availability of capacity from cogeneration and
other non-utility generating sources, on ACE's own planned
capacity additions and on capacity purchases from sources yet to
be determined.  ACE's installed capacity, planned capacity
additions, and capacity purchase arrangements for 1996-1998 are
expected to be sufficient to supply its share of PJM reserve
requirements during that period.  The on-going outage of the
Salem units has reduced ACE's installed generating capacity and
has required ACE to secure additional capacity, sufficient to
meet PJM reserve requirements.  Increases in PJM reserve
requirements and less than anticipated benefits associated with
conservation and load management efforts could further increase
ACE's need for additional generating capacity.  To the extent
that such capacity provided by others is not available, ACE would
be required to pursue other sources of capacity, and to
accelerate or expand its construction program which, in certain
instances, may require additional regulatory approvals and
construction expenditures which could be substantial.  On an
operational basis, ACE expects to be able to continue to meet the
demand for electricity on its system through operation of
available equipment and by power purchases.  However, if periods
of unusual demand should coincide with forced outages of
equipment, ACE could find it necessary at times to reduce or
curtail load in order to safeguard the continued operation of its
system.  See Note 10 of the accompanying Notes to Financial
Statements herein for additional information.  

Nonutility Generation

     Additional sources of capacity for use by ACE are made
available by non-utility sources, principally cogenerators.  ACE
currently has four, BPU-approved power purchase agreements for
the purchase of capacity and energy from non-utility sources
under the standard offer methodology developed and approved by
the BPU in August 1987.  

Project             Fuel           MW             Date of   
Location            Type         Provided    Commercial Operation

Chester,            solid
Pennsylvania        waste           75            September 1991
Pedricktown,
New Jersey          gas            116            March 1992
Carney's Point,
New Jersey          coal           188            March 1994
Logan Township,
New Jersey          coal           200            September 1994

     Total                         579 

     An amendment to the agreement between ACE and the sponsors
of the Pedricktown facility has restructured ACE's payment for
capacity and energy reducing the energy component of the payment. 
The amendment also increased the available capacity of the
facility from 106 MW to 116 MW and returns the project's thermal
host to ACE as a retail customer effective November 1995. 
Renegotiation of a third contract is currently underway and is
expected to be completed in the third quarter of 1996.  See Note
3 of the accompanying Notes to Financial Statements for
additional information regarding the recovery of capacity costs.  
  

Nuclear Generating Station Developments

     ACE is a co-owner of the Hope Creek and Salem Nuclear
Generating Stations, to the extent of 5% and 7.41%, respectively. 
The Hope Creek Unit and Salem Units 1 and 2 are located adjacent
to each other in Salem County, New Jersey and are operated by PS. 
ACE is also an owner of 7.51% of Peach Bottom Units 2 and 3,
which are located in York County, Pennsylvania and are operated
by PECO.  See Note 5 of ACE's Notes to Financial Statements filed
as Exhibit 28(a) and incorporated by reference for additional
information relating to the Company's investment in jointly-owned
generating stations.  

          In 1995, nuclear generation provided 19% of ACE's total
energy output.  The approximate capacity factors (based on
maximum dependable capacity ratings) for ACE's jointly-owned
units for 1994 and 1995 were as follows:

   Unit                  1995                 1994               
Salem Unit 1             26.0%                59.3%               
Salem Unit 2             20.8%                57.8%              
Peach Bottom Unit 2      95.8%                80.3%       
Peach Bottom Unit 3      88.2%                97.8%              
Hope Creek               78.2%                78.9%               

See "Salem Station" below for additional information on operating
performance at Salem.

     ACE is collecting through rates amounts to fund its share of
estimated future costs relating to the decommissioning of the
five nuclear units in which it has joint ownership interests. 
Such estimated decommissioning costs are based on studies and
forecasts including generic estimates provided by the Nuclear
Regulatory Commission (NRC).  Funding to cover the future costs
of decommissioning each of the five nuclear units, as currently
authorized by the BPU and provided for in rates, is $6.4 million
annually.  Site specific studies are currently being performed
and expected to be completed during 1996.  At that time,
adjustments to funding amounts may be required.  

     See Notes 1 and 10 of the accompanying Notes to Financial
Statements for additional information relating to nuclear
decommissioning.

     ACE has been advised that the NRC has raised concerns that
the Thermo-Lag 330 fire barrier systems used to protect cables
and equipment at the Peach Bottom Station may not provide the
necessary level of fire protection and has requested licensees to
describe short and long term measures being taken to address this
concern.  ACE has been advised that PECO has informed the NRC
that it has taken short term compensatory actions to address the
inadequacies of the Thermo-Lag barriers installed at Peach Bottom
and is participating in an industry-coordinated program to
provide long term corrective solutions.   By letter dated
December 21, 1992, the NRC stated that PECO's interim actions
were acceptable.  PECO has advised ACE that PECO has been in
contact with the NRC regarding PECO's long term measures to
address Thermo-Lag fire barrier issues.  In 1995, PECO completed
its engineering re-analysis for Peach Bottom.  The re-analysis
identified proposed modifications to be performed over the next
several years in order to implement the long-term measures
addressing the concern over Thermo-Lag use.  NRC approval of the
proposed modifications is pending.  

     ACE has been advised that in October 1990 General Electric
Company (GE) reported that crack indications were discovered near
the seam welds in the core shroud assembly in a GE boiling water
reactor (BWR) located outside the United States.  As a result, GE
issued a letter requesting that the owners of GE BWR plants take
interim corrective actions, including a review of fabrication
records and visual examinations of accessible areas of the core
shroud seam welds.  Both Peach Bottom Units 2 and 3 and Hope
Creek are affected by this issue and both PECO and PS are
participating in the GE BWR Owners Group to evaluate this issue
and develop long term corrective action.  In June 1994, an
industry group was formed and subsequently established generic
inspection guidelines which were approved by the NRC.  PECO has
advised ACE that Peach Bottom 3 was last examined during its fall
1995 refueling outage and the extent of the cracking identified
was determined to be within industry-established guidelines.  In
a letter to the NRC dated November 3, 1995, PECO concluded that
there is a substantial margin for each core shroud weld to allow
for continued operation of Unit 3.  PECO has also advised ACE
that Peach Bottom 2 was examined in October 1994 during its
refueling outage.  Although some crack indications were
identified, PECO advised that they were considered to be much
less severe than those found on Unit 3 and no repairs were
required to operate Unit 2 for another two-year cycle.  At the
Hope Creek Unit, PS advised ACE that during the spring 1994
refueling outage, PS inspected the shroud of Hope Creek in
accordance with GE's recommendations and found no cracks.  PS
reports that due to the age and materials of the Hope Creek
shroud and the historical maintenance of low conductivity water
chemistry, Hope Creek has been placed in the lowest
susceptibility category under industry-established guidelines. 
Hope Creek must undergo another shroud inspection during its next
refueling outage in 1997, or install a preemptive repair that
would maintain the structural integrity of the shroud under all
normal and design basis accident conditions for the remaining
life of the plant.  ACE cannot predict what further action will
be taken with regard to these units or what long term corrective
actions, if any, will be identified.         

     The periodic review and evaluation of nuclear generating
station licensees conducted by the NRC is known as the Systematic
Assessment of Licensee Performance (SALP).  Under the revised
SALP process, ratings are assigned in four assessment areas,
reduced from seven assessment areas:  Operations, Maintenance,
Engineering and Plant Support (the Plant Support area includes
security, emergency preparedness, radiological controls, fire
protection, chemistry and housekeeping).  Ratings are assigned
from "1" to "3", with "1" being the highest and "3" being the
lowest.

     As previously reported under Part 1, Item I-Business,
"Regulation" and Note 1 of the Notes to Financial Statements in
the Company's 1994 Annual Report on Form 10-K, New Jersey
Administrative Code 14:5A-2.1 requires that all New Jersey
electric utilities file with the BPU a nuclear decommissioning
cost update by January 1, 1996 and every four years thereafter. 
PS, on behalf of the co-owners of the Salem, Hope Creek and Peach
Bottom stations, has engaged an independent engineer to develop
this estimate.  ACE is a 7.41%, 5.00% and 7.51% owner of the
Salem, Hope Creek and Peach Bottom stations, respectively.  ACE
expects that its share of nuclear decommissioning cost will
increase, however, the magnitude of the increase cannot be
determined at this time.

Salem Station 

     ACE is a 7.41% owner of Salem Nuclear Generating Station
(Salem) operated by PS.  Salem consists of two 1,100 MW
pressurized water nuclear reactors (PWR) representing 164,000 KW
of ACE's total installed capacity of 2,348,700 KW.  ACE's net
investment in the Salem Station was approximately $141.8 million,
or 6% of ACE's total assets at December 31, 1995. 

     ACE was advised on January 3, 1995, the NRC issued its SALP
report for the Salem Station for the period covering June 20,
1993 through November 5, 1994.  The Salem SALP report was issued
under the revised SALP process in which the number of assessment
areas has been reduced from seven to four:  Operations,
Maintenance, Engineering and Plant Support (the Plant Support
area includes security, emergency preparedness, radiological
controls, fire protection, chemistry and housekeeping).  The NRC
assigned ratings of "1" in the functional area of Plant Support,
"2" in the area of Engineering and "3" in the areas of Operations
and Maintenance.  The NRC noted an overall decline in
performance, and evidenced particular concern with plant and
operator challenges caused by repetitive equipment problems and
personnel errors.  The NRC has noted that although PS has
initiated several comprehensive actions within the past year to
improve plant performance, and some recent incremental gains have
been made, these efforts have yet to noticeably change overall
performance at Salem.

     ACE has been advised that on March 21, 1995, representatives
of the NRC staff met with the Boards of Directors of PS and PS'
parent company, Public Service Enterprise Group, to reiterate the
previously expressed concerns with regard to Salem's operations. 
The NRC staff acknowledged that PS had made efforts to improve
Salem's operations, including making senior management changes,
but indicated that demonstrated sustained results have not yet
been achieved.  

     ACE has been advised by PS that its own assessments, as well
as those by the NRC and the Institute of Nuclear Power
Operations, indicated that additional efforts are required to
further improve operating performance, as reflected in the
restart plans referred to above.  PS has advised ACE that PS is
committed to taking the necessary actions to address Salem's
performance needs.  It is anticipated that the NRC will continue
to maintain a close watch on Salem's restart activities and
subsequent operational performance.  No assurance can be given as
to what, if any, further or additional actions may be taken or
required by the NRC to improve Salem's performance.  

     As previously reported, a Salem NRC enforcement conference
was held on July 28, 1995 related to certain violations of NRC
requirements at Salem.  The violations included valves that were
incorrectly positioned following a plant modification in May
1993, non-conservatisms in the setpoints for a pressurizer
overpressure protection system and several examples of inadequate
root cause determination of events, leading to insufficient
corrective actions at Salem.  On October 16, 1995, the NRC
proposed cumulative civil penalties of $600,000 related to these
violations.  PS has advised the NRC that the proposed penalties
would not be contested.

     ACE has been advised that on October 5, 1995, PS declared an
alert at Salem Unit 1.  The event involved a problem with the
overhead annunciator panel in the Unit 1 control room. PS has
chartered a significant event response team (SERT) to investigate
the event, determine the root causes and suggest corrective
actions.  Simultaneously, the NRC formed a special inspection
team to investigate the event during the period October 6 through
October 18.  What actions the NRC might take, if any, cannot be
determined at this time.  At the time of the event there was no
fuel in the reactor, no release of radiation and no danger to the
public or on-site personnel.

     Salem 1 and 2 have been out of service since May 16, 1995
and June 7, 1995, respectively.  ACE has been advised that since
that time, PS has been engaged in a thorough assessment of each
unit to identify and complete the work necessary to achieve safe,
sustained, reliable and economic operation.  PS has stated that
it will keep each unit off line until it is satisfied that the
unit is ready to return to service and to operate reliably over
the long term and the NRC has agreed that the unit is
sufficiently prepared to restart.  On June 9, 1995, the NRC
issued a Confirmatory Action Letter documenting these commitments
of PS.  

     ACE was advised that on December 11, 1995, PS presented its
restart plan for both units to the NRC at a public meeting.  On
February 13, 1996, the NRC staff issued a letter to PS indicating
that it had concluded that PS's overall restart plan, if
implemented effectively, should adequately address the numerous
Salem issues to support a safe plant restart, and describing
further actions the NRC will undertake to confirm that PS'
actions have resulted in the necessary performance improvements
to support safe plant restart.  

     As a part of PS' comprehensive review, ACE has been advised
that an extensive examination is being performed on the steam
generators, which are large heat exchangers used to produce steam
to drive the turbines.  Within the industry, certain PWR's other
than Salem have experienced cracking in a sufficient number of
the steam generator tubes to require various modifications to
these tubes and replacement of the steam generators in some
cases.  Until the current outage, regular periodic inspections of
the steam generators for each Salem unit have resulted in repairs
of a small number of tubes well within NRC limits.  As a result
of the experience of other utilities with cracking in steam
generator tubes, in April 1995, the NRC issued a generic letter
to all utilities with pressurized water reactors.  This generic
letter requested utilities with pressurized water reactors to
conduct steam generator examinations with more sensitive
inspection devices capable of detecting evidence of degradation. 
Subsequently, PS conducted steam generator inspections of the
Salem units using the latest technology available, including a
new, more sensitive, eddy current testing device.  

     With respect to Salem I, ACE has been advised that the most
recent inspection of the steam generators is not complete, but
partial results from eddy current inspections in February 1996
using this new technology show indications of degradation in a
significant number of tubes.  The inspections are continuing and
PS has decided to remove several tubes for laboratory examination
to confirm the results of the inspections.  Removal of the tubes
should be completed in March and preliminary results of the state
of the Salem 1 tubes from the subsequent laboratory examinations
should be known in April.  However, based on the results of
inspections to date, PS has concluded that the Salem 1 outage,
which was expected to be completed in the second quarter of 1996,
will be required to be extended for a substantial additional
period to evaluate the state of the steam generators and to
subsequently determine an appropriate course of action. 
Degradation of steam generators in PWRs has become an increasing
concern for the nuclear industry.  Nationally and
internationally, utilities have undertaken actions to repair or
replace steam generators.  In the extreme, degradation of steam
generators has contributed to the retirement of several American
nuclear power reactors.  After the Salem 1 tubes are fully
examined, PS will be able to evaluate its course of action in
light of NRC and other industry requirements.  

     ACE has been advised that the examination of the Salem 2
steam generators was completed in January 1996 using the same
testing device used in Salem 1.  The results of the Salem 2
inspection are being reviewed again to confirm their results in
light of the experience with Salem 1.  Although this review has
not yet been completed, results to date appear to confirm that
the condition of the Salem 2 steam generators is well within
current repair limits at the present time.  PS will also remove
tubes from the Salem 2 steam generators for laboratory analysis
to further confirm the results of this testing. 

     ACE has been advised that PS had planned to return Salem 1
to service in the second quarter of 1996 and Salem 2 in the third
quarter of 1996.  As a result of the extent of the recently
discovered degradation in the Salem 1 steam generators, PS is
focusing its efforts on the return of Salem 2 to service in the
third quarter.  The additional steam generator inspections and
testing on Salem 2 is not expected to adversely affect the timing
of its restart.  However, the timing of the restart is subject to
completion of the requirements of the restart plan to the
satisfaction of PS and the NRC as well as to the normal
uncertainties associated with such a substantial review and
improvement of the systems of a large nuclear unit, so that no
assurance can be given that the projected return date will be
met.  

     ACE's share of additional operating and maintenance expenses
associated with Salem restart activities in 1995 was $2.6
million.  In 1996 operations and maintenance expenses are
estimated to be $5.8 million and capital expenditures to amount
to $1.9 million.  ACE's share of total operating and maintenance
expenses for both Salem units for the year was $24.5 million and
capital costs were $10.6 million.  For 1996, ACE does not
presently expect its share of operating and maintenance expenses
or capital costs for Salem Station to exceed 1995 amounts;
however this could change as a result of the steam generator
inspection results referred to above.  

     The outage of each Salem unit causes ACE to incur
replacement power costs of approximately $700 thousand per month
per unit.  Such amounts vary, however, depending on the
availability of other generation, the cost of purchased energy
and other factors, including modifications to maintenance
schedules of other units.  Based on the information provided by
PS regarding the delay in the return of Salem Unit 1, the return
of Salem Unit 2 in the third quarter of 1996 and expected
operation of the other nuclear units in which ACE has an
ownership interest, ACE presently estimates that its aggregate
nuclear capacity factor for 1996 will be approximately 50%.  Such
capacity factor would result in an estimated penalty of $3.3
million under the BPU nuclear performance standard.   

     On February 27, 1996, the Salem co-owners filed a Complaint
in United States District Court for the District of New Jersey
against Westinghouse Electric Corporation, the designer and
manufacturer of the Salem steam generators, under state and
federal RICO statutes alleging fraud, negligent misrepresentation
and breach of contract.  The Westinghouse complaint seeks
compensatory and punitive damages.      

     On March 5, 1996, ACE filed a Complaint in Superior Court of
New Jersey against PS seeking compensatory damages based on
allegations of breach of contract and negligence.  ACE has been
advised that the other nonoperating co-owners of Salem have filed
a similar complaint against PS in the United States District
Court for the Eastern District of Pennsylvania.

     ACE was advised in 1990 that the NJDEP issued a draft New
Jersey Pollutant Discharge Elimination System (NJPDES) Permit to
the Salem Station which required closed-cycle cooling.  In
response to the 1990 Draft Permit, PS submitted further written
comments to the NJDEP regarding the ecological effects of station
operations demonstrating that Salem was not having and would not
have an adverse environmental impact and that closed-cycle
cooling was an inappropriate solution.  PS also developed and
submitted a supplement to the permit renewal application setting
forth an alternative approach that would protect aquatic life in
the Delaware Estuary and provide other ecological benefits.  PS
proposed intake screen modifications to reduce fish loss, a study
of sound deterrent systems to divert fish from the intake and a
limit on intake flow.  In addition, PS proposed conservation
measures, including the restoration of up to 10,000 acres of
degraded wetlands and the installation of fish ladders to allow
fish to reach upstream spawning areas.  Finally, PS proposed a
comprehensive biological monitoring program to expand existing
knowledge of the Delaware Estuary and to monitor station impacts. 
In June 1993, ACE was advised that the NJDEP issued Salem a
revised draft permit which reconsidered the requirement for
closed-cycle cooling and adopted the alternative measures
proposed by PS with certain modifications.  A final five-year
permit was issued on July 20, 1994 with an effective date of
September 1, 1994.  The Environmental Protection Agency (EPA),
which has the authority to review the final permit issued by the
NJDEP, completed its review and has not raised any objections. 
Certain environmental groups and other entities, including the
State of Delaware, have filed requests for hearings with the
NJDEP challenging the final permit.  The NJDEP granted the
hearing requests on certain of the issues and PS has been named
as a respondent along with the NJDEP in these matters which are
pending in the Office of Administrative Law of the State of New
Jersey.  ACE has been advised that PS is implementing the final
permit.  Additional permits from various agencies must be
obtained to implement the permit.  No assurances can be given as
to receipt of any such additional permits.  PS has advised ACE
that it estimates that the cost of compliance with the final
permit is approximately $100 million, of which ACE's share is
7.41% and is included in ACE's current forecast of construction
expenditures.

     On March 13, 1996, the BPU announced that all revenues
associated with Salem Unit 1 would be made interim and subject to
refund effective immediately, pending further investigation and
hearings on the steam generator cracking and the expected return
date of the unit.  The BPU also announced that ACE must
demonstrate why revenues for Salem Unit 2 should not be made
interim and subject to refund.  For further information with
regard to this and other rate issues, see "Rates" herein. 
  
     At this time, it is not possible to predict what other
actions may be taken in any regulatory, administrative or civil
proceedings by ACE or others, the outcome of any such
proceedings, if commenced, or the ultimate amount of
responsibility of ACE for costs and penalties arising from such
proceedings. 

Hope Creek Station

     ACE is a 5% owner of Hope Creek Nuclear Generating Station
(Hope Creek) which is operated by PS.  An outage of the Hope
Creek unit can cause ACE to incur replacement power costs
currently estimated to be $400 thousand per month, depending on
the availability of other generation, the cost of purchased
energy and other factor including changes in maintenance
schedules of other units. 

     Hope Creek is currently undergoing a refueling and
maintenance outage which commenced November 11, 1995.

     The NRC's most recent SALP report for Hope Creek for the
period June 20 1993 through April 22, 1995 assigned ratings of
"1" in the area of Plant Support and a rating of "2" in the
functional category of Engineering, Operations and Maintenance.
The NRC noted an overall decline in performance in the
Operations, Maintenance and Engineering areas compared to the
previous SALP period, and cited weak root cause analysis as a
dominant factor.

     ACE has been advised by PS that as a result of an internal
allegation report, PS submitted a Licensee Event Report in
October 1994 which stated that the Hope Creek control room was
understaffed for approximately three minutes and a decision was
made by those involved that the incident did not warrant
initiation of NRC reporting documentation.  PS has advised ACE
that a meeting with NRC Region I personnel was held on October
18, 1994 in which the NRC expressed a high degree of concern over
the issue.  After investigation by both the NRC and PS, on
September 19, 1995, the NRC issued two Level IV violations with
no civil penalty.

     PS has advised ACE that a small amount of low-level
radioactive material was released to the atmosphere at Hope Creek
on April 5, 1995.  PS advised that the release did not exceed
federal limits nor pose any danger to the public or plant
employees; however, a trailer driven offsite had exceeded the
limit for releasing materials and was later cleaned.  PS and the
NRC have investigated the event, and on June 16, 1995 an
enforcement conference was held.  On July 20, 1995, the NRC
issued a Notice of Violation for the Hope Creek unplanned release
which noted four violations.  No fine was issued, partly because
of the comprehensive corrective actions taken following the event
and the plant's history of limited enforcement action.  


     ACE has been advised that on July 8, 1995, during a manual
shutdown of Hope Creek for repair of control room ventilation
equipment, operators partially opened a valve for a period of
time and reduced the effectiveness of the shutdown cooling
system.  Although the impact of the event to plant safety was
minimal, the positioning of the valve and the resulting
temperature change violated plant procedures and technical
specifications.  On July 31, 1995, NRC staff met with plant
management concerning this issue and subsequently decided to
assign a special inspection team to independently evaluate this
event as well as PS' response to it, including PS' procedures and
training for operator handling of abnormal conditions.  ACE was
advised that on September 25, 1995, the NRC's special inspection
team issued its report and identified several areas where
operator and senior plant management performance during this
event was inadequate.  PS has advised ACE that an NRC enforcement
conference was held on November 6, 1995, and on December 12,
1995, the NRC issued a Level III violation for this event with a
civil penalty of $100,000.  
     
     As previously reported, PS had advised ACE that the NRC, by
letter dated December 1, 1995, informed PS that a Plant
Performance Review performed by the NRC for the period April
23,1995 to October 21, 1995 indicated a continued decline in
plant performance, and that PS had determined to extend the
refueling outage to include the implementation of corrective
actions to eliminate operational deficiencies noted by the NRC
and detected by PS through self assessment.  PS has also advised
ACE that in the NRC December 1, 1995, letter the NRC requested a
management meeting prior to restart to allow PS to present its
self assessment of the progress made during the outage and of the
readiness of the unit for restart.  ACE has also been advised
that on February 12, 1996 the NRC commenced a Readiness
Assessment Team Inspection for Hope Creek, scheduled to be
completed on March 1, 1996, and that the Hope Creek unit is
expected to return to service in March 1996.  It is not possible
to predict the outcome of the NRC inspection or what other
actions which may be taken by the NRC with respect
to Hope Creek. 

     ACE has been advised that by letter dated January 29, 1996,
the NRC requested a meeting with PS senior management to discuss
its concerns regarding declining trends in performance at Hope
Creek.  The meeting has not yet been scheduled but is expected to
occur after the restart of Hope Creek from its current refueling
and maintenance outage. 

Peach Bottom Station

     ACE is a 7.51% owner of Peach Bottom Atomic Power Station
(Peach Bottom) operated by PECO.

     ACE has been advised that on January 19, 1996, the NRC
issued its SALP report for the Peach Bottom Station for the
period covering May 1, 1994 through October 14, 1995.  The NRC
assigned ratings of "1" in the functional areas of Plant
Operations, Maintenance and Plant Support.  Engineering received
a rating of "2".  The NRC found continued improvement in
performance during the period.  Operator performance continued to
be a strength, as well as operations management oversight.
Effective engineering management actions to improve the overall
self assessment and system performance were noted, as well as
good management oversight activities.  Response to emerging
issues, equipment problems and event related issues were noted as
particularly strong. However, lapses in the quality of technical
work and in modification implementation indicated inconsistent
performance, and resulted in a repeat rating of "2" for the
Engineering area.  ACE has been advised that PECO will be taking
actions to address weaknesses discussed in the SALP Report.    

     As previously reported in the June 30, 1995 report on Form
10-Q, ACE has been advised by PECO that on August 2, 1995, the
NRC held an predecisional enforcement conference regarding three
alleged violations in control and design activities and technical
specification requirements regarding operability of the emergency
diesel generators. ACE has been advised that on August 17, 1995,
the NRC issued its notice of violation report and, in the report,
recognized that PECO identified the problem issues, conducted a
detailed root cause evaluation and took appropriate corrective
actions.  The NRC elected not to propose a civil penalty in this
case based on the identification and corrective action taken by
PECO.

     ACE has been advised by PECO that, by letter dated October
18, 1994, the NRC has approved PECO's request to rerate the
authorized maximum reactor core power levels of Peach Bottom
Units No. 2 and 3 by 5% to 3,458 MWs from the current limits of
3,293 MWs.  The amendment of the Peach Bottom Unit No. 2 facility
operating license was effective upon the date of the NRC approval
letter.  The amendment of the Unit No. 3 facility operating
license became effective with the completion of hardware changes
which were done during Unit No. 3's fall 1995 refueling outage.


Fuel Supply

     ACE's sources of electrical energy (including power
purchases) for the years indicated are shown below:

Source                        1995       1994          1993     
Coal                           33%         29%          34%  
Nuclear                        19%         23%          24%  
Oil/Natural Gas                 3%          7%           5%       
Interchange and
 Purchased Power               21%         24%          28%  
Nonutility                     24%         17%           9%       
         
     The prices of all types of fuels used by ACE for the
generation of electricity are subject to various factors, such as
world markets, labor unrest and actions by governmental
authorities, including allocations of fuel supplies, over which
ACE has no control.

     Oil

     Residual oil and distillate oil for ACE's wholly-owned
stations are furnished under two separate contracts with a major
fuel supplier.  ACE has a contract for the supply of 1.0% sulfur
residual oil for both Deepwater and B. L. England Stations and
for distillate oil sufficient to supply ACE's combustion
turbines.  Both contracts expire October 31, 1997.  See
"Environmental Controls-Air" for information concerning the use
of particular fuels at B. L. England Station.  

     On December 31, 1995, the oil supply at Deepwater Station
was sufficient to operate Deepwater Unit 1 for 45 days, and the
supply at B. L. England Station was sufficient to operate Unit 3
for 45 days. 

     Coal

     ACE has contracted with one supplier for the purchase of
2.6% sulfur coal for B. L. England Units 1 and 2 through April
30, 1999.  On December 31, 1995, the coal inventory at the B. L.
England Station was sufficient to operate Units 1 and 2 for 30
days.  See "Environmental Controls-Air" herein for additional
information relating to B.L. England Station. 

     ACE has contracted with one supplier for the purchase of
1.0% sulfur coal for Deepwater Unit 6/8 through June 30, 1998. 
On December 31, 1995, the coal inventory at Deepwater Station was
sufficient to operate Unit 6/8 for 92 days.

     The Keystone and Conemaugh Stations, in which ACE has joint
ownership interests of 2.47% and 3.83%, respectively, are mine-
mouth generating stations located in western Pennsylvania.  The
owners of the Keystone Station have a contract through 2004,
providing for a portion of the annual bituminous coal
requirements of the Keystone Station.  A combination of long and
short term contracts provide for the annual bituminous coal
requirements of the Conemaugh Station.  To the extent that the
requirements of both plants are not covered by these contracts,
coal supplies are obtained from local suppliers.  As of December
31, 1995, Keystone and Conemaugh had approximately a 41 day
supply and a 44 day supply of coal, respectively.

     Gas 

     ACE is currently capable of firing natural gas in six
combustion turbine peaking units and in two conventional steam
turbine generating units.  ACE has entered into a firm electric
service tariff with the local distribution company for the supply
of natural gas to its units.  The tariff provides for the payment
of certain commodity and demand charges.  Portions of the gas
supply are obtained from the spot market under short term
renewable gas supply and transportation contracts with various
producers/suppliers and pipelines.

Nuclear Fuel

     As a joint owner of the Peach Bottom, Salem and Hope Creek
generating units, ACE relies upon the respective operating
company for arrangements for nuclear fuel supply and management.
ACE is responsible for the costs thereof to the extent of its
particular ownership interest through an arrangement with a third
party.  Generally, the supply of fuel for nuclear generating
units involves the mining and milling of uranium ore to uranium
concentrate, conversion of the uranium concentrate to uranium
hexafluoride, enrichment of uranium hexafluoride and fabrication
of fuel assemblies.  After spent fuel is removed from a nuclear
reactor, it is placed in temporary storage for cooling in a spent
fuel pool at the nuclear station site.  Under the Nuclear Waste
Policy Act of 1982 (NWPA), the Federal government has a
contractual obligation for transportation and ultimate disposal
of the spent fuel.  See Note 12 of the accompanying Notes to
Financial Statements for financing arrangements for nuclear fuel.

     ACE has been advised by PECO, the operator of Peach Bottom,
that it has contracts for uranium concentrates to fully operate
Peach Bottom Units 2 and 3 through 2002.  On February 25, 1995,
two companies which supply uranium concentrates to PECO filed
petitions for bankruptcy protection under Chapter 11 of the
Bankruptcy Code.  The two companies supply approximately half of
PECO's 1995 and 1996 requirements for uranium concentrates.  In
addition, one of the companies is under contract to supply
approximately 25% of PECO's uranium concentrate requirements for
the period 1997 to 2002.  PECO has made alternate arrangements
with other suppliers to satisfy its short-term requirements for
uranium concentrates.  PECO is also finalizing arrangements with
another supplier to satisfy PECO's longer-term needs.  ACE has
been advised that PECO does not anticipate any difficulties in
obtaining its requirements for uranium concentrates.  ACE has
also been advised by PECO that its contracts for uranium
concentrates will be allocated to the Peach Bottom units, and
other PECO nuclear facilities in which ACE has no ownership
interest, on an as-needed basis.  

     ACE has also been advised that PECO has contracted for the
following segments of the nuclear fuel supply cycle with respect
to the Peach Bottom units through the following years:

Nuclear Unit         Conversion     Enrichment       Fabrication

Peach Bottom Unit 2      1997         1998              1999
Peach Bottom Unit 3      1997         1998              1998

     ACE has been advised by PS, the operating company for the
Salem and Hope Creek Stations, that it has arrangements which are
expected to provide sufficient uranium concentrates to meet the
current projected requirements of the Salem and Hope Creek units
through the year 2000 and approximately 60% of the requirements
through 2002.  PS has advised ACE that present contracts meet the
other nuclear fuel cycle requirements for the Salem and Hope
Creek units through the years indicated below:

Nuclear Unit         Conversion     Enrichment       Fabrication

  Salem Unit 1          2000           (1)             2004
  Salem Unit 2          2000           (1)             2005
  Hope Creek            2000           (1)             2000

(1) 100% coverage through 1998, approximately 50% through 2002;
and approximately 30% through 2004.  PS has advised ACE that it
does not anticipate difficulties in obtaining necessary
enrichment service for the Salem and Hope Creek units.

     In conformity with the NWPA, PS and PECO, on behalf of the
co-owners of the Salem and Hope Creek, and Peach Bottom stations,
respectively, have entered into contracts with the U.S.
Department of Energy (DOE) for the disposal of spent nuclear fuel
from those stations.  Under these contracts, the DOE is to take
title to the spent fuel at the site, then transport it and
provide for its permanent disposal at a cost to utilities based
on nuclear generation, subject to such escalation as may be
required to assure full cost recovery by the Federal government. 

     Under NWPA, the Federal government must commence the
acceptance of these materials for permanent offsite storage no
later than 1998, but it is possible that such storage may be
delayed indefinitely.  ACE has been advised that the DOE has
stated that it would not be able to open a permanent, high-level
nuclear waste storage facility until 2015, at the earliest. 
Legislation has been introduced in Congress for the construction
of a temporary storage facility which would accept spent nuclear
fuel from utilities in 1998 or soon thereafter.  ACE has been
advised that the NRC has determined that spent nuclear fuel
generated in any reactor can be stored safely and without
significant environmental impacts in reactor facility storage
pools or in independent spent fuel storage installations located
at reactor or away-from-reactor sites for at least 30 years
beyond the licensed life for operation (which may include the
term of a revised or renewed license).  The DOE is exploring
options to address delays in the currently projected waste
acceptance schedules.  The options under consideration by the DOE
include offsetting a portion of the financial burden associated
with the costs of continued on-site storage of spent fuel after
1998.  It is not possible for ACE to predict when any type of
Federal storage facility will become available, or what offsets
to the costs of storage, if any, will be available.

     PECO has advised ACE that spent fuel racks at Peach Bottom
Units 2 and 3 have storage capacity until 1998 for Unit 2 and
1999 for Unit 3.  Options for expansion of storage capacity at
Peach Bottom beyond the pertinent dates, including rod
consolidation, are being investigated.    

     PS has advised ACE that as a result of reracking two spent
fuel pools at Salem, the availability of adequate spent fuel
storage capacity is conservatively estimated through 2008 for
Salem 1 and 2012 for Salem 2, prior to losing an operational full
core discharge reserve.  The Hope Creek pool is also fully racked
and it is conservatively expected to provide storage capacity
until 2006, again prior to losing an operational full core
discharge reserve.  The units can be safely operated for many
years beyond these dates, as pool storage capacity will continue
to be available.  These dates assist in planning the need for
additional storage capacity that may be needed to operate the
units until the expiration of their operating license.  

Nuclear Decommissioning

     See Note 10-Nuclear Plant Decommissioning and Other of the
accompanying Notes to Financial Statements for information
relating to decommissioning of the five nuclear units in which
ACE has an ownership interest.  

     The Energy Policy Act states, among other things, that
utilities with nuclear reactors must pay for the decommissioning
and decontamination of the DOE nuclear fuel enrichment
facilities.  The total costs are estimated to be $150 million per
year for 15 years, of which ACE's share is estimated to be $8.5
million.  The Act provides that these costs are to be recoverable
in the same manner as other fuel costs.  ACE has recorded a 
liability of $6 million and a related regulatory asset of $6.4
million for such costs at December 31, 1995.  ACE made its first
payment related to this liability to the respective operating
companies in September 1993 and continues to make payments as
required.  In ACE's 1993 LEC filing, the BPU approved a
stipulation of settlement which included, among other things, the
full LEC recovery of this and future assessments.

     In January 1993, the BPU adopted N.J.A.C. 14:5A which was
designed to provide a mechanism for periodic review of the
estimated costs of decommissioning nuclear generating stations
owned by New Jersey electric utilities.  The purpose of this
regulation is to insure that adequate funds are available to
assure completion of decommissioning activities at the cessation
of commercial operation.  The regulation established
decommissioning trust fund reporting requirements for electric
utilities in order to provide the BPU with timely information for
its oversight of these funds.  

     On January 3, 1996, PS and ACE jointly filed with the BPU
its 1995 Nuclear Decommissioning Cost updates pursuant to
N.J.A.C. 14:5A-2 et seq.  In order to comply with N.J.A.C. 14:5A-
2.2(a)2, PS and ACE jointly filed NRC cost estimates for each of
their five jointly owned nuclear units.  These cost estimates are
based on the NRC's existing generic formula.  ACE and PS do not
believe that these NRC generic estimates provide an accurate
estimate of the cost of decommissioning the nuclear units. 
Inclusion of these NRC generic estimates should not be
interpreted as a validation by ACE and PS of the appropriateness
of these estimates for estimating the cost of decommissioning the
nuclear units.  ACE and PS believe these costs are best estimated
with periodic site-specific studies.  Such site-specific studies
are currently being undertaken and upon completion will be filed
with the BPU later in 1996.   
     
Regulation

     ACE is a public utility organized under the laws of New
Jersey and is subject to regulation as such by the BPU, among
others, which is also charged with the responsibility for energy
planning and coordination within the State of New Jersey.  ACE is
also subject to regulation by the Pennsylvania Public Utility
Commission in limited respects concerning property and operations
in Pennsylvania.  ACE is also subject, in certain respects, to
the jurisdiction of the FERC, and ACE maintains a system of
accounts in conformity with the Uniform System of Accounts
prescribed for public utilities and licensees subject to the
provisions of the Federal Power Act.

     The construction of generating stations and the availability
of generating units for commercial operation are subject to the
receipt of necessary authorizations and permits from regulatory
agencies and governmental bodies.  Standards as to environmental
suitability or operating safety are subject to change. 
Litigation or legislation designed to delay or prevent
construction of generating facilities and to limit the use of
existing facilities may adversely affect the planned installation
and operation of such facilities.  No assurance can be given that
necessary authorizations and permits will be received or
continued in effect, or that standards as to environmental
suitability or operating safety will not be changed in a manner
to adversely affect the Company, ACE or its operations.

     Pursuant to legislation enacted in the State of New Jersey
in 1983, no public utility can commence construction of certain
electric facilities without having obtained a certificate of need
from the appropriate state regulatory authorities.  For purposes
of the legislation, such electrical facilities are electric
generating units at a single site having a combined capacity of
100 MW or more and electric generating units which, when added to
an existing electric generating facility, would increase the
installed capacity of such facility by 25% or by more than 100
MW, whichever is smaller. 

     Operation of nuclear generating units involves continuous
close regulation by the NRC.  Such regulation involves testing,
evaluation and modification of all aspects of plant operation in
light of NRC safety and environmental requirements, and
continuous demonstration to the NRC that plant operations meet
applicable requirements.  The NRC has the ultimate authority to
determine whether any nuclear generating plant may operate.  In
addition, the Federal Emergency Management Agency has
responsibility for the review, in conjunction with the NRC, of
certain aspects of emergency planning relating to the operation
of nuclear plants.

     As a by-product of nuclear operations, nuclear generating
units, including those in which ACE owns an interest, produce
substantial amounts of low-level radioactive waste (LLRW).  Such
waste is presently accumulated on-site pending permanent storage
in federally licensed disposal facilities located elsewhere.  The
Federal Low Level Radioactive Policy Act, as amended (LLRWPA),
provides that each state must have a permanent storage faciity
operational by January 1, 1996.  ACE has been advised that to
date Pennsylvania has met such requirements by entering into a
compact with West Virginia, Maryland, Delaware and the District
of Columbia.  To date, New Jersey has complied with the LLRWPA
requirements by entering into a compact with the State of
Connecticut and certifying its capability to manage, store or
dispose of low-level radioactive waste requiring disposal after
December 31, 1992.  ACE has been advised by PS and PECO that LLRW
generated at Salem, Hope Creek and Peach Bottom is being
temporarily stored in on-site facilities pending development of
permanent disposal sites in New Jersey and Pennsylvania.  PS's
on-site facility, completed in September 1994, provides storage
for 5 years from Hope Creek and Salem.  It will be used for
interim storage of radioactive materials and waste, and if it
proves necessary in the future, to temporarily store waste until
New Jersey provides a permanent disposal facility.  PECO has
advised that is has an on-site LLRW storage facility for Peach
Bottom which will also provide at least 5 years of temporary
storage.  PECO has also advised that Pennsylvania is pursuing its
own LLRW site development via state-selected candidate sites,
along with a volunteer plan option.  New Jersey has introduced a
volunteer siting process to establish a LLRW disposal facility by
the year 2000.  Public meetings have been held across the state
in an effort to provide information to and obtain feedback from
the public.  To date, there have been no volunteers identified.
In June 1991, New Jersey enacted legislation providing for
funding of an estimated $90 million cost of establishing a
facility for disposal by 1998.  Fee regulation provided for in
the statute will permit the state to recover costs of such
facility from waste generators. 

     In March 1983, New Jersey enacted the Public Utility Fault
Determination Act which requires that the BPU make a
determination of fault with regard to any past or future accident
at any electric generating or transmission facility, prior to
granting a request by that utility for a rate increase to cover
accident-related costs in excess of $10 million.  However, the
law allows the affected utility to file for non-accident related
rate increases during such fault determination hearings and to
recover contributions to federally mandated or voluntary cost-
sharing plans.  The law further allows the BPU to authorize the
recovery of certain fault-related repair, cleanup, power
replacement or damage costs if substantiated by the evidence
presented and if authorized in writing by the BPU.

     In April 1995, Atlantic Jersey Thermal Systems, Inc. (AJTS),
a wholly-owned subsidiary of ATS, filed a petition with the BPU
for an order declaring that AJTS not be deemed a "public utility"
under New Jersey law subject to the BPU's jurisdiction by reason
of either its ownership and operation of a proposed thermal
energy production facility serving certain customers in Atlantic
City or the sale of thermal energy therefrom.  AJTS has proposed
that its thermal energy services would not constitute the
operation of facilities for public use, but will service a
limited number of large, sophisticated energy consumers through
individually-negotiated service agreements.  The BPU has not yet
issued a ruling and the final outcome cannot be determined at
this time.   

     Information regarding ACE's nuclear power replacement cost
insurance and liability under the Federal Price-Anderson Act is
incorporated herein by reference to Note 8 of ACE's Notes to
Financial Statements, filed as Exhibit 28(a) to this report.

Environmental Matters

     General

     ACE is subject to regulation with respect to air and water
quality and other environmental matters by various Federal, state
and local authorities.  Emissions and discharges from ACE's
facilities are required to meet established criteria, and
numerous permits are required to construct new facilities and to
operate new and existing facilities.  Additional regulations and
requirements are continually being developed by various
government agencies.  The principal laws, regulations and
agencies relating to the protection of the environment which
affect ACE's operations are described below.

     Construction projects and operations of ACE are affected by
the National Environmental Policy Act under which all Federal
agencies are required to give appropriate consideration to
environmental values in major Federal actions significantly
affecting the quality of the human environment.

     The Federal Resource Conservation and Recovery Act of 1976
(RCRA) provides for the identification of hazardous waste and
includes standards and procedures that must be followed by all
persons that generate, transport, treat, store or dispose of
hazardous waste.  ACE has filed notifications and plans with the
U. S. EPA relating to the generation and treatment of hazardous
waste at certain of its facilities and generating stations.

     The Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), as amended by
the Superfund Amendments and Reauthorization Act of 1986 (SARA),
and RCRA authorize the EPA to bring an enforcement action to
compel responsible parties to take investigative and/or cleanup
actions at any site that is determined to present an imminent and
substantial danger to the public or to the environment because of
an actual or threatened release of one or more hazardous
substances. The New Jersey Spill Compensation and Control Act
(Spill Act) provides similar authority to the NJDEP.  Because of
the nature of ACE's business, including the production of
electricity, various by-products and substances are produced
and/or handled which are classified as hazardous under the above
laws. ACE generally provides for the disposal and/or processing
of such substances through licensed independent contractors.
However, the statutory provisions may impose joint and several
responsibility without regard to fault on the generators of
hazardous substances for certain investigative and/or cleanup
costs at the site where these substances were disposed and/or
processed. Generally, actions directed at funding such site
investigations and/or cleanups include all known allegedly
responsible parties.

     ACE has received requests for information under CERCLA with
respect to certain sites.  One site, a sanitary landfill
comprising approximately 40 acres, is situated in Atlantic
County, New Jersey.  ACE received a Directive, dated November 7,
1991, from the NJDEP, identifying ACE as one of a number of
parties allegedly responsible for the placement of certain
hazardous substances, namely, flyash which had been approved as
landfill material.  An Administrative Consent Order (ACO) has
been executed and submitted to the NJDEP by ACE and at least four
other identified responsible parties.  Site remediation will
include a soil cover of the site.  ACE has joined with three
other parties and will cooperate in implementing the terms of the
ACO.  Approximately eight additional responsible parties have
also been identified by the NJDEP.  ACE, together with the other
signatories to the ACO, will pursue recovery against those
persons who may also pursue recovery against other responsible
parties not named in the NJDEP Directive.  

     ACE has been served a Summons and Complaint dated June 30,
1992 in a civil action brought pursuant to Section 107(a) of
CERCLA on behalf of the EPA.  ACE has been named as one of
several defendants in connection with the recovery of costs
incurred, and to be incurred, in response to the alleged release
of hazardous substances located in Gloucester County, New Jersey. 
Approximately 70 separate financially solvent entities have been
identified as having responsibility for remediation which is now
predicted to be in excess of $175 million.  Sufficient discovery
has been conducted to establish that ACE's contribution to the
clean-up and remediation activity will be within the lower tiers
of financial participation.  Notwithstanding the joint and
several liability imposed by law, primary responsibility will be
apportioned among others, including Federal and state agencies
and private parties.  It is estimated that ACE's contribution for
the remediation and clean-up of both the Atlantic County and
Gloucester County sites is not expected to exceed $1 million.  

     The New Jersey Environmental Clean-up Responsibility Act was
supplemented and amended in June 1993 and became the New Jersey
Industrial Site Recovery Act.  The act provides, among other
things, that any business having certain Standard Industrial
Classification Code numbers that generates, uses, transports,
manufactures, refines, treats, stores, handles or disposes of
hazardous substances or hazardous wastes is subject to the
requirements of the act upon the closing of operations or a
transfer of ownership or operations.  As a precondition to such
termination or transfer of ownership or operations, the approval
of the NJDEP of a negative declaration, a remedial action work
plan or a remediation agreement and the establishment of the
remediation funding source is required.   
     
     Various state and Federal legislation have established a
comprehensive program for the disclosure of information about
hazardous substances in the workplace and the community, and
provided a procedure whereby workers and residents can gain
access to this information.  Implementing the regulations
provides for extensive recordkeeping, labeling and training to be
accomplished by each employer responsible for the handling of
hazardous substances.  ACE has implemented the requirements of
this legislation to achieve substantial compliance with
appropriate schedules.

     ACE is also subject to the Wetlands Act of 1970, which
requires applications to and permits from the NJDEP for
conducting regulated activities (including construction and
excavation) within the "coastal wetlands," as defined therein. 
Legislation enacted in 1987 by the State of New Jersey designates
certain areas as fresh water wetlands and restricts development
in those areas.  

     The New Jersey Coastal Area Facility Review Act (CAFRA)
requires applications to and permits from the NJDEP for
construction of certain types of facilities within the "coastal
area" as defined by CAFRA.  Recent changes in regulations
effective July 1994 may have substantive impact and are in the
process of being finalized.  Although the CAFRA regulations, as
initially drafted, exclude certain utilities from the most
rigorous portions of the regulations, electric utilities were not
excluded.  At the present time, the NJDEP indicates that the
final rules will exclude electric lines and substation
construction and maintenance from the definition of "public
development".  These activities will then be excluded from
regulation.  The regulations do not effect existing facilities or
equipment and ACE does not presently have construction of such
facilities or equipment planned.  ACE will continue pursuit for
the exemption.      

     Public concern continues over the health effects from
exposure to electric and magnetic fields (EMF).  To date, there
are not conclusive scientific studies to support such concerns. 
The New Jersey Commission on Radiation Protection (CORP) is
considering promulgation of regulations which would authorize the
NJDEP to review all new power line projects of 100 kilovolts or
more.  While the promulgation of such regulations may affect the
design and location of ACE's existing and future electric power
lines and facilities and the cost thereof, current discussions
with CORP indicate that such regulations would not significantly
impact ACE's operations.  ACE's program of Prudent Field
Management implements reasonable measures, at modest cost, to
limit magnetic field levels in the design and location of new
facilities.  Such amounts as may be necessary to comply with any
new EMF rules cannot be determined at this time and are not
included in ACE's 1996-1998 estimated construction expenditures.  

     Air

     The Federal Clean Air Act, as amended, requires that all
states achieve specified primary ambient air quality standards
(relating to public health) by December 31, 1982 unless the
deadline is extended for certain pollutants for a particular
state by appropriate action taken by the EPA, and also requires
that states achieve secondary ambient air quality standards
(relating to public welfare) under the Clean Air Act within a
reasonable time.  The Clean Air Act also requires the
Administrator of the EPA to promulgate revised new source
performance standards for sulfur dioxide, particulates and
nitrogen dioxide, mandate the use of the "best technological
system of continuous emission reduction" and preclude the use of
low sulfur coal as a sole means of achieving compliance with
sulfur regulations for new power plants.  The Clean Air Act
Amendments (CAAA), which provide for penalties in the event of
noncompliance, further provide that State Implementation Plans
(SIP) contain emission limitations and such other measures as may
be necessary, as determined under regulations promulgated by the
EPA, to prevent "significant deterioration" of air quality based
on regional non-degradation classifications.

     The NJDEP is using the New Jersey Administrative Code, Title
7, Chapter 27 (NJAC 7:27) as its SIP to achieve compliance with
the national ambient air quality standards adopted by EPA under
the Clean Air Act.  NJAC 7:27 currently provides ambient air
quality standards and emission limitations, all of which have EPA
approval, for seven pollutants, including sulfur dioxide and
particulates.  ACE believes that all of its fossil fuel-fired
generating units are, in all substantial respects, currently
operating in compliance with NJAC 7:27 and the EPA approved SIP.

     In November 1990, the CAAA was enacted to provide for
further restrictions and limitations on sulfur dioxide and other
emission sources as a means to reduce acid deposition.  Phase I
of the legislation mandates compliance with the sulfur dioxide
reduction provisions of the legislation by January 1, 1995 by
utility power plants emitting sulfur dioxide at a rate of above
2.5 pounds per million BTU.  Plants utilizing certain control
technologies to meet the Phase I sulfur dioxide reductions could
be permitted, subject to EPA approval, to either postpone
compliance until 1997 or receive an early reduction bonus
allowance for reductions achieved between 1995 and 1997.  Phase
II of the legislation requires controls by January 1, 2000 on
plants emitting sulfur dioxide at a rate above 1.2 pounds per
million BTU.  

     ACE's wholly-owned B. L. England Units 1 and 2 and its
jointly-owned Conemaugh Units 1 and 2, in which ACE has a 3.83%
ownership interest, are affected by Phase I, and all of ACE's
other fossil-fueled steam generating units are affected by Phase
II.  The Keystone Station, in which ACE has a 2.47% ownership
interest, is impacted by the sulfur dioxide provisions of Title
IV of the CAAA during Phase II.  In addition, all of ACE's
fossil-fueled steam generating units will be affected by the
nitrogen oxide provisions of the CAAA.  Compliance with the
legislation will cause ACE to incur additional capital and/or
operating costs.  On April 26, 1991, the NJDEP renewed ACE's
expiring Certificates to Operate Control Apparatus or Equipment
for the three generating units at B.L. England Station for a
period of five years, expiring April 26, 1995.  A draft renewal
permit is currently under review by the NJDEP and is expected to
be issued by the end of March 1996.  The CAAA Title V operating
permit, becoming effective in 1997, will supersede the current
permitting requirements.     

     The cost of certain power purchase arrangements between ACE
and other electric utilities may also be affected by the
legislation.  A portion of the capital costs necessary to
continue compliance with the CAAA are included in ACE's current
estimate of construction expenditures shown under "Construction
and Financing" above.  ACE expects that costs associated with
compliance would be recoverable through rates, and may be offset,
in part, by utilization of certain allowances as permitted by the
CAAA, the value of which is not presently determinable.

     The CAAA requires that reductions in nitrogen oxide (NOx) be
made from the emissions of major contributing sources and each
state must impose reasonable available control technologies on
these major sources.  NJDEP regulations adopted in November 1993
require that a compliance plan be filed with the NJDEP.  ACE's
compliance plan, filed April 22, 1994, has been accepted by the
NJDEP.  Draft permits for acceptable conditions are to be
finalized before May 1996 with compliance by May 31, 1996. 
Preliminary capital expenditures are estimated at $7 million over
the next five years to achieve compliance with Phase II NOx
reductions.  The necessary emission reductions are based on
modeling results and regulatory agency discussions and could
result in additional changes to equipment and in methods of
operation and fuel, the extent of which has not been fully
determined.  

     Water

     The Federal Water Pollution Control Act, as amended (the
Clean Water Act) provides for the imposition of effluent
limitations to regulate the discharge of pollutants, including
heat, into the waters of the United States.  The Clean Water Act
also requires that cooling water intake structures be designed to
minimize adverse environmental impact.  Under the Clean Water
Act, compliance with applicable effluent limitations is to be
achieved by a National Pollution Discharge Elimination System
(NPDES) permit program to be administered by the EPA or by the
state involved if such state establishes a permit program and
water quality standards satisfactory to the EPA.  Having
previously adopted the New Jersey Pollution Discharge Elimination
System (NJPDES), NJDEP assumed authority to operate the NJPDES
permit program.  During 1981, ACE received NJPDES permits for
discharges to surface waters for all facilities with existing
EPA-issued NPDES permits.  During 1986, ACE received draft
renewal permits for both B.L. England Station and Deepwater
Station for discharges to surface waters as well as groundwater. 
ACE filed extensive comments with the NJDEP contesting the
numerous newly-imposed conditions in both permits.  The NJDEP
subsequently issued final permits for both stations containing
certain conditions which are unacceptable to ACE.  ACE filed
requests for adjudicatory hearings contesting the unacceptable
conditions contained in the permits.  ACE has reached a
resolution with the NJDEP relating to groundwater permits at B.L.
England Station which required ACE to conduct additional studies,
which were completed in 1991.  A draft NJPDES permit was issued
in February 1994 to include past contested conditions and bring
current permit limitations with respect to today's environment
and technology.  Most of the contested conditions were resolved
with the issuance of the NPDES permit renewal effective January
1, 1995.  ACE has adjudicated two minor issues related to permit
conditions requiring that a pollutant reduction and a dilution
study is being conducted to comply with the latest NJPDES
requirements.     


     Effective December 2, 1974, the NJDEP adopted new surface
water quality standards which, in part, provide guidelines for
heat dissipation from any source and which become standards for
subsequent Federal permits.  These NJDEP guidelines were included
in the final EPA permits issued for the B. L. England, Deepwater,
Salem, and Hope Creek stations.  On receipt of the permits for B.
L. England and Deepwater stations, ACE filed with the EPA a
request for alternative thermal limitations (variance) in
accordance with the provisions of Section 316(a) of the Act.  The
NJDEP and EPA have subsequently determined that B. L. England
Units 1 and 2 are in compliance with applicable thermal water
quality standards.  The request for a Section 316(a) variance for
Deepwater Station has not yet been acted upon.  ACE is not able
at this time to predict the outcome of the request, but it
believes that it has adequately supported the request for such
variance.  ACE believes that all of its wholly-owned steam
electric generating units are, in all substantial respects,
currently operating in compliance with all applicable standards
and NJPDES permit limitations, except as described herein above. 
All current surface water discharge permits for B.L. England have
been renewed as of January 1, 1995 and ACE has filed for renewal
of the ground water discharge permits for B. L. England and
surface water discharge permits for Deepwater.  
  
     The Delaware River Basin Commission (DRBC) has required
various electric utilities, as a condition of being permitted to
withdraw water from the Delaware River for use in connection with
the operation of certain electric generating stations, to provide
for a means of replacing water withdrawn from the river during
certain periods of low river flow.  Such a requirement presently
applies to the Salem and Hope Creek Stations.  As a result of
such requirement, ACE and certain other electric utilities
constructed the Merrill Creek Reservoir Project.  ACE owns a 4.8%
ownership interest in the reservoir project.   Although ACE
expects that sufficient replacement water would be provided by
Merrill Creek during periods of low river flow to permit the full
operation of Salem and Hope Creek, such events cannot be assured.

     Environmental control technology, generally, is in the
process of further development and the implementation of such may
require, in many instances, balancing of the needs for additional
quantities of energy in future years and the need to protect the
environment.  As a result, ACE cannot estimate the precise effect
of existing and potential regulations and legislation upon any of
its existing and proposed facilities and operations, or the
additional costs of such regulations.  ACE's capital expenditures
related to compliance with environmental requirements in 1995
amounted to $26.3 million, and its most recent estimate for such
compliance for the years 1996-1998 is $54 million.  Such
estimates do not include amounts which ACE may be required to
expend to comply with Phase II requirements of the CAAA at B.L.
England Unit 1 and Keystone Station or the normal costs of
compliance with radiation protection.  Such additional costs
which ACE may incur in affecting compliance with potential
regulations and legislation are not included in the estimated
construction costs for the period 1996-1998 (see "Construction
and Financing").   Future regulatory and legislative developments
may require ACE to further modify, supplement or replace
equipment and facilities, and may delay or impede the
construction and operation of new facilities, at costs which
could be substantial.  See Note 10 of the accompanying Notes to
Financial Statements for further information.   


Executive Officers

     Information concerning the Executive Officers of the Company
and ACE, as of December 31, 1995, is set forth below.  Executive
Officers are elected by the respective Boards of Directors of the
Company and ACE and may be removed from office at any time by a
vote of a majority of all the Directors in office.

Name (age)                         Title(s) (effective date of         
                                   election to current position(s)
Jerrold L. Jacobs (56)          President and Chief Executive Officer
                                of the Company and Chairman and Chief
                                Executive Officer of ACE (4/26/95).
Michael J. Chesser (47)         Senior Vice President of the Company
                                and President and Chief Operating
                                Officer of ACE (4/26/95),  Director
                                of ACE. 
Michael J. Barron (46)          Vice President and Chief Financial
                                Officer of the Company and Senior
                                Vice President and Chief Financial
                                Officer of ACE (9/15/95). Director of 
                                ACE.
James E. Franklin II (49)       Vice President, Secretary and General
                                Counsel to the Company and Senior
                                Vice President, Secretary and General
                                Counsel of ACE (4/26/95), Director of
                                ACE.  
Meredith I. Harlacher, Jr.(53)  Vice President-Power System of the
                                Company and Senior Vice President-
                                Power System of ACE (4/26/95),
                                Director of ACE.
Henry K. Levari, Jr. (47)       Vice President-External Affairs of
                                the Company and Senior Vice
                                President-External Affairs of ACE
                                (4/26/95), Director of ACE.
Marilyn T. Powell (48)          Vice President of the Company and
                                Senior Vice President-Marketing of    
                                ACE (11/9/95).  Director of ACE.
Scott B. Ungerer (37)           Vice President-Enterprise Activities
                                of the Company (4/26/95).
Louis M. Walters (43)           Treasurer of the Company (4/26/95)
                                and Vice President-Treasurer and
                                Assistant Secretary of ACE (1/31/95).
Ernest L. Jolly (43)            Vice President-Human Resources and 
                                Transformation of the Company and ACE
                                (1/8/96).
J. David McCann (44)            Vice President-Strategic Customer
                                Support of ACE (4/28/93).
Henry C. Schwemm, Jr. (54)      Vice President-Power Generation & 
                                Fuels Management of ACE (4/28/93). 

     Prior to election to the positions above, the following
officers held other positions with ACE (unless otherwise noted)
since January 1, 1991:

J.L. Jacobs         President and Chief Executive Officer of the
                    Company and Chairman, President and Chief
                    Executive Officer of ACE (4/28/93). 
M.J. Chesser        Senior Vice President of the Company and
                    Executive Vice President and Chief Operating
                    Officer of ACE (2/1/94).
                    Vice President-Marketing & Gas Operations,
                    Baltimore Gas & Electric Company 
M.J. Barron         Vice President and Treasurer of Maxus Energy
                    Corporation, Dallas, Texas.
J.E. Franklin II    Secretary and General Counsel to the Company
                    and ACE (1/31/95); General Counsel to the
                    Company and ACE (10/1/94); Partner in the law
                    firm Megargee, Youngblood, Franklin &
                    Corcoran, P.A. 
M.I. Harlacher, Jr. Vice President of the Company and Senior Vice
                    President-Utility Operations of ACE (8/9/91);
                    Vice President of the Company and Senior Vice
                    President-Energy Supply of ACE (4/28/93). 
M.T. Powell         Vice President of the Company and Senior Vice
                    President-Marketing of ACE (9/16/94);
                    Director of marketing process, International
                    Business Machines Corporation. 
H.K. Levari, Jr.    Vice President of the Company (8/13/86) and
                    Senior Vice President-Customer Operations of
                    ACE (9/17/94); Vice President of the Company
                    and Senior Vice President-Marketing and
                    Customer Operations of ACE (4/28/93). 
E.L. Jolly          Vice President-Atlantic Transformation of ACE
                    (5/23/94); Vice President-External Affairs of
                    ACE (3/1/92);  Station Manager Deepwater
                    Generating Station-Dupont Area for ACE.
J.D. McCann         Vice President-Power Delivery of ACE
                    (8/9/91).  
H.C. Schwemm, Jr.   Vice President-Production of ACE.
S.B. Ungerer        Vice President of the Company (1/17/94);
                    Manager, Business Planning Services (1/4/93);
                    Manager, Strategic Business Planning
                    (1/6/92);  Manager, Joint Generation. 
L.M. Walters        Vice President-Treasurer and Assistant
                    Secretary of ACE (1/31/95); Vice President-
                    Treasurer and Secretary (4/28/94); Vice
                    President-Treasurer and Assistant Secretary
                    (4/28/93); General Manager, Treasury and
                    Finance (8/1/91).

ITEM 2   PROPERTIES

     Reference is made to the Financial Statements for
information regarding investment in such property by the Company
and ACE.  Substantially all of ACE's electric plant is subject to
the lien of the Mortgage and Deed of Trust under which First
Mortgage Bonds of ACE are issued.  Reference is made to Item 1 -
Business "General" and "Energy Requirements and Power Supply" for
information regarding ACE's properties.  Information concerning
leases is set forth in Note 10 of ACE's Notes to Financial
Statements incorporated herein by reference.  Information
regarding electric generating stations is set forth in Item 1,
Business-"Energy Requirements and Power Supply."


ITEM 3   LEGAL PROCEEDINGS

     Reference is made to Item 1-Business and the Notes to
Financial Statements of the Company (Notes 3 and 10) and ACE
(Notes 3 and 8) for information regarding various pending
administrative and judicial proceedings involving rate and
operating and environmental matters, respectively. 

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     Not Applicable

PART II
ITEM 5   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

     The Company's Common Stock is listed on the New York Stock
Exchange.  All of ACE's Common Stock is owned by the Company.  At
December 31, 1995, there were 48,683 holders of record of the
Company's Common Stock.  The following table indicates the high
and low sale prices for the Company's Common Stock as reported in
the Wall Street Journal-Composite Transactions, and dividends
paid for the periods indicated:
                                                      Dividends
                                  High      Low       per Share
Common Stock:
 1995
     First Quarter             $19.000   $17.750       $ .385
     Second Quarter            $19.625   $17.875       $ .385
     Third Quarter             $19.875   $18.125       $ .385
     Fourth Quarter            $20.125   $19.000       $ .385

  1994
     First Quarter             $21.750   $19.875       $ .385
     Second Quarter            $21.500   $16.375       $ .385
     Third Quarter             $19.625   $16.125       $ .385
     Fourth Quarter            $18.250   $16.000       $ .385


     The funds required to enable the Company to pay dividends on
its Common Stock are derived primarily from the dividends paid by
ACE on its Common Stock, all of which is held by the Company. 
Therefore the ability of the Company to pay dividends on its
Common Stock will be governed by the ability of ACE to pay
dividends on its Common Stock.  The rate and timing of future
dividends of the Company will depend upon the earnings and
financial condition of the Company and its subsidiaries,
including ACE, and upon other factors affecting dividend policy
not presently determinable.  ACE is subject to certain
limitations on the payment of dividends to the Company.  Whenever
full dividends on Preferred Stock have been paid for all past
quarter-yearly periods, ACE may pay dividends on its Common Stock
from funds legally available for such purpose.  Until all
cumulative dividends have been paid upon all series of Preferred
Stock and until certain required sinking fund redemptions of such
Preferred Stock have been made, no dividend or other distribution
may be paid or declared on the Common Stock of ACE and no Common
Stock of ACE shall be purchased or otherwise acquired for value
by ACE.  In addition, as long as any Preferred Stock is
outstanding, ACE may not pay dividends or make other
distributions to the holder of its Common Stock if, after giving
effect to such payment or distribution, the capital of ACE
represented by its Common Stock, together with its surplus as
then stated on its books of account, shall in the aggregate, be
less than the involuntary liquidation value of the then
outstanding shares of Preferred Stock.  

ITEM 6   SELECTED FINANCIAL DATA
     Selected financial data for the Company and ACE for each of
the last five years is listed below. 


Atlantic Energy, Inc.
                        1995        1994          1993          1992        1991
                                   (Thousands of Dollars)
                                                        
Operating
 Revenues            $ 953,137    $ 913,039   $  865,675   $  816,825  $  808,374   
Net Income           $  81,768    $  76,113   $   95,297   $   86,210  $   85,635   
Earnings per Average
  Common Share       $    1.55    $    1.41   $     1.80   $     1.67  $     1.75   
Total Assets
 (Year-end)          $2,620,896   $2,545,555  $2,487,508   $2,219,338   $2,151,416
Long Term Debt and
 Redeemable Preferred
 Stock (Year-end)(b) $1,032,103   $  940,788  $  952,101   $  842,236  $  807,347
 Capital Lease
 Obligations
 (Year-end)(b)       $   40,886   $   42,030  $   45,268   $   49,303  $   53,093 
 Common Dividends
 Declared            $     1.54   $     1.54  $    1.535   $    1.515  $    1.495  
 


Atlantic City Electric Company 
 

                        1995        1994          1993          1992        1991
                                   (Thousands of Dollars)
                                                          
Operating 
  Revenues           $ 953,779     $  913,226   $  865,799   $  816,931  $  808,482
Net Income           $  98,752     $   93,174   $  109,026   $  107,446  $  107,428 
Earnings for Common 
 Shareholder (a)     $  84,125     $   76,458   $   91,621   $   89,634  $   91,017 
Total Assets
  (Year-end)         $2,461,907    $2,421,316   $2,363,584   $2,100,278  $2,042,859 
Long Term Debt and
 Redeemable Preferred
 Stock (Year-end)(b) $  951,603    $  924,788   $  937,101   $  817,108  $  768,247 
Capital Lease
 Obligations
 (Year-end)(b)       $   40,877    $   42,030   $   45,268   $   49,303  $   53,093 
 Common Dividends
 Declared (a)        $   81,239    $   83,482   $   81,347   $   78,336  $   74,073 
   
  
(a)  Amounts shown as total, rather than on a per-share basis, since ACE is a
     wholly-owned subsidiary of the Company.
(b)  Includes current portion.
/TABLE

ITEM 7  Management's Discussion and Analysis of Financial 
                      Condition and Results of Operations

      
Financial Summary

     Consolidated operating revenues for 1995, 1994 and 1993 were
$953.1 million, $913.0 million and $865.7 million, respectively.  The
increase in 1995 revenue over 1994 largely reflects a provisional
increase in annual Levelized Energy Clause (LEC) revenues of $37.0
million granted in July 1995 and an increase in unbilled revenues. 
The increase in 1994 revenue from 1993 was primarily due to an
increase of $55.0 million in LEC revenues effective July 1994,
accompanied by an increase in sales of energy.  

     Consolidated earnings per share for 1995 were $1.55 on net income
of $81.8 million, compared with $1.41 on net income of $76.1 million
in 1994 and $1.80 on net income of $95.3 million in 1993.  The 1994
and 1993 earnings include reductions of $.37 and $.10 for special
charges, respectively.  Excluding the 1994 special charges, 1995
earnings per share decreased from 1994 primarily due to reduced sales
of energy.  Contributions to consolidated earnings per share were as
follows:

                        1995           1994           1993    
Utility                $1.59          $1.41          $1.73  
Nonutility              (.04)           -              .07

 
     The quarterly dividend paid on Common Stock was $.385 per share,
or an annual rate of $1.54 per share.  Information with respect to
Common Stock is as follows:


                                    1995        1994        1993    
Dividends Paid Per Share          $ 1.54      $ 1.54      $ 1.53  
Book Value Per Share              $15.48      $15.56      $15.62  
Annualized Dividend Yield            8.0%        8.7%        7.0%
Return on Average Common Equity      9.9%        9.1%       11.7%
Total Return (Dividends paid
 plus change in share price)        18.0%      (11.9)%       0.6%
Market to Book Value                 124%        113%        139% 
Price/Earnings Ratio                  12          13          12  
Year End Closing Price-NYSE       $19.25      $17.63      $21.75     

Liquidity and Capital Resources

Atlantic Energy, Inc.

Atlantic Energy, Inc. (AEI, Company or parent) is the parent of
Atlantic City Electric Company (ACE) and Atlantic Energy Enterprises,
Inc. (AEE), which are wholly-owned subsidiaries.  The Company's cash
flows are dependent on the cash flows of its subsidiaries, primarily
ACE.  


Principal cash inflows of the Company were as follows:

                               1995        1994        1993
(millions)
Dividends from ACE            $81.2       $83.2       $81.3       
Credit Facility                34.5         -           -         
Dividend Reinvestment            
 and Stock Purchase Plan        -           6.7        16.2  

     In September 1995, AEI established a $75 million revolving credit
and term loan facility.  The revolver is comprised of a 364-day senior
revolving credit facility in the amount of $35 million and a three-
year senior revolving credit facility in the amount of $40 million. 
Interest rates on borrowings are based on senior debt ratings and on
the borrowing option selected by the Company.  As of December 31,
1995, AEI had $34.5 million outstanding.  This facility can be used to
fund further acquisitions of Company Common Stock and for other
general corporate purposes.

Principal cash outflows of the Company were as follows:
                                                                      
                                   1995       1994       1993 
(Millions)
Dividends to Shareholders         $81.2      $83.2      $81.3
Advances and Capital  
 Contributions to Subsidiaries*    (6.7)      25.6       29.8
Common Stock Reacquisitions        29.6        3.9        -
Loans to Subsidiaries               7.5         -         -    
* Net of repayments

     The Company has a program to reacquire up to three million shares
of the Company's Common Stock outstanding.  There is no schedule or
specific share price target associated with the reacquisitions.  The
authorized number of shares is not to be affected.  During 1995, the
Company reacquired and cancelled 1,625,000 shares for a total cost of
$29.6 million with prices ranging from $17.625 to $18.875 per share. 
At December 31, 1995, the Company has reacquired and cancelled
1,846,700 shares of its Common Stock at a total cost of $33.5 million.

     Current year Dividends Declared on Common Stock as presented on
the Consolidated Statement of Cash Flows includes the effects of
market purchases of Common Stock with reinvested dividends as
instituted since July 1994. Prior to this, funds were available to the
Company from the issuance of original shares through optional cash
purchases and reinvested dividends.
 
     Agreements between the Company and its subsidiaries provide for
allocation of tax liabilities and benefits generated by the respective
subsidiaries.  A separate credit support agreement exists between the
Company and ATE. 






Atlantic City Electric Company

     ACE is a public utility primarily engaged in the generation,
transmission, distribution and sale of electric energy.  ACE's service
territory encompasses approximately 2,700 square miles within the
southern one-third of New Jersey with the majority of customers being
residential and commercial.  ACE, with its wholly-owned subsidiary
that operates certain generating facilities, is the principal
subsidiary within the consolidated group.  Cash construction
expenditures for 1993-1995 amounted to $359.0 million and included
expenditures for upgrades to existing transmission and distribution
facilities and compliance with provisions of the Clean Air Act
Amendments (CAAA) of 1990.  ACE's current estimate of cash
construction expenditures for 1996-1998  is $255 million.  These
estimated expenditures reflect necessary improvements to generation,
transmission and distribution facilities.

     ACE also utilizes cash for mandatory redemptions of Preferred
Stock and maturities and redemption of long term debt.  Optional
redemptions of securities are reviewed on an ongoing basis with a view
toward reducing the overall cost of capital.  Redemptions of Preferred
Stock (at par or stated value) for the period were as follows:
 
                                    1995      1994      1993 
Preferred Stock
  (Series)      
   9.96% (Shares)                     -         -       48,000 
  $8.53  (Shares)                  240,000   240,000      -    
  $8.25  (Shares)                    5,000     5,000     5,000
 
  Aggregate Amount (000)           $24,500   $24,500    $5,300

First Mortgage Bonds redeemed, acquired and retired or matured
in the period 1993-1995 were as follows:

    Date                 Series            Principal     Price(%)      
                                             Amount                    
                                              (000)
October 1995         9-1/4% due 2019       $ 53,857      105.15
October 1995        10-1/2% due 2014            850      101.00  
November 1994        7-5/8% due 2005          6,500      100.00
June 1994           10-1/2% due 2014         23,150      102.00
Various 1994 Dates   9-1/4% due 2019         11,910      105.38*
September 1993       9-1/4% due 2019         69,233      110.95*
September 1993       8-7/8% due 2016        125,000      104.80
March 1993           8-7/8% due 2000         19,000      102.41
March 1993           8%     due 2001         27,000      102.53
March 1993           8%     due 1996         95,000      100.91
March 1993           4-3/8% due 1993          9,540      100.00

* Average price

     Scheduled debt maturities and sinking fund requirements aggregate
$113.8 million for 1996-1998.

     On or before April 1 of each year, ACE and other New Jersey
utilities are required to pay excise taxes to the State of New Jersey. 
In March 1995, ACE paid $98.7 million funded  through the issuance of
short term debt.  In 1994 and 1993, ACE paid an additional $50 million
and $45 million, respectively, for the accelerated payment of one
year's tax due as required by amended state law.  These accelerated
payments are being recovered through rates.

     During 1995, ACE made $19.1 million in payments related to its
workforce reduction program.  ACE expects payments and settlement of
the remaining obligation for this program of $7.5 million to be
substantially completed by the end of 1996. 

     On an interim basis, ACE finances construction costs and other
capital requirements in excess of internally generated funds through
the issuance of unsecured short term debt consisting of commercial
paper and borrowings from banks.  As of December 31, 1995, ACE has
arranged for lines of credit of $150 million of which $119.5 million
was available.  Permanent financing by ACE is undertaken by the
issuance of long term debt and Preferred Stock, and at times from
capital contributions by AEI.  ACE's nuclear fuel requirements
associated with its jointly-owned units have been financed through
arrangements with a third party.

     A summary of the issue and sale of ACE's long term debt for 1993-
1995 is as follows:

(millions)                  1995       1994       1993   
First Mortgage Bonds          -          -        $225
Medium Term Notes           $105         -         240
Pollution Control Bonds       -         $55          4

     The proceeds from these financings were used to refund higher
cost debt and for construction purposes.  During 1996-1998, ACE may
issue up to $150 million in new long term debt to be used for 
construction and repayment of short term debt.  The provisions of
ACE's charter, mortgage and debenture agreements can limit, in certain
cases, the amount and type of additional financing which may be used. 
At December 31, 1995, ACE estimates additional funding capacities of
$288 million of First Mortgage Bonds, or $490 million of Preferred
Stock, or $413 million of unsecured debt.  These amounts are not
necessarily additive.

Atlantic Energy Enterprises, Inc.

     On January 1, 1995, AEI transferred direct ownership of its
existing nonutility companies to AEE.  AEE is a holding company which
is responsible for the management of the investments in the nonutility
companies consisting of:  Atlantic Generation, Inc. (AGI); Atlantic
Southern Properties, Inc. (ASP); ATE Investment, Inc. (ATE); Atlantic
Thermal Systems, Inc. (ATS); CoastalComm, Inc. (CCI) and Atlantic
Energy Technology, Inc. (AET).  Also, AEE has a 50% equity interest in
a limited liability company which provides energy management services,
including natural gas supply, transportation and marketing. Management
of the nonutility companies has developed a five-year business
strategy to expand operations and improve its financial performance. 
AEE's business strategy reflects the potential investment of
approximately $400 million over the next five years.    

Atlantic Generation, Inc.

     AGI and its wholly-owned subsidiaries are engaged in the
development, acquisition, ownership and operation of cogeneration
power projects.  AGI's activities through its subsidiaries are
primarily represented by partnership interests in three cogeneration
facilities located in New Jersey and New York.  At December 31, 1995,
total investments in these partnerships amounted to $30.6 million. 
Cash outlays for capital investments  by AGI for 1993-1995 totaled
$7.5 million.  AGI obtained the funds for its investments through
capital contributions from AEI.  
Atlantic Southern Properties, Inc.

     ASP owns and manages a 280,000 square-foot commercial office and
warehouse facility located in southern New Jersey with a net book
value of $10.1 million at December 31, 1995.  This investment has been
funded by capital contributions from AEI and borrowings under a loan
agreement with ATE.  

ATE Investment, Inc.

     ATE provides funds management and financing to affiliates and
manages a portfolio of investments in leveraged leases.  ATE has
invested $79.0 million in leveraged leases of three commercial
aircraft and two containerships.  ATE obtained funds for its business
activities and loans to affiliates through capital contributions from
AEI and external borrowings.  These borrowings include $15 million
principal amount of 7.44% Senior Notes due 1999 and a revolving credit
and term loan facility of up to $25 million.  At December 31, 1995,
$18.5 million was outstanding under this facility.  ATE's cash flows
are provided from lease rental receipts and realization of tax
benefits generated by the leveraged leases.  ATE has notes receivable,
including interest, outstanding with ASP which totaled $9.4 million at
December 31, 1995.  ATE has established a $10 million revolving credit
agreement with ATS, of which $522 thousand was receivable,  including
interest, from ATS at December 31, 1995.  ATE has established credit
arrangements with AEE, of which $9.6 million was receivable, including
interest, from AEE at December 31, 1995.    

Atlantic Thermal Systems, Inc.

     ATS and its wholly-owned subsidiaries are engaged in the
development and operation of thermal heating and cooling systems.  ATS
has invested $11.9 million as of December 31, 1995.  ATS is authorized
to make $88 million in capital expenditures related to a district
heating and cooling system to serve the business and casino district
in Atlantic City, New Jersey.  ATS has obtained funds for its project
development through loans from AEI and has established a $10 million
revolving credit agreement with ATE.  Additional funding for the
project is expected from $12.5 million borrowed from the proceeds of
bonds issued by the New Jersey Economic Development Authority with an
initial rate of interest of 3.70%.  These funds are currently
restricted in trust pending resolution of certain loan conditions. 
Satisfaction of these conditions and use of the funds is expected in
1996.   

CoastalComm, Inc.

     Formed in November 1995, CCI invested $5.2 million in a joint
venture pursuing telecommunication technology. 

Atlantic Energy Technology, Inc. 

     AET is currently concluding the affairs of its subsidiary, which
is its sole investment.  The net investment in this subsidiary is
nominal. Provisions for the write down of this investment to its
current book value had been made in prior years.  There are no future
plans for investment activity at this time by AET.

RESULTS OF OPERATIONS

     Operating results are dependent upon the performance of the
subsidiaries, primarily ACE.  Since ACE is the principal subsidiary
within the consolidated group, the operating results presented in the
Consolidated Statement of Income are those of ACE, after elimination
of transactions among members of the consolidated group.  Results of
the nonutility companies are reported in Other Income.

Revenues

     Operating Revenues - Electric increased 4.4% and 5.5% in 1995 and
1994, respectively. Components of the overall changes are shown as
follows:

                                         1995         1994         
(millions)       
Levelized Energy Clause                $ 49.2        $30.3
Kilowatt-hour Sales                     (10.0)         9.6        
Unbilled Revenues                        16.6         (7.3)       
Sales for Resale                        (11.9)        17.8       
Other                                    (3.8)        (3.0)       
Total                                  $ 40.1        $47.4

     LEC revenues increased in 1995 due to a provisional rate increase
of $37.0 million in July 1995 and a $55 million increase in July 1994. 
Changes in kilowatt-hour sales are discussed under "Billed Sales to
Ultimate Utility Customers."  Overall, the combined effects of changes
in rates charged to customers and kilowatt-hour sales resulted in
increases of 5.9% and 3.1% in revenues per kilowatt-hour in 1995 and
1994, respectively.  The changes in Unbilled Revenues are a result of
the amount of kilowatt-hours consumed by, but not yet billed to,
ultimate customers at the end of the respective periods, which are
affected by weather and economic conditions, and the corresponding
price per kilowatt-hour.  The changes in Sales for Resale are a
function of ACE's energy mix strategy, which in turn is dependent upon
ACE's needs for energy, the energy needs of other utilities
participating in the regional power pool of which ACE is a member, and
the sources and prices of energy available.  The decline in the 1995
Sales for Resale reflects a decrease in the demand of the power pool,
the decline in market prices and a reduction in excess energy sources
when compared to the previous year.  The decrease in supplemental
excess energy sources reflect the expiration of a 200 megawatt
purchase capacity arrangement in May 1994, and expiration of other
short term purchase contracts.  The increase in Sales for Resale for
1994 was the result of being able to meet the demands of the regional
power pool due to the extreme weather conditions during the first six
months of 1994.  

Billed Sales to Ultimate Utility Customers

     Changes in kilowatt-hour sales are generally due to changes in
the average number of customers and average customer use, which is
affected by economic and weather conditions.  Energy sales statistics,
stated as percentage changes from the previous year, are shown as
follows:

                        1995                      1994  
                         Avg    Avg #              Avg    Avg #
Customer Class   Sales   Use   of Cust     Sales   Use   of Cust
Residential      (2.0)% (3.1)%  1.2%        1.5 %  .4 %  1.1%
Commercial        1.4    (.1)   1.5         2.6    .5    2.1
Industrial       (7.4)  (9.0)   1.7        (2.9) (3.8)    .9
Total            (1.4)  (2.6)   1.2         1.3    -     1.2
      
     The 1995 decrease in total sales was attributable to weather
conditions that led to below normal electricity consumption for a
majority of the year and a decreased number of billing days in 1995
compared to 1994.  The 1994 increase in total sales was due to an
increase in the number of billing days in 1994 compared to 1993 and,
to a lesser extent, weather.  The Commercial sector experienced
continued growth during 1995 due to sales increases across all the
major commercial subsectors.  Commercial growth in both years
benefitted from night lighting programs.  The sales declines in the
Industrial sector are primarily related to the impact of two former
customers taking energy service from independent power producers
commencing in June 1994 and January 1995.    

Costs and Expenses 

     Total Operating Expenses increased 5.9% and 7.6% in 1995 and
1994, respectively.  Included in these expenses are the costs of
energy, purchased capacity, operations, maintenance, depreciation and
taxes.  

     Energy expense reflects costs incurred for energy needed to meet
load requirements, various energy supply sources used and operation of
the LECs.  Changes in costs reflect the varying availability of low-
cost generation from ACE-owned and purchased energy sources, and the
corresponding unit prices of the energy sources used, as well as
changes in the needs of other utilities participating in the PJM power
pool.  The cost of energy is recovered from customers primarily
through the operation of the LEC.  Excluding the effects of SNJEI
(discussed below), earnings generally are not affected by energy costs
because these costs are adjusted to match the associated LEC revenues. 
In any period, the actual amount of LEC revenue recovered from
customers may be greater or less than the actual amount of energy cost
incurred in that period.  Such respective overrecovery or
underrecovery of energy costs is recorded on the Consolidated Balance
Sheet as a liability or an asset as appropriate.  Amounts in the
balance sheet are recognized in the Consolidated Statement of Income
within Energy expense during the period in which they are subsequently
recovered through the LEC.  ACE was underrecovered by $31.4 million
and by $11 million at December 31, 1995 and 1994, respectively.  The
increase in 1995 is due to the combination of the election to defer
recovery of $20.6 million of recoverable fuel costs, lower than
projected kilowatt-hour sales and greater than projected purchased
fuel as replacement for Salem Station generation.  

     As a result of implementing the Southern New Jersey Economic
Initiative (SNJEI), ACE is forgoing the recovery of energy costs in
LEC rates in the amount of $10.0 million and $28.0 million for the
1995 and 1994 LEC periods, respectively.  After tax net income has
been reduced by $12.2 million and $10.1 million due to the effects of
the initiative for 1995 and 1994, respectively.

     Energy expense decreased 9.0% in 1995 primarily due to the
increase in underrecovered fuel costs, offset in part by the effects
of the SNJEI referred to above.  In 1994, Energy expense increased
32.7% due to the SNJEI and the increase in the levelized energy clause
that reduced underrecovered fuel costs. Production-related energy
costs for 1995 decreased 1.9% due to reduced generation.  The average
unit cost of energy decreased to 2.02 cents per kilowatt-hour in 1995
compared to 2.04 cents per kilowatt-hour in 1994.  Production-related
energy costs for 1994 increased by 19.9% due to increased overall
generation and the high cost of energy from additional nonutility
sources.  The 1993 cost per kilowatt-hour was 1.82 cents.  

     Purchased Capacity expense reflects entitlement to generating
capacity owned by others.  Purchased Capacity expense increased 45.5%
and 18.2% in 1995 and 1994, respectively.  The increases  reflect
additional contract capacity supplied by nonutility power producers in
each year.

     Operations expense decreased 2.8% and 3.5% in 1995 and 1994,
respectively.  These decreases reflect the benefits of ACE's
restructuring programs, initiated in 1993 and 1994.  The 1995 decrease
was offset in part by the additional costs associated with Salem
Station restart activities.  Net after tax savings approximated $8
million in 1995 related to the workforce reduction recorded in 1994. 
Employee separations throughout ACE of approximately 300 employees
largely occurred on March 1, 1995.  The original estimate of net after
tax savings of $10 million was based on a full-year assessment. 
Maintenance expense decreased 8.5% and 17.2% in 1995 and 1994,
respectively, due to cost saving measures. 

     Depreciation and Amortization expense increased 7.0% and 7.9% in
1995 and 1994, respectively, as a result of continued increases in
ACE's depreciable electric plant in service.  

     State Excise Taxes expense increased 5.9% in 1995 due to an
increase in the tax base used to calculate the tax in comparison to
the 1994 tax base.  In 1994, State Excise Taxes expense decreased 6.9%
relative to the higher tax assessment in 1993.
   
     Federal Income Taxes increased 7.9% in 1995 and decreased 6.1% in
1994 as a result of the level of taxable income during those periods. 

     Employee Separation costs is the provision by ACE in 1994 for the
reduction of its workforce.  Other-Net within Other Income (Expense)
decreased in 1994 due to the net after-tax impacts of the write-off of
deferred nuclear study costs of $1.4 million and the write-down of the
carrying value of ASP's commercial property of $1.7 million.  The
Litigation Settlement for 1993 represents an additional allocation to
customers of the proceeds from the 1992 settlement associated with the
Peach Bottom Station shut down in prior years.  
  
     Interest on Long Term Debt increased 5.2% in 1995 due to
increased amounts of debt outstanding during the year.  In 1994,
interest on long term debt decreased 3.4% due to refunding of higher
cost debt.  At December 31, 1995, 1994 and 1993, ACE's embedded cost
of long term debt was 7.5%, 7.6% and 7.8%, respectively.  

     Preferred Stock Dividend Requirements decreased 12.5% and 4% in
1995 and 1994, respectively, as a result of continuing mandatory and
optional redemptions.  Embedded cost of Preferred Stock as of December
31, 1995, 1994 and 1993 was 7.4%, 7.6% and 7.7%, respectively.

Outlook

     Over the next five years, AEI will devote considerable resources
to the development of energy-related businesses and markets.  AEE's
business plan calls for additional investments of $400 million.  AEE's
investment strategy will further its long term objectives of becoming
a wholesale energy supplier and aggregator as well as a provider of
energy services for its customers.  AEE also expects to make
additional investments in energy-related technologies and services
while continuing to pursue strategic business alliances and services
that will support its growth and financial performance.  AEE's
business plan indicates a positive contribution to earnings in 1996.

     Throughout this period, however, ACE's utility business will
continue to be the primary factor influencing the Company's overall
financial performance.  Factors such as regional economic trends,
abnormal weather conditions and inflation will continue to be
important determinants of ACE's financial performance. However,
continued competition from independent power producers and the
anticipated deregulation of the electric utility industry are becoming
the most critical strategic factors for ACE.
  
     Fundamental changes in the industry have led to the emergence of
significant competitive issues for ACE, including heightened
competition in the wholesale bulk power market, the growth of the
independent power industry and the pressure to offer more competitive
rates to customers.   

     ACE is closely monitoring deregulation of the industry on both a
state and Federal level.  The Federal Energy Regulatory Commissions'
(FERC) on-going rulemaking proceeding is proposing changes to rules
governing transmission access and pricing.  FERC is also establishing
guidelines for recovery of stranded costs and investments stemming
from wholesale transactions.  In response to FERC's initiative, the
power pool in which ACE participates has proposed significant changes
to its structure and operation.

     State jurisdictions across the country, including New Jersey, are
closely examining the issues surrounding deregulation or are creating
new regulations designed to foster a more competitive industry.  ACE
is playing an active role in the BPUs on-going Energy Master Plan
proceeding.  Among other things, the proceeding is investigating the
extent to which utilities, in a competitive environment, may be
threatened with the inability to recover investments or long term
commitments prudently made, and placed into rates under traditional
ratemaking regulations.  To date, the BPU has made no formal policy
pronouncement regarding deregulation or the recovery of stranded
commitments.
     
In anticipation of heightened competition in energy markets, ACE is
pursuing a number of initiatives designed to strengthen its position
in the marketplace.  The cost of ACE's power supply, including the
cost of power purchased from independent power producers, along with
its retail prices are expected to be critical success factors in a
competitive marketplace.  ACE is focusing on cost and rate control
measures as well as the development of new energy-related products and
services.  To allow for more flexibility and closer cost control, ACE
transferred its production operations to its subsidiary, Deepwater
Operating Company, on January 1, 1996.  Alternate pricing mechanisms
and long term discount power contracts are being explored as a means
of retaining key customers that are at risk of leaving ACE's system. 
While any such discounts are intended to have a long term beneficial
impact, they could have a detrimental effect on ACE's operating
revenues and net income in the short term.  

ACE's net income and its levelized energy adjustment rates may be
affected by the operational performance of nuclear generating
facilities and a BPU-mandated nuclear unit performance standard. Net
income may also be affected by significant changes in the
decommissioning costs associated with the nuclear units.  At this
time, it is not known what impact there may be on future operations
and financial condition associated with the uncertain status of Salem
Station Unit 1.

The electric utility industry continues to be capital intensive.  ACE
has lowered its planned construction budget to $398 million for 1996-
2000, with an expected reduction in its external cash requirements. 
ACE's ability to generate cash flows or access the capital markets to
fund capital requirements will be affected by competitive pressures on
revenues and net income, as well as regulatory initiatives and rate
developments.

The FASB issued two new statements in 1995 - Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" and Statement No. 123 "Accounting for Stock-
Based Compensation".  Both statements are effective for the Company in
1996.  Statement No. 121 primarily concerns accounting for the
impairment and disposal of property, plant and equipment.  Statement
No. 123 permits a fair value-based method to account for stock-based
compensation as an alternative to the intrinsic value-based method
currently permitted.  The Company currently employs stock-based
compensation which has not had a material impact on the financial
statements.  The Company has not yet fully assessed the impacts on its
financial statements of the requirements of these new accounting
standards. 

Inflation

Inflation affects the level of operating expenses and also the cost of
new utility plant placed in service.  Traditionally, the rate making
practices that have applied to ACE have involved the use of historical
test years and the actual cost of utility plant.  However, the ability
to recover increased costs through rates, whether resulting from
inflation or otherwise, depends upon both market circumstances and the
frequency, timing and results of rate case decisions.  
 
ITEM 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF MANAGEMENT

The management of Atlantic Energy, Inc. and its subsidiaries (the
Company) is responsible for the preparation of the financial
statements presented in this Annual Report.  The financial statements
have been prepared in conformity with generally accepted accounting
principles.  In preparing the financial statements, management made
informed judgments and estimates, as necessary, relating to events and
transactions reported.  

Management has established a system of internal accounting and
financial controls and procedures designed to provide reasonable
assurance as to the integrity and reliability of financial reporting. 
In any system of financial reporting controls, inherent limitations
exist.  Management continually examines the effectiveness and
efficiency of this system, and actions are taken when opportunities
for improvement are identified.  Management believes that, as of
December 31, 1995, the system of internal accounting and financial
controls over financial reporting is effective.  Management also
recognizes its responsibility for fostering a strong ethical climate
in which the Company's affairs are conducted according to the highest
standards of corporate conduct.  This responsibility is characterized
and reflected in the Company's code of ethics and business conduct
policy.

The financial statements have been audited by Deloitte & Touche LLP,
Certified Public Accountants.  Deloitte & Touche provides objective,
independent audits as to management's discharge of its
responsibilities insofar as they relate to the fairness of the
financial statements.  Their audits are based on procedures believed
by them to provide reasonable assurance that the financial statements
are free of material misstatement.

The Company's internal auditing function conducts audits and
appraisals of the Company's operations.  It evaluates the system of
internal accounting, financial and operational controls and compliance
with established procedures.  Both the external auditors and the
internal auditors periodically make recommendations concerning the
Company's internal control structure to management and the Audit
Committee of the Board of Directors.  Management responds to such
recommendations as appropriate in the circumstances.  None of the
recommendations made for the year ended December 31, 1995 represented
significant deficiencies in the design or operation of the Company's
internal control structure.


J. L. Jacobs                                             
President and Chief Executive Officer


M. J. Barron
Vice President and Chief Financial Officer

February 2, 1996

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors is comprised solely of
independent directors.  The members of the Committee are:  Matthew
Holden, Jr., Kathleen MacDonnell, Bernard J. Morgan and Harold J.
Raveche.  The Committee held five meetings during 1995.

The Committee oversees the Company's financial reporting process on
behalf of the Board of Directors.  In fulfilling its responsibility,
the Committee recommended to the Board of Directors, subject to
shareholder ratification, the selection of the Company's independent
auditors, Deloitte & Touche LLP.  The Committee discussed with the
Company's internal auditors and Deloitte & Touche the overall scope of
and specific plans for their respective activities concerning the
Company.  The Committee meets regularly with the internal and external
auditors, without management present, to discuss the results of their
activities, the adequacy of the Company's system of accounting,
financial and operational controls and the overall quality of the
Company's financial reporting.  The meetings are designed to
facilitate any private communication with the Committee desired by the
internal and external auditors.  No significant actions by the
Committee were required during the year ended December 31, 1995 as a
result of any communications conducted.



Matthew Holden, Jr.
Chairman, Audit Committee

February 2, 1996 

INDEPENDENT AUDITORS' REPORT
                                                    




To the Shareholders and the Board of Directors
of Atlantic Energy, Inc.:

We have audited the accompanying consolidated balance sheets of
Atlantic Energy, Inc. and subsidiaries as of December 31, 1995 and
1994 and the related consolidated statements of income, changes in
common shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1995.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Atlantic Energy,
Inc. and subsidiaries at December 31, 1995 and 1994 and the results of
their operations and their cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally
accepted accounting principles.



DELOITTE & TOUCHE LLP
Parsippany, New Jersey  

February 2, 1996 
















CONSOLIDATED STATEMENT OF INCOME     
(Thousands of Dollars)                  
                                    For the Years Ended December 31,
                                     1995         1994         1993 
Operating Revenues-Electric        $953,137     $913,039     $865,675 

Operating Expenses:
Energy                              191,766      210,891      159,438
Purchased Capacity                  190,570      130,929      110,781
Operations                          152,060      156,409      162,151
Maintenance                          34,379       37,568       45,360
Depreciation and Amortization        78,461       73,344       67,950
State Excise Taxes                  102,811       97,072      104,280
Federal Income Taxes                 45,876       42,529       45,277
Other Taxes                           8,677       10,757       10,854
Total Operating Expenses            804,600      759,499      706,091

Operating Income                    148,537      153,540      159,584

Other Income and Expense:
Allowance for Equity Funds Used 
 During Construction                    817        3,634        2,368
Employee Separation Costs, 
 net of tax benefit of $9,265          -         (17,335)        -  
Litigation Settlement, net of tax 
 benefit of $1,321                     -            -          (2,564)
Other-Net                             8,241        8,678       12,884 
Total Other Income and Expense        9,058       (5,023)      12,688

Income Before Interest Charges      157,595      148,517      172,272  

Interest Charges:
Interest on Long Term Debt           60,329       57,346       59,385
Other Interest Expense                2,550        1,114        1,633
Total Interest Charges               62,879       58,460       61,018
Allowance for Borrowed Funds             
 Used During Construction            (1,679)      (2,772)      (1,448)
Net Interest Charges                 61,200       55,688       59,570
Less Preferred Stock Dividend              
 Requirements of Subsidiary          14,627       16,716       17,405

Net Income                         $ 81,768     $ 76,113     $ 95,297
                                                         
Average Number of Shares of Common                        
 Stock Outstanding(in thousands)     52,815       54,149       52,888
Per Common Share:
Earnings                              $1.55        $1.41        $1.80
Dividends Declared                    $1.54        $1.54        $1.535
Dividends Paid                        $1.54        $1.54        $1.53


The accompanying Notes to Consolidated Financial Statements are an 
integral part of these statements.



CONSOLIDATED STATEMENT OF CASH FLOWS    
(Thousands of Dollars)
                                      For the Years Ended December 31,
                                         1995       1994       1993
Cash Flows Of Operating Activities:
Net Income                            $ 81,768   $ 76,113   $ 95,297
Deferred Purchased Power Costs          15,721     14,920     (6,050)
Deferred Energy Costs                  (20,435)    (3,819)   (15,269)
Preferred Stock Dividend Requirements   14,627     16,716     17,405
Depreciation and Amortization           78,461     73,344     67,950
Deferred Income Taxes-Net               25,946     17,863     20,901
Unrecovered State Excise Taxes           9,560    (40,128)   (33,706)
Employee Separation Costs              (19,112)    26,600       - 
Net (Increase) Decrease in Other         
 Working Capital                       (43,068)   (21,472)    30,088 
Other-Net                                4,893     (2,457)     1,534
Net Cash Provided by Operating       
 Activities                            148,361    157,680    178,150
Cash Flows Of Investing Activities:
Utility Construction Expenditures     (100,904)  (119,961)  (138,111)
Leased Property                        (10,446)   (10,713)    (9,946)
Decommissioning Trust Fund Deposits     (6,424)    (6,424)    (6,424) 
Other-Net                              (22,596)   (11,276)    (9,832)
Net Cash Used by Investing Activities (140,370)  (148,374)  (164,313)

Cash Flows Of Financing Activities:
Proceeds from Long Term Debt           168,904     54,572    464,633
Retirement and Maturity of Long Term     
 Debt                                  (57,489)   (42,664)  (370,541)
Increase (Decrease) in Short Term Debt  21,945      8,600    (14,600)
Proceeds from Common Stock Issued         -        10,289     16,208
Repurchase of Common Stock             (29,626)    (3,909)      -
Redemption of Preferred Stock          (24,500)   (24,500)    (5,469)
Dividends Declared on Preferred Stock  (14,627)   (16,716)   (17,405)
Dividends Declared on Common Stock     (81,088)   (75,829)   (67,259)
Other-Net                                9,067     12,330      8,584 
Net Cash (Used) Provided by Financing 
 Activities                             (7,414)   (77,827)    14,151 
Net Increase (Decrease) in Cash and 
 Temporary Investments                     577    (68,521)    27,988
Cash and Temporary Investments, 
 beginning of year                       5,114     73,635     45,647
Cash and Temporary Investments,       
 end of year                          $  5,691   $  5,114   $ 73,635

Supplemental Schedule of Payments:
Interest                              $ 61,160   $ 62,855   $ 52,765
Income taxes                          $ 30,769   $ 23,374   $ 19,565
Noncash Financing Activities:
Common Stock issued under stock plans $    137   $  7,652   $ 14,088


The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements. 

CONSOLIDATED BALANCE SHEET      
(Thousands of Dollars)
                                                   December 31,
                                                1995          1994
Assets
Electric Utility Plant:
In Service:
  Production                                 $1,187,169    $1,151,661 
  Transmission                                  366,242       357,389
  Distribution                                  691,830       659,619
  General                                       183,935       180,204
Total In Service                              2,429,176     2,348,873
Less Accumulated Depreciation                   794,479       725,999
Net                                           1,634,697     1,622,874
Construction Work in Progress                   119,270       110,078
Land Held for Future Use                          6,941         6,941
Leased Property-Net                              40,878        42,030
Electric Utility Plant-Net                    1,801,786     1,781,923

Investments and Nonutility Property:
Investment in Leveraged Leases                   78,959        78,216
Nuclear Decommissioning Trust Fund               61,802        52,004
Nonutility Property and Equipment-Net            22,743        18,163
Other Investments and Funds                      52,780        28,940
Total Investments and Nonutility Property       216,284       177,323

Current Assets:
Cash and Temporary Investments                    5,691         5,114
Accounts Receivable:
  Utility Service                                66,099        54,554
  Miscellaneous                                  17,477        14,067
  Allowance for Doubtful Accounts                (3,300)       (3,300)
Unbilled Revenues                                41,515        32,070
Fuel (at average cost)                           25,459        28,030
Materials and Supplies (at average cost)         25,434        27,823
Working Funds                                    14,421        14,475
Deferred Energy Costs                            31,434        10,999
Deferred Income Taxes                              -           12,264
Prepaid Excise Tax                               10,753         5,287
Other                                            13,339         6,596
Total Current Assets                            248,322       207,979

Deferred Debits:
Unrecovered Purchased Power Costs                99,817       115,538
Recoverable Future Federal Income Taxes          85,858        85,854
Unrecovered State Excise Taxes                   64,274        73,834
Unamortized Debt Costs                           39,004        38,184
Other Regulatory Assets                          54,568        47,055
Other                                            10,983        17,865
Total Deferred Debits                           354,504       378,330

Total Assets                                 $2,620,896    $2,545,555

The accompanying Notes to Consolidated Financial Statements are an 
integral part of these statements.

CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
                                                   December 31,
                                                1995           1994

Liabilities and Capitalization
Capitalization:
Common Shareholders' Equity:
Common Stock, no par value; 75,000,000 
 shares authorized; issued and outstanding: 
 1995 - 52,531,878; 1994 - 54,155,245        $  563,436     $  593,475
Retained Earnings                               249,741        249,181
Total Common Shareholders' Equity               813,177        842,656
Preferred Stock: 
 Not Subject to Mandatory Redemption             40,000         40,000
 Subject to Mandatory Redemption                114,750        149,250
Long Term Debt                                  829,856        778,288
Total Capitalization (excluding current                      
  portion)                                    1,797,783      1,810,194

Current Liabilities:
Preferred Stock Redemption Requirement           22,250         12,250
Long Term Debt                                   65,247          1,000
Short Term Debt                                  30,545          8,600
Accounts Payable                                 60,858         66,080
Taxes Accrued                                     3,450         10,409
Interest Accrued                                 20,315         19,168
Dividends Declared                               23,490         24,681
Accrued Employee Separation Costs                 7,488         26,600
Deferred Income Taxes                             2,569           -   
Other                                            20,554         19,813
Total Current Liabilities                       256,766        188,601

Deferred Credits and Other Liabilities:
Deferred Income Taxes                           425,875        412,574
Deferred Investment Tax Credits                  49,112         51,646
Capital Lease Obligations                        40,227         41,111
Other                                            51,133         41,429
Total Deferred Credits and Other Liabilities    566,347        546,760

Commitments and Contingencies (Note 10)  

Total Liabilities and Capitalization         $2,620,896     $2,545,555
         

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.










CONSOLIDATED STATEMENT OF CHANGES IN             
COMMON SHAREHOLDERS' EQUITY
(Thousands of Dollars)
                                                Common      Retained
                                  Shares        Stock       Earnings

Balance, December 31, 1992      52,198,624     $549,147     $242,768
Common Stock issued              1,308,162       30,296
Net Income                                                    95,297
Capital stock expense of
 subsidiary                                                     (169)
Dividends on Common Stock                                    (81,347)
Balance, December 31, 1993      53,506,786      579,443      256,549
Common Stock issued                870,159       17,941
Common Stock repurchased          (221,700)      (3,909)            
Net Income                                                    76,113 
Dividends on Common Stock                                    (83,481)
Balance, December 31, 1994      54,155,245      593,475      249,181
Common Stock issued*                 1,633         (413)              
Common Stock repurchased        (1,625,000)     (29,626)            
Net Income                                                    81,768  
Dividends on Common Stock                                    (81,208)
Balance, December 31, 1995      52,531,878     $563,436     $249,741

*Included in Common Stock issued are amounts associated with
adjustments made for employee stock plans.
      

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements. 

Notes to Consolidated Financial Statements
Note 1. SIGNIFICANT ACCOUNTING POLICIES

Organization - Atlantic Energy, Inc. (the Company, AEI or parent)
is the parent of Atlantic City Electric Company (ACE) and
Atlantic Energy Enterprises, Inc. (AEE), which are wholly-owned
subsidiaries.  ACE is a public utility primarily engaged in the
generation, transmission, distribution and sale of electric
energy.  ACE's service territory encompasses approximately 2,700
square miles within the southern one-third of New Jersey with the
majority of customers being residential and commercial.  ACE,
with its wholly-owned subsidiary that operates certain generating
facilities, is the principal subsidiary within the consolidated
group.  On January 1, 1995, AEI transferred direct ownership of
its existing nonutility companies to AEE.  AEE is a holding
company which is responsible for the management of the
investments in the nonutility companies consisting of:  Atlantic
Generation, Inc. (AGI), Atlantic Southern Properties, Inc. (ASP),
ATE Investment, Inc. (ATE), Atlantic Thermal Systems, Inc. (ATS), 
CoastalComm, Inc. (CCI) and Atlantic Energy Technology, Inc.
(AET).  AGI and its wholly-owned subsidiaries are engaged in the
development, acquisition, ownership and operation of cogeneration
power projects.  AGI's activities, through its subsidiaries, are
represented by partnership interests in three cogeneration
facilities located in New Jersey and New York.  ASP owns and
manages a commercial office and warehouse facility located in
southern New Jersey.  ATE provides funds management and financing
to affiliates and manages a portfolio of investments in leveraged
leases for equipment used in the airline and shipping industries. 
ATS and its wholly-owned subsidiaries are engaged in the
development and operation of thermal heating and cooling systems. 
AET is presently concluding the affairs of its subsidiary, which
is its sole investment and only activity.  CCI was formed in
November 1995 and manages investments in telecommunication
technology.  AEE also has a 50% equity interest in a limited
liability company which provides energy management services,
including natural gas supply, transportation and marketing.  

Principles of Consolidation - The consolidated financial
statements include the accounts of the Company and its
subsidiaries.  All significant intercompany accounts and
transactions have been eliminated in consolidation.  ACE and AEE
consolidate their respective subsidiaries.  Ownership interests
in other entities, between 20% and 50%, where control is not
evident, are accounted for using the equity method by recognizing
a proportionate share of the results of operations of that
investment.  The results of operations of the nonutility
companies are not significant to the results of the Company and
are classified under Other Income in the Consolidated Statement
of Income. 






Regulation - The accounting policies and rates of service for ACE
are subject to the regulations of the New Jersey Board of Public
Utilities (BPU) and in certain respects to the Federal Energy
Regulatory Commission (FERC).  ACE follows generally accepted
accounting principles (GAAP) and financial reporting requirements
employed by all industries as specified by the Financial
Accounting Standards Board (FASB) and the Securities and Exchange
Commission (SEC).  However, accounting for rate regulated
industries may depart from GAAP applied by other industries as
permitted by Statement of Financial Accounting Standards No. 71
(SFAS No. 71).  SFAS No. 71 provides guidance on circumstances
where the economic effect of a regulator's decision warrants
different applications of GAAP as a result of the ratemaking
process.  In setting rates, a regulator may provide recovery of
an incurred cost in a year or years other than the year the cost
is incurred.  As permitted by SFAS No. 71, costs ordered by a
regulator to be deferred or capitalized for future recovery are
recorded as a regulatory asset because the regulator's rate
action provides reasonable assurance of future economic benefits
attributable to these costs.  In a non-rate regulated industry,
such costs may be charged to expense in the year incurred.  SFAS
No. 71 further specifies that a regulatory liability is recorded
when a regulator orders a refund to customers of revenues
previously collected, or when existing rates provide for recovery
of future costs not yet incurred.  Such treatment is not afforded
to non-rate regulated companies.  When collection of regulatory
assets or relief of regulatory liabilities is no longer probable,
the assets and liabilities are applied to income in the year that
the assessment is made.  Specific regulatory assets and
liabilities that have been recorded are discussed elsewhere in
the notes to the consolidated financial statements.

Electric Operating Revenues - Revenues are recognized when
electric energy services are rendered, and include estimates for
amounts unbilled at the end of the year for energy used by
customers subsequent to the last bill rendered for the calendar
year.

Nuclear Fuel - Fuel costs associated with ACE's participation in
jointly-owned nuclear generating stations, including spent
nuclear fuel disposal costs, are charged to Energy expense based
on the units of thermal energy produced.

Electric Utility Plant - Property is stated at original cost. 
Generally, the plant is subject to a first mortgage lien.  The
cost of property additions, including replacement of units of
property and betterments, is capitalized.  Included in certain
property additions is an Allowance for Funds Used During
Construction (AFDC), which is defined in the applicable
regulatory system of accounts as the cost, during the period of
construction, of borrowed funds used for construction purposes
and a reasonable rate on other funds when so used.  AFDC has been
calculated using a semi-annually compounded rate of 8.25% since
August 1, 1993.  The AFDC rate was 8.95% prior to this date. 
Property and equipment of the nonutility companies are not
significant.  

Depreciation - ACE provides for straight-line depreciation based
on:  transmission and distribution property - estimated remaining
life;  nuclear property - remaining life of the related plant
operating license in existence at the time of the last base rate
case;  other depreciable property - estimated average service
life.  The overall composite rate of depreciation was 3.3% for
the last three years.  Accumulated depreciation is charged with
the cost of depreciable property retired together with removal
costs less salvage and other recoveries.  Depreciation for the
nonutility companies is not significant.

Nuclear Plant Decommissioning Reserve -  A reserve for
decommissioning costs is presented as a component of accumulated
depreciation and amounted to $60.9 million and $51.1 million at
December 31, 1995 and 1994, respectively.  

The SEC has questioned certain accounting practices employed by
the electric utility industry concerning decommissioning costs
for nuclear generating facilities.  The FASB is currently
reviewing this issue within the broad context of removal costs
relative to all industries.  At this time, the Company cannot
predict what future accounting practices may be required by the
FASB and SEC concerning this issue, or the impact on future
financial statements, that any new accounting practices may have.
  
Deferred Energy Costs - As approved by the BPU, ACE has a
Levelized Energy Clause (LEC) through which energy and energy-
related costs (energy) are charged to customers.  LEC rates are
based on projected energy costs and prior period underrecoveries
or overrecoveries.  Generally, energy costs are recovered through
levelized rates over the period of projection, which is usually a
12-month period.  In any period, the actual amount of LEC
revenues recovered from customers may be greater or less than the
recoverable amount of energy costs incurred in that period. 
Energy expense is adjusted to match the associated LEC revenues. 
Any underrecovery (an asset representing energy costs incurred
that are to be collected from customers) or overrecovery (a
liability representing previously collected energy costs to be
returned to customers) of costs is deferred on the Consolidated
Balance Sheet as Deferred Energy Costs.  These deferrals are
recognized in the Consolidated Statement of Income as Energy
expense during the period in which they are subsequently included
in the LEC.  ACE may elect to forgo recovery of certain amounts
of otherwise recoverable energy costs.  Such amounts are
expensed.

Income Taxes - Deferred Federal and state income taxes are
provided on all significant temporary differences between book
bases and tax bases of assets and liabilities, transactions that
reflect taxable income in a year different than book income, and
tax carryforwards.  Investment tax credits previously used for
income tax purposes have been deferred on the Consolidated
Balance Sheet and are recognized in book income over the life of
the related property.  The Company and its subsidiaries file a
consolidated Federal income tax return.  Income taxes are
allocated to each of the companies within the consolidated group
based on the separate return method.

Earnings Per Common Share - This is computed based upon the
weighted average number of common shares outstanding during the
year.  Common stock equivalents exist but are not included in the
computation of earnings per share because they are currently
antidilutive.

Financial Instruments - A number of items within Current Assets
and Current Liabilities on the Consolidated Balance Sheet are
considered to be financial instruments because they are cash or
are to be settled in cash.  Due to their short term nature, the
carrying values of these items approximate their fair market
values.  Accounts Receivable - Utility Service and Unbilled
Revenues are subject to concentration of credit risk because they
pertain to utility service conducted within a fixed geographic
region.  Investments in Leveraged Leases are subject to
concentration of credit risk because they are exclusive to a
small number of parties within two industries.  The Company has
recourse to the affected assets under lease.  These leased assets
are of general use within their respective industries.

Other - Debt premium, discount and expense of ACE are amortized
over the life of the related debt.  Temporary investments
considered as cash equivalents for Consolidated Statement of Cash
Flows purposes represent purchases of highly liquid debt
instruments maturing in three months or less.  ACE's weighted
daily average interest rate on short term debt was 6.3% for 1995
and 4.4% for 1994.  AEI's weighted daily average interest rate on
its short term debt was 6.3% for 1995.  There was no short term
debt outstanding for AEI in 1994.

The preparation of financial statements in conformity with GAAP
requires management at times to make certain judgments, estimates
and assumptions that affect amounts and matters reported at the
year end dates and for the annual periods presented.  Actual
results could differ from those estimates.  Any change in the
judgments, estimates and assumptions used, which in management's
opinion would have a significant effect on the financial
statements, will be reported when management becomes aware of
such changes.

New Accounting Standards - The FASB issued two new statements in
1995 - Statement No. 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" and
Statement No. 123 "Accounting for Stock-Based Compensation". 
Both statements are effective for the Company in 1996.  Statement
No. 121 primarily concerns accounting for the impairment and
disposal of property, plant and equipment.  Statement No. 123
permits a fair value-based method to account for stock-based
compensation as an alternative to the intrinsic value-based
method that is currently permitted.  The Company currently
employs stock-based compensation which has not had a material
impact on the financial statements.  Should the Company elect to
continue to use the intrinsic value-based method to account for
stock-based compensation, the statement requires, if material,
certain disclosures as if the fair value-based method was used. 
The Company has not yet fully assessed the impacts on its
financial statements of the requirements of these new accounting
standards. 

Certain prior year amounts have been reclassified to conform to
the current year reporting of these items.

NOTE 2.  INCOME TAXES
The components of Federal income tax expense for the years ended
December 31 are as follows:
                                      
(000)                                  1995        1994        1993   
Current                             $ 20,483    $ 19,729    $ 25,349
Deferred                              25,993      17,414      20,247
Investment Tax Credits Recognized    
 on Leveraged Leases                     (28)         -          (12)
Total Federal Income Tax Expense      46,448      37,143      45,584
Less Amounts in Other Income             572      (5,386)        307
Federal Income Taxes in 
 Operating Expenses                 $ 45,876    $ 42,529    $ 45,277

A reconciliation of the expected Federal income taxes compared to the
reported Federal income tax expense computed by applying the statutory
rate for the years ended December 31 follows:
                                       1995        1994        1993
Statutory Federal Income Tax Rate       35%         35%         35%
(000)
Income Tax Computed at the           
 Statutory Rate                     $ 49,995    $ 45,490    $ 55,400
Plant Basis Differences                1,307         (27)     (5,171)
Amortization of Investment Tax
 Credits                              (2,562)     (2,534)     (2,546)
Tax Adjustments                         (897)     (4,097)     (2,071)
Other-Net                             (1,395)     (1,689)        (28)
Total Federal Income Tax Expense    $ 46,448    $ 37,143    $ 45,584
Effective Federal Income Tax Rate       33%         29%         30%

State income tax expense is not significant.

Items comprising deferred tax balances as of December 31 are as
follow: 
(000)                                 1995         1994    

Deferred Tax Liabilities:
Plant Basis Differences             $316,834     $304,476
Leveraged Leases                      71,180       61,409
Unrecovered Purchased Power Costs     28,209       33,557
State Excise Taxes                    22,527       25,842 
Other                                 32,825       24,732
  Total Deferred Tax Liabilities     471,575      450,016
Deferred Tax Assets:
Deferred Investment Tax Credits       26,511       27,879
Employee Separation Costs              2,621        6,932
Other                                 13,999       15,245
  Total Deferred Tax Assets           43,131       50,056
Total Deferred Taxes-Net            $428,444     $399,960

At December 31, 1995 and 1994, deferred tax assets exist for
cumulative state income tax net operating loss (NOL's)
carryforwards.  Valuation allowances of virtually the same
amounts have been recorded.  The effects of the state NOL's and
associated valuation allowances are not material to consolidated
results of operations and financial position.  At December 31,
1995, unexpired state NOL's amount to approximately $72 million,
with expiration dates from 1996 through 2002.

At December 31, 1995 there was an estimated remaining Federal
Alternative Minimum Tax (AMT) credit of approximately $7 million. 
The AMT credit is available for an indefinite carryforward period
against future Federal income tax payable, to the extent that the
regular Federal income tax payable exceeds future AMT payable. 
The AMT is included with the tax effects of leveraged leases. 

Deferred tax costs associated with additional deferred tax
liabilities resulting from a prior year accounting change are
recorded on the Consolidated Balance Sheet as Recoverable Future
Federal Income Taxes.  This recognition is given for the probable
amount of revenue to be collected from ratepayers for these
additional taxes to be paid in future years.

NOTE 3.  RATE MATTERS OF ACE 

Energy Clause Proceedings

              Changes in Levelized Energy Clause Rates
                            1993 - 1995
                              
                    Amount            Amount             
     Date         Requested          Granted            Date
     Filed        (millions)        (millions)        Effective

     3/93            $14.2             $10.9            10/93
     2/94             63.0              55.0             7/94
     4/95             37.0              37.0             7/95

ACE's Levelized Energy Clause (LEC) is subject to annual review
by the BPU.

In March 1993, ACE filed a petition with the BPU requesting a
$14.2 million increase in LEC revenues for the June 1, 1993
through May 31, 1994 LEC period.  Effective for service rendered
on and after October 1, 1993, the BPU approved an increase of
$10.9 million.  The request was reduced primarily to return to
customers an additional 25%, or $3.8 million, of a $15.5 million
litigation settlement with the operator of the Peach Bottom
Atomic Power Station.     

On February 8, 1994, ACE filed a petition with the BPU requesting
an increase in LEC revenues of $63 million for the period June 1,
1994 through May 31, 1995.  The increase was primarily due to the
additional costs incurred from two new independent power
producers (IPPs) scheduled to begin commercial operation during
the 1994/1995 LEC period.  The requested amount was reduced by
$84 million as a result of the utilization of $56 million of
current base rate revenues associated with a utility power
purchase contract expiring in May 1994 and the Southern New
Jersey Economic Initiative (SNJEI), an ACE initiative that
forgoes the recovery of $28 million of energy costs that ACE will
incur during the LEC period.  On November 30, 1994, the BPU
rendered its final decision approving the continuation of a
provisional LEC rate increase of $55 million that had been in
effect since July 26, 1994.       
   
On April 17, 1995, ACE filed a petition with the BPU requesting a
$37 million increase in LEC revenues for the period June 1, 1995
through May 31, 1996.  This filing represents the first that
includes a full year of costs for capacity and energy with all
four of the IPPs with which ACE is under contract.  The requested
amount had been reduced by ACE from $67.6 million by forgoing $10
million in LEC revenues under the SNJEI and deferring $20.6
million of LEC costs that ACE will incur during the 1995/1996 LEC
period for recovery in a future LEC period.  Effective July 7,
1995, the BPU approved a provisional increase of $37 million
effective for service rendered on and after July 7, 1995.  On
November 15, 1995, the Administrative Law Judge (ALJ) recommended
that the provisional rates be made final.  On December 1, 1995,
the Ratepayer Advocate, the BPU Staff and ACE agreed to a
stipulation recommending that the ALJ's findings be accepted by
the BPU.  A final decision is expected from the BPU by the end of
March 1996.

Other Rate Proceedings

In November 1993, ACE filed a petition with the BPU requesting
that hotel-casino customers be permitted to take service under
rate schedules offered to all other commercial and industrial
customers.  On June 23, 1994, the BPU approved the request. 
Prior to BPU approval, hotel-casino customers were served under
the Hotel Casino Service rate schedule, the highest rate for
service of all ACE's service classes.  Effective July 1, 1994,
all hotel-casino customers began taking service under a general
service rate schedule.  The effect of this change was not
material to the results of operations. 
   
On September 14, 1994, the BPU issued an order supporting the
investigation of the double recovery of capacity costs from
nonutility generation projects.  This issue relates to the
Ratepayer Advocate's allegation that ACE, along with other New
Jersey electric utility companies, is recovering cogeneration
capacity costs concurrently in base rates and LEC rates.  The
order confirmed the establishment of a generic proceeding to
review the nonutility capacity cost recovery methodology and
ordered that the matter be reviewed in a two phase proceeding. 
The scope of the issues to be resolved during the first phase of
the proceeding include:  1) the determination of the existence,
or lack of existence, of the double recovery as a result of the
traditional LEC pass-through of nonutility generation capacity
costs;  2) the quantification of any double recovery found to
exist for each utility for the relevant periods;  3) a
determination of an appropriate remedy or adjustment if double
recovery is found to occur and the periods of time over which an
adjustment would be applicable.  Following the conclusion of the
first phase of the proceeding, the BPU, in the second phase, will
render a final decision regarding the specific findings of the
Office of Administrative Law and address the broader issues
relating to the appropriate prospective purchase power capacity
cost recovery methods.  In September 1995, the Ratepayer Advocate
filed testimony that claims ACE's overrecovery of capacity costs
for the four-year period June 1991 through May 1995 is $46
million.  The Ratepayer Advocate also filed testimony supporting
similar claims with respect to other New Jersey electric
utilities.  In December 1995, ACE and the other electric
utilities filed testimony rebutting the Ratepayer Advocate's
claims.  Litigation is expected to continue in 1996; the BPU's
final decision is not expected until the latter part of 1996.  At
this time, ACE cannot predict the outcome of this proceeding and
cannot estimate the impact that the double recovery issue may
have on future rates.

NOTE 4.  RETIREMENT BENEFITS

Pension

ACE has a noncontributory defined benefit pension plan covering
substantially all of its employees and those of its wholly-owned
subsidiary.  Benefits are based on an employee's years of service
and average final pay.  ACE's policy is to fund pension costs
within the guidelines of the minimum required by the Employee
Retirement Income Security Act and the maximum allowable as a tax
deduction.  Each company is allocated its participative share of
plan costs and contributions.

Net periodic pension costs include:
(000)                                  1995      1994      1993
Service cost-benefits earned  
 during the period                  $  6,363  $  6,871  $  7,196
Interest cost on projected benefit                                
 obligation                           14,794    15,390    16,016
Actual return on plan assets         (44,067)     (860)  (23,200)    
Other-net                             28,379   (16,885)    5,496  
Net periodic pension costs          $  5,469  $  4,516  $  5,508  


Of these costs, $3.0 million were charged to operating expense in both
1995 and 1994 and $5.2 million in 1993.  The remaining costs, which
are associated with construction labor, were charged to the cost of
new utility plant.  Actual return on plan assets and other-net for
1995 primarily reflect the favorable market conditions from the
investment of plan assets and expected returns versus the unfavorable
market conditions in 1994.    

A reconciliation of the funded status of the plan as of December 31 is
as follows:

(000)                                  1995          1994      
Fair value of plan assets            $212,000      $190,200     
Projected benefit obligation          213,470       206,742     
Plan assets less than           
 projected benefit obligation          (1,470)      (16,542)    
Unrecognized net transition asset      (1,550)       (1,722)   
Unrecognized prior service cost           282           306
Unrecognized net loss                  10,006        24,106    
Prepaid pension cost                 $  7,268      $  6,148     
Accumulated benefit obligation:
Vested benefits                      $169,044      $166,602     
Nonvested benefits                      3,413           485     
Total                                $172,457      $167,087         

At December 31, 1995, approximately 65% of plan assets were invested
in equity securities, 21% in fixed income securities and 14% in other
investments.  The assumed rates used in determining the actuarial
present value of the projected benefit obligation at December 31 were
as follows:
                                         1995       1994
Weighted average discount                7.0%       7.5%
Anticipated increase in compensation     3.5%       3.5%

The assumed long term rate of return on plan assets was 8.5% for both
1995 and 1994.

Other Postretirement Benefits 

ACE and its subsidiary provide certain health care and life insurance
benefits for retired employees and their eligible dependents. 
Substantially all employees may become eligible for these benefits if
they reach retirement age while working for the companies.  Benefits
are provided through insurance companies and other plan providers
whose premiums and related plan costs are based on the benefits paid
during the year.  ACE has a tax qualified trust to fund these
benefits.  Each company is allocated its participative share of plan
costs and contributions.  

Net periodic other postretirement benefit costs include:
(000)                                  1995        1994        1993  
Service cost-benefits attributed to 
 service during the period           $ 2,891     $ 3,817     $ 3,045
Interest cost on accumulated 
 postretirement benefits obligation    8,107       8,450       7,133
Actual return on plan assets          (1,437)        100        (255) 
Amortization of unrecognized 
 transition obligation                 3,893       3,893       3,893
Other-net                                404        (700)       (711)
Net periodic other postretirement 
  cost                               $13,858     $15,560     $13,105  



These costs were allocated as follows:
(millions)                                 1995     1994     1993
Operating expense                          $5.0     $5.6     $3.3
New utility plant-associated with   
 construction labor                          .6       .2      1.7
Regulatory asset                            8.3      9.8      8.1

The regulatory asset represents the amount of cost recognized in
excess of the amount of cost currently recovered in rates.  These
excess costs are deferred as authorized by an accounting order of the
BPU pending future recovery through rates.   

A reconciliation of the funded status of the plan as of December 31 is
as follows:
(000)                                        1995         1994   
Accumulated benefits obligation:
Retirees                                  $ 64,516     $ 43,265 
Fully eligible active plan participants      6,954       18,010 
Other active plan participants              33,649       60,588 
Total accumulated benefits obligation      105,119      121,863 
Less fair value of plan assets              16,500       14,700 
Accumulated benefits obligation in      
 excess of plan assets                      88,619      107,163 
Unrecognized net loss                      (15,335)     (19,223)
Unamortized unrecognized transition 
 obligation                                (47,057)     (70,075)
Accrued other postretirement benefits      
 cost obligation                          $ 26,227     $ 17,865

The accumulated benefit obligation for retirees and other active plan
participants for 1995 reflect the impact of ACE's workforce reduction
program and a lower discount rate effective in 1995.  The unamortized
unrecognized transition obligation for 1995 was reduced by certain
changes to the plan.

At December 31, 1995, approximately 80% of plan assets were invested
in fixed income securities and 20% in other investments.

The assumed health care costs trend rate for 1996 is 9% and is assumed
to evenly decline to an ultimate constant rate of 5% in the year 2001
and thereafter.  If the assumed health care costs trend rate was
increased by 1% in each future year, the aggregate service and
interest costs of the 1995 net periodic benefits cost would increase
by $1.8 million, and the accumulated postretirement benefits
obligation at December 31, 1995 would increase by $12.1 million.  The
weighted average discount rate assumed in determining the accumulated
benefits obligation was 7% for 1995 and 7.5% for 1994.  The assumed
long term return rate on plan assets was 7% for both 1995 and 1994. 


NOTE 5.  JOINTLY-OWNED GENERATING STATIONS

ACE owns jointly with other utilities several electric production
facilities.  ACE is responsible for its pro-rata share of the costs of
construction, operation and maintenance of each facility.

The amounts shown represent ACE's share of each facility at, or for
the year ending, December 31, including AFDC as appropriate.           
                                                                       
                                       Peach                  Hope
              Keystone   Conemaugh     Bottom      Salem      Creek   
Energy Source   Coal        Coal      Nuclear     Nuclear    Nuclear
Company's Share
 (%/MWs)      2.47/42.3  3.83/65.4   7.51/157.0  7.41/164.0  5.00/52.0

Electric Plant in Service (000):
1995           $12,719    $35,371     $128,398    $214,306   $239,499
1994            11,293     26,607      125,003     206,804    238,980

Accumulated Depreciation (000):
1995           $ 3,277    $ 6,445     $ 58,870    $ 84,611   $ 60,998
1994             3,180      6,237       55,190      79,898     53,746

Construction Work in Progress (000):
1995           $   442    $   873     $ 11,056    $ 11,198   $    655
1994             1,216      2,649       11,002       8,727        387

Operations and Maintenance Expenses (including fuel)(000):
1995           $ 5,143    $ 7,252     $ 29,647    $ 28,306   $ 10,360
1994             5,085      7,211       29,530      27,731     10,471 
1993             5,323      6,855       31,479      27,021      9,764

Working Funds (000):
1995           $    44    $    69     $  4,505    $  5,782   $  1,919
1994                44         69        5,051       5,199      2,013

Generation (MWHr):
1995           285,899    451,211    1,232,921     334,572    352,316 
1994           257,561    419,313    1,214,776     836,725    355,390
1993           293,876    416,263    1,043,485     840,043    440,118

ACE provides financing during the construction period for its share of
the jointly-owned facilities and includes its share of direct
operations and maintenance expenses in the Consolidated Statement of
Income.  Additionally, ACE provides an amount of working funds to the
operators of the facilities to fund operational needs.  

The decrease in Salem's generation is due to both units being taken
out of service in May and June 1995, respectively, by its operator
Public Service Electric and Gas Company, pending review and resolution
of certain equipment and management issues. (See Note 10 for further
information).
          
NOTE 6.  NONUTILITY COMPANIES

Principal assets of each of the subsidiary companies of AEE at
December 31, 1995 are:  AGI - investments of approximately $30.6
million in cogeneration facilities;  ASP - commercial real estate site
with a net book value of $10.1 million;  ATE - leveraged lease
investments of $79.0 million;  ATS - construction costs in thermal
heating and cooling projects of $11.9 million.  In November 1995, CCI
was formed to invest in telecommunication systems.  In December 1995,
CCI invested $5.2 million in such business opportunities.  Other
financial information regarding the subsidiary companies is as
follows:

                       Net Worth           Net Income (Loss)  
Company              1995      1994     1995     1994     1993
(000)
AGI                $26,082   $23,610   $2,513   $2,959   $4,459 
ASP                  2,334     3,175     (841)  (1,956)    (347)
ATE                  9,399     9,449      (50)     266     (777)
ATS                  2,187     2,577     (213)    (327)     -
CCI                  5,258       -        -        -        -  
       
AGI's results in each year primarily reflect the equity in earnings of
cogeneration facilities in which AGI has an ownership interest. 

ASP's results in each year reflect vacancy in its commercial site due
to generally poor market conditions in commercial real estate. 
Additionally, 1994 included a net after tax write-down of the carrying
value of the commercial site of $1.7 million.  

ATE's 1995 results reflect increased interest expense associated with
its revolving credit and term loan agreement.  1993 results reflect
adjustments in income taxes.     

ATS's results for 1995 and 1994 reflect administrative and general
costs in the development of operations, while construction of heating
and cooling systems are underway.  Operating expenses were offset in
part in 1995 by revenues generated from the operation and maintenance
of heating and cooling facilities.

AEI and AEE parent-only operations, excluding equity in the results of
subsidiary companies, generally reflect administrative and general 
expenses in the management of their respective subsidiaries. AEI's
results were losses of $1.6 million in 1995, $543 thousand in 1994 and
$183 thousand in 1993.  AEI's 1995 results reflect interest charges
associated with a line of credit established to fund repurchases of
common stock and certain affiliate capital needs.  AEE's 1995 results 
were a loss of $2.4 million.









NOTE 7.  CUMULATIVE PREFERRED STOCK OF ACE

ACE has authorized 799,979 shares of Cumulative Preferred Stock, $100
Par Value, two million shares of No Par Preferred Stock and three
million shares of Preference Stock, No Par Value.  Information
relating to outstanding shares at December 31 is shown in the table
below.
                                                                       
                                                             Current
                                                             Optional
         Par            1995                    1994        Redemption 
Series  Value     Shares     (000)        Shares     (000)    Price    
Not Subject to Mandatory Redemption:
4%       $100      77,000   $ 7,700        77,000   $ 7,700   $105.50
4.10%     100      72,000     7,200        72,000     7,200    101.00
4.35%     100      15,000     1,500        15,000     1,500    101.00
4.35%     100      36,000     3,600        36,000     3,600    101.00
4.75%     100      50,000     5,000        50,000     5,000    101.00
5%        100      50,000     5,000        50,000     5,000    100.00
7.52%     100     100,000    10,000       100,000    10,000    101.88
Total                       $40,000                 $40,000
Subject to Mandatory Redemption:
$8.25     None     50,000  $  5,000        55,000  $  5,500    104.45
$8.53     None    120,000    12,000       360,000    36,000    101.00
$8.20     None    500,000    50,000       500,000    50,000       -
$7.80     None    700,000    70,000       700,000    70,000       -
Total                       137,000                 161,500
Less portion due within
 one year                    22,250                  12,250
Total                      $114,750                $149,250            
                                                                    

Cumulative Preferred Stock Not Subject to Mandatory Redemption is
redeemable solely at the option of ACE.

On November 1 of each year, 2,500 shares of the $8.25 No Par Preferred
Stock must be redeemed through the operation of a sinking fund at a
redemption price of $100 per share.  ACE may redeem not more than an
additional 2,500 shares on any sinking fund date without premium.  ACE
redeemed 5,000 shares in each of the years 1995 and 1994.

On November 1 of each year, 120,000 shares of the $8.53 No Par
Preferred Stock must be redeemed through the operation of a sinking
fund at a redemption price of $100 per share.  At the option of ACE,
not more than an additional 120,000 shares may be redeemed on any
sinking fund date without premium.  ACE redeemed 240,000 shares in
each of the years 1995 and 1994.  ACE redeemed the remainder of this
series at a price of $101.00 in February 1996.  

Beginning August 1, 1996 and annually thereafter, 100,000 shares of
the $8.20 No Par Preferred Stock must be redeemed through the
operation of a sinking fund at a redemption price of $100 per share. 
At the option of ACE, not more than an additional 100,000 shares may
be redeemed on any sinking fund date without premium.  This series is
not refundable prior to August 1, 2000.    

Beginning May 1, 2001 and annually through 2005, 115,000 shares of
$7.80 No Par Preferred Stock must be redeemed through the operation of
a sinking fund at a redemption price of $100 per share.  On May 1,
2006, the remaining shares outstanding must be redeemed at $100 per
share.  ACE has the option to redeem up to an additional 115,000
shares without premium on each May 1 through 2005.  This series is not
refundable prior to May 1, 2006.  

At December 31, 1995, the minimum annual sinking fund requirements of
the Cumulative Preferred Stock Subject to Mandatory Redemption for the
next five years are $22.25 million in 1996 and $10.25 million in each
of the years 1997 through 2000.

Cumulative Preferred Stock of ACE is not widely held and trades
infrequently.  The estimated aggregate fair market value of ACE's
outstanding Cumulative Preferred Stock at December 31, 1995 and 1994
was approximately $172 million and $185 million, respectively.  The
fair market value has been determined using market information
available from actual trades of similar instruments of companies with
similar credit quality and rate.

NOTE 8.  LONG TERM DEBT                                                
                                Maturity         December 31,   
Series                                 Date         1995       1994   
(000)
5-1/8% First Mortgage Bonds          2/1/1996    $  9,980   $  9,980
Medium Term Notes Series B (6.28%)   1998          56,000     56,000
Medium Term Notes Series A (7.52%)   1999          30,000     30,000
Medium Term Notes Series B (6.83%)   2000          46,000     46,000
Medium Term Notes Series C (6.86%)   2001          40,000        -
7-1/2% First Mortgage Bonds          4/1/2002      20,000     20,000
Medium Term Notes Series C (7.02%)   2002          30,000        -
Medium Term Notes Series B (7.18%)   2003          20,000     20,000
7-3/4% First Mortgage Bonds          6/1/2003      29,976     29,976
Medium Term Notes Series A (7.98%)   2004          30,000     30,000
Medium Term Notes Series B (7.125%)  2004          28,000     28,000
Medium Term Notes Series C (7.15%)   2004           9,000        -
Medium Term Notes Series B (6.45%)   2005          40,000     40,000
6-3/8% Pollution Control            12/1/2006       2,500      2,500
Medium Term Notes Series C (7.15%)   2007           1,000        -
Medium Term Notes Series B (6.76%)   2008          50,000     50,000
Medium Term Notes Series C (7.25%)   2010           1,000        -
10-1/2% Pollution Control Series B   7/15/2012        -          850
6-5/8% First Mortgage Bonds          8/1/2013      75,000     75,000
7-3/8% Pollution Control Series A    4/15/2014     18,200     18,200
Medium Term Notes Series C (7.63%)   2014           7,000        -
Medium Term Notes Series C (7.68%)   2015          15,000        -
Medium Term Notes Series C (7.68%)   2016           2,000        -
8-1/4% Pollution Control Series A    7/15/2017      4,400      4,400
9-1/4% First Mortgage Bonds         10/1/2019         -       53,857
6.80% Pollution Control Series A     3/1/2021      38,865     38,865
7%    First Mortgage Bonds           9/1/2023      75,000     75,000
5.60% Pollution Control Series A    11/1/2025       4,000      4,000
7%    First Mortgage Bonds           8/1/2028      75,000     75,000
6.15% Pollution Control Series A     6/1/2029      23,150     23,150
7.20% Pollution Control Series A    11/1/2029      25,000     25,000
7%    Pollution Control Series B    11/1/2029       6,500      6,500
 Total                                            812,571    762,278  
Debentures:
5-1/4%                               2/1/1996       2,267      2,267
7-1/4%                               5/1/1998       2,619      2,619
Total                                               4,886      4,886  
Unamortized Premium and Discount-Net               (2,854)    (3,876)
Total Long Term Debt of ACE                       814,603    763,288
Long Term Debt of AEI                              34,500        -     
Long Term Debt of ATE                              33,500     16,000
Long Term Debt of ATS                              12,500        -
Less Portion Due within One Year                   65,247      1,000
                                                 $829,856   $778,288  

Medium Term Notes have varying maturity dates and are shown with the
weighted average interest rate of the related issues within the year
of maturity.




In 1995, ACE redeemed its 10-1/2% Pollution Control Bonds Series B due
7/15/2012 and the remaining outstanding principal amount of its 9-1/4%
First Mortgage Bonds due 10/1/2019.  The aggregate cost of these
redemptions was $2.6 million, net of related Federal income taxes.

Sinking fund deposits are required for retirement of First Mortgage
Bonds, 6-3/8% Pollution Control Series due 2006 annually beginning
December 1, 1997 in amounts sufficient to redeem $75 thousand
principal amount.  Sinking fund deposits are also required for
retirement of 7-1/4% Debentures annually on May 1 through 1997 in
amounts sufficient to redeem $100 thousand principal amount.  ACE may,
at its option, redeem an additional $100 thousand annually.  Through
December 31, 1995, ACE acquired and cancelled $81 thousand principal
amount of the 7-1/4% Debentures, which will be used to satisfy its
requirements for 1996.  Certain series of First Mortgage Bonds contain
provisions for deposits of cash or certification of bondable property
currently amounting to $100 thousand, which ACE may elect to satisfy
through property additions.  For the next five years, the annual
amount of scheduled maturities and sinking fund requirements of ACE's
long term debt are $12.266 million in 1996, $175 thousand in 1997,
$58.575 million in 1998, $30.075 million in 1999 and $46.075 million
in 2000.  

ACE's long term debt securities are not widely held and generally
trade infrequently.  The estimated aggregate fair market value of
ACE's outstanding long term debt at December 31, 1995 and 1994 was
$851 million and $693 million, respectively.  The fair market value
has been determined based on quoted market prices for the same or
similar debt issues or on debt instruments of companies with similar
credit quality, coupon rates and maturities.

In September 1995, AEI established a $75 million revolving credit and
term loan facility.  The revolver is comprised of a 364-day senior
revolving credit facility in the amount of $35 million and a three-
year senior revolving credit facility in the amount of $40 million. 
Interest rates on borrowings will be based on senior debt ratings and
on the borrowing option selected by the Company.  As of December 31,
1995, AEI had $34.5 million outstanding.  This facility can be used to
fund further acquisitions of Company Common Stock and for other
general corporate purposes.

Long term debt of ATE consists of $15 million of 7.44% Senior Notes
due 1999.  The estimated fair market value of these Notes at December
31, 1995 and 1994 was approximately $16 million and $14 million,
respectively, based on debt instruments of companies with similar
credit quality, coupon rates and maturities.  Also, ATE has a
revolving credit and term loan agreement which provides for borrowings
of up to $25 million during successive revolving credit and term loan
periods through June 1996.  There were $18.5 million in borrowings
outstanding under this agreement at December 31, 1995.  Commitment
fees on the unused credit line were not significant.  

On December 13, 1995, ATS through a partnership arrangement borrowed
from the New Jersey Economic Development Authority (EDA) $12.5 million
from the proceeds of bonds issued by the EDA.  The bonds have an
initial interest rate of 3.70%.  Availability of the borrowed funds
for their intended use and the ultimate term of the borrowing are
subject to certain conditions.  Satisfaction of these conditions and
use of the funds are expected in 1996.

NOTE 9.  COMMON SHAREHOLDERS' EQUITY

In addition to public offerings, Common Stock may be issued through
the Dividend Reinvestment and Stock Purchase Plan (DRP), ACE benefit
plans (ACE plans) and the Equity Incentive Plan (EIP).  The number of
shares of Common Stock issued (forfeited), and the number of shares
reserved for issuance at December 31, 1995, were as follows:
                  1995        1994          1993       Reserved
DRP                 -        699,493     1,300,129     723,975
ACE Plans        (7,601)      (5,046)        8,033     148,639
EIP               9,234      175,712          -        615,054
Total             1,633      870,159     1,308,162

Eligible participants of the EIP are officers, general managers and
nonemployee directors of the Company and its subsidiaries.  Under the
EIP, nonemployee director participants are entitled to receive a grant
of 1,000 shares of restricted stock.  Restrictions on these grants
expire over a five-year period.  Employee participants may be awarded
shares of restricted Common Stock, stock options and other Common
Stock-based awards.  Actual awards of restricted shares are based on
attainment of certain Company performance criteria within a three-year
period.  Restrictions lapse upon actual award at the end of the three-
year performance period.  Shares not awarded are forfeited.  Dividends
earned on restricted stock issued through the EIP are invested in
additional restricted stock under the EIP which is subject to the same
award criteria. 

Activity in the EIP, initiated in April 1994, was as follows:
                                                                       
                            Restricted                   Option
                              Shares        Options       Price
Issued/Granted                175,712       167,300       21.125
Balance, December 31, 1994    175,712       167,300
Issued/Granted                 24,435         6,387       21.125
Forfeited                      (7,587)       (6,700)      21.125
Balance, December 31, 1995    192,560       166,987 

The 1995 restricted shares granted include 7,614 shares purchased on
the open market from reinvestment of dividends on EIP shares
outstanding.

Stock options granted are nonqualified and are exercisable 3 years
after but within 10 years from the date of grant.  Stock options are
priced at an amount at least equal to 100% of the fair market value of
the related Common Stock at the date of grant.  No options were
eligible to be exercised in 1995 or 1994.

The Company has a program to reacquire up to three million shares of
the Company's Common Stock outstanding.  There is no schedule or
specific share price target associated with the reacquisitions.  The
authorized number of shares is not to be affected.  During 1995, the
Company reacquired and cancelled 1,625,000 shares for a total cost of
$29.6 million with prices ranging from $17.625 to $18.875 per share. 
At December 31, 1995, the Company has reacquired and cancelled
1,846,700 shares of its common stock at a total cost of $33.5 million.

NOTE 10.  COMMITMENTS AND CONTINGENCIES

Construction Program

Cash construction expenditures for 1996 are estimated to be
approximately $192 million.  

Insurance Programs

Nuclear
ACE is a member of certain insurance programs that provide coverage
for decontamination and property damage to members' nuclear generating
plants.  Facilities at the Peach Bottom, Salem and Hope Creek stations
are insured against property damage losses up to $2.75 billion per
site under these programs.

In addition, ACE is a member of an insurance program which provides
coverage for the cost of replacement power during prolonged outages of
nuclear units caused by certain specific conditions.  The insurer for
nuclear extra expense insurance provides stated value coverage for
replacement power costs incurred in the event of an outage at a
nuclear unit resulting from physical damage to the nuclear unit.  The
stated value coverage is subject to a deductible period of the first
21 weeks of any outage.  Limitations of coverage include, but are not
limited to, outages 1) not resulting from physical damage to the unit,
2) resulting from any government mandated shutdown of the unit, 3)
resulting from any gradual deterioration, corrosion, wear and tear,
etc. of the unit, 4) resulting from any intentional acts committed by
an insured and 5) resulting from certain war risk conditions.  Under
the property and replacement power insurance programs, ACE could be
assessed retrospective premiums in the event the insurers' losses
exceed their reserves.  As of December 31, 1995, the maximum amount of
retrospective premiums ACE could be assessed for losses during the
current policy year was $6.4 million under these programs.

The Price-Anderson provisions of the Atomic Energy Act of 1954, as
amended by the Price-Anderson Amendments Act of 1988, govern liability
and indemnification for nuclear incidents.  All nuclear facilities
could be assessed, after exhaustion of private insurance, up to
$79.275 million each reactor per incident, payable at $10 million per
year.  Based on its ownership share of nuclear facilities, ACE could
be assessed up to an aggregate of $27.6 million per incident.  This
amount would be payable at an aggregate of $3.48 million per year, per
incident.

Other

ACE's comprehensive general liability insurance provides pollution
liability coverage, subject to certain terms and limitations for
environmental costs incurred in the event of bodily injury or property
damage resulting from the discharge or release of pollutants into or
upon the land, atmosphere or water.  Limitations of coverage include
any pollution liability 1) resulting subsequent to the disposal of
such pollutants, 2) resulting from the operation of a storage facility
of such pollutants, 3) resulting in the formation of acid rain, 4)
caused to property owned by an insured and 5) resulting from any
intentional acts committed by an insured.

Nuclear Plant Decommissioning 

ACE has a trust to fund the future costs of decommissioning each of
the five nuclear units in which it has an ownership interest.  The
current annual funding amount, as authorized by the BPU, totals $6.4
million and is provided for in rates charged to customers.  The
funding amount is based on estimates of the future cost of
decommissioning each of the units, the dates that decommissioning
activities are expected to begin and return to be earned by the assets
of the fund.  The present value of ACE's nuclear decommissioning
obligation, based on costs adopted by the BPU in 1991 and restated in
1995 dollars, is $157 million.  Decommissioning activities as approved
by the BPU were expected to begin in 2006 and continue through 2032. 
ACE will seek to adjust these estimates and the level of rates
collected from customers in future BPU proceedings to reflect changes
in decommissioning cost estimates and the expected levels of inflation
and interest to be earned by the assets in the trust.  The total
estimated value of the trust at December 31, 1995, inclusive of the
present value of future funding, based on current annual funding
amounts and expected decommissioning dates approved by the BPU, is
approximately $131 million, without earnings on or appreciation of the
fund assets.  As of December 31, 1995, the market value of the trust
approximated the book value.  In accordance with BPU requirements,
updated site specific studies are underway.  Amounts to be recognized
and recovered in rates based on the updated studies are not presently
determinable.

Purchased Capacity and Energy Arrangements

ACE arranges with various providers of bulk energy to obtain
sufficient supplies of energy to satisfy current and future energy
requirements of the company.  Arrangements may be for generating
capacity and associated energy or for energy only.  Terms of the
arrangements vary in length to enable ACE to optimally manage its
supply portfolio in response to changing near and long term market
conditions.  At December 31, 1995, ACE has contracted for 707
megawatts (MW's) of purchased capacity with terms remaining of 3 to 29
years.  Additionally, ACE has contracted for capacity of 125 MW's
commencing in 1998 for 2 years and for 175 MW's commencing in 1999 for
10 years.   Information regarding these arrangements relative to ACE
was as follows:
                               1995        1994        1993     
As a % of Capacity (year end)     30%         29%         23%  
As a % of Generation              52%         48%         46%  
Capacity charges (millions)   $190.6      $130.9      $110.8  
Energy charges (millions)     $135.4      $128.6       $98.3
    
Amounts for purchased capacity are shown on the Consolidated Statement
of Income as Purchased Capacity.  Of these amounts, charges of certain
nonutility providers are recoverable through the LEC, which amounted
to $162.7 million, $77.0 million and $30.2 million in 1995, 1994 and
1993, respectively.  Future purchases of energy and payments for
purchased capacity and energy under contracts with remaining terms in
excess of one year from December 31, 1995 generally are contingent
upon provider performance and availability, and as such are not
presently determinable.
Environmental Matters

The provisions of Title IV of the Clean Air Act Amendments of 1990
(CAAA) will require, among other things, phased reductions of sulfur
dioxide (SO2) emissions by 10 million tons per year, a limit on SO2
emissions nationwide by the year 2000 and reductions in emissions of
nitrogen oxides (NOx) by approximately 2 million tons per year.  ACE's
wholly-owned B.L. England Units 1 and 2 and its jointly-owned
Conemaugh Station Units 1 and 2 are in compliance with Phase I
requirements as the result of recent installation of scrubbers at each
station.  All of ACE's other fossil-fuel steam generating units are
affected by Phase II (2000) of the CAAA.  A compliance plan for these
units initially estimates capital expenditures of approximately $10
million in 1996 through 2000.  The jointly-owned Keystone Station is
impacted by the SO2 and NOx provisions of Title IV of the CAAA during
Phase II.  The Keystone owners plan to primarily rely on emission
allowances to comply with the CAAA through the year 2000.  

Other

ACE is a 7.41% owner of the Salem Nuclear Generating Station (Salem)
operated by Public Service Electric & Gas Company (PS). Salem Units 1
and 2 were taken out of service on May 16, 1995 and June 7, 1995,
respectively.  Unit 2 is expected to return to service in the third
quarter of 1996.  A thorough assessment of the equipment and
management issues that have affected the operation of the unit and
station are being resolved and necessary corrections are being made to
assure safe and reliable operation over the long term.  Unit 1 is
undergoing extended testing of its steam generation equipment and its
return has been delayed to an indefinite period.  ACE's expenses
associated with restart activities totalled $2.6 million for 1995 and
are estimated to be $5.6 million for 1996.  The additional incremental
cost of replacement power during the outages is approximately $1.4
million per month.

ACE is a 5% owner in the Hope Creek Nuclear Generating Station (Hope
Creek) also operated by PS.  Hope Creek went into a scheduled
refueling and maintenance outage on November 11, 1995 which has been
extended to correct maintenance and performance problems.  The unit is
expected to return to service in March 1996.  The incremental
replacement power costs associated with the Hope Creek outage is
approximately $400 thousand per month.  

ACE is subject to a performance standard for its five jointly-owned
nuclear units.  This standard is used by the BPU in determining
recovery of replacement energy costs.  The standard establishes a
target aggregate capacity factor within a zone of reasonable
performance to be achieved by the units.  Underperformance results in
penalties.  Penalties incurred are not permitted to be recovered from
customers and are charged against income.  For 1995, ACE recorded $845
thousand after tax for a performance penalty because the aggregate
capacity factor of ACE's nuclear units was below the reasonable
performance zone as a result of the Salem outage noted above. 
   
In December 1994, ACE recorded the costs of an employee separation
program in the amount of $17.3 million, net of tax of $9.3 million, or
$.32 in earnings per share.  This program was initiated so that ACE
could be better positioned for the more competitive environment within
the electric industry.  The balance of the accrued separation costs on
the Consolidated Balance Sheet at December 31, 1995 is $7.5 million
compared to $26.6 million at December 31, 1994.  ACE expects payments
in settlement of this obligation to be substantially completed by the
end of 1996.

The Energy Policy Act of 1992 permits the Federal government to assess
investor-owned electric utilities that have ownership interests in
nuclear generating facilities.  The assessment funds the
decontamination and decommissioning of three Federally operated
nuclear enrichment facilities.  Based on its ownership in five nuclear
generating units, ACE has a liability of $6.0 million and $6.6 million
at December 31, 1995 and 1994, respectively, for its obligation to be
paid over the next 12 years.  ACE has an associated regulatory asset
of $6.4 million and $7.2 million at December 31, 1995 and 1994,
respectively.  Amounts are currently being recovered in rates for this
liability and the regulatory asset is concurrently being amortized to
expense based on the annual assessment billed by the Federal
government.

In March 1995, FERC issued a Notice of Proposed Rulemaking regarding
several key electric utility industry issues such as transmission
access, transmission pricing and recovery guidelines for stranded
costs stemming from wholesale transactions.  The focus of the proposal
is to establish policies that will provide a structure to facilitate
more competitive wholesale electric power markets.  What is being
proposed is a departure from the existing regulatory framework.  FERC
is considering comments on the proposal submitted by ACE and other
members of the industry, as well as other interested parties. 
Associated with the FERC proposal are structural initiatives by the
BPU concerning New Jersey electric regulation and by the regional
power pool in which ACE participates regarding bulk power transmission
and generation dispatch within the region.  At this time, the Company
cannot predict the outcomes of these sweeping initiatives and the
impacts on the Company that may ensue.  The Company is taking an
active role in the development of these issues.

Note 11.  REGULATORY ASSETS AND LIABILITIES

Costs incurred by ACE that have been permitted by the BPU to be
deferred for recovery in rates in more than one year, or for which
future recovery is probable, are recorded as regulatory assets.
Regulatory assets are amortized to expense over the period of
recovery.  Total regulatory assets at December 31 are as follows:  
                                                                       
                                                          Remaining   
                                                          Recover
(000)                                1995         1994       Period*
Recoverable Future Federal   
 Income Taxes(see Note 2)          $ 85,858     $ 85,854       (A)
Unrecovered Purchased Power Costs:
 Capacity Costs                      80,598       95,878       5 years 
 Contract Renegotiation Costs        19,219       19,660      19 years
Unrecovered State Excise Taxes       64,274       73,834       7 years
Unamortized Debt Costs-Refundings    33,110       32,227    1-29 years
Deferred Energy Costs(see Note 1)    31,434       10,999       (B)
Other Regulatory Assets:
 Postretirement Benefits Other
  Than Pensions (see Note 4)         26,227       17,865       (A)
 Asbestos Removal Costs               9,356        9,625      34 years 
 Decommissioning/Decontaminating       
  Federally-owned Nuclear Units      
  (See Note 10)                       6,404        7,231      13 years 
 Other                               12,581       14,379               
                                   $369,061     $367,552          
*From December 31, 1995
(A)  Pending future recovery
(B)  Recovered over annual LEC period


Unrecovered Purchased Power Capacity Costs represent deferrals of
prior capacity costs then in excess of levelized revenues associated
with a certain long term capacity arrangement.  Levelized revenues
have since been greater than costs, permitting the deferred costs to
be amortized to expense.  Contract Renegotiation Costs were incurred
through renegotiation of a long term capacity and energy contract with
a certain independent power producer.  Unrecovered State Excise Taxes
represent additional amounts paid as a result of prior legislative
changes in the computation of state excise taxes.  Unamortized Debt
Costs associated with debt reacquired by refundings are amortized over
the life of the related new debt.  Asbestos Removal Costs were
incurred to remove asbestos insulation from a wholly-owned generating
station.  Within Other are certain amounts being recovered over a
period of two to six years.
 
No regulatory liabilities existed at December 31, 1995 and 1994.

NOTE 12.  LEASES

ACE leases from others various types of property and equipment for use
in its operations.  Certain of these lease agreements are capital
leases consisting of the following at December 31:

(000)                                1995       1994
Production plant                   $ 9,097    $13,521
Less accumulated amortization        6,810      9,707
Net                                  2,287      3,814
Nuclear fuel                        38,591     38,216
Leased property-net                $40,878    $42,030

ACE has a contractual obligation to obtain nuclear fuel for the Salem,
Hope Creek and Peach Bottom stations.  The asset and related
obligation for the leased fuel are reduced as the fuel is burned and
are increased as additional fuel purchases are made.  No commitments
for future payments beyond satisfaction of the outstanding obligation
exist.  Operating expenses for 1995, 1994 and 1993 include leased
nuclear fuel costs of $11.2 million, $14.1 million and $13.9 million,
respectively, and rentals and lease payments for all other capital and
operating leases of $3.9 million, $5.3 million and $4.8 million,
respectively.  Future minimum rental payments for all noncancellable
lease agreements are not significant to ACE's operations.

Rental charges of nonutility companies are not significant. 

ATE is the lessor in five leveraged lease transactions consisting of
three aircraft and two containerships with total respective costs of
approximately $168 million and $76 million.  Remaining lease terms for
all leases approximate 15 to 16 years.  The Company's equity
participation in the leases range from 22% to 32%.  Funding of the
investment in the leveraged lease transactions is comprised of equity
participation by ATE and financing provided by third parties as long
term debt without recourse to ATE.  The lease transactions provide
collateral for such third parties, including a security interest in
the leased equipment.  Net investment in leveraged leases at December
31 was as follows:
                                          1995         1994    
Rentals receivable (net of principal     
 and interest on nonrecourse debt)     $ 50,955     $ 51,012    
Estimated residual values                53,435       53,435    
Unearned and deferred income            (25,431)     (26,232)    
Investment in leveraged leases           78,959       78,215    
Deferred taxes arising from leveraged   
 leases                                 (71,064)     (61,409)   
       
Net investment in leveraged leases     $  7,895     $ 16,806      





NOTE 13.  QUARTERLY FINANCIAL RESULTS (UNAUDITED)

Quarterly financial data, reflecting all adjustments necessary in the
opinion of management for a fair presentation of such amounts, are as
follows:                                                               
                                                          Dividends
         Operating    Operating      Net      Earnings      Paid      
Quarter  Revenues       Income      Income    Per Share   Per Share 
1995       (000)        (000)       (000) 
1st      $218,626     $ 27,584     $11,469     $ .21       $ .385
2nd       206,232       27,771      10,568       .20         .385  
3rd       302,685       66,482      48,745       .93         .385  
4th       225,594       26,700      10,986       .21         .385

Annual   $953,137     $148,537     $81,768     $1.55       $1.54    
1994                       
1st      $232,098     $ 39,712     $22,862     $ .43       $ .385
2nd       205,822       30,427      16,798       .31         .385
3rd       272,708       58,431      46,323       .85         .385
4th       202,410       24,969      (9,871)     (.18)        .385

Annual   $913,039     $153,540     $76,113     $1.41       $1.54


Individual quarters may not add to the total due to rounding, and the
effect on earnings per share of changing average number of common
shares outstanding.  

Third quarter results generally exceed those of other quarters due to
increased sales and higher residential rates for ACE.

Net income in 1994 includes special charges aggregating $20.4 million,
after tax of $10.9 million, or $.37 per share, recorded in Other
Income during the fourth quarter of 1994.  These special charges
consisted of costs of a workforce reduction, write-off of certain
deferred costs and a write-down in carrying value of certain property.


ITEM 9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE
   None

PART III 
ITEM 10   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 

     Information for this item concerning Directors of the
Company is set forth in the section entitled "Nominees for
Election" on page 3 of the Company's Notice of Annual Meeting of
Shareholders and definitive Proxy Statement, which is
incorporated by reference.  The information required by Item 10
of Form 10-K with respect to the executive officers of the
Company and the directors of ACE is, pursuant to Instruction 3 to
Item 401(b) of Regulation S-K, set forth in Part I of this Form
10-K under the heading "Executive Officers".

ITEM 11   EXECUTIVE COMPENSATION

     Information for this item with respect to the amounts paid
to the five most highly compensated executive officers of the
Company and ACE, is set forth in the section entitled "Table 1-
Summary Compensation Table" on page 14 of the Company's Notice of
Annual Meeting of Shareholders and definitive Proxy Statement,
which is incorporated herein by reference.  The cash compensation
paid to 13 executive officers of ACE, as a group, in 1995 was
$2,531,032.

ITEM 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

     The information required by this item as to compliance with
Section 16(a) of the Exchange Act is contained in the section
captioned "Stock Ownership of Directors and Officers"  on page 6
of the Company's Notice of Annual Meeting of Shareholders and
definitive Proxy Statement, which is incorporated herein by
reference.

ITEM 13   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information for this item is set forth in the section
entitled "Personnel & Benefits Committee Interlocks and Insider
Participation" on page 14 of the Company's Notice of Annual
Meeting of Shareholders and definitive Proxy Statement, which is
incorporated herein by reference.

PART IV

ITEM 14   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K

Exhibits:  See Exhibit Index attached.
Financial Statements and Supplementary Schedules:  The following 
information for Atlantic Energy, Inc. is filed as part of this
report.

Management's Discussion and Analysis of 
Financial Condition and Results of Operation           Page  46
Consolidated Statement of Income for the three 
years ended December 31, 1995                          Page  60
Consolidated Statement of Cash Flows for 
the three years ended December 31, 1995                Page  61 
Consolidated Balance Sheet - December 31, 1995 
and December 31, 1994                                  Page  62 
Consolidated Statement of Changes in Common
Shareholders' Equity                                                   Page  64 

Notes to Consolidated Financial Statements             Page  65 
Supplementary information regarding selected 
quarterly financial data (Unaudited) (Note 13 to 
Financial Statements)                                  Page  89 
Independent Auditors' Report                           Page  59 
Report of Management                                   Page  57 

     The following financial information, financial statements
and notes to financial statements for ACE are filed herewith as
Exhibit 28(a) and are incorporated by reference herein:

   Management's Discussion and Analysis of Financial Condition
and Results of Operation; Consolidated Statement of Income for
the three years ended December 31, 1995; Consolidated Statement
of Cash Flows for the three years ended December 31, 1995;
Consolidated Balance Sheet-December 31, 1995 and December 31,
1994; Consolidated Statement of Changes in Common Shareholder's
Equity; Notes to Consolidated Financial Statements; Independent
Auditors' Report.

     All other financial schedules are included in the Financial
Statements and Notes to Financial Statements of the Company and
ACE.

Reports on Form 8-K:

   Current Reports on Form 8-K were filed, dated October 19,
1995 and December 14, 1995 relating to the shutdown, and
subsequent events, of Salem Units 1 and 2 on May 16, 1995 and
June 7, 1995, respectively.   
                               SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, who also signed in the capacity
indicated.

                           ATLANTIC ENERGY, INC.
                      ATLANTIC CITY ELECTRIC COMPANY


Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
in the capacities and on the date indicated.

Date: March 19, 1996                    By:  /s/ J. L. Jacobs     
                                                 J. L. Jacobs

Title: President and Chief Executive Officer 
       and Director of Atlantic Energy, Inc. and Chairman,
       Chief Executive Officer and Director of
       Atlantic City Electric Company

Date:  March 19, 1996                   By:  /s/ M. J. Barron     
                                                 M. J. Barron

Title: Vice President and Chief Financial Officer of Atlantic
       Energy, Inc. and Senior Vice President and Chief
       Financial Officer of Atlantic City Electric Company

DIRECTORS OF ATLANTIC ENERGY, INC.:
Jos. Michael Galvin, Jr.*               Kathleen MacDonnell*
Gerald A. Hale*                         Richard B. McGlynn*
Matthew Holden, Jr.*                    Bernard J. Morgan*
Cyrus H. Holley*                        Harold J. Raveche*
E. Douglas Huggard*

A MAJORITY OF DIRECTORS OF ATLANTIC CITY ELECTRIC COMPANY:
Michael J. Chesser*                     James E. Franklin II*
Meredith I. Harlacher, Jr.*             Henry K. Levari, Jr.*
M. T. Powell *


Date:   March 19, 1996                  *By:  /s/ M. J. Barron    
                                                  M. J. Barron    
                                              Attorney-in-Fact


                            EXHIBIT INDEX

3a  Restated Certificate of Incorporation of Atlantic Energy,
Inc. (File No. 1-9760, Form 10-Q for quarter ended September 30,
1987-Exhibit 4(a)); Certificate of Amendment to restated
Certificate of Incorporation of Atlantic Energy, Inc. dated April
15, 1992.  File No. 33-53511, Form S-8 dated May 6, 1994-Exhibit
No. 3(ii).

3b  By-Laws of Atlantic Energy, Inc. as amended August 8, 1991
(File No. 1-9760, Form 10-K for year ended December 31, 1991-
Exhibit No. 3b);  By-Laws of Atlantic Energy, Inc. as amended
July 13, 1995 (File No. 1-9760, Form 10-Q for the quarter ended
June 30, 1995 - Exhibit 3b(1).

3c  Agreement of Merger between Atlantic City Electric Company
and South Jersey Power & Light Company filed June 30, 1949, and
Amendments through May 3, 1991 (File No. 2-71312-Exhibit No.
3(a); File No. 1-3559, Form 10-Q for quarter ended June 30, 1982-
Exhibit No. 3(b); Form 10-Q for quarter ended March 31, 1985-
Exhibit No. 3(a); Form 10-Q for quarter ended March 31, 1987-
Exhibit No. 3(a): Form 8-K dated October 12, 1988-Exhibit No.
3(a); Form 10-K for fiscal year ended December 31, 1990-Exhibit
No. 3c; and Form 10-Q for quarter ended September 30, 1991-
Exhibit No. 3c). 

3d  By-Laws of Atlantic City Electric Company, as amended April
24, 1989 (File No. 1-3559, Form 10-Q for the quarter ended
September 31, 1989-Exhibit No. 3).

4a  Purchase Agreement, dated as of December 1, 1977, with
respect to $8.25 No Par Preferred Stock of Atlantic City Electric
Company (File No. 2-60966-Exhibit No. 2(d)).

4b  Mortgage and Deed of Trust, dated January 15, 1937, between
Atlantic City Electric Company and The Bank of New York (formerly
Irving Trust Company) and Supplemental Indentures through
November 1, 1994 (File No. 2-66280-Exhibit No. 2(b); File No. 1-
3559, Form 10-K for year ended December 31, 1980-Exhibit No.
4(d); Form 10-Q for quarter ended June 30, 1981-Exhibit No. 4(a);
Form 10-K for year ended December 31, 1983-Exhibit No. 4(d); Form
10-Q for quarter ended March 31, 1984-Exhibit No. 4(a); Form 10-Q
for quarter ended June 30, 1984-Exhibit 4(a); Form 10-Q for
quarter ended September 30, 1985-Exhibit 4; Form 10-Q for quarter
ended March 31, 1986-Exhibit No. 4; Form 10-K for year ended
December 31, 1987-Exhibit No. 4(d); Form 10-Q for quarter ended
September 30, 1989-Exhibit No. 4(a); Form 10-K for year ended
December 31, 1990-Exhibit No. 4(c); File No. 33-49279-Exhibit No.
4(b); File No. 1-3559, Form 10-Q for the quarter ended September
30, 1993 - Exhibits 4(a) & 4(b); Form 10-K for the year ended
December 31, 1993 - Exhibit 4c(i); File no. 1-3559, Form 10-Q for
the quarter ended June 30, 1994 - Exhibit 4(a); File No. 1-3559,
Form 10-Q for the quarter ended September 30, 1994 - Exhibit
4(a); Form 10-K for year ended December 31, 1994-Exhibit 4(c)(1).

4e  Agreement dated as of February 1, 1966, between Atlantic City
Electric Company and Fidelity Union Trust Company and Supplement
dated as of May 1, 1968. (File No. 1-3559, Form 8-K dated
March 7, 1966-Exhibit 13(b)(2); Form 8-K dated June 6, 1968-
Exhibit No. 13(b)(1)).

4f(1)  Revolving Credit and Term Loan Agreement dated as of May
24, 1988 by and between ATE Investment, Inc. and The Bank of New
York (File No.1-9760, Form 10-K for year ended December 31, 1988-
Exhibit No. 4g(1)).

4f(2)  Support Agreement dated as of May 24, 1988 between
Atlantic Energy, Inc. and ATE Investment, Inc. (File No. 1-9760,
Form 10-K for year ended December 31, 1988-Exhibit No. 4g(2)).

4f(3)  Letter Agreement dated as of May 24, 1988 between Atlantic
Energy, Inc. and The Bank of New York (File No. 1-9760, Form 10-K
for year ended December 31, 1988-Exhibit No. 4g(3)).

4f(4)  Amendment No. 1 dated as of February 22, 1989 to Revolving
Credit and Term Loan Agreement dated as of May 24, 1988 by and
between ATE Investment, Inc. and The Bank of New York (File No.
1-9760, Form 10-K for the fiscal year ended December 31, 1988).

4f(5) Amendment No. 2 dated as of June 1, 1991, to Revolving
Credit and Term Loan Agreement dated as of May 24, 1988 by and
between ATE Investment, Inc. and The Bank of New York (File No.
1-9760, Form 10-K for year ended December 31, 1991-Exhibit No.
4f(5)).

4f(6) Revolving Credit Agreements dated as of September 28, 1995
by and among Atlantic Energy, Inc., The Bank of New York, as
agent, and Lender party thereto, filed herewith.

10a(1) Atlantic Energy, Inc. Directors Deferred Compensation Plan
revised as of February 4, 1988 (File No. 1-9760, Form 10-K for
year ended December 31, 1988-Exhibit No. 10a(1)).

10a(2) Description of amendment to the Deferred Compensation Plan
for Directors effective December 10, 1992 (File No. 1-9760, Form
10-K for year ended December 31, 1992-Exhibit No. 10a(1)). 

10a(3) Deferred Compensation Plan for Employees of Atlantic
Energy, Inc. and Participating Subsidiaries (File No. 1-9760, 
Form 10-K for year ended December 31, 1988-Exhibit No. 10a(2)).

10a(4)  Description of amendment to Deferred Compensation Plan 
for Employees of Atlantic Energy, Inc. and Participating
Subsidiaries effective December 10, 1992 (File No. 1-9760, Form
10-K for year ended December 31, 1992-Exhibit No. 10a(2)). 

10a(5) Supplemental Executive Retirement Plan for Officers of
Atlantic City Electric Company, as amended effective March 1,
1990 (File No. 1-9760, Form 10-K for year ended December 31,
1989-Exhibit No. 10a(4)).

10a(5)1  Supplemental Executive Retirement Plan - II for Officers
of Atlantic City Electric effective September 8, 1995, filed
herewith. 

10a(6)  Description of amendment to Supplemental Executive
Retirement Plan effective December 10, 1992 (File No. 2-9760,
Form 10-K for year ended December 31, 1992-Exhibit 10a(3)).

10a(6)1  Supplemental Executive Retirement Plan for Officers of
Atlantic City Electric Company, amendment No. 1995-1, filed
herewith.

10a(7)  Executive Medical Expense Reimbursement Plan for Officers
of Atlantic City Electric Company (File No. 1-3559, Form 10-K for
year ended December 31, 1985-Exhibit No. 10a(5)).

10a(8)  Copy of Management Annual Incentive Plan of Atlantic
Energy, Inc. and its subsidiaries, effective January 1, 1992
(File No. 1-9760, Form 10-K for year ended December 31, 1991-
Exhibit No. 10a(5)).

10a(9)  Copy of Atlantic Electric Excess Benefit Retirement
Income Program, as amended, effective as of August 2, 1990 (File
No. 1-3559, Form 10-K for year ended December 31, 1991-Exhibit
No. 10a(6)).

10a(10)  Description of amendment to the Excess Benefit
Retirement Income Program effective December 10, 1992 (File No.
1-9760, Form 10-K for year ended December 31, 1992-Exhibit
10a(6)).

10a(10)1  Atlantic City Electric Company Excess Benefit
Retirement Income Program, Amendment No. 1995-1, filed herewith.

10a(11)  Agreement, effective as of February 1, 1990, between
Atlantic City Electric Company and E. Douglas Huggard (File No.
1-9760, Form 10-K for year ended December 31, 1989-Exhibit No.
10a(8)).

10a(12)  Agreement entered February 11, 1993 between Atlantic
City Electric Company and E. Douglas Huggard (File No. 1-9760,
Form 10-K for year ended December 31, 1992-Exhibit No. 10a(7)).

10a(13)  Copy of Atlantic City Electric Company Long-Term
Performance Incentive Plan, as amended effective November 1, 1990
(File No. 1-3559, Form 10-K for year ended December 31, 1991-
Exhibit No. 10a(8)).

10a(14)  Atlantic Energy, Inc. Retirement Plan for Directors, as
amended effective November 13, 1991 (File No. 1-9760, Form 10-K
for year ended December 31, 1991-Exhibit No. 10a(9)).

10a(14)1  Atlantic Energy, Inc. Retirement Plan for Directors,
Amendment No. 1995-1, filed herewith.

10a(15)  Copy of Atlantic Energy, Inc. Restricted Stock Plan for
Non-employee Directors, effective January 1, 1991 (File No. 1-
9760, Form 10-K for year ended December 31, 1991-Exhibit No.
10a(10)).

10a(16)  Agreement dated February 11, 1993 between Atlantic City
Electric Company and Jerrold L. Jacobs (File No. 1-3559, Form 10-
K for the year ended December 31, 1994 - Exhibit No. 10a(16)).


10a(16)1  Agreement dated August 10, 1995 between Atlantic
Energy, Inc. and Jerrold L. Jacobs, as amended, filed herewith.

10a(17)  Agreement dated February 10, 1994 between Atlantic City
Electric Company and Meredith I. Harlacher, Jr. (File No. 1`-
3559, Form 10-K for the year ended December 31, 1993 - Exhibit
No. 10a(17)). 

10a(17)1  Agreement dated August 10, 1995 between Atlantic
Energy, Inc. and Meredith I. Harlacher, Jr. as amended, filed
herewith.

10a(18)  Agreement dated February 10, 1994 between Atlantic City
Electric Company and Henry K. Levari, Jr. (File No. 1-3559, Form
10-K for the year ended December 31, 1993 - Exhibit No. 10a(18)).

10a(19)  Agreement dated February 10, 1994 between Atlantic City
Electric Company and J. G. Salomone, Amendment to Agreement
Termination and Release Agreement dated  January 31, 1995 between
Atlantic City Electric Company and J. G. Salomone (File No. 1-
3559, Form 10-K for the year ended December 31, 1993 - Exhibit
No. 10a(19)); Amendment to Agreement Termination and Release
Agreement between Atlantic City Electric Company and J. G.
Salomone (File No. 1-3559, Form 10-K for the year ended December
31, 1994 - Exhibit No. 10a(19)). 

10a(20)  Agreement dated January 10, 1994 between Atlantic City
Electric Company and Michael Chesser (File No. 1-3559, Form 10-K
for the year ended December 31, 1993 - Exhibit No. 10a(20)). 

10a(20)1  Agreement dated August 10, 1995 between Atlantic
Energy, Inc. and Michael J. Chesser, as amended, filed herewith.

10a(21)  Agreement dated October 1, 1994 between Atlantic City
Electric Company and James E. Franklin II (File No. 1-3559, Form
10-K for year ended December 31, 1994-Exhibit 10a(23).

10a(22)  Atlantic Energy, Inc. Equity Incentive Plan (File No.
33-53511, Form S-8 filed May 6, 1994-Exhibit 10.)

10a(23)  Agreement dated August 10, 1995 between Atlantic Energy,
Inc. and Marilyn T. Powell, as amended, filed herewith.

10a(24)  Agreement dated August 10, 1995 between Atlantic Energy,
Inc. and Scott B. Ungerer, as amended, filed herewith.

10b(1)  Agreement as to ownership as tenants in common of the
Salem Nuclear Generating Station Units 1, 2, and 3, dated
November 24, 1971, and of Supplements, dated as of September 1,
1975, and as of January 26, 1977 (File No. 2-43137-Exhibit No.    
5(p); File No. 2-60966-Exhibit No. 5(m); and File No. 2-58430-
Exhibit No. 5(o)).

10b(2)  Agreement as to ownership as tenants in common of the
Peach Bottom Atomic Power Station Units 2 and 3, dated November
24, 1971 and of Supplements dated as of September 1, 1975 and as
of January 26, 1977 (File No. 2-43137-Exhibit No. 5(o); File No.
2-60966-Exhibit No. 5(j); File No. 2-58430-Exhibit No. 5(m)).

10b(3)  Owners Agreement, dated April 28, 1977 between Atlantic
City Electric Company and Public Service Electric & Gas Company
for the Hope Creek Generating Station Units No. 1 and 2 (File No.
2-60966-Exhibit No. 5(v)).
10b(3-1)  Amendment to Owners Agreement for Hope Creek Generating
Station, dated as of December 23, 1981, between Atlantic City
Electric Company and Public Service Electric & Gas Company (File
No. 1-3559, Form 10-K for year ended December 31, 1983-Exhibit
No. 10b(3-2)).

10b(4)  Pennsylvania-New Jersey-Maryland Interconnection
Agreement, dated September 26, 1956 between Public Service
Electric & Gas Company, Philadelphia Electric Company,
Pennsylvania Power & Light Company, Baltimore Gas & Electric
Company, Jersey Central Power & Light Company, Metropolitan
Edison Company, Pennsylvania Electric Company, Potomac Electric
Power Company and supplemental agreements through June 15, 1977
(File No. 1-3559, Form 10-K for year ended December 31, 1981-
Exhibit No. 10(p)).

10b(5)  Pennsylvania-New Jersey-Maryland Interconnection
Supplemental Agreement, dated March 26, 1981, between Public
Service Electric & Gas Company, Philadelphia Electric Company,
Pennsylvania Power & Light Company, Baltimore Gas & Electric
Company, Jersey Central Power & Light Company, Metropolitan
Edison Company, Pennsylvania Electric Company, Potomac Electric
Power Company, Atlantic City Electric Company and Delmarva Power
& Light Company (File No. 1-3559, Form 10-Q for quarter ended
March 31, 1981-Exhibit No. 20b).

24  Independent Auditors' Consent, filed herewith.

25a  Powers of Attorney for Atlantic Energy, Inc. dated as of
March 14, 1996, filed herewith.

25b  Powers of Attorney for Atlantic City Electric Company dated
as of March 11, 1996, filed herewith.

27 Financial Data Schedules for Atlantic Energy, Inc. and
Atlantic City Electric Company for periods ended December 31,
1995.

28(a)  Consolidated Financial Statements, Notes to Financial
Statements, Management's Discussion and Analysis of Results of
Operation and Financial Condition, and Independent Auditors'
Report for Atlantic City Electric Company for the three years
ended December 31, 1995, filed herewith.

28(b)  Supplemental Financial Schedules for Atlantic Energy, Inc.
and Atlantic City Electric Company for the three years ended
December 31, 1995, filed herewith.




EX-24
2


                                        Exhibit 24




INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in Registration No.
33-49683 of Atlantic Energy, Inc. on Form S-3 and Registration
No. 33-53511 of Atlantic Energy, Inc. on Form S-8 and
Registration No. 33-53841 of Atlantic City Electric Company on
Form S-3 of our reports dated February 2, 1995 appearing in the
Annual Report of Form 10-K of Atlantic Energy, Inc. and Atlantic
City Electric Company for the year ended December 31, 1995.



DELOITTE & TOUCHE LLP   
Parsippany, New Jersey

March 19, 1996



EX-25
3


                                                    EXHIBIT 25(A)

                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ M. Holden, Jr.
                                  M. Holden, Jr.


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                                 /s/ G/ A. Hale      
                                     G. A. Hale 


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for her and in her name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in her name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as her own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                                   /s/ K. MacDonnell
                                       K. MacDonnell

                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ B. J. Morgan          
                                  B. J. Morgan



                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ H. J. Raveche                  
                                  H. J. Raveche


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  


                                          /s/ R. B. McGlynn
                                              R. B. McGlynn




                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ C. H. Holley
                                  C. H. Holley 



                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ E. D. Huggard
                                  E. D. Huggard


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ J. M. Galvin, Jr.
                                  J. M. Galvin, Jr.


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ J. L. Jacobs
                                  J. L. Jacobs




EX-25
4


                                                   Exhibit 25(b)
                      ATLANTIC CITY ELECTRIC COMPANY


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                                /s/ J. L. Jacobs         
                                    J. L. Jacobs  



                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                              /s/ M. J. Chesser
                                  M. J. Chesser


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                               /s/ J. E. Franklin II
                                   J. E. Franklin II             


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                              /s/ M. I. Harlacher, Jr.
                                  M. I. Harlacher, Jr.           


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                                   /s/ H. K. Levari, Jr.
                                       H. K. Levari, Jr.


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                                /s/ M. J. Barron
                                    M. J. Barron

                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for her and in her name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in her name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as her own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                              /s/ M. T. Powell
                                  M. T. Powell



EX-27
5


 

 UT
 0000806393 
  ATLANTIC ENERGY, INC.
       
                             
                   YEAR
                          DEC-31-1995
                               DEC-31-1995
                                  PER-BOOK
                    1,801,786
                     63,879
                         243,429
                       352,813
                                       0
                               2,461,907
                                        54,963
                      491,712
                            252,484
                 799,159
                          114,750
                                     40,000
                           802,356
                              30,545
                            0
                       0
                   12,247
                       22,250
                     40,227
                                   650
                 599,723
                2,461,907
                      953,779
                            45,876
                     758,976
                     804,852
                        148,927
                              11,025
                 159,952
                        61,200
                                    98,752
                     14,627
                   84,125
                        81,239
                            0
                         157,427
                                        0
                                        0
        

 



EX-27
6


 

 UT
    0000008192
   ATLANTIC CITY ELECTRIC COMPANY
       
                             
                   YEAR
                          DEC-31-1995
                               DEC-31-1995
                                  PER-BOOK
                    1,801,786
                    216,284
                         248,322
                       354,504
                                       0
                               2,620,896
                                       563,436
                            0
                            249,741
                 813,177
                          114,750
                                     40,000
                           829,856
                              30,545
                            0
                       0
                   65,247
                       22,250
                     40,227
                                     0
                 664,844
                2,620,896
                      953,137
                            45,876
                     758,724
                     804,600
                        148,537
                               9,058
                 157,595
                        61,200
                                    81,768
                          0
                   81,768
                        81,088
                            0
                         148,361
                                     1.55
                                     1.55
        

 



EX-28
7


                                                   Exhibit 28(a)
INDEPENDENT AUDITORS' REPORT
                                                    
To Atlantic City Electic Company:

We have audited the accompanying consolidated balance sheets of
Atlantic City Electric Company and subsidiary as of December 31,
1995 and 1994 and the related consolidated statements of income,
changes in common shareholder's equity, and cash flows for each
of the three years in the period ended December 31, 1995.  These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Atlantic City Electric Company and subsidiary at December 31,
1995 and 1994 and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting
principles.



DELOITTE & TOUCHE LLP
Parsippany, New Jersey

February 2, 1996 



REPORT OF MANAGEMENT

The management of Atlantic City Electric Co. and its subsidiary
is responsible for the preparation of the financial statements
presented in this Annual Report.  The financial statements have
been prepared in conformity with generally accepted accounting
principles.  In preparing the financial statements, management
made informed judgments and estimates, as necessary, relating to
events and transactions reported.  

Management has established a system of internal accounting and
financial controls and procedures designed to provide reasonable
assurance as to the integrity and reliability of financial
reporting.  In any system of financial reporting controls,
inherent limitations exist.  Management continually examines the
effectiveness and efficiency of this system, and actions are
taken when opportunities for improvement are identified. 
Management believes that, as of December 31, 1995, the system of
internal accounting and financial controls over financial
reporting is effective.  Management also recognizes its
responsibility for fostering a strong ethical climate in which
the Company's affairs are conducted according to the highest
standards of corporate conduct.  This responsibility is
characterized and reflected in the Company's code of ethics and
business conduct policy.

The financial statements have been audited by Deloitte & Touche
LLP, Certified Public Accountants.  Deloitte & Touche provides
objective, independent audits as to management's discharge of its
responsibilities insofar as they relate to the fairness of the
financial statements.  Their audits are based on procedures
believed by them to provide reasonable assurance that the
financial statements are free of material misstatement.

The Company's internal auditing function conducts audits and
appraisals of the Company's operations.  It evaluates the system
of internal accounting, financial and operational controls and
compliance with established procedures.  Both the external
auditors and the internal auditors periodically make
recommendations concerning the Company's internal control
structure to management and the Audit Committee of the Board of
Directors.  Management responds to such recommendations as
appropriate in the circumstances.  None of the recommendations
made for the year ended December 31, 1995 represented significant
deficiencies in the design or operation of the Company's internal
control structure.


M. J. Chesser                                            
President and Chief Operating Officer


M. J. Barron
Senior Vice President and Chief Financial Officer

February 2, 1996

CONSOLIDATED STATEMENT OF INCOME    
(Thousands of Dollars)                           
                                     For the Years Ended December
31,
                                      1995        1994       
1993 

Operating Revenues-Electric         $953,779    $913,226   
$865,799
Operating Expenses:
Energy                               191,766     210,891    
159,438
Purchased Capacity                   190,570     130,929    
110,781
Operations                           152,277     157,047    
162,840  Maintenance                           34,414      37,662 
    45,452
Depreciation and Amortization         78,461      73,344     
67,950
State Excise Taxes                   102,811      97,072    
104,280
Federal Income Taxes                  45,876      42,529     
45,277
Other Taxes                            8,677      10,757     
10,854
Total Operating Expenses             804,852     760,231    
706,872

Operating Income                     148,927     152,995    
158,927

Other Income and Expense:
Allowance for Equity Funds Used                                   
 
 During Construction                     817       3,364      
2,368
Employee Separation Costs,                                        
      net of tax benefit of $9,265           -        (17,335)    
  -   
Litigation Settlement, net of tax            
 benefit of $1,321                      -           -        
(2,564)  Other-Net                             10,208       9,568 
     9,865
Total Other Income and Expense        11,025      (4,133)     
9,669

Income Before Interest Charges       159,952     148,862    
168,596
Interest Charges:
Interest on Long Term Debt            60,329      57,346     
59,385
Other Interest Expense                 2,550       1,114      
1,633
Total Interest Charges                62,879      58,460     
61,018
Allowance for Borrowed Funds Used        
 During Construction                  (1,679)     (2,772)    
(1,448)
Net Interest Charges                  61,200      55,688     
59,570

Net Income                          $ 98,752    $ 93,174   
$109,026
                                                           
       
Earnings for Common Stock:
Net Income                          $ 98,752    $ 93,174   
$109,026
Less Preferred Stock Dividend
Requirements                          14,627      16,716     
17,405
Income Available for Common Stock   $ 84,125    $ 76,458    $
91,621


The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.

CONSOLIDATED STATEMENT OF CASH FLOWS                                   
(Thousands of Dollars)              
                                      For the Years Ended December 31,
                                        1995       1994       1993    
Cash Flows Of Operating Activities:
Net Income                             $ 98,752   $ 93,174   $109,026
Deferred Purchased Power Costs           15,721     14,920     (6,050)
Deferred Energy Costs                   (20,435)    (3,819)   (15,269)
Depreciation and Amortization            78,461     73,344     67,950
Deferred Income Taxes-Net                15,694      6,116     16,213 
Prepaid State Excise Taxes                9,560    (40,128)   (33,706)
Net (Increase) Decrease in Other 
 Working Capital                        (31,262)   (22,913)    28,486 
Employee Separation Costs               (19,112)    26,600       -
Other-Net                                10,048      1,403      7,559
Net Cash Provided by Operating          157,427    148,697    174,209
 Activities
Cash Flows Of Investing Activities:
Construction Expenditures              (100,904)  (119,961)  (138,111)
Leased Property                         (10,446)   (10,713)    (9,946)
Decommissioning Trust Fund Deposits      (6,424)    (6,424)    (6,424)
Plant Removal Costs                      (4,525)    (8,000)    (1,943)
Other-Net                                 7,316      7,223     (3,824)
Net Cash Used by Investing Activities  (114,983)  (137,875)  (160,248)

Cash Flows Of Financing Activities:
Proceeds from Long Term Debt            104,404     53,572    464,633
Retirement and Maturity of           
 Long Term Debt                         (57,489)   (42,664)  (360,414)
Increase (Decrease) in Short Term Debt   21,945      8,600    (14,600)
Proceeds from Capital Lease 
 Obligations                             10,446     10,713      9,946
Redemption of Preferred Stock           (24,500)   (24,500)    (5,469)
Dividends                               (95,866)  (100,198)   (98,752)
Capital Contributions                        13     25,270     20,991
Other-Net                                  (869)     1,601     (1,362)
Net Cash Used by Financing Activities   (41,916)   (67,606)   (14,973)
Net Increase (Decrease) in Cash   
 and Temporary Investments                  528    (56,784)    28,934
Cash and Temporary Investments, 
 beginning of year                        3,459     60,243     31,309
Cash and Temporary Investments, 
 end of year                           $  3,987   $  3,459   $ 60,243
Supplemental Schedule of Payments:
 Interest                              $ 58,274   $ 61,035  $  51,331
 Federal income taxes                  $ 31,999   $ 32,254  $  25,809

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
CONSOLIDATED BALANCE SHEET           
(Thousands of Dollars)
                                                December 31,
                                             1995          1994  
Assets
Electric Utility Plant:
In Service:
  Production                              $1,187,169    $1,151,661     
  Transmission                               366,242       357,389
  Distribution                               691,830       659,619
  General                                    183,935       180,204
Total In Service                           2,429,176     2,348,873
Less Accumulated Depreciation                794,479       725,999
Net                                        1,634,697     1,622,874
Construction Work in Progress                119,270       110,078
Land Held for Future Use                       6,941         6,941
Leased Property-Net                           40,878        42,030
Electric Utility Plant-Net                 1,801,786     1,781,923
Investments and Nonutility Property:
Nuclear Decommissioning Trust Fund            61,802        52,004
Other                                          2,077         3,139
Total Investments and Nonutility Property     63,879        55,143
Current Assets:
Cash and Temporary Investments                 3,987         3,459
Accounts Receivable:
  Utility Service                             66,099        54,554
  Miscellaneous                               17,379        15,804
  Allowance for Doubtful Accounts             (3,300)       (3,300)
Unbilled Revenues                             41,515        32,070
Fuel (at average cost)                        25,459        28,030
Materials and Supplies (at average cost)      25,434        27,823
Working Funds                                 14,420        14,475
Deferred Energy Costs                         31,434        10,999
Deferred Income Taxes                           -           12,141
Other Prepayments                             21,002        11,760
Total Current Assets                         243,429       207,815

Deferred Debits:
Unrecovered Purchased Power Costs             99,817       115,538
Recoverable Future Federal Income Taxes       85,858        85,854
Unrecovered State Excise Taxes                64,274        73,834
Unamortized Debt Costs                        38,924        38,083
Other Regulatory Assets                       54,568        47,055
Other                                          9,372        16,071
Total Deferred Debits                        352,813       376,435
Total Assets                              $2,461,907    $2,421,316

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.


CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
                                                   December 31,
                                                1995           1994

Liabilities and Capitalization
Capitalization:
Common Shareholder's Equity:
Common Stock                                $   54,963     $   54,963
Premium on Capital Stock                       231,081        231,081
Contributed Capital                            262,762        262,749
Capital Stock Expense                           (2,131)        (2,300)
Retained Earnings                              252,484        249,767
Total Common Shareholder's Equity              799,159        796,260
Preferred Stock:                                                      
  Not Subject to Mandatory Redemption           40,000         40,000
  Subject to Mandatory Redemption              114,750        149,250
Long Term Debt                                 802,356        763,288 
Total Capitalization (excluding current                               
  portion)                                   1,756,265      1,748,798

Current Liabilities:                                                  
Preferred Stock Redemption Requirement          22,250         12,250 
Capital Lease Obligations                          650            928 
Long Term Debt - Current Portion                12,247            -
Short Term Debt                                 30,545          8,600 
Accounts Payable                                60,831         65,632 
Federal Income Taxes Payable - Affiliate        11,574          9,537
Other Taxes Accrued                              3,382          3,490
Interest Accrued                                19,961         19,048
Dividends Declared                              23,490         24,681
Accrued Employee Separation Costs                7,488         26,600
Deferred Income Taxes                            2,569            - 
Other                                           17,156         18,206 
Total Current Liabilities                      212,143        188,972 

Deferred Credits and Other Liabilities:                               
Deferred Income Taxes                          354,218        350,697
Deferred Investment Tax Credits                 49,112         51,646
Capital Lease Obligations                       40,227         41,102
Other                                           49,942         40,101  
Total Deferred Credits and Other
  Liabilities                                  493,499        483,546

Commitments and Contigencies (Note 8)

Total Liabilities and Capitalization        $2,461,907     $2,421,316




CONSOLIDATED STATEMENT OF CHANGES IN    
COMMON SHAREHOLDER'S EQUITY             
(Thousands of Dollars)
                            Premium On               Capital      
                   Common    Capital   Contributed    Stock  Retained
                   Stock      Stock      Capital     Expense Earnings
Balance,
December 31, 1992  $54,963   $231,081   $216,488   $(2,496)  $246,883
Net Income                                                    109,026
Capital stock
 expense                                                 26      (196)
Capital contritution
 from parent                              20,991                      
Less dividends 
 declared:
 Preferred                                                    (17,405)
 Common                                                       (81,347)
Balance,
December 31, 1993   54,963    231,081    237,479    (2,470)   256,961
Net Income                                                     93,174
Capital stock
 expense                                               170       (170)
Capital contribution
 from parent                              25,270                      
Less dividends
 declared:
 Preferred                                                    (16,716)
 Common                                                       (83,482)
Balance,
December 31, 1994   54,963    231,081    262,749    (2,300)   249,767
Net income                                                     98,752 
Capital stock
 expense                                               169       (169)
Capital contribution
 from parent                                  13                      
Less dividends
 declared:                                                       
Preferred                                                     (14,627)
Common                                                        (81,239)
Balance,         
December 31, 1995  $54,963   $231,081   $262,762   $(2,131)  $252,484
                                                                      


As of December 31, 1995, the Company had $25 million authorized shares
of Common Stock at $3 par value.  Shares outstanding at December 31,
1995, 1994 and 1992 were 18,320,937.   

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements. 

Notes to Consolidated Financial Statements
Note 1. SIGNIFICANT ACCOUNTING POLICIES

Organization - Atlantic City Electric Company (the Company) is a 
wholly-owned subsidiary of Atlantic Energy, Inc.(AEI).  The Company is
a public utility primarily engaged in the generation, transmission,
distribution and sale of electric energy.  The Company's service
territory encompasses approximately 2,700 square miles within the
southern one-third of New Jersey with the majority of customers being
residential and commercial.  Deepwater Operating Company is a wholly-
owned subsidiary of the Company which operates certain generating
facilities.
   
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its subsidiary.  All
significant intercompany accounts and transactions have been
eliminated in consolidation.  

Regulation - The accounting policies and rates of service for the
Company are subject to the regulations of the New Jersey Board of
Public Utilities (BPU) and in certain respects to the Federal Energy
Regulatory Commission (FERC).  The Company follows generally accepted
accounting principles (GAAP) and financial reporting requirements
employed by all industries as specified by the Financial Accounting
Standards Board (FASB) and the Securities and Exchange Commission
(SEC).  However, accounting for rate regulated industries may depart
from GAAP applied by other industries as permitted by Statement of
Financial Accounting Standards No. 71 (SFAS No. 71).  SFAS No. 71
provides guidance on circumstances where the economic effect of a
regulator's decision warrants different applications of GAAP as a
result of the ratemaking process.  In setting rates, a regulator may
provide recovery of an incurred cost in a year or years other than the
year the cost is incurred.  As permitted by SFAS No. 71, costs ordered
by a regulator to be deferred or capitalized for future recovery are
recorded as a regulatory asset because the regulator's rate action
provides reasonable assurance of future economic benefits attributable
to these costs.  In a non-rate regulated industry, such costs may be
charged to expense in the year incurred.  SFAS No. 71 further
specifies that a regulatory liability is recorded when a regulator
orders a refund to customers of revenues previously collected, or when
existing rates provide for recovery of future costs not yet incurred. 
Such treatment is not afforded to non-rate regulated companies.  When
collection of regulatory assets or relief of regulatory liabilities is
no longer probable, the assets and liabilities are applied to income
in the year that the assessment is made.  Specific regulatory assets
and liabilities that have been recorded are discussed elsewhere in the
notes to the consolidated financial statements.

Electric Operating Revenues - Revenues are recognized when electric
energy services are rendered, and include estimates for amounts
unbilled at the end of the year for energy used by customers
subsequent to the last bill rendered for the calendar year.

Nuclear Fuel - Fuel costs associated with the Company's participation
in jointly-owned nuclear generating stations, including spent nuclear
fuel disposal costs, are charged to Energy expense based on the units
of thermal energy produced.

Electric Utility Plant - Property is stated at original cost. 
Generally, the plant is subject to a first mortgage lien.  The cost of
property additions, including replacement of units of property and
betterments, is capitalized.  Included in certain property additions
is an Allowance for Funds Used During Construction (AFDC), which is
defined in the applicable regulatory system of accounts as the cost,
during the period of construction, of borrowed funds used for
construction purposes and a reasonable rate on other funds when so
used.  AFDC has been calculated using a semi-annually compounded rate
of 8.25% since August 1, 1993.  The AFDC rate was 8.95% prior to this
date.   

Depreciation - The Company provides for straight-line depreciation
based on:  transmission and distribution property - estimated
remaining life;  nuclear property - remaining life of the related
plant operating license in existence at the time of the last base rate
case;  other depreciable property - estimated average service life. 
The overall composite rate of depreciation was 3.3% for the last three
years.  Accumulated depreciation is charged with the cost of
depreciable property retired together with removal costs less salvage
and other recoveries.  

Nuclear Plant Decommissioning Reserve -  A reserve for decommissioning
costs is presented as a component of accumulated depreciation and
amounted to $60.9 million and $51.1 million at December 31, 1995 and
1994, respectively.  

The SEC has questioned certain accounting practices employed by the
electric utility industry concerning decommissioning costs for nuclear
generating facilities.  The FASB is currently reviewing this issue
within the broad context of removal costs relative to all industries. 
At this time, the Company cannot predict what future accounting
practices may be required by the FASB and SEC concerning this issue,
or the impact on future financial statements, that any new accounting
practices may have.
  
Deferred Energy Costs - As approved by the BPU, the Company has a
Levelized Energy Clause (LEC) through which energy and energy-related
costs (energy) are charged to customers.  LEC rates are based on
projected energy costs and prior period underrecoveries or
overrecoveries.  Generally, energy costs are recovered through
levelized rates over the period of projection, which is usually a 12-
month period.  In any period, the actual amount of LEC revenues
recovered from customers may be greater or less than the recoverable
amount of energy costs incurred in that period.  Energy expense is
adjusted to match the associated LEC revenues.  Any underrecovery (an
asset representing energy costs incurred that are to be collected from
customers) or overrecovery (a liability representing previously
collected energy costs to be returned to customers) of costs is
deferred on the Consolidated Balance Sheet as Deferred Energy Costs. 
These deferrals are recognized in the Consolidated Statement of Income
as Energy expense during the period in which they are subsequently
included in the LEC.  The Company may elect to forgo recovery of
certain amounts of otherwise recoverable energy costs.  Such amounts
are expensed.

Income Taxes - Deferred Federal income taxes are provided on all
significant temporary differences between book bases and tax bases of
assets and liabilities, transactions that reflect taxable income in a
year different than book income, and tax carryforwards.  Investment
tax credits previously used for income tax purposes have been deferred
on the Consolidated Balance Sheet and are recognized in book income
over the life of the related property.  The Company files a
consolidated Federal income tax return with AEI.  An agreement with
AEI provides for allocation to the Company of tax liabilities or
benefits generated by the Company based on the separate return method.

Related Party Transactions - The Company has a contract for a total of
106 MWS of capacity and related energy from a cogeneration facility
that is 50% owned by a wholly-owned subsidiary of Atlantic Energy
Enterprises, Inc. (AEE), which is a wholly-owned subsidiary of AEI. 
Capacity costs totaled $23.8 million in 1995 and $23.0 million in 1994
and 1993. The Company sells electricity to subsidiaries of AEE.  The
Company also rents office space from a wholly-owned subsidiary of AEE. 
The electric sales recorded and the rents paid are not significant to
the Consolidated Income Statement.  The amounts receivable from and
payable to affiliates for such transactions were not significant at
December 31, 1995 and 1994.

Financial Instruments - A number of items within Current Assets and
Current Liabilities on the Consolidated Balance Sheet are considered
to be financial instruments because they are cash or are to be settled
in cash.  Due to their short term nature, the carrying values of these
items approximate their fair market values.  Accounts Receivable -
Utility Service and Unbilled Revenues are subject to concentration of
credit risk because they pertain to utility service conducted within a
fixed geographic region.  

Other - Debt premium, discount and expense are amortized over the life
of the related debt.  Temporary investments considered as cash
equivalents for Consolidated Statement of Cash Flows purposes
represent purchases of highly liquid debt instruments maturing in
three months or less.  The Company's weighted daily average interest
rate on short term debt was 6.3% for 1995 and 4.4% for 1994.  

The preparation of financial statements in conformity with GAAP
requires management at times to make certain judgments, estimates and
assumptions that affect amounts and matters reported at the year end
dates and for the annual periods presented.  Actual results could
differ from those estimates.  Any change in the judgments, estimates
and assumptions used, which in management's opinion would have a
significant effect on the financial statements, will be reported when
management becomes aware of such changes.

New Accounting Standards - The FASB issued two new statements in 1995 -
 Statement No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" and Statement No. 123
"Accounting for Stock-Based Compensation".  Both statements are
effective for the Company in 1996.  Statement No. 121 primarily
concerns accounting for the impairment and disposal of property, plant
and equipment.  Statement No. 123 permits a fair value-based method to
account for stock-based compensation as an alternative to the
intrinsic value-based method that is currently permitted.  The Company
currently employs stock-based compensation which has not had a
material impact on the financial statements.  Should the Company elect
to continue to use the intrinsic value-based method to account for
stock-based compensation, the statement requires, if material, certain
disclosures as if the fair value-based method was used.  The Company
has not yet fully assessed the impacts on its financial statements of
the requirements of these new accounting standards. 

Certain prior year amounts have been reclassified to conform to the
current year reporting of these items.

NOTE 2.  INCOME TAXES
The components of Federal income tax expense for the years ended
December 31 are as follows:
                                      
(000)                                  1995        1994        1993   
Current                             $ 32,457    $ 30,013    $ 29,679
Deferred                              15,694       6,116      16,214
Total Federal Income Tax Expense      48,151      36,129      45,893
Less Amounts in Other Income           2,275      (6,400)        616
Federal Income Taxes in 
 Operating Expenses                 $ 45,876    $ 42,529    $ 45,277

A reconciliation of the expected Federal income taxes compared to the
reported Federal income tax expense computed by applying the statutory
rate for the years ended December 31 follows:
                                       1995        1994        1993
Statutory Federal Income Tax Rate       35%         35%         35%
(000)
Income Tax Computed at the           
 Statutory Rate                     $ 51,417    $ 45,256    $ 54,221
Plant Basis Differences                1,307         (27)     (5,171)
Amortization of Investment Tax
 Credits                              (2,534)     (2,534)     (2,534)
Tax Adjustments                           -       (4,874)       (750)
Other-Net                             (2,039)     (1,692)        127
Total Federal Income Tax Expense    $ 48,151    $ 36,129    $ 45,893
Effective Federal Income Tax Rate       33%         28%         30%

Items comprising deferred tax balances as of December 31 are as
follow: 
(000)                                 1995         1994    
Deferred Tax Liabilities:
Plant Basis Differences             $316,834     $304,476
Unrecovered Purchased Power Costs     28,209       33,557
State Excise Taxes                    22,527       25,842 
Other                                 29,519       22,573
 Total Deferred Tax Liabilities      397,089      386,448
Deferred Tax Assets:
Deferred Investment Tax Credits       26,511       27,879
Employee Separation Costs              2,621        6,932
Other                                 11,169       13,081
 Total Deferred Tax Assets            40,301       47,892
Total Deferred Taxes-Net            $356,788     $338,556

Deferred tax costs associated with additional deferred tax
liabilities resulting from a prior year accounting change are
recorded on the Consolidated Balance Sheet as Recoverable Future
Federal Income Taxes.  This recognition is given for the probable
amount of revenue to be collected from ratepayers for these
additional taxes to be paid in future years.

NOTE 3.  RATE MATTERS    

Energy Clause Proceedings

              Changes in Levelized Energy Clause Rates
                            1993 - 1995
                              
                    Amount            Amount             
     Date         Requested          Granted            Date
     Filed        (millions)        (millions)        Effective

     3/93            $14.2             $10.9            10/93
     2/94             63.0              55.0             7/94
     4/95             37.0              37.0             7/95

The Company's Levelized Energy Clause (LEC) is subject to annual
review by the BPU.

In March 1993, the Company filed a petition with the BPU
requesting a $14.2 million increase in LEC revenues for the June
1, 1993 through May 31, 1994 LEC period.  Effective for service
rendered on and after October 1, 1993, the BPU approved an
increase of $10.9 million.  The request was reduced primarily to
return to customers an additional 25%, or $3.8 million, of a
$15.5 million litigation settlement with the operator of the
Peach Bottom Atomic Power Station.     

On February 8, 1994, the Company filed a petition with the BPU
requesting an increase in LEC revenues of $63 million for the
period June 1, 1994 through May 31, 1995.  The increase was
primarily due to the additional costs incurred from two new
independent power producers (IPPs) scheduled to begin commercial
operation during the 1994/1995 LEC period.  The requested amount
was reduced by $84 million as a result of the utilization of $56
million of current base rate revenues associated with a utility
power purchase contract expiring in May 1994 and the Southern New
Jersey Economic Initiative (SNJEI), a Company initiative that
forgoes the recovery of $28 million of energy costs that the
Company will incur during the LEC period.  On November 30, 1994,
the BPU rendered its final decision approving the continuation of
a provisional LEC rate increase of $55 million that had been in
effect since July 26, 1994.       

On April 17, 1995, the Company filed a petition with the BPU
requesting a $37 million increase in LEC revenues for the period
June 1, 1995 through May 31, 1996.  This filing represents the
first that includes a full year of costs for capacity and energy
with all four of the IPPs with which the Company is under
contract.  The requested amount had been reduced by the Company
from $67.6 million by forgoing $10 million in LEC revenues under
the SNJEI and deferring $20.6 million of LEC costs that the
Company will incur during the 1995/1996 LEC period for recovery
in a future LEC period.  Effective July 7, 1995, the BPU approved
a provisional increase of $37 million effective for service
rendered on and after July 7, 1995.  On November 15, 1995, the
Administrative Law Judge (ALJ) recommended that the provisional
rates be made final.  On December 1, 1995, the Ratepayer
Advocate, the BPU Staff and the Company agreed to a stipulation
recommending that the ALJ's findings be accepted by the BPU.  A
final decision is expected from the BPU by the end of March 1996.

Other Rate Proceedings

In November 1993, the Company filed a petition with the BPU
requesting that hotel-casino customers be permitted to take
service under rate schedules offered to all other commercial and
industrial customers.  On June 23, 1994, the BPU approved the
request.  Prior to BPU approval, hotel-casino customers were
served under the Hotel Casino Service rate schedule, the highest
rate for service of all the Company's service classes.  Effective
July 1, 1994, all hotel-casino customers began taking service
under a general service rate schedule.  The effect of this change
was not material to the results of operations. 
   
On September 14, 1994, the BPU issued an order supporting the
investigation of the double recovery of capacity costs from
nonutility generation projects.  This issue relates to the
Ratepayer Advocate's allegation that the Company, along with
other New Jersey electric utility companies, is recovering
cogeneration capacity costs concurrently in base rates and LEC
rates.  The order confirmed the establishment of a generic
proceeding to review the nonutility capacity cost recovery
methodology and ordered that the matter be reviewed in a two
phase proceeding.  The scope of the issues to be resolved during
the first phase of the proceeding include:  1) the determination
of the existence, or lack of existence, of the double recovery as
a result of the traditional LEC pass-through of nonutility
generation capacity costs;  2) the quantification of any double
recovery found to exist for each utility for the relevant
periods;  3) a determination of an appropriate remedy or
adjustment if double recovery is found to occur and the periods
of time over which an adjustment would be applicable.  Following
the conclusion of the first phase of the proceeding, the BPU, in
the second phase, will render a final decision regarding the
specific findings of the Office of Administrative Law and address
the broader issues relating to the appropriate prospective
purchase power capacity cost recovery methods.  In September
1995, the Ratepayer Advocate filed testimony that claims the
Company's overrecovery of capacity costs for the four-year period
June 1991 through May 1995 is $46 million.  The Ratepayer
Advocate also filed testimony supporting similar claims for other
New Jersey electric utilities.  In December 1995, the Company and
the other electric utilities filed testimony rebutting the
Ratepayer Advocate's claims.  Litigation is expected to continue
in 1996; the BPU's final decision is not expected until the
latter part of 1996.  At this time, the Company cannot predict
the outcome of this proceeding and cannot estimate the impact
that the double recovery issue may have on future rates.

NOTE 4.  RETIREMENT BENEFITS

Pension

The Company has a noncontributory defined benefit pension plan
covering substantially all of its employees and those of its
wholly-owned subsidiary.  Benefits are based on an employee's
years of service and average final pay.  The Company's policy is
to fund pension costs within the guidelines of the minimum
required by the Employee Retirement Income Security Act and the
maximum allowable as a tax deduction.  Each company is allocated
its participative share of plan costs and contributions.

Net periodic pension costs include:
(000)                                  1995      1994      1993
Service cost-benefits earned  
 during the period                  $  6,363  $  6,871  $  7,196
Interest cost on projected benefit                                
 obligation                           14,794    15,390    16,016
Actual return on plan assets         (44,067)     (860)  (23,200)    
Other-net                             28,379   (16,885)    5,496  
Net periodic pension costs          $  5,469  $  4,516  $  5,508  




Of these costs, $3.0 million were charged to operating expense in both
1995 and 1994 and $5.2 million in 1993.  The remaining costs, which
are associated with construction labor, were charged to the cost of
new utility plant.  Actual return on plan assets and other-net for
1995 primarily reflect the favorable market conditions from the
investment of plan assets and expected returns versus the unfavorable
market conditions in 1994.    

A reconciliation of the funded status of the plan as of December 31 is
as follows:
(000)                                  1995          1994      
Fair value of plan assets            $212,000      $190,200     
Projected benefit obligation          213,470       206,742     
Plan assets less than           
 projected benefit obligation          (1,470)      (16,542)    
Unrecognized net transition asset      (1,550)       (1,722)   
Unrecognized prior service cost           282           306
Unrecognized net loss                  10,006        24,106    
Prepaid pension cost                 $  7,268      $  6,148     
Accumulated benefit obligation:
Vested benefits                      $169,044      $166,602     
Nonvested benefits                      3,413           485     
Total                                $172,457      $167,087         

At December 31, 1995, approximately 65% of plan assets were invested
in equity securities, 21% in fixed income securities and 14% in other
investments.  The assumed rates used in determining the actuarial
present value of the projected benefit obligation at December 31 were
as follows:
                                         1995       1994
Weighted average discount                7.0%       7.5%
Anticipated increase in compensation     3.5%       3.5%

The assumed long term rate of return on plan assets was 8.5% for both
1995 and 1994.

Other Postretirement Benefits 

The Company and its subsidiary provide certain health care and life
insurance benefits for retired employees and their eligible
dependents.  Substantially all employees may become eligible for these
benefits if they reach retirement age while working for the companies. 
Benefits are provided through insurance companies and other plan
providers whose premiums and related plan costs are based on the
benefits paid during the year.  The Company has a tax qualified trust
to fund these benefits.  Each company is allocated its participative
share of plan costs and contributions.  

Net periodic other postretirement benefit costs include:
(000)                                  1995        1994        1993  
Service cost-benefits attributed to 
 service during the period           $ 2,891     $ 3,817     $ 3,045
Interest cost on accumulated 
 postretirement benefits obligation    8,107       8,450       7,133
Actual return on plan assets          (1,437)        100        (255) 
Amortization of unrecognized 
 transition obligation                 3,893       3,893       3,893
Other-net                                404        (700)       (711)
Net periodic other postretirement 
  cost                               $13,858     $15,560     $13,105  
These costs were allocated as follows:
(millions)                                 1995     1994     1993
Operating expense                          $5.0     $5.6     $3.3
New utility plant-associated with   
 construction labor                          .6       .2      1.7
Regulatory asset                            8.3      9.8      8.1

The regulatory asset represents the amount of cost recognized in
excess of the amount of cost currently recovered in rates.  These
excess costs are deferred as authorized by an accounting order of the
BPU pending future recovery through rates.   

A reconciliation of the funded status of the plan as of December 31 is
as follows:
(000)                                        1995         1994   
Accumulated benefits obligation:
Retirees                                  $ 64,516     $ 43,265 
Fully eligible active plan participants      6,954       18,010 
Other active plan participants              33,649       60,588 
Total accumulated benefits obligation      105,119      121,863 
Less fair value of plan assets              16,500       14,700 
Accumulated benefits obligation in      
 excess of plan assets                      88,619      107,163 
Unrecognized net loss                      (15,335)     (19,223)
Unamortized unrecognized transition 
 obligation                                (47,057)     (70,075)
Accrued other postretirement benefits      
 cost obligation                          $ 26,227     $ 17,865

The accumulated benefit obligation for retirees and other active plan
participants for 1995 reflect the impact of the Company's workforce
reduction program and a lower discount rate effective in 1995.  The
unamortized unrecognized transition obligation for 1995 was reduced by
certain changes to the plan.

At December 31, 1995, approximately 80% of plan assets were invested
in fixed income securities and 20% in other investments.

The assumed health care costs trend rate for 1996 is 9% and is assumed
to evenly decline to an ultimate constant rate of 5% in the year 2001
and thereafter.  If the assumed health care costs trend rate was
increased by 1% in each future year, the aggregate service and
interest costs of the 1995 net periodic benefits cost would increase
by $1.8 million, and the accumulated postretirement benefits
obligation at December 31, 1995 would increase by $12.1 million.  The
weighted average discount rate assumed in determining the accumulated
benefits obligation was 7% for 1995 and 7.5% for 1994.  The assumed
long term return rate on plan assets was 7% for both 1995 and 1994. 

NOTE 5.  JOINTLY-OWNED GENERATING STATIONS

The Company owns jointly with other utilities several electric
production facilities.  The Company is responsible for its pro-rata
share of the costs of construction, operation and maintenance of each
facility.

The amounts shown represent the Company's share of each facility at,
or for the year ending, December 31, including AFDC as appropriate.    
                                       Peach                  Hope
              Keystone   Conemaugh     Bottom      Salem      Creek   
Energy Source   Coal        Coal      Nuclear     Nuclear    Nuclear
Company's Share
 (%/MWs)      2.47/42.3  3.83/65.4   7.51/157.0  7.41/164.0  5.00/52.0

Electric Plant in Service (000):
1995           $12,719    $35,371     $128,398    $214,306   $239,499
1994            11,293     26,607      125,003     206,804    238,980

Accumulated Depreciation (000):
1995           $ 3,277    $ 6,445     $ 58,870    $ 84,611   $ 60,998
1994             3,180      6,237       55,190      79,898     53,746

Construction Work in Progress (000):
1995           $   442    $   873     $ 11,056    $ 11,198   $    655
1994             1,216      2,649       11,002       8,727        387

Operations and Maintenance Expenses (including fuel)(000):
1995           $ 5,143    $ 7,252     $ 29,647    $ 28,306   $ 10,360
1994             5,085      7,211       29,530      27,731     10,471 
1993             5,323      6,855       31,479      27,021      9,764

Working Funds (000):
1995           $    44    $    69     $  4,505    $  5,782   $  1,919
1994                44         69        5,051       5,199      2,013

Generation (MWHr):
1995           285,899    451,211    1,232,921     334,572    352,316 
1994           257,561    419,313    1,214,776     836,725    355,390
1993           293,876    416,263    1,043,485     840,043    440,118

The Company provides financing during the construction period for its
share of the jointly-owned facilities and includes its share of direct
operations and maintenance expenses in the Consolidated Statement of
Income.  Additionally, the Company provides an amount of working funds
to the operators of the facilities to fund operational needs.  

The decrease in Salem's generation is due to both units being taken
out of service in May and June 1995, respectively, by its operator
Public Service Electric and Gas Company, pending review and resolution
of certain equipment and management issues. (See Note 8 for further
information).

NOTE 6.  CUMULATIVE PREFERRED STOCK 

The Company has authorized 799,979 shares of Cumulative Preferred
Stock, $100 Par Value, two million shares of No Par Preferred Stock
and three million shares of Preference Stock, No Par Value. 
Information relating to outstanding shares at December 31 is shown in
the table below.
                                                                       
                                                             Current
                                                             Optional
         Par            1995                    1994        Redemption 
Series  Value     Shares     (000)        Shares     (000)    Price    
Not Subject to Mandatory Redemption:
4%       $100      77,000   $ 7,700        77,000   $ 7,700   $105.50
4.10%     100      72,000     7,200        72,000     7,200    101.00
4.35%     100      15,000     1,500        15,000     1,500    101.00
4.35%     100      36,000     3,600        36,000     3,600    101.00
4.75%     100      50,000     5,000        50,000     5,000    101.00
5%        100      50,000     5,000        50,000     5,000    100.00
7.52%     100     100,000    10,000       100,000    10,000    101.88
Total                       $40,000                 $40,000
Subject to Mandatory Redemption:
$8.25     None     50,000  $  5,000        55,000  $  5,500    104.45
$8.53     None    120,000    12,000       360,000    36,000    101.00
$8.20     None    500,000    50,000       500,000    50,000       -
$7.80     None    700,000    70,000       700,000    70,000       -
Total                       137,000                 161,500
Less portion due within
 one year                    22,250                  12,250
Total                      $114,750                $149,250            
                                                                    

Cumulative Preferred Stock Not Subject to Mandatory Redemption is
redeemable solely at the option of the Company.

On November 1 of each year, 2,500 shares of the $8.25 No Par Preferred
Stock must be redeemed through the operation of a sinking fund at a
redemption price of $100 per share.  The Company may redeem not more
than an additional 2,500 shares on any sinking fund date without
premium.  The Company redeemed 5,000 shares in each of the years 1995
and 1994.

On November 1 of each year, 120,000 shares of the $8.53 No Par
Preferred Stock must be redeemed through the operation of a sinking
fund at a redemption price of $100 per share.  At the option of the
Company, not more than an additional 120,000 shares may be redeemed on
any sinking fund date without premium.  The Company redeemed 240,000
shares in each of the years 1995 and 1994.  The Company redeemed the
remainder of this series at a price of $101.00 in February 1996.  

Beginning August 1, 1996 and annually thereafter, 100,000 shares of
the $8.20 No Par Preferred Stock must be redeemed through the
operation of a sinking fund at a redemption price of $100 per share. 
At the option of the Company, not more than an additional 100,000
shares may be redeemed on any sinking fund date without premium.  This
series is not refundable prior to August 1, 2000.    

Beginning May 1, 2001 and annually through 2005, 115,000 shares of
$7.80 No Par Preferred Stock must be redeemed through the operation of
a sinking fund at a redemption price of $100 per share.  On May 1,
2006, the remaining shares outstanding must be redeemed at $100 per
share.  The Company has the option to redeem up to an additional
115,000 shares without premium on each May 1 through 2005.  This
series is not refundable prior to May 1, 2006.  

At December 31, 1995, the minimum annual sinking fund requirements of
the Cumulative Preferred Stock Subject to Mandatory Redemption for the
next five years are $22.25 million in 1996 and $10.25 million in each
of the years 1997 through 2000.

Cumulative Preferred Stock of the Company is not widely held and
trades infrequently.  The estimated aggregate fair market value of the
Company's outstanding Cumulative Preferred Stock at December 31, 1995
and 1994 was approximately $172 million and $185 million,
respectively.  The fair market value has been determined using market
information available from actual trades of similar instruments of
companies with similar credit quality and rate.

NOTE 7.  LONG TERM DEBT                                                
                      Maturity        December 31,    Series          
                          Date         1995       1994    (000)
5-1/8% First Mortgage Bonds          2/1/1996    $  9,980   $  9,980
Medium Term Notes Series B (6.28%)   1998          56,000     56,000
Medium Term Notes Series A (7.52%)   1999          30,000     30,000
Medium Term Notes Series B (6.83%)   2000          46,000     46,000
Medium Term Notes Series C (6.86%)   2001          40,000        -
7-1/2% First Mortgage Bonds          4/1/2002      20,000     20,000
Medium Term Notes Series C (7.02%)   2002          30,000        -
Medium Term Notes Series B (7.18%)   2003          20,000     20,000
7-3/4% First Mortgage Bonds          6/1/2003      29,976     29,976
Medium Term Notes Series A (7.98%)   2004          30,000     30,000
Medium Term Notes Series B (7.125%)  2004          28,000     28,000
Medium Term Notes Series C (7.15%)   2004           9,000        -
Medium Term Notes Series B (6.45%)   2005          40,000     40,000
6-3/8% Pollution Control            12/1/2006       2,500      2,500
Medium Term Notes Series C (7.15%)   2007           1,000        -
Medium Term Notes Series B (6.76%)   2008          50,000     50,000
Medium Term Notes Series C (7.25%)   2010           1,000        -
10-1/2% Pollution Control Series B   7/15/2012        -          850
6-5/8% First Mortgage Bonds          8/1/2013      75,000     75,000
7-3/8% Pollution Control Series A    4/15/2014     18,200     18,200
Medium Term Notes Series C (7.63%)   2014           7,000        -
Medium Term Notes Series C (7.68%)   2015          15,000        -
Medium Term Notes Series C (7.68%)   2016           2,000        -
8-1/4% Pollution Control Series A    7/15/2017      4,400      4,400
9-1/4% First Mortgage Bonds         10/1/2019         -       53,857
6.80% Pollution Control Series A     3/1/2021      38,865     38,865
7%    First Mortgage Bonds           9/1/2023      75,000     75,000
5.60% Pollution Control Series A    11/1/2025       4,000      4,000
7%    First Mortgage Bonds           8/1/2028      75,000     75,000
6.15% Pollution Control Series A     6/1/2029      23,150     23,150
7.20% Pollution Control Series A    11/1/2029      25,000     25,000
7%    Pollution Control Series B    11/1/2029       6,500      6,500
 Total                                            812,571    762,278  
Debentures:
5-1/4%                               2/1/1996       2,267      2,267
7-1/4%                               5/1/1998       2,619      2,619
Total                                               4,886      4,886  
Unamortized Premium and Discount-Net               (2,854)    (3,876)
Total Long Term Debt of ACE                       814,603    763,288
Less Portion Due within One Year                   12,247       -     
                                                 $802,356   $763,288 

Medium Term Notes have varying maturity dates and are shown with the
weighted average interest rate of the related issues within the year
of maturity.


In 1995, the Company redeemed its 10-1/2% Pollution Control Bonds
Series B due 7/15/2012 and the remaining outstanding principal amount
of its 9-1/4% First Mortgage Bonds due 10/1/2019.  The aggregate cost
of these redemptions was $2.6 million, net of related Federal income
taxes.

Sinking fund deposits are required for retirement of First Mortgage
Bonds, 6-3/8% Pollution Control Series due 2006 annually beginning
December 1, 1997 in amounts sufficient to redeem $75 thousand
principal amount.  Sinking fund deposits are also required for
retirement of 7-1/4% Debentures annually on May 1 through 1997 in
amounts sufficient to redeem $100 thousand principal amount.  The
Company may, at its option, redeem an additional $100 thousand
annually.  Through December 31, 1995, the Company acquired and
cancelled $81 thousand principal amount of the 7-1/4% Debentures,
which will be used to satisfy its requirements for 1996.  Certain
series of First Mortgage Bonds contain provisions for deposits of cash
or certification of bondable property currently amounting to $100
thousand, which the Company may elect to satisfy through property
additions.  For the next five years, the annual amount of scheduled
maturities and sinking fund requirements of the Company's long term
debt are $12.266 million in 1996, $175 thousand in 1997, $58.575
million in 1998, $30.075 million in 1999 and $46.075 million in 2000. 

The Company's long term debt securities are not widely held and
generally trade infrequently.  The estimated aggregate fair market
value of the Company's outstanding long term debt at December 31, 1995
and 1994 was $851 million and $693 million, respectively.  The fair
market value has been determined based on quoted market prices for the
same or similar debt issues or on debt instruments of companies with
similar credit quality, coupon rates and maturities.


NOTE 8.  COMMITMENTS AND CONTINGENCIES

Construction Program

Cash construction expenditures for 1996 are estimated to be
approximately $92 million.  

Insurance Programs

Nuclear
The Company is a member of certain insurance programs that provide
coverage for decontamination and property damage to members' nuclear
generating plants.  Facilities at the Peach Bottom, Salem and Hope
Creek stations are insured against property damage losses up to $2.75
billion per site under these programs.

In addition, the Company is a member of an insurance program which
provides coverage for the cost of replacement power during prolonged
outages of nuclear units caused by certain specific conditions.  The
insurer for nuclear extra expense insurance provides stated value
coverage for replacement power costs incurred in the event of an
outage at a nuclear unit resulting from physical damage to the nuclear
unit.  The stated value coverage is subject to a deductible period of
the first 21 weeks of any outage.  Limitations of coverage include,
but are not limited to, outages 1) not resulting from physical damage
to the unit, 2) resulting from any government mandated shutdown of the
unit, 3) resulting from any gradual deterioration, corrosion, wear and
tear, etc. of the unit, 4) resulting from any intentional acts
committed by an insured and 5) resulting from certain war risk
conditions.  Under the property and replacement power insurance
programs, the Company could be assessed retrospective premiums in the
event the insurers' losses exceed their reserves.  As of December 31,
1995, the maximum amount of retrospective premiums the Company could
be assessed for losses during the current policy year was $6.4 million
under these programs.

The Price-Anderson provisions of the Atomic Energy Act of 1954, as
amended by the Price-Anderson Amendments Act of 1988, govern liability
and indemnification for nuclear incidents.  All nuclear facilities
could be assessed, after exhaustion of private insurance, up to
$79.275 million each reactor per incident, payable at $10 million per
year.  Based on its ownership share of nuclear facilities, the Company
could be assessed up to an aggregate of $27.6 million per incident. 
This amount would be payable at an aggregate of $3.48 million per
year, per incident.

Other

The Company's comprehensive general liability insurance provides
pollution liability coverage, subject to certain terms and limitations
for environmental costs incurred in the event of bodily injury or
property damage resulting from the discharge or release of pollutants
into or upon the land, atmosphere or water.  Limitations of coverage
include any pollution liability 1) resulting subsequent to the
disposal of such pollutants, 2) resulting from the operation of a
storage facility of such pollutants, 3) resulting in the formation of
acid rain, 4) caused to property owned by an insured and 5) resulting
from any intentional acts committed by an insured.

Nuclear Plant Decommissioning 

The Company has a trust to fund the future costs of decommissioning
each of the five nuclear units in which it has an ownership interest. 
The current annual funding amount, as authorized by the BPU, totals
$6.4 million and is provided for in rates charged to customers.  The
funding amount is based on estimates of the future cost of
decommissioning each of the units, the dates that decommissioning
activities are expected to begin and return to be earned by the assets
of the fund.  The present value of the Company's nuclear
decommissioning obligation, based on costs adopted by the BPU in 1991
and restated in 1995 dollars, is $157 million.  Decommissioning
activities as approved by the BPU were expected to begin in 2006 and
continue through 2032.  The Company will seek to adjust these
estimates and the level of rates collected from customers in future
BPU proceedings to reflect changes in decommissioning cost estimates
and the expected levels of inflation and interest to be earned by the
assets in the trust.  The total estimated value of the trust at
December 31, 1995, inclusive of the present value of future funding,
based on current annual funding amounts and expected decommissioning
dates approved by the BPU, is approximately $131 million, without
earnings on or appreciation of the fund assets.  As of December 31,
1995, the market value of the trust approximated the book value.  In
accordance with BPU requirements, updated site specific studies are
underway.  Amounts to be recognized and recovered in rates based on
the updated studies are not presently determinable.

Purchased Capacity and Energy Arrangements

The Company arranges with various providers of bulk energy to obtain
sufficient supplies of energy to satisfy current and future energy
requirements of the company.  Arrangements may be for generating
capacity and associated energy or for energy only.  Terms of the
arrangements vary in length to enable the Company to optimally manage
its supply portfolio in response to changing near and long term market
conditions.  At December 31, 1995, the Company has contracted for 707
megawatts (MW's) of purchased capacity with terms remaining of 3 to 29
years.  Additionally, the Company has contracted for capacity of 125
MW's commencing in 1998 for 2 years and for 175 MW's commencing in
1999 for 10 years.

Information regarding these arrangements relative to the Company was
as follows:
                               1995        1994        1993     
As a % of Capacity (year end)     30%         29%         23%  
As a % of Generation              52%         48%         46%  
Capacity charges (millions)   $190.6      $130.9      $110.8  
Energy charges (millions)     $135.4      $128.6       $98.3
    
Amounts for purchased capacity are shown on the Consolidated Statement
of Income as Purchased Capacity.  Of these amounts, charges of certain
nonutility providers are recoverable through the LEC, which amounted
to $162.7 million, $77.0 million and $30.2 million in 1995, 1994 and
1993, respectively.  Future purchases of energy and payments for
purchased capacity and energy under contracts with remaining terms in
excess of one year from December 31, 1995 generally are contingent
upon provider performance and availability, and as such are not
presently determinable.

Environmental Matters

The provisions of Title IV of the Clean Air Act Amendments of 1990
(CAAA) will require, among other things, phased reductions of sulfur
dioxide (SO2) emissions by 10 million tons per year, a limit on SO2
emissions nationwide by the year 2000 and reductions in emissions of
nitrogen oxides (NOx) by approximately 2 million tons per year.  The
Company's wholly-owned B.L. England Units 1 and 2 and its jointly-
owned Conemaugh Station Units 1 and 2 are in compliance with Phase I
requirements as the result of recent installation of scrubbers at each
station.  All of the Company's other fossil-fuel steam generating
units are affected by Phase II (2000) of the CAAA.  A compliance plan
for these units initially estimates capital expenditures of
approximately $10 million in 1996 through 2000.  The jointly-owned
Keystone Station is impacted by the SO2 and NOx provisions of Title IV
of the CAAA during Phase II.  The Keystone owners plan to primarily
rely on emission allowances to comply with the CAAA through the year
2000.  

Other

The Company is a 7.41% owner of the Salem Nuclear Generating Station
(Salem) operated by Public Service Electric & Gas Company (PS). Salem
Units 1 and 2 were taken out of service on May 16, 1995 and June 7,
1995, respectively.  Unit 2 is expected to return to service in the
third quarter of 1996.  A thorough assessment of the equipment and
management issues that have affected the operation of the unit and
station are being resolved and necessary corrections are being made to
assure safe and reliable operation over the long term.  Unit 1 is
undergoing extended testing of its steam generation equipment and its
return has been delayed to an indefinite period.  The Company's
expenses associated with restart activities totalled $2.6 million for
1995 and are estimated to be $5.6 million for 1996.  The additional
incremental cost of replacement power during the outages is
approximately $1.4 million per month.

The Company is a 5% owner in the Hope Creek Nuclear Generating Station
(Hope Creek) also operated by PS.  Hope Creek went into a scheduled
refueling and maintenance outage on November 11, 1995 which has been
extended to correct maintenance and performance problems.  The unit is
expected to return to service in March 1996.  The incremental
replacement power costs associated with the Hope Creek outage is
approximately $400 thousand per month.  

The Company is subject to a performance standard for its five
jointly-owned nuclear units.  This standard is used by the BPU in
determining recovery of replacement energy costs.  The standard
establishes a target aggregate capacity factor within a zone of
reasonable performance to be achieved by the units.  Underperformance
results in penalties.  Penalties incurred are not permitted to be
recovered from customers and are charged against income.  For 1995,
the Company recorded $845 thousand after tax for a performance penalty
because the aggregate capacity factor of the Company's nuclear units
was below the reasonable performance zone as a result of the Salem
outage noted above. 
   
In December 1994, the Company recorded the costs of an employee
separation program in the amount of $17.3 million, net of tax of $9.3
million, or $.32 in earnings per share.  This program was initiated so
that the Company could be better positioned for the more competitive
environment within the electric industry.  The balance of the accrued
separation costs on the Consolidated Balance Sheet at December 31,
1995 is $7.5 million compared to $26.6 million at December 31, 1994. 
The Company expects payments in settlement of this obligation to be
substantially completed by the end of 1996.

The Energy Policy Act of 1992 permits the Federal government to assess
investor-owned electric utilities that have ownership interests in
nuclear generating facilities.  The assessment funds the
decontamination and decommissioning of three Federally operated
nuclear enrichment facilities.  Based on its ownership in five nuclear
generating units, the Company has a liability of $6.0 million and $6.6
million at December 31, 1995 and 1994, respectively, for its
obligation to be paid over the next 12 years.  The Company has an
associated regulatory asset of $6.4 million and $7.2 million at
December 31, 1995 and 1994, respectively.  Amounts are currently being
recovered in rates for this liability and the regulatory asset is
concurrently being amortized to expense based on the annual assessment
billed by the Federal government.

In March 1995, FERC issued a Notice of Proposed Rulemaking regarding
several key electric utility industry issues such as transmission
access, transmission pricing and recovery guidelines for stranded
costs stemming from wholesale transactions.  The focus of the proposal
is to establish policies that will provide a structure to facilitate
more competitive wholesale electric power markets.  What is being
proposed is a departure from the existing regulatory framework.  FERC
is considering comments on the proposal submitted by the Company and
other members of the industry, as well as other interested parties. 
Associated with the FERC proposal are structural initiatives by the
BPU concerning New Jersey electric regulation and by the regional
power pool in which the Company participates regarding bulk power
transmission and generation dispatch within the region.  At this time,
the Company cannot predict the outcomes of these sweeping initiatives
and the impacts on the Company that may ensue.  The Company is taking
an active role in the development of these issues.

Note 9.  REGULATORY ASSETS AND LIABILITIES

Costs incurred by the Company that have been permitted by the BPU to
be deferred for recovery in rates in more than one year, or for which
future recovery is probable, are recorded as regulatory assets.
Regulatory assets are amortized to expense over the period of
recovery.  Total regulatory assets at December 31 are as follows:
  
                                                            Remaining  
                                                                     Recovery
(000)                                1995         1994       Period*
Recoverable Future Federal   
 Income Taxes(see Note 2)          $ 85,858     $ 85,854       (A)
Unrecovered Purchased Power Costs:
 Capacity Costs                      80,598       95,878       5 years 
 Contract Renegotiation Costs        19,219       19,660      19 years
Unrecovered State Excise Taxes       64,274       73,834       7 years
Unamortized Debt Costs-Refundings    33,110       32,227    1-29 years
Deferred Energy Costs(see Note 1)    31,434       10,999       (B)
Other Regulatory Assets:
 Postretirement Benefits Other
  Than Pensions (see Note 4)         26,227       17,865       (A)
 Asbestos Removal Costs               9,356        9,625      34 years 
 Decommissioning/Decontaminating       
  Federally-owned Nuclear Units      
  (See Note 10)                       6,404        7,231      13 years 
 Other                               12,581       14,379               
                                   $369,061     $367,552          
*From December 31, 1995
(A)  Pending future recovery
(B)  Recovered over annual LEC period

Unrecovered Purchased Power Capacity Costs represent deferrals of
prior capacity costs then in excess of levelized revenues associated
with a certain long term capacity arrangement.  Levelized revenues
have since been greater than costs, permitting the deferred costs to
be amortized to expense.  Contract Renegotiation Costs were incurred
through renegotiation of a long term capacity and energy contract with
a certain independent power producer.  Unrecovered State Excise Taxes
represent additional amounts paid as a result of prior legislative
changes in the computation of state excise taxes.  Unamortized Debt
Costs associated with debt reacquired by refundings are amortized over
the life of the related new debt.  Asbestos Removal Costs were
incurred to remove asbestos insulation from a wholly-owned generating
station.  Within Other are certain amounts being recovered over a
period of two to six years.
 
No regulatory liabilities existed at December 31, 1995 and 1994.

NOTE 10.  LEASES

The Company leases from others various types of property and equipment
for use in its operations.  Certain of these lease agreements are
capital leases consisting of the following at December 31:

(000)                                1995       1994
Production plant                   $ 9,097    $13,521
Less accumulated amortization        6,810      9,707
Net                                  2,287      3,814
Nuclear fuel                        38,591     38,216
Leased property-net                $40,878    $42,030

The Company has a contractual obligation to obtain nuclear fuel for
the Salem, Hope Creek and Peach Bottom stations.  The asset and
related obligation for the leased fuel are reduced as the fuel is
burned and are increased as additional fuel purchases are made.  No
commitments for future payments beyond satisfaction of the outstanding
obligation exist.  Operating expenses for 1995, 1994 and 1993 include
leased nuclear fuel costs of $11.2 million, $14.1 million and $13.9
million, respectively, and rentals and lease payments for all other
capital and operating leases of $4.1 million, $5.9 million and $5.5
million, respectively.  Future minimum rental payments for all
noncancellable lease agreements are not significant to the Company's
operations.

NOTE 11.  QUARTERLY FINANCIAL RESULTS (UNAUDITED)

Quarterly financial data, reflecting all adjustments necessary in the
opinion of management for a fair presentation of such amounts, are as
follows:                                                               
                                                                     
              Operating    Operating      Net      Earnings for        
Quarter       Revenues       Income      Income    Common Stock        
1995           (000)        (000)       (000) 
1st           $218,666     $ 27,565     $15,779     $11,992           
2nd            206,246       27,755      15,111      11,324           
3rd            303,031       67,026      52,666      48,879            
4th            225,836       26,581      15,195      11,930           

Annual        $953,779     $148,927     $98,752     $84,125            

1994                       
1st           $232,134     $ 39,580     $27,130     $22,821           
2nd            205,861       30,299      20,635      16,326           
3rd            272,769       58,321      49,679      45,370           
4th            202,461       24,794      (4,272)     (8,059)          

Annual        $913,226     $153,995     $93,174     $76,458       


Individual quarters may not add to the total due to rounding, and the
effect on earnings per share of changing average number of common
shares outstanding.  

Third quarter results generally exceed those of other quarters due to
increased sales and higher residential rates for the Company.

Net income in 1994 includes special charges aggregating $18.7 million,
after tax of $10.0, million recorded in Other Income during the fourth
quarter of 1994.  These special charges consisted of costs of a
workforce reduction and write-off of certain deferred costs.


            Management's Discussion and Analysis of Financial 
                    Condition and Results of Operations

      
Financial Summary
 
Consolidated operating revenues for 1995, 1994 and 1993 were
$953.8 million, $913.2 million and $865.8 million, respectively. 
The increase in 1995 revenue over 1994 largely reflects a
provisional increase in annual Levelized Energy Clause (LEC)
revenues of $37.0 million granted in July 1995 and an increase in
unbilled revenues.  The increase in 1994 revenue from 1993 was
primarily due to an increase of $55.0 million in LEC revenues
effective July 1994, accompanied by an increase in sales of
energy.  

Liquidity and Capital Resources

Atlantic City Electric Company (the Company) is a wholly-owned 
subsidiary of Atlantic Energy, Inc. (AEI).  The Company is a
public utility primarily engaged in the generation, transmission,
distribution and sale of electric energy.  The Company's service
territory encompasses approximately 2,700 square miles within the
southern one-third of New Jersey with the majority of customers
being residential and commercial.  The Company has a wholly-owned
subsidiary that operates certain generating facilities. 

Cash construction expenditures for 1993-1995 amounted to $359.0
million and included expenditures for upgrades to existing
transmission and distribution facilities and compliance with
provisions of the Clean Air Act Amendments (CAAA) of 1990.  The
Company's current estimate of cash construction expenditures for
1996-1998 is $255 million.  These estimated expenditures reflect
necessary improvements to generation, transmission and distribu-
tion facilities.

The Company also utilizes cash for mandatory redemptions of
Preferred Stock and maturities and redemption of long term debt. 
Optional redemptions of securities are reviewed on an ongoing
basis with a view toward reducing the overall cost of capital. 
Redemptions of Preferred Stock (at par or stated value) for the
period were as follows:
 
                                    1995      1994      1993 
Preferred Stock
  (Series)      
   9.96% (Shares)                     -         -       48,000 
  $8.53  (Shares)                  240,000   240,000      -    
  $8.25  (Shares)                    5,000     5,000     5,000
 
  Aggregate Amount (000)           $24,500   $24,500    $5,300








First Mortgage Bonds redeemed, acquired and retired or matured
in the period 1993-1995 were as follows:

    Date                 Series            Principal     Price(%) 
                                             Amount               
                                              (000)
October 1995         9-1/4% due 2019       $ 53,857      105.15
October 1995        10-1/2% due 2014            850      101.00        
November 1994        7-5/8% due 2005          6,500      100.00
June 1994           10-1/2% due 2014         23,150      102.00
Various 1994 Dates   9-1/4% due 2019         11,910      105.38*
September 1993       9-1/4% due 2019         69,233      110.95*
September 1993       8-7/8% due 2016        125,000      104.80
March 1993           8-7/8% due 2000         19,000      102.41
March 1993           8%     due 2001         27,000      102.53
March 1993           8%     due 1996         95,000      100.91
March 1993           4-3/8% due 1993          9,540      100.00

* Average price

Scheduled debt maturities and sinking fund requirements aggregate
$113.8 million for 1996-1998.

On or before April 1 of each year, the Company and other New
Jersey utilities are required to pay excise taxes to the State of
New Jersey.  In March 1995, the Company paid $98.7 million funded 
through the issuance of short term debt.  In 1994 and 1993, the
Company paid an additional $50 million and $45 million,
respectively, for the accelerated payment of one year's tax due
as required by amended state law.  These accelerated payments are
being recovered through rates.

During 1995, the Company made $19.1 million in payments related
to its workforce reduction program.  The Company expects payments
and settlement of the remaining obligation for this program of
$7.5 million to be substantially completed by the end of 1996. 

On an interim basis, the Company finances construction costs and
other capital requirements in excess of internally generated
funds through the issuance of unsecured short term debt
consisting of commercial paper and borrowings from banks.  As of
December 31, 1995, the Company has arranged for lines of credit
of $150 million of which $119.5 million was available.  Permanent
financing by the Company is undertaken by the issuance of long
term debt and Preferred Stock, and at times from capital
contributions by AEI.  The Company's nuclear fuel requirements
associated with its jointly-owned units have been financed
through arrangements with a third party.

A summary of the issue and sale of the Company's long term debt
for 1993-1995 is as follows:

(millions)                  1995       1994       1993   
First Mortgage Bonds          -          -        $225
Medium Term Notes           $105         -         240
Pollution Control Bonds       -         $55          4


The proceeds from these financings were used to refund higher
cost debt and for construction purposes.  During 1996-1998, the
Company may issue up to $150 million in new long term debt to be
used for construction and repayment of short term debt.  The
provisions of the Company's charter, mortgage and debenture
agreements can limit, in certain cases, the amount and type of
additional financing which may be used.  At December 31, 1995,
the Company estimates additional funding capacities of $288
million of First Mortgage Bonds, or $490 million of Preferred
Stock, or $413 million of unsecured debt.  These amounts are not
necessarily additive.

Revenues

Operating Revenues - Electric increased 4.4% and 5.5% in 1995 and
1994, respectively. Components of the overall changes are shown
as follows:

                                         1995         1994        
 (millions)       
Levelized Energy Clause                $ 49.2        $30.3
Kilowatt-hour Sales                     (10.0)         9.6        
Unbilled Revenues                        16.6         (7.3)       
Sales for Resale                        (11.9)        17.8       
Other                                    (3.3)        (3.0)       
Total                                  $ 40.6        $47.4

LEC revenues increased in 1995 due to a provisional rate increase
of $37.0 million in July 1995 and a $55 million increase in July
1994.  Changes in kilowatt-hour sales are discussed under "Billed
Sales to Ultimate Customers."  Overall, the combined effects of
changes in rates charged to customers and kilowatt-hour sales
resulted in increases of 5.9% and 3.1% in revenues per
kilowatt-hour in 1995 and 1994, respectively.  The changes in
Unbilled Revenues are a result of the amount of kilowatt-hours
consumed by, but not yet billed to, ultimate customers at the end
of the respective periods, which are affected by weather and
economic conditions, and the corresponding price per kilowatt-
hour.  The changes in Sales for Resale are a function of the
Company's energy mix strategy, which in turn is dependent upon
the Company's needs for energy, the energy needs of other
utilities participating in the regional power pool of which the
Company is a member, and the sources and prices of energy
available.  The decline in the 1995 Sales for Resale reflects a
decrease in the demand of the power pool, the decline in market
prices and a reduction in excess energy sources when compared to
the previous year.  The decrease in supplemental excess energy
sources reflect the expiration of a 200 megawatt purchase
capacity arrangement in May 1994, and expiration of other short
term purchase contracts.  The increase in Sales for Resale for
1994 was the result of being able to meet the demands of the
regional power pool due to the extreme weather conditions during
the first six months of 1994.  


Billed Sales to Ultimate Customers

Changes in kilowatt-hour sales are generally due to changes in
the average number of customers and average customer use, which
is affected by economic and weather conditions.  Energy sales
statistics, stated as percentage changes from the previous year,
are shown as follows:

                        1995                      1994  
                         Avg    Avg #              Avg    Avg #
Customer Class   Sales   Use   of Cust     Sales   Use   of Cust
Residential      (2.0)% (3.1)%  1.2%        1.5 %  .4 %  1.1%
Commercial        1.4    (.1)   1.5         2.6    .5    2.1  
Industrial       (7.4)  (9.0)   1.7        (2.9) (3.8)    .9  
Total            (1.4)  (2.6)   1.2         1.3    -     1.2     

The 1995 decrease in total sales was attributed to weather
conditions that led to below normal electricity consumption for a
majority of the year and a decreased number of billing days in
1995 compared to 1994.  The 1994 increase in total sales was due
to an increase in the number of billing days in 1994 compared to
1993 and, to a lesser extent, weather.  The Commercial sector
experienced continued growth during 1995 due to sales increases
across all the major commercial subsectors.  Commercial growth in
both years benefitted from night lighting programs.  The sales
declines in the Industrial sector are primarily related to the
impact of two former customers taking energy service from
independent power producers commencing in June 1994 and January
1995.    

Costs and Expenses 

Total Operating Expenses increased 5.9% and 7.5% in 1995 and
1994, respectively.  Included in these expenses are the costs of
energy, purchased capacity, operations, maintenance, depreciation
and taxes.  

Energy expense reflects costs incurred for energy needed to meet
load requirements, various energy supply sources used and
operation of the LECs.  Changes in costs reflect the varying
availability of low-cost generation from Company-owned and
purchased energy sources, and the corresponding unit prices of
the energy sources used, as well as changes in the needs of other
utilities participating in the Pennsylvania-New Jersey-Maryland
Interconnection power pool.  The cost of energy is recovered from
customers primarily through the operation of the LEC.  Excluding
the effects of the SNJEI (discussed below), earnings generally
are not affected by energy costs because these costs are adjusted
to match the associated LEC revenues.  In any period, the actual
amount of LEC revenue recovered from customers may be greater or
less than the actual amount of energy cost incurred in that
period.  Such respective overrecovery or underrecovery of energy
costs is recorded on the Consolidated Balance Sheet as a
liability or an asset as appropriate.  Amounts in the balance
sheet are recognized in the Consolidated Statement of Income
within Energy expense during the period in which they are
subsequently recovered through the LEC.  The Company was
underrecovered by $31.4 million and by $11 million at December
31, 1995 and 1994, respectively.  The increase in 1995 is due to
the combination of the election to defer recovery of $20.6
million of recoverable fuel costs, lower than projected kilowatt-
hour sales and greater than projected purchased fuel as
replacement for Salem Station generation.  

As a result of implementing the Southern New Jersey Economic
Initiative (SNJEI), the Company is forgoing the recovery of
energy costs in LEC rates in the amount of $10.0 million and
$28.0 million for the 1995 and 1994 LEC periods, respectively. 
After tax net income has been reduced by $12.2 million and $10.1
million due to the effects of the initiative for 1995 and 1994,
respectively.

Energy expense decreased 9.0% in 1995 primarily due to the
increase in underrecovered fuel costs, offset in part by the
effects of the SNJEI referred to above.  In 1994, Energy expense
increased 32.7% due to the SNJEI and the increase in the
levelized energy clause that reduced underrecovered fuel costs.
Production-related energy costs for 1995 decreased 1.9% due to
reduced generation.  The average unit cost of energy decreased to
2.02 cents per kilowatt-hour in 1995 compared to 2.04 cents per
kilowatt-hour in 1994.  Production-related energy costs for 1994
increased by 19.9% due to increased overall generation and the
high cost of energy from additional nonutility sources.  The 1993
cost per kilowatt-hour was 1.82 cents.  

Purchased Capacity expense reflects entitlement to generating
capacity owned by others.  Purchased Capacity expense increased
45.5% and 18.2% in 1995 and 1994, respectively.  The increases 
reflect additional contract capacity supplied by nonutility power
producers in each year.

Operations expense decreased 3.0% and 3.6% in 1995 and 1994,
respectively.  These decreases reflect the benefits of the
Company's restructuring programs, initiated in 1993 and 1994. 
The 1995 decrease was offset in part by the additional costs
associated with Salem Station restart activities.  Net after tax
savings approximated $8 million in 1995 related to the workforce
reduction recorded in 1994.  Employee separations throughout the
Company of approximately 300 employees largely occurred on March
1, 1995.  The original estimate of net after tax savings of $10
million was based on a full-year assessment.  Maintenance expense
decreased 8.6% and 17.1% in 1995 and 1994, respectively, due to
cost saving measures. 

Depreciation and Amortization expense increased 7.0% and 7.9% in
1995 and 1994, respectively, as a result of continued increases
in the Company's depreciable electric plant in service.  
  
State Excise Taxes expense increased 5.9% in 1995 due to an
increase in the tax base used to calculate the tax in comparison
to the 1994 tax base.  In 1994, State Excise Taxes expense
decreased 6.9% relative to the higher tax assessment in 1993.
   
Federal Income Taxes increased 7.9% in 1995 and decreased 6.1% in
1994 as a result of the level of taxable income during those
periods.  

Employee Separation costs is the provision by the Company in 1994
for the reduction of its workforce.  Other-Net within Other
Income (Expense) decreased in 1994 due to the net after-tax
impacts of the write-off of deferred nuclear study costs of $1.4
million.  The Litigation Settlement for 1993 represents an
additional allocation to customers of the proceeds from the 1992
settlement associated with the Peach Bottom Station shut down in
prior years.  

Interest on Long Term Debt increased 5.2% in 1995 due to
increased amounts of debt outstanding during the year.  In 1994,
interest on long term debt decreased 3.4% due to refunding of
higher cost debt.  At December 31, 1995, 1994 and 1993, the
Company's embedded cost of long term debt was 7.5%, 7.6% and
7.8%, respectively.  

Preferred Stock Dividend Requirements decreased 12.5% and 4% in
1995 and 1994, respectively, as a result of continuing mandatory
and optional redemptions.  Embedded cost of Preferred Stock as of
December 31, 1995, 1994 and 1993 was 7.4%, 7.6% and 7.7%,
respectively.

Outlook

Factors such as regional economic trends, abnormal weather
conditions and inflation will continue to be important
determinants of the Company's financial performance.  However,
continued competition from independent power producers and the
anticipated deregulation of the electric utility industry are
becoming the most critical strategic factors for the Company.
  
Fundamental changes in the industry have led to the emergence of
significant competitive issues for the Company, including
heightened competition in the wholesale bulk power market, the
growth of the independent power industry and the pressure to
offer more competitive rates to customers.   

The Company is closely monitoring deregulation of the industry on
both a state and Federal level.  The Federal Energy Regulatory
Commissions' (FERC) on-going rulemaking proceeding is proposing
changes to rules governing transmission access and pricing.  FERC
is also establishing guidelines for recovery of stranded costs
and investments stemming from wholesale transactions.  In
response to FERC's initiative, the power pool in which the
Company participates has proposed significant changes to its
structure and operation.

State jurisdictions across the country, including New Jersey, are
closely examining the issues surrounding deregulation or are
creating new regulations designed to foster a more competitive
industry.  The Company is playing an active role in The New
Jersey Board of Public Utilities' (BPU) on-going Energy Master
Plan proceeding.  Among other things, the proceeding is
investigating the extent to which utilities, in a competitive
environment, may be threatened with the inability to recover
investments or long term commitments prudently made, and placed
into rates under traditional ratemaking regulations.  To date,
the BPU has made no formal policy pronouncement regarding
deregulation or the recovery of stranded commitments.

In anticipation of heightened competition in energy markets, the
Company is pursuing a number of initiatives designed to
strengthen its position in the marketplace.  The cost of the
Company's power supply, including the cost of power purchased
from independent power producers, along with its retail prices
are expected to be critical success factors in a competitive
marketplace.  The Company is focusing on cost and rate control
measures as well as the development of new energy-related
products and services.  To allow for more flexibility and closer
cost control, the Company transferred its production operations
to its subsidiary, Deepwater Operating Company, on January 1,
1996.  Alternate pricing mechanisms and long term discount power
contracts are being explored as a means of retaining key
customers that are at risk of leaving the Company's system. 
While any such discounts are intended to have a long term
beneficial impact, they could have a detrimental effect on the
Company's operating revenues and net income in the short term.  

The Company's net income and its levelized energy adjustment
rates may be affected by the operational performance of nuclear
generating facilities and a BPU-mandated nuclear unit performance
standard.  Net income may also be affected by significant changes
in the decommissioning costs associated with the nuclear units. 
At this time, it is not known what impact there may be on future
operations and financial condition associated with the uncertain
status of Salem Station Unit 1.

The electric utility industry continues to be capital intensive. 
The Company has lowered its planned construction budget to $398
million for 1996-2000, with an expected reduction in its external
cash requirements.  The Company's ability to generate cash flows
or access the capital markets to fund capital requirements will
be affected by competitive pressures on revenues and net income,
as well as regulatory initiatives and rate developments.

The FASB issued two new statements in 1995 - Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of" and Statement No. 123 "Accounting
for Stock-Based Compensation".  Both statements are effective for
the Company in 1996.  Statement No. 121 primarily concerns 
accounting for the impairment and disposal of property, plant and
equipment.  Statement No. 123 permits a fair value-based method
to account for stock-based compensation as an alternative to the
intrinsic value-based method currently permitted.  The Company
currently employs stock-based compensation which has not had a
material impact on the financial statements.  The Company has not
yet fully assessed the impacts on its financial statements of the
requirements of these new accounting standards. 

Inflation

Inflation affects the level of operating expenses and also the
cost of new utility plant placed in service.  Traditionally, the
rate making practices that have applied to the Company have
involved the use of historical test years and the actual cost of
utility plant.  However, the ability to recover increased costs
through rates, whether resulting from inflation or otherwise,
depends upon both market circumstances and the frequency, timing
and results of rate case decisions.  





EX-99.1
8


                                             Final Copy 9/8/95


ATLANTIC CITY ELECTRIC COMPANY
      
                SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - II


Article 1.  Definitions

The following are defined terms wherever they appear in this
Supplemental Executive Retirement Plan - II ( SERP-II ).

  1.1    Board of Directors  means the Board  of Directors of
     Atlantic Energy, Inc.

  1.2    Change of Control  means that one of the following has
     occurred:

     (i)    when any  person  as defined in Section 3(a)(9) of
        the Securities Exchange Act of 1934, as amended (the
         Exchange Act ) and as used in Section 13(d) and 14(d)
        thereof, including a  group  as defined in Section
        13(d) of the Exchange Act but excluding the Company and
        any subsidiary and any employee benefit plan sponsored
        or maintained by the Company of any subsidiary
        (including any trustee of such plan acting as trustee),
        directly or indirectly, becomes the  beneficial owner 
        (as defined in Rule 13d-3 under the Exchange Act), of
        securities of the Company representing 20 percent or
        more of the combined voting power of the Company s then
        outstanding securities; or

     (ii)   when, during any period of 24 consecutive months
        during the existence of the Plan, the individuals who,
        at the beginning of such period, constitute the Board
        (the  Incumbent Directors ) cease for any reason other
        than death to constitute at least a majority thereof;
        provided, however, that a director  who is not a
        director at the beginning of such 24-month period shall
        be deemed to have satisfied such 24-month requirement
        (and be an Incumbent Director) if such director was
        elected by, or on the recommendation of or with the
        approval of, at least two-thirds of the directors who
        then qualified as Incumbent Directors either actually
        (because they were directors at the beginning of such
        24-month period) or by prior operation of this Section;
        or

     (iii)  upon the occurrence of a transaction requiring
        stockholder approval for the acquisition of the Company
        by an entity other than the Company or a subsidiary
        through purchase of assets, or by merger, or otherwise.
  
  1.3    Company  means Atlantic City Electric Company, any of
     its subsidiaries authorized by the Board of Directors to
     participate in this Plan with respect to its employees,
     its successors (whether direct or indirect by purchase,
     merger, consolidation or otherwise) to all or
     substantially all of the business or assets of Atlantic
     City Electric Company, and its assigns, except that for
     purposes of the definition of Change of Control it shall
     mean Atlantic Energy, Inc., and to the extent a
     participant is employed by Atlantic City Electric Company
     upon the occurrence of an event which constitutes a Change
     of Control, Atlantic City Electric Company.

  1.4    Compensation  means the Qualified Executive s base
     salary plus annual incentive payments.  Compensation 
     shall not include any amounts distributed or distributable
     to a Qualified Executive in stock or cash pursuant to the
     Long-Term Executive Incentive Plan.

  1.5    Designated Beneficiary  means a person or persons
     designated, in writing, by a Qualified Executive or, if no
     designation is made or if the person or persons so
     designated should predecease the Qualified Executive, the
     legal representative of the estate of a deceased Qualified
     Executive or the person or persons who shall acquire the
     benefits payable to the Qualified Executive by bequest or
     inheritance, or in the case of a Beneficiary s death after
     the Qualified Executive s death, the Beneficiary s estate.

  1.6    Early Retirement Date  means the first day of any
     month after the Qualified Executive has attained age
     fifty-five (55) and has completed five (5) years of
     Service with the Company, but before age sixty (60).

  1.7    Excess Benefit Plan  means the Atlantic City Electric
     Company Excess Benefit Retirement Income Program as may be
     supplemented or amended or any successor plan in effect at
     the time a Qualified Executive s employment with the
     Company terminates.

  1.8    Final Annual Compensation  means (i) the base salary
     of a Qualified Executive in the calendar year in which the
     Qualified Executive terminates Service, plus (ii) the
     average of the bonuses, if any, paid to a Qualified
     Executive during the year in which he terminates Service,
     and the bonuses, if any, paid to a Qualified Executive
     during the year immediately before he terminates Service. 
     Final Annual Compensation shall not include any amounts
     distributed or distributable to a Qualified Executive in
     stock or cash pursuant to the Long-Term Executive
     Incentive Plan.

  1.9    Final Average Compensation  means the average of the
     Qualified Executive s annual Compensation over the 36 full
     calendar months immediately preceding or coinciding with
     the Qualified Executive s last day of employment with the
     Company.

  1.10   Normal Retirement Date  means the first day of the
     month coincident with or next following the date on which
     the Qualified Executive attains (or would have attained)
     age sixty (60).

  1.11   Plan  means the Atlantic City Electric Company
     Supplemental Executive Retirement Plan - II approved by
     the Board of Directors of Atlantic City Electric Company,
     as embodied in this document and as may be supplemented or
     amended. 

  1.12   Qualified Executive  means an employee of the Company
     elected to the position of officer of the Company and who
     is designated by the Board of Directors to participate in
     this Plan.

  1.13   Retirement Plan  means the Atlantic City Electric
     Company Retirement Plan as may be supplemented or amended
     or any successor plan in effect at the time a Qualified
     Executive s employment with the Company terminates.

  1.14   SERP-II  Disability Benefits  means the benefits
     listed in paragraph 3.4.

  1.15   SERP-II Pre-Retirement Survivor Benefits  means the
     benefits listed in paragraph 3.2.

  1.16   SERP-II Post-Retirement Survivor Benefits  means the
     benefits listed in paragraph 3.3.
  
  1.17   SERP-II Retirement Benefits  means the benefits listed
in paragraph 3.1.
  
  1.18   Service  means all periods in which a Qualified
     Executive is an officer of the Company prior to attainment
     of age 66.  In addition to periods of employment, the
     following periods of absence count as Service:

     (1)    absence due to any illness or injury during which
        a Qualified Executive is receiving regular disability
        benefits under the Company s officer disability benefit
        program; and

     (2)    any period of absence granted by the Company s
        Board of Directors.

Article 2.  SERP-II Benefits - Vested Portion

  2.1   Upon termination of employment and the attainment of
     age 55 or greater as of such termination, a Qualified
     Executive shall be entitled to receive the Vested portion
     of his SERP- II Retirement Benefits, which shall be
     determined as follows:

     Service (as defined
     in paragraph 1.18)                   Vested Portion
      0-4 Years                                0%
        5 Years                              50%
        6 Years                              60%
        7 Years                              70%
        8 Years                              80%
        9 Years                              90%
     10 Years                                 100%

     Notwithstanding any other provision of the Plan, in the
     event of a Change of Control, any Qualified Executive not
     having 5 years of service shall be deemed to have 5 years
     of service and shall vest at that level.

  2.2   In the event of (i) the death of a Qualified Executive
     while he is in Service or (ii) the death of a Qualified
     Executive entitled to receive SERP-II Retirement Benefits
     or SERP-II Disability Benefits who has not received any of
     such benefits, the Designated Beneficiary of the Qualified
     Executive shall be entitled to receive the benefits listed
     in paragraph 3.2.

  2.3   In the event of the death of a Qualified Executive who
     has received SERP-II Retirement Benefits or SERP-II
     Disability Benefits for a period of less than 15 years,
     the Designated Beneficiary of such Qualified Executive
     shall be entitled to receive the benefits listed in
     paragraph 3.3.

  2.4   In the event that a Qualified Executive becomes
     disabled, such Qualified Executive shall be entitled to
     receive the benefits listed in paragraph 3.4.

Article 3.  Amount of Benefits

The amount of benefits payable, pursuant to this SERP-II are as
follows:

  3.1   SERP-II Retirement Benefits:  Subject to the limitation
     provided in paragraph 3.5 below and the vesting schedule
     provided in paragraph 2.1 above, SERP-II Retirement
     Benefits shall equal an annual benefit payable to the 
     Qualified Executive for life with guaranteed minimum
     payments of fifteen (15) years in an amount equal to A
     minus B:

     (A)    60% of the Qualified Executive s Final Average
        Compensation.
     (B)    The sum of (i) the annual primary social security
        retirement benefit payable (before reduction for the
        commencement of post-retirement earnings) to the
        Qualified Executive or which would be payable if
        applied for by the Qualified Executive, (ii) the annual
        amounts of benefits payable (whether or not actually
        paid) from the Retirement Plan (determined without
        regard to any optional method of benefit payment
        selected), and (iii) the annual amounts of benefits
        payable (whether or not actually paid) from the Excess
        Benefit Plan.

     Upon the Qualified Executive s retirement on or after his
     Early Retirement Date but prior to his Normal Retirement
     Date, the amount equal to the SERP-II Retirement Benefit
     shall be reduced by 4% for each year (to be calculated on
     a full calendar month basis) that the payment commencement
     date precedes the Qualified Executive s Normal Retirement
     Date.  

  3.2   SERP-II Pre-Retirement Survivor Benefits:

     (1)    A Qualified Executive shall be covered by a split
        dollar insurance policy providing benefits equal to
        three (3) times Final Annual Compensation.

     (2)    Notwithstanding subparagraph (1) above, if a
        Qualified Executive who would otherwise be entitled to
        the benefit described in subparagraph (1) is
        uninsurable, or if the Company determines that he is
        such a rated risk for insurance purposes that the cost
        of the split dollar insurance described in subparagraph
        (1) is excessive, the Company shall notify the
        Qualified Executive that he is not entitled to the
        benefit described in subparagraph (1) and that the
        benefit described below in subparagraph (3) shall be
        substituted therefore.

     (3)    Any Qualified Executive not eligible for the
        benefit described in subparagraph (1), as defined in
        subparagraph (2), shall be entitled to a benefit upon
        death equal to the sum of:

        (i) An amount equivalent to Final Average Compensation
            to be paid in a lump-sum within a reasonable time
            following the date of death; and
        (ii)   Subject to the limitation provided in paragraph
            3.5 and commencing with the first anniversary of the
            death of the Qualified Executive, an annual payment
            of fifty percent (50%) of the annual  Vested SERP-II
            Retirement Benefit to which the Qualified Executive
            would have been entitled to receive if he had
            terminated employment on his date of death, until
            the Qualified Executive would have attained the age
            of 60 years, or until fifteen (15) such annual
            payments have been made, whichever is the later to
            occur.



  3.3   SERP-II Post-Retirement Survivor Benefits:
     Commencing with the first anniversary of the death of the
     Qualified Executive, an annual payment of 100% of the
     annual SERP-II Retirement Benefit that the Qualified
     Executive was entitled to receive as of his date of death
     until benefits have been paid to both the Qualified
     Executive and the Designated Beneficiary for an aggregate
     of fifteen (15) years.
  3.4   SERP-II Disability Benefits
     Subject to the limitation provided in paragraph 3.5, in
     the event the Board of Directors shall determine, on the
     basis of such medical evidence as it may require, that the
     Qualified Executive has become disabled, mentally or
     physically, such that he is prevented from performing all
     the material aspects of his duties, the Qualified
     Executive shall be entitled to an annual payment equal to
     fifty percent (50%) of his Vested SERP-II Retirement
     Benefit.  SERP-II Disability Benefits shall commence on
     the date the Qualified Executive is determined to be
     disabled and shall be made for life with guaranteed
     minimum payments of fifteen (15) years.  In the event of
     death during such payment period, subsequent annual
     payments will be made to the Designated Beneficiary until
     such benefits have been paid to both the Qualified
     Executive and the Designated Beneficiary for an aggregate
     of fifteen (15) years.
  3.5   Limitation on SERP-II Benefits
     Notwithstanding the above, annual payments made pursuant
     to paragraph 3.1, 3.2(3)(ii) or 3.4 shall not exceed 25%
     of the Qualified Executive s Final Annual Compensation.
Article 4.  Commencement of SERP-II Retirement Benefits
  4.1   Unless this Plan specifically provides otherwise, SERP-
     II Retirement Benefits payable to a Qualified Executive
     shall commence when retirement benefits commence under the
     Retirement Plan.
     Notwithstanding  any other provision of the Plan, if any
     payment due under this Plan, when taken into account with
     all other payments of  applicable employee remuneration 
     (as defined in Section 162(m)(4) of the Internal Revenue
     Code)  made to the Qualified Executive in the taxable year
     his employment terminates, exceeds the limitation under
     Section 162(m)(l) of the Internal Revenue Code, then such
     payment will be deferred to the taxable year of the
     Qualified Executive next following the year of
     termination.


Article 5. Forfeiture of Benefits
  5.1   Forfeitures.  In the event of a Change of Control this
     paragraph 5.1 of the Plan shall be void and of no force
     and effect.  In the absence of a Change of Control,
     notwithstanding anything contained in this Plan to the
     contrary, a Qualified Executive shall forfeit all benefits
     not yet paid from this Plan in the event the Company
     terminates his employment for Cause or for his breach of
     the Non-Competition or Non-Disclosure provisions specified
     in paragraphs 5.2 and 5.3.  For purposes of this
     paragraph,  Cause  means:
     (i)  willful and continuous failure by a participant to
     perform his duties (other than resulting from incapacity
     due to physical or mental illness), (ii) a participant s
     conviction or plea of nolo contendere to a felony; (iii) a
     participant s willful engagement in misconduct in
     connection with employment which results in material
     damage to the Company s business or reputation; or (iv)
     material breach of Executive s duties under any applicable
     employment agreement which results in material damage to
     the Company s business or reputation, in each of (ii)
     through (iv) above, upon 30 days written notice to the
     Executive, the opportunity for the Executive to be heard
     by the Board and the good faith determination by at least
     two-thirds of the Company s non-emplyoee directors that
     Cause exists; provided, however, that after the occurrence
     of a Change of Control (as hereinafter defined),  Cause 
     shall be limited to (ii) through (iv) above.
  5.2   Non-Competition. 
     A Qualified Executive shall not, during his Service and
     for the period after termination of employment, compete
     directly or indirectly with the Company or be directly or
     indirectly interested in any business competing with the
     business being conducted by the Company; provided,
     however, that the Qualified Executive shall not be
     prohibited from owning up to one percent (1%) of the
     shares of common stock of any corporation whose shares are
     publicly traded on a national securities exchange or in
     the over-the-counter market, or from engaging in
     activities with the written permission of the Board of
     Directors.
  5.3   Non-Disclosure.
     A Qualified Executive shall regard and preserve as
     confidential and not use, communicate or disclose to any
     person, orally, in writing or by a publication, any secret
     or confidential information of the Company, regardless of
     where or when or how acquired by the Company, which the
     Company is obligated to maintain in confidence until such
     information becomes a matter of public knowledge through
     no act of the Qualified Executive.

Article 6.  General
  6.1   Form of Payment.   Benefits under this Plan shall be
     paid in cash.  In lieu of the fifteen (15) year certain
     form of payment provided in Article 3, a Qualified
     Executive may, with the approval of the Company, elect to
     receive an actuarially equivalent lump sum Benefit,
     provided that such election is made and becomes
     irrevocable before the Benefit is actually payable.  For
     purposes of this paragraph,  actuarial equivalent  shall
     have the same meaning as given such term in the Retirement
     Plan.
  6.2   Withholding.  The Company may withhold from any
     benefits payable all federal, state, city, or other taxes
     as shall be required pursuant to any law or governmental
     legislation or ruling.
  6.3   Amendment and Termination.  In the event of a Change of
     Control, the Plan may not be amended, curtailed, or
     terminated.  In the absence of a Change of Control, the
     Plan may be amended, curtailed, or terminated at any time
     by the Board of Directors; provided, however, that at the
     time such action is taken, to the extent that a Qualified
     Executive or his Designated Beneficiary is then entitled
     to receive benefits pursuant to paragraph 2.1, 2.2, or
     2.3, such benefits shall nonetheless be paid as if the
     Plan were still in existence and without reference to such
     change if the effect of such change would be to reduce the
     amount, frequency or duration of benefit payments; and
     further provided that no amendment or curtailment of the
     Plan pursuant hereto shall have the effect of reducing the
     accrued benefit under the Plan of any Qualified Executive.
  6.4   Assignability. Except for naming a Designated
     Beneficiary to receive benefits upon a Qualified
     Executive s death, no right to receive payments shall be
     transferable or assignable by a Qualified Executive.  Any
     other attempted assignment or alienation of payments shall
     be void and of no force or effect.
  6.5   Qualified Executive s Rights Unsecured.  The right of
     any Qualified Executive to receive future benefits under
     the provisions of the Plan shall be an unsecured claim
     against the general assets of the Company.  The benefits
     to be paid, pursuant to this Plan, are unfunded by the
     Company.  Nothing herein shall be construed to prevent
     establishment by the Company of a trust arrangement,
     commonly called a  rabbi trust,  to identify certain
     Company assets to be applied (subject to prior claims of
     creditors) to the discharge of the Company s obligations
     under the Plan.
  6.6   Agreement.  Each Qualified Executive shall execute a
     SERP-II agreement with the Company pursuant to which the
     Qualified Executive agrees, as a condition precedent to
     receipt of benefits, that the Company will purchase, own
     and be beneficiary of a policy or policies of insurance,
     insuring the life of each Qualified Executive.
  6.7   Not an Employment Contract.  The Plan does not confer
     any right of employment upon a Qualified Executive,
     provided the Qualified Executive shall not be discharge
     for the sole purpose of avoiding any obligation under the
     Plan.
  6.8   Applicable Law.  The Plan shall be construed and
     applied in accordance with the laws of the State of New
     Jersey, to the extent such laws have not been superseded
     by federal law (which shall otherwise prevail).
  6.9   Headings and Captions.  Headings and captions are for
     convenience of reference only; shall not be deemed
     provisions of the Plan; and shall not be applied to the
     construction of the Plan.
  6.10  Gender and Number. All terms used in the Plan shall be
     deemed both gender and quantity-neutral unless otherwise
     required by context.  Accordingly, the masculine shall
     include the feminine, the feminine shall include the
     masculine, the singular shall include the plural and the
     plural shall include the singular.
  6.11  Binding Effect.  The terms of the Plan shall be binding
     on each Qualified Executive and on the heirs,
     beneficiaries and personal representatives of each
     Qualified Executive.
  6.12  Construction of Provisions. In the event of any dispute
     as to the construction of any provision of the Plan, the
     need to supply an omission or reconcile an inconsistency
     in the provisions of the Plan, or the need to resolve any
     dispute as to benefits under the Plan, the Board of
     Directors shall appoint one or more individuals to serve
     as a committee with full authority to construe the Plan,
     to supply such omission, to reconcile any inconsistency in
     the provisions of the Plan, and to resolve any such
     disputes.  The determinations made by such appointee in
     good faith shall be binding upon the parties.




EX-99.2
9


                                                 EXHIBIT 10A(10)1

                             ATLANTIC ELECTRIC
               EXCESS BENEFIT PLAN RETIREMENT INCOME PROGRAM

                           Amendment No. 1995-1

          Atlantic City Electric Company hereby adopts this
Amendment No. 1995-1 to the instrument setting forth the Atlantic
Electric Excess Benefit Retirement Income Program (the "Program
Instrument").  This amendment is adopted pursuant to Section 7 of
the Program Instrument.

          1.   The following definition is added to Section 1 of
the Program Instrument:

               "Change of Control" means that one of
          the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii)  when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.


          2.   The following definition in Section 1 of the
Program Instrument is restated to read as follows:

               "Company" means Atlantic City Electric
          Company, except that for purposes of the
          definition of Change of Control it shall mean
          Atlantic Energy, Inc., and to the extent a
          participant is employed by Atlantic City
          Electric Company upon the occurrence of an
          event which constitutes a Change of Control,
          Atlantic City Electric Company.

          3.   Section 2(b) of the Program Instrument is hereby
restated to read as follows:

               (b)  Payment of Income.  In the event of
          a Change of Control, the entire Excess
          Benefit Retirement Income payable under this
          Section 2 shall become immediately vested to
          the extent not already vested.  The Excess
          Benefit Retirement Income payable under this
          Section 2 shall be paid in either (a) one
          lump sum or (b) monthly coincident with the
          date of benefits under the Retirement Plan;
          provided, however, that a Participant who is
          to receive monthly benefits under the
          Retirement Plan may elect to receive a single
          sum distribution and a Participant who is to
          receive a single sum distribution under the
          Retirement Plan may receive a monthly
          distribution, if the Participant applies to
          do so at least one year prior to the date on
          which his benefits hereunder first become
          payable, and further provided that the
          Program Administrator determines, in its sole
          discretion and applying such values and
          standards as it deems relevant, that it is in
          the best interest of the Participant. 
          Subject to Section 7 of this Program, payment
          of the Excess Benefit Retirement Income shall
          be made by the Company.  Any entity
          (including the Company) making a payment
          under this Program may withhold therefrom
          such amounts as may be required by federal,
          state or local law, and the amount payable
          under the Program to the Participant or his
          beneficiary may be reduced by the amount so
          withheld.  The amount of any single sum
          distribution of Excess Benefit Retirement
          Income shall be equal to the actuarial
          equivalent of the monthly benefit herein
          described, computed using the actuarial the
          Retirement Plan.

          4.  Section 7 of the Program Instrument is hereby
restated to read as follows:

          SECTION 7.  Change or Termination of the Program.

               In the event of a Change of Control,
          this Program may not be amended.  In the
          absence of a Change of Control, the Company
          may amend the Program in any respect and at
          any time; provided, however, that no such
          amendment shall have the effect of (a)
          reducing the basis on which the Excess
          Benefit Retirement Income then being paid to
          any Participant pursuant to the Program, or
          which might thereafter become payable to the
          Participant's beneficiary, is computed, or
          (b) reducing the accrued Excess Benefit
          Retirement Income under Section 2 of any
          active or terminated vested participant of
          the Plan, unless the Participant or his
          beneficiary becomes entitled to an amount
          equal to such benefit under another plan or
          practice adopted by the Company.
               In the event of a Change of Control,
          this Program may not be terminated.  In the
          absence of a Change of Control, the Company
          may terminate the Program at any time.  The
          Excess Benefit Retirement Income then being
          paid to any Participant under Section 3 shall
          continue to be paid subject to the terms of
          the Program and each Participant shall be
          fully vested in such Participant's accrued
          Excess Benefit Retirement Income under
          Section 2, unless the Participant or his
          beneficiary becomes entitled to an amount
          equal to such benefit under another plan or
          practice adopted by the Company, subject to
          diminution resulting from any increase in his
          funded Plan benefit.
               The accrued Excess Benefit Retirement
          Income at any time is the amount contingently
          payable under Section 2 if all factors used
          in determining the funded benefit of such
          active or terminated vested participant of
          the Plan remained constant under the first
          date on which such benefit was in pay status.

          5.   The amendment made hereby shall be effective as of
August 10, 1995.

                              By:______________________


                              Title:___________________



EX-99.3
10


                                             EXHIBIT 10A(16)1
                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey
corporation (the "Company"), and Jerrold L. Jacobs (the
"Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  (a)  Employment Period.  The
term of this Agreement shall commence on the date hereof (the
"Effective Date") and shall continue until the second anniversary
of the Effective Date (the "Employment Period"); provided,
however, that the Employment Period shall be automatically
renewed for two years unless either party shall send the other
written notice of its intention to terminate the agreement at the
end of such Employment Period one year prior to the end of such
Employment Period; and, provided, further, that upon the
occurrence of a Change of Control, the Employment Period shall
become three years and shall commence on the date of the Change
of Control, and shall thereafter be automatically renewed for two
years unless either party shall send the other written notice of
its intention to terminate the agreement one year prior to the
end of the then current Employment Period.

          (b)  Consulting Period.  Notwithstanding the foregoing,
in the event that the Executive elects to retire at any time on
or after December 1, 1996 (the "Retirement Date") he may, at his
election, enter into a consulting arrangement with the Company
commencing on the day after the Retirement Date and ending on 
the second anniversary thereof (the "Consulting Period").  The
rights and obligations of the parties during the Consulting
Period are set forth on Exhibit A hereto.

   
          2.  Place of Employment.  The Executive's services
during the Employment Period shall be performed primarily at the
principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably
require in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees
to employ the Executive as its President and Chief Executive
Officer and as the Chairman and Chief Executive Officer of
Atlantic City Electric Company ("Electric") for the Employment
Period.  The Executive shall exercise his reasonable best efforts
in furtherance of, and shall devote substantially all of his
working time and attention to the affairs of the Company and its
affiliates, and shall perform such duties and services as may
reasonably be assigned to him by, and shall report directly to
the Board of Directors of the Company (the "Board").


          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees on
which he served prior to the Effective Date, in each case only if
and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of
vacation and sick leave to which he is entitled.  It is expressly
understood and agreed that the Executive's continuing to serve on
any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the Effective Date
which is not in violation of any Company policy shall not be
deemed to interfere with the performance of the Executive's
services to the Company.  In addition, the Executive may commence
service as a director of other corporations or organizations
after the Effective Date upon approval by the Board which, in the
judgment of the Board, will not present any conflict of interest
with the Company or any subsidiary or affiliate thereof, and
which would not affect the performance of Executive's duties
pursuant to this Agreement, which approval shall not be
unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility
under the Federal Power Act, or any successor act, (ii) any bank,
trust company, banking association or firm that is authorized by
law to underwrite or participate in the marketing of securities
of a public utility, or (iii) any company supplying electrical
equipment to the Company, nor (b) accept any such position and
commence the performance of any duties or services in such
capacity (an "Interlock"), unless the Executive shall have first
(x) furnished the Board with at least thirty (30) days prior
written notice of his intention to create such Interlock and (y)
secured, if the Board shall request that such action be taken,
any necessary authorization for such Interlock, in form and
substance satisfactory to the Board, from the Federal Energy
Regulatory Commission, or successor regulatory agency, pursuant
to Section 305(b) of the Federal Power Act, or any supplement or
amendment thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall
be reviewed at least once each year after the Effective Date, and
may be increased (but not decreased) at any time and from time to
time by action of the Board or any committee thereof or any
individual having authority to take such action in accordance
with the Company's regular practices.  Once increased, any
reference to Base Salary herein shall be a reference to such
increased amount.  Neither the Base Salary nor any increase in
Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid
to the Executive for the most recently ended fiscal year of the
Company or the target bonus for the then current fiscal year (the
"Minimum Bonus Amount").  Any amount payable in respect of the
Annual Bonus Opportunity or the Minimum Bonus Amount shall be
paid no later than sixty (60) days after the close of the fiscal
year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to
any deferral programs or arrangements that the Company may make
available to the Executive.

          (c)  Long-term Incentive Compensation Programs and
Equity Programs.  During the Employment Period, the Executive
shall participate in all long-term incentive compensation
programs and equity programs for key executives at a level that
is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter, it being
understood that as of the Effective Date all of the Executive's
options now or hereafter granted under such plans shall be
exercisable, by the Executive or his beneficiary, until the later
of (i) December 31, 1999, or (ii) the date set forth in the plan
or the operative option agreements. 

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
retirement, supplemental retirement or excess benefit
(collectively, the "Supplemental Retirement Benefits"), deferred
compensation, savings, medical, dental, health, disability, group
life, accidental death and travel accident insurance plans and
programs of the Company and its affiliated companies at a level
that is commensurate with and provides the same level and quality
of coverage as the Executive's participation in such plans
immediately prior to the Effective Date (except for the Medical
Executive Reimbursement Plan (the "MERP"), it being understood
that the MERP shall be terminated as of September 30, 1995), or,
if more favorable to the Executive, at the level made available
to the Executive or other similarly situated executive officers
of the Company and its affiliated companies at any time
thereafter, it being understood that (I) post-employment medical
benefits either under the Company's medical insurance plan, or
otherwise, shall be provided by the Company to the Executive and
his spouse, Carol Jacobs (the "Spouse"), at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive and Spouse's participation in such plan
immediately prior to the Date of Termination until the later of
(i) the Executive's death or (ii) the Spouse's death; provided,
however, that such benefits shall be offset by any medical
benefits payable to the Executive or the Spouse under any then
applicable state or federal medical plans or programs, and (II)
to the extent Board or Company approval is required or to the
extent notice by the Executive is required under any plan
providing Supplemental Retirement Benefits for any election for
form of benefit or timing of payment thereof, such approval is
hereby deemed granted and such notice is deemed to have been
satisfied.  In addition, in the event that the Company adjusts
interest rate assumptions or mortality tables used in the
calculation of lump sum benefits under the Company's qualified
pension plan in order to comply with federal law, Executive's
aggregate benefits under the Company's qualified and nonqualified
pension plans shall not be less than such benefits would have
been if calculated in accordance with the interest rate
assumptions and mortality table in effect as of the Effective
Date.  

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time; provided, however, that in no event shall such
policies and procedures after the occurrence of a Change of
Control be less favorable to the Executive than immediately prior
to a Change of Control.  Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the
Change of Control date to the Executive, if such policies and
procedures are more favorable to the Executive than those in
effect immediately prior to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to

the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"); provided, however, that in no event shall
the protection afforded to the Executive hereunder be less than
that afforded under the Governing Documents as in effect im-
mediately prior to the Effective Date, or if later, the Change of
Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time, it being understood that the Executive is eligible
for voluntary retirement as of the Effective Date.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, the Executive may, upon not
less than 60 days' written notice to the Company, voluntarily
terminate employment for any reason; provided, however, that any
termination by the Executive pursuant to Section 5(d) on account
of Good Reason (as defined therein) or voluntary retirement shall
not be treated as a voluntary termination under this Section
5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness), (ii) the
Executive's conviction or plea of nolo contendere to a felony;
(iii) the Executive's willful engagement in misconduct in
connection with employment which results in material damage to
the Company's business or reputation; or (iv) material breach of
Executive's duties hereunder which result in material damage to
the Company's business or reputation, in each of (ii) through
(iv) above, upon 30 days written notice to the Executive, the
opportunity for the Executive to be heard by the Board and the
good faith determination by at least two-thirds of the Company's
non-employee directors that Cause exists; provided, however, that
after the occurrence of a Change of Control (as hereinafter
defined), "Cause" shall be limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any
     duties inconsistent with the Executive's position, authority
     or responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

           (iv   any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the
     occurrence of a Change of Control; provided, however, that
     the successor has had actual written notice of the existence
     of this Agreement and its terms and an opportunity to assume
     the Company's responsibilities under this Agreement during a
     period of 10 business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the Executive's having actual
knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon as
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.


          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement, this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representatives under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i)  the Executive's full Base Salary through the Date
               of Termination (the "Earned Salary");

              (ii)  in the event of a termination by reason of
              death
                    or Permanent Disability only, a cash amount
                    (the
                    "Severance Amount") equal to the sum of

                    (A)  the Executive's annual Base Salary; plus

                    (B)  the Minimum Bonus Amount; multiplied by

                    (C)  a fraction, the numerator of which is
                         the number of full months remaining in
                         the Employment Period, and the
                         denominator of which is twelve.

                    Notwithstanding the foregoing, in the event
                    of termination by reason of Permanent
                    Disability, the Severance Amount shall be
                    reduced by any salary replacement payments
                    received by the Executive under any long-term
                    disability plan sponsored by the Company.
     
             (iii)  the Supplemental Retirement Benefits and the
                    amount otherwise payable to or in respect of the
                    Executive under the Company's otherwise applicable
                    long-term incentive compensation and equity plans
                    and programs (the "Incentive and Equity  Amounts")
                    it being understood that, in the event of death or
                    disability, any applicable performance targets
                    thereunder (to the extent not already determined
                    as of the last day of Employment) shall be deemed
                    to have been met for the applicable performance
                    period and that payments thereunder shall be pro-
                    rated as of the last day of the Employment Period;
                    and in the event of a termination by reason of
                    voluntary retirement, then the Supplemental
                    Retirement Benefits and the Incentive and Equity
                    Amounts, the Incentive and Equity Amounts being
                    calculated and payable in accordance with the
                    terms of the underlying plans and payable to the
                    Executive when awards are payable to all other
                    participants in such plans in accordance with the
                    terms thereof, but prorated through the date of
                    such retirement; and

              (iv)  an amount (the "Pro-Rated Bonus") equal to the
                    product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable
                    bonus plan (the "Actual Bonus Payment")
     
          (v)  all vested amounts or benefits owing to the
               Executive under the Company's otherwise applicable
               employee benefit plans and programs, including any
               compensation previously deferred by the Executive
               (together with any accrued earnings thereon) and
               not yet paid by the Company and any accrued
               vacation pay not yet paid by the Company (the
               "Accrued Obligations").

Any Earned Salary, Severance Amount, Accrued Obligations and
Pro-Rated Bonus shall be paid in cash in a single lump sum as
soon as practicable (but in no event more than 20 days) following
the Date of Termination.  Any Incentive and Equity Amounts and
Supplemental Retirement Benefits accrued by the Executive shall
be payable in accordance with the terms of the underlying plans,
it being understood that for purposes of such plans, in the event
of a termination by reason of death or Permanent Disability,
Executive shall be treated as if he retired on the last day of
the Employment Period.

          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason), the Company shall pay the Executive
the Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the
Date of Termination, or in accordance with the terms of the
underlying plan.

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A),
               Executive's vested interest in such benefits shall
               accelerate; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a
     Change of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, it being
               understood that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination (the "Benefit Plans").  To
               the extent any such benefits cannot be provided
               under the terms of the applicable plan, policy or
               program, the Company shall provide a comparable
               benefit under another plan or from the Company's
               general assets.  The Executive's participation in
               the Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time described in
               Section 4(c) after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.


     (B) After the Occurrence of a Change of Control.

          (i)  Payments.  If, following a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;


          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the
               calculation of Supplemental Retirement Benefits,
               Final Annual Compensation (as defined in the
               underlying plans) shall be equal to Final Annual
               Compensation as of the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein) and the elections of the Executive thereunder.

           (ii   Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause, or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, excluding the
               Supplemental Retirement Benefits (the "Benefit
               Plans").  To the extent any such benefits cannot
               be provided under the terms of the applicable
               plan, policy or program, the Company shall provide
               a comparable benefit under another plan or from
               the Company's general assets.  The Executive's
               participation in the Benefit Plans will be on the
               same terms and conditions that would have applied
               had the Executive continued to be employed by the
               Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the Equity
               Documents for the period of time described in
               Section 4(c) after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.  Except as
expressly provided in the last sentence of this Section 6(d), the
amounts payable to the Executive pursuant to this Section 6
following termination of his employment shall be in full and
complete satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 6(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid
     or distributed to the Executive by the Company or any
     affiliated company (collectively, the "Covered Payments"),
     are or become subject to the tax (the "Excise Tax") imposed
     under Section 4999 of the Code or any similar tax that may
     hereafter be imposed, the Company shall pay to the Executive
     at the time specified in Section 6(e)(v) below an additional
     amount (the "Tax Reimbursement Payment") such that the net
     amount retained by the Executive with respect to such
     Covered Payments, after deduction of any Excise Tax on the
     Covered Payments and any Federal, state and local income,
     employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section 6(e), but
     before deduction for any Federal, state or local income or
     employment tax withholding on such Covered Payments, shall
     be equal to the amount of the Covered Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as
               "parachute payments" within the meaning of Section
               28OG of the Code, and all "parachute payments" in
               excess of the "base amount" (as defined under
               Section 28OG(b)(3) of the Code) shall be treated
               as subject to the Excise Tax, unless, and except
               to the extent that, in the good faith judgment of
               the Company's independent certified public
               accountants appointed prior to the Effective Date
               or tax counsel selected by such Accountants (the
               "Accountants"), the Company has a reasonable basis
               to conclude that such Covered Payments (in whole
               or in part) either do not constitute "parachute
               payments" or represent reasonable compensation for
               personal services actually rendered (within the
               meaning of Section 28OG(b)(4)(B) of the Code) in
               excess of the "base amount," or such "parachute
               payments" are otherwise not subject to such Excise
               Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the
     Tax Reimbursement Payment, the Executive shall be deemed to
     pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum
               reduction in Federal incomes taxes which could be
               obtained from the deduction of such state or local
               taxes if paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding
     or negotiations with the Internal Revenue Service to be less
     than the amount taken into account hereunder in calculating
     the Tax Reimbursement Payment made, the Executive shall
     repay to the Company, at the time that the amount of such
     reduction in the Excise Tax is finally determined, the
     portion of such prior Tax Reimbursement Payment that would
     not have been paid if such Excise Tax had been applied in
     initially calculating such Tax Reimbursement Payment, plus
     interest on the amount of such repayment at the rate
     provided in Section 1274(b)(2)(B) of the Code. 
     Notwithstanding the foregoing, in the event any portion of
     the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund
     or credit of such portion has been made to the Executive,
     and interest payable to the Company shall not exceed
     interest received or credited to the Executive by such tax
     authority for the period it held such portion.  The
     Executive and the Company shall mutually agree upon the
     course of action to be pursued (and the method of allocating
     the expenses thereof) if the Executive's good faith claim
     for refund or credit is denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service (the
     "Service") to exceed the amount taken into account hereunder
     at the time the Tax Reimbursement Payment is made
     (including, but not limited to, by reason of any payment the
     existence or amount of which cannot be determined at the
     time of the Tax Reimbursement Payment), the Company shall
     make an additional Tax Reimbursement Payment in respect of
     such excess (plus any interest or penalty payable with
     respect to such excess) at the time that the amount of such
     excess is finally determined, such that the net amount
     retained by the Executive with respect to the Covered
     Payments, after deduction of any Excise Tax on the Covered
     Payments and any Federal, state and local income, employment
     or other tax and Excise Tax on the Tax Reimbursement Payment
     provided for by this Section, but before deduction for any
     Federal, state or local income or employment tax withholding
     on such Covered Payments, shall be equal to the amount of
     the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises
     out of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for
     the cost of preparing the Executive's income tax returns for
     the year in which any payment by the Company may be
     characterized as a parachute payment.  The Executive shall
     notify the Company in writing of any such Claim as soon as
     practicable but in no event later than ten (10) business
     days after the Executive is informed of such Claim and shall
     cooperate with the Company in good faith to effectively
     contest the Claim.  The Company shall control all
     proceedings taken in connection with such contest and, at
     its sole option, may pursue or forego any and all
     administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect of such
     Claim and the Executive agrees to prosecute such contest as
     the Company shall determine.  Notwithstanding the foregoing,
     if the Company forgoes further prosecution of such contest,
     the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

            (v   The Tax Reimbursement Payment (or portion
     thereof) provided for in Section 6(e)(i) above shall be paid
     to the Executive not later than 10 business days following
     the payment of the Covered Payments; provided, however, that
     if the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date
     on which payment is due, the Company shall pay to the
     Executive by such date an amount estimated in good faith by
     the Accountants to be the minimum amount of such Tax Re-
     imbursement Payment and shall pay the remainder of such Tax
     Reimbursement Payment (together with interest at the rate
     provided in Section 1274(b)(2)(B) of the Code) as soon as
     the amount thereof can be determined, but in no event later
     than 45 calendar days after payment of the related Covered
     Payment.  In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

7.  Definitions.  (a)  Change of Control.  For purposes of this
Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed  to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise
In the event that the Executive shall in good faith give a Notice
of Termination for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual
consent of the Company and the Executive and, except as provided
in the last preceding sentence, the Executive shall be entitled
to receive only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 11
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date, including,
but not limited to, that certain Employment Agreement between the
parties dated as of February 11, 1993.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the city
of Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of
law or equity.  The arbitrator shall be acceptable to both the
Company and the Executive.  If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators, one appointed by each of the parties and the
third appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company


If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey  08232
                              Attention: Secretary



with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.


or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.


          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.


          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.


          (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.


          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.


          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.


          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.



                                 By:/S/ J. Michael Galvin, Jr.    
        
     Secretary                           J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee


                                 EXECUTIVE:


                                                                  
        
                                   J. L. Jacobs


                                 EXHIBIT A
                             CONSULTING TERMS

          (i)  Executive shall serve as a consultant to the
          Company on an exclusive basis and shall furnish
          advisory and consultative services to the Company, its
          divisions and subsidiaries including advice and
          assistance in connection not only with matters then
          current, but also matters in which Executive
          participated during and subsequent to the Employment
          Period in accordance with the instructions of the
          Board;

          (ii)  Executive shall be entitled to prompt
          reimbursement as vouchers are presented in accordance
          with the Company's practices for all reasonable
          business expenses incurred by him in the performance of
          services during the Consulting Period;

          (iii)   The Company shall pay Executive $130,000 annual
          consulting fee payable annually at the end of each
          fiscal year;

          (iv)  In the event of the occurrence of a Change of
          Control, the Executive shall be paid in a lump sum as
          soon as practicable thereafter (but in no event more
          than 20 days thereafter) an amount equal to his
          consulting fee for the balance of the Consulting
          Period;

          (v)  In the event that the Executive dies prior to the
          end of the Consulting Period, the Company shall pay the
          Executive's legal representatives under this Agreement
          in a lump sum as soon as practicable thereafter (but in
          no event more than 20 days thereafter) an amount equal
          to the Executive's consulting fee for the balance of
          the Consulting Period;

          (vi)    During the Consulting Period, Executive shall
          be treated by the Company as an independent contractor
          for all purposes, and is therefore not entitled to
          participate in the Company's employee benefit plans,
          programs or arrangements, (except to the extent such
          participation is attributable to service rendered prior
          to or during the Employment Period).

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
                ATLANTIC ENERGY, INC. and JERROLD L. JACOBS
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and JERROLD L. JACOBS (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________________       
BY:______________________________
                                   J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
Committee

                              BY:  /s/ J. L. Jacobs
                                       J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ J. L. Jacobs
                                  J. L. Jacobs




EX-99.4
11


                                              EXHIBIT 10A(20)1

                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey
corporation (the "Company"), and Michael J. Chesser (the
"Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  The term of this Agreement
shall commence on the date hereof (the "Effective Date") and
shall continue until the second anniversary of the Effective Date
(the "Employment Period"); provided, however, that the Employment
Period shall be automatically renewed for two years unless either
party shall send the other written notice of its intention to
terminate the agreement at the end of such Employment Period one
year prior to the end of such Employment Period; and, provided,
further, that upon the occurrence of a Change of Control, the
Employment Period shall become three years and shall commence on
the date of the Change of Control, and shall thereafter be
automatically renewed for two years unless either party shall
send the other written notice of its intention to terminate the
agreement one year prior to the end of the then current
Employment Period.
          
          2.  Place of Employment.  The Executive's services
during the term of this Agreement shall be performed primarily at
the principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably
require in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees
to employ the Executive as its Senior Vice President and as the
President and Chief Operating Officer of Atlantic City Electric
Company ("Electric") for the Employment Period.  The Executive
shall exercise his reasonable best efforts in furtherance of, and
shall devote substantially all of his working time and attention
to the affairs of the Company and its affiliates, and shall
perform such duties and services as may reasonably be assigned to
him by, and shall report directly to the Chief Executive Officer
and the Board of Directors of the Company (the "Board").
   
          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees on
which he served prior to the Effective Date, in each case only if
and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of
vacation and sick leave to which he is entitled.  It is expressly
understood and agreed that the Executive's continuing to serve on
any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the Effective Date
which is not in violation of any Company policy shall not be
deemed to interfere with the performance of the Executive's
services to the Company.  In addition, the Executive may commence
service as a director of other corporations or organizations
after the Effective Date upon approval by the Board which, in the
judgment of the Board, will not present any conflict of interest
with the Company or any subsidiary or affiliate thereof, and
which would not affect the performance of Executive's duties
pursuant to this Agreement, which approval shall not be
unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility
under the Federal Power Act, or any successor act, (ii) any bank,
trust company, banking association or firm that is authorized by
law to underwrite or participate in the marketing of securities
of a public utility, or (iii) any company supplying electrical
equipment to the Company, nor (b) accept any such position and
commence the performance of any duties or services in such
capacity (an "Interlock"), unless the Executive shall have first
(x) furnished the Board with at least thirty (30) days prior
written notice of his intention to create such Interlock and (y)
secured, if the Board shall request that such action be taken,
any necessary authorization for such Interlock, in form and
substance satisfactory to the Board, from the Federal Energy
Regulatory Commission, or successor regulatory agency, pursuant
to Section 305(b) of the Federal Power Act, or any supplement or
amendment thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall
be reviewed at least once each year after the Effective Date, and
may be increased (but not decreased) at any time and from time to
time by action of the Board or any committee thereof or any
individual having authority to take such action in accordance
with the Company's regular practices.  Once increased, any
reference to Base Salary herein shall be a reference to such
increased amount.  Neither the Base Salary nor any increase in
Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid
to the Executive for the most recently completed fiscal year of
the Company or the target bonus for the then current fiscal year
(the "Minimum Bonus Amount").  Any amount payable in respect of
the Annual Bonus Opportunity or the Minimum Bonus Amount shall be
paid no later than sixty (60) days after the close of the fiscal
year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to
any deferral programs or arrangements that the Company may make
available to the Executive.

          (c)  Long-term Incentive Compensation Programs and
Equity Programs.  During the Employment Period, the Executive
shall participate in all long-term incentive compensation
programs and equity programs for key executives at a level that
is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter.

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
supplemental retirement or excess benefit (collectively, the
"Supplemental Retirement Benefits"), deferred compensation,
savings, medical, dental, health, disability, group life,
accidental death and travel accident insurance plans and programs
of the Company and its affiliated companies at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive's participation in such plans
immediately prior to the Effective Date (except for the Medical
Executive Reimbursement Plan (the "MERP"), it being understood
that the MERP shall be terminated as of September 30, 1995), or,
if more favorable to the Executive, at the level made available
to the Executive or other similarly situated executive officers
of the Company and its affiliated companies at any time
thereafter.

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time; provided; however, that in no event shall such
policies and procedures after the occurrence of a Change of
Control be less favorable to the Executive than immediately prior
to a Change of Control.  Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the
Change of Control date to the Executive, if such policies and
procedures are more favorable to the Executive than those in
effect immediately prior to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to

the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"); provided, however, that in no event shall
the protection afforded to the Executive hereunder be less than
that afforded under the Governing Documents as in effect im-
mediately prior to the Effective Date, or if later, the Change of
Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, the Executive may, upon not
less than 60 days' written notice to the Company, voluntarily
terminate employment for any reason (including early retirement
under the terms of any of the Company's retirement plans as in
effect from time to time); provided, however, any termination by
the Executive pursuant to Section 5(d) on account of Good Reason
(as defined therein) shall not be treated as a voluntary
termination under this Section 5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness),(ii) the
Executive's conviction or plea of nolo contendere to a felony;
(iii) the Executive's willful engagement in misconduct in
connection with employment which results in material damage to
the Company's business or reputation; or (iv) material breach of
Executive's duties hereunder which result in material damage to
the Company's business or reputation, in each of (ii) through
(iv) above, upon 30 days written notice to the Executive, the
opportunity for the Executive to be heard by the Board and the
good faith determination by at least two-thirds of the Company's
non-employee directors that Cause exists; provided, however, that
after the occurrence of a Change of Control (as hereinafter
defined), "Cause" shall be limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any
     duties inconsistent with the Executive's position, authority
     or responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

          (iv    any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the
     occurrence of a Change of Control; provided, however, the
     successor has had actual written notice of the existence of
     this Agreement and its terms and an opportunity to assume
     the Company's responsibilities under this Agreement during a
     period of 10 business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the Executive's having actual
knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.

          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representative under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i     the Executive's full Base Salary through the
     Date of Termination (the "Earned Salary");
     
          (ii    the Supplemental Retirement Benefits and the
     amount otherwise payable to or in respect of the Executive
     under the Company's otherwise applicable long-term incentive
     compensation and equity plans and programs (the "Incentive
     and Equity Amounts") it being understood that, in the event
     of death or disability, any applicable performance targets
     thereunder (to the extent not already determined as of the
     Termination Date) shall be deemed to have been met for the
     applicable performance period and that payments thereunder
     shall be pro-rated as of the Date of Termination; and in the
     event of a termination by reason of retirement, then the
     Supplemental Retirement Benefits and the Incentive and
     Equity Amounts, the Incentive and Equity Amounts being
     calculated and payable in accordance with the terms of the
     underlying plans and payable to the Executive when awards
     are payable to all other participants in such plans in
     accordance with the terms thereof, but prorated through the
     date of such retirement; and

          (iii   an amount (the "Pro-Rated Bonus") equal to the
     product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable
                    bonus plan (the "Actual Bonus Payment")
     
          (iv)        all vested amounts or benefits owing to the
     Executive under the Company's otherwise applicable employee
     benefit plans and programs, including any compensation
     previously deferred by the Executive (together with any
     accrued earnings thereon) and not yet paid by the Company
     and any accrued vacation pay not yet paid by the Company
     (the "Accrued Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall
be paid in cash in a single lump sum as soon as practicable ( but
in no event more than 20 days) following the Date of Termination.

Any Incentive and Equity Amounts and Supplemental Retirement
Benefits accrued by the Executive shall be payable in accordance
with the terms of the underlying plans.


          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason), the Company shall pay the Executive
the Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the
Date of Termination, or in accordance with the terms of the
underlying plan. 

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A),
               Executive's vested interest in such benefits shall
               accelerate; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a
     Change of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or, (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, it being
               understood that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination (the "Benefit Plans").  To
               the extent any such benefits cannot be provided
               under the terms of the applicable plan, policy or
               program, the Company shall provide a comparable
               benefit under another plan or from the Company's
               general assets.  The Executive's participation in
               the Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time permitted in
               accordance with the generally applicable terms of
               the governing Equity Documents) after the Date of
               Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

     (B) After the Occurrence of a Change of Control.

            (i   Payments.  If, following a Change of Control,
     the Company terminates the Executive's employment other than
     for Cause, or the Executive terminates his employment for
     Good Reason, the Company shall pay to the Executive the
     following amounts, either in a lump sum or in such other
     form of payment as is provided or elected by the Executive
     under the operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the
               calculation of Supplemental Retirement Benefits,
               Final Annual Compensation (as defined in the
               underlying plans) shall be equal to Final Annual
               Compensation as of the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein) and the elections of the Executive thereunder.

          (ii)  Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer,
               (the "End Date"), to continue participation
               (including, but not limited to, vesting and
               accruals) in all of the Company's employee and
               executive pension, welfare and fringe benefit
               plans, excluding the Supplemental Retirement
               Benefits (the "Benefit Plans").  To the extent any
               such benefits cannot be provided under the terms
               of the applicable plan, policy or program, the
               Company shall provide a comparable benefit under
               another plan or from the Company's general assets.

               The Executive's participation in the Benefit Plans
               will be on the same terms and conditions that
               would have applied had the Executive continued to
               be employed by the Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               Equity Documents for the period of time permitted
               in accordance with the generally applicable terms
               of the governing Equity Documents, after the Date
               of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
6(d), the amounts payable to the Executive pursuant to this
Section 6 following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under
this Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 6(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid
     or distributed to the Executive by the Company or any
     affiliated company (collectively, the "Covered Payments"),
     are or become subject to the tax (the "Excise Tax") imposed
     under Section 4999 of the Code or any similar tax that may
     hereafter be imposed, the Company shall pay to the Executive
     at the time specified in Section 6(e)(v) below an additional
     amount (the "Tax Reimbursement Payment") such that the net
     amount retained by the Executive with respect to such
     Covered Payments, after deduction of any Excise Tax on the
     Covered Payments and any Federal, state and local income,
     employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section 6(e), but
     before deduction for any Federal, state or local income or
     employment tax withholding on such Covered Payments, shall
     be equal to the amount of the Covered Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as
               "parachute payments" within the meaning of Section
               28OG of the Code, and all "parachute payments" in
               excess of the "base amount" (as defined under
               Section 28OG(b)(3) of the Code) shall be treated
               as subject to the Excise Tax, unless, and except
               to the extent that, in the good faith judgment of
               the Company's independent certified public
               accountants appointed prior to the Effective Date
               or tax counsel selected by such Accountants (the
               "Accountants"), the Company has a reasonable basis
               to conclude that such Covered Payments (in whole
               or in part) either do not constitute "parachute
               payments" or represent reasonable compensation for
               personal services actually rendered (within the
               meaning of Section 28OG(b)(4)(B) of the Code) in
               excess of the "base amount," or such "parachute
               payments" are otherwise not subject to such Excise
               Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the
     Tax Reimbursement Payment, the Executive shall be deemed to
     pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum
               reduction in Federal incomes taxes which could be
               obtained from the deduction of such state or local
               taxes if paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding
     or negotiations with the Internal Revenue Service to be less
     than the amount taken into account hereunder in calculating
     the Tax Reimbursement Payment made, the Executive shall
     repay to the Company, at the time that the amount of such
     reduction in the Excise Tax is finally determined, the
     portion of such prior Tax Reimbursement Payment that would
     not have been paid if such Excise Tax had been applied in
     initially calculating such Tax Reimbursement Payment, plus
     interest on the amount of such repayment at the rate
     provided in Section 1274(b)(2)(B) of the Code. 
     Notwithstanding the foregoing, in the event any portion of
     the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund
     or credit of such portion has been made to the Executive,
     and interest payable to the Company shall not exceed
     interest received or credited to the Executive by such tax
     authority for the period it held such portion.  The
     Executive and the Company shall mutually agree upon the
     course of action to be pursued (and the method of allocating
     the expenses thereof) if the Executive's good faith claim
     for refund or credit is denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service (the
     "Service") to exceed the amount taken into account hereunder
     at the time the Tax Reimbursement Payment is made
     (including, but not limited to, by reason of any payment the
     existence or amount of which cannot be determined at the
     time of the Tax Reimbursement Payment), the Company shall
     make an additional Tax Reimbursement Payment in respect of
     such excess (plus any interest or penalty payable with
     respect to such excess) at the time that the amount of such
     excess is finally determined, such that the net amount
     retained by the Executive with respect to the Covered
     Payments, after deduction of any Excise Tax on the Covered
     Payments and any Federal, state and local income, employment
     or other tax and Excise Tax on the Tax Reimbursement Payment
     provided for by this Section, but before deduction for any
     Federal, state or local income or employment tax withholding
     on such Covered Payments, shall be equal to the amount of
     the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises
     out of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for
     the cost of preparing the Executive's income tax returns for
     the year in which any payment by the Company may be
     characterized as a parachute payment.  The Executive shall
     notify the Company in writing of any such Claim as soon as
     practicable but in no event later than ten (10) business
     days after the Executive is informed of such Claim and shall
     cooperate with the Company in good faith to effectively
     contest the Claim.  The Company shall control all
     proceedings taken in connection with such contest and, at
     its sole option, may pursue or forego any and all
     administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect of such
     Claim and the Executive agrees to prosecute such contest as
     the Company shall determine.  Notwithstanding the foregoing,
     if the Company forgoes further prosecution of such contest,
     the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

          (v     The Tax Reimbursement Payment (or portion
     thereof) provided for in Section 6(e)(i) above shall be paid
     to the Executive not later than 10 business days following
     the payment of the Covered Payments; provided, however, that
     if the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date
     on which payment is due, the Company shall pay to the
     Executive by such date an amount estimated in good faith by
     the Accountants to be the minimum amount of such Tax Re-
     imbursement Payment and shall pay the remainder of such Tax
     Reimbursement Payment (together with interest at the rate
     provided in Section 1274(b)(2)(B) of the Code) as soon as
     the amount thereof can be determined, but in no event later
     than 45 calendar days after payment of the related Covered
     Payment.  In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

     7.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed  to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise
In the event that the Executive shall in good faith give a Notice
of Termination for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual
consent of the Company and the Executive and, except as provided
in the last preceding sentence, the Executive shall be entitled
to receive only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 11
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date, including,
but not limited to, that certain Employment Agreement between the
parties dated as of January 10, 1994.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City
of Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of
law or equity.  The arbitrator shall be acceptable to both the
Company and the Executive.  If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators, one appointed by each of the parties and the
third appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey 08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.

          (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.

          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.

                                 By:/s/  J. Michael Galvin, Jr.   
        
     Secretary                           J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee

                                 By: /s/ J. L. Jacobs            
                                         J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:

                              /s/  Michael J. Chesser             
        
                                   Michael J. Chesser

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
               ATLANTIC ENERGY, INC. and MICHAEL J. CHESSER
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and MICHAEL J. CHESSER (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________________       
BY:______________________________
                                   J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
                              Committee

                              BY:/s/ J. L. Jacobs
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Michael J. Chesser
                                  Michael J. Chesser



EX-99.5
12


                                                 EXHIBIT 10A(23)

                     EMPLOYMENT CONTINUATION AGREEMENT


          THIS AGREEMENT by and between Atlantic Energy, Inc., a
New Jersey corporation (the "Company"), and Marilyn T. Powell
(the "Executive"), is hereby dated this 10th day of August, 1995.


                           W I T N E S S E T H:


          WHEREAS, the Company or a subsidiary has employed the
Executive in an officer position and has determined that the
Executive holds an important position with the Company;

          WHEREAS, the Company believes that, in the event it is
confronted with a situation that could result in a change in
ownership or control of the Company or Atlantic City Electric
Company ("Electric"), continuity of management will be essential
to its ability to evaluate and respond to such situation in the
best interests of shareholders;

          WHEREAS, the Company understands that any such
situation will present significant concerns for the Executive
with respect to his financial and job security;

          WHEREAS, the Company desires to assure itself of the
Executive's services during the period in which it is confronting
such a situation, and to provide the Executive certain financial
assurances to enable the Executive to perform the
responsibilities of his position without undue distraction and to
exercise his judgment without bias due to his personal
circumstances;

          WHEREAS, to achieve these objectives, the Company and
the Executive desire to enter into an agreement providing the
Company and the Executive with certain rights and obligations
upon the occurrence of a Change of Control or Potential Change of
Control (as defined in Section 2);

          NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, it is hereby agreed by and
between the Company and the Executive as follows:

          1.  Operation of Agreement. (a)  Effective Date.  The
effective date of this Agreement shall be the earlier of the date
on which a Potential Change of Control or Change of Control
occurs (the "Effective Date"); provided, however, that if the
Executive is not employed by the Company or has received notice
of termination, on the Effective Date, this Agreement shall be
void and without effect.

          (b)  Termination of Agreement Following a Potential
Change of Control.  Notwithstanding Section l(a), in the event
the Effective Date occurs upon a Potential Change of Control,
this Agreement shall cease to be effective upon (i) a good faith
determination by the Board of Directors of the Company ("Board")
that the events giving rise to a Potential Change of Control will
not result in the occurrence of a Change of Control or (ii) the
discontinuance or termination of the events which constituted the
Potential Change of Control without resulting in a Change of
Control including, but not limited to, a failed hostile takeover
attempt.  Following such a determination by the Board, neither
the Company nor the Executive shall have any obligation to the
other under this Agreement, unless and until it thereafter again
becomes effective by reason of the occurrence of another
Potential Change of Control or any actual Change of Control.

     2.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

          (b)  Potential Change of Control.  For purposes of this
Agreement, a Potential Change of Control shall be deemed to have
occurred:

            (i   upon the approval by shareholders of an
     agreement by the Company, the consummation of which would
     result in a Change of Control of the Company as defined in
     (a) above; or

           (ii   upon the acquisition of beneficial ownership,
     directly or indirectly by any entity, person or group (other
     than the Company or a subsidiary or any Company employee
     benefit plan, including any trustee of such plan acting as
     such trustee) of securities of the Company representing 5%
     or more of the combined voting power of the Company's
     outstanding securities and the adoption by the Board of a
     resolution to the effect that a Potential Change of Control
     of the Company has occurred.

For purposes of this Section 2, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric. 

          3.  Employment Period.  Subject to Section 6 of this
Agreement, if the Executive is employed on the Effective Date,
the Company agrees to continue the Executive in its employ, and
the Executive agrees to remain in the employ of the Company, for
the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a
Change of Control occurs (the "Change of Control Date"). 
Notwithstanding the foregoing, if, prior to the Effective Date,
the Executive is demoted to a lower position than the position
held on the date first set forth above, the Board may declare
that this Agreement shall be without force and effect by written
notice delivered to the Executive within 30 days following such
demotion and prior to the occurrence of a Potential Change of
Control or a Change of Control.  Nothing contained herein is
intended to create a contract of employment between the Executive
and the Company prior to the Effective Date.

     4.  Position and Duties.  (a)  No Reduction in Position. 
During the Employment Period, the Executive's position (including
titles), authority and responsibilities shall be at least
commensurate with those held, exercised and assigned immediately
prior to the Effective Date; provided, however, that, during the
period from the occurrence of a Potential Change of Control until
the Change of Control Date (the "Pre-Change Effective Period"),
the Company may, in its discretion, reduce, modify or otherwise
change the Executive's position, authority or responsibilities,
and such reduction, modification or change shall not constitute
Good Reason.  Any subsequent reductions, modification or change
in the Executive's position, authority or responsibilities after
a Change of Control shall be governed by the provisions of
Article 6(d).  During the Pre-Change Effective Period the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date.

          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees,
in each case only if and to the extent not substantially
interfering with the performance of such responsibilities, and
(ii) periods of vacation and sick leave to which he is entitled. 
It is expressly understood and agreed that the Executive's
continuing to serve on any boards and committees on which he is
serving or with which he is otherwise associated immediately
preceding the Effective Date which is not in violation of any
Company policy shall not be deemed to interfere with the
performance of the Executive's services to the Company.

          5.  Compensation.  (a)  Base Salary.  During the
Employment Period, the Executive shall receive a base salary
("Base Salary") at an annual rate at least equal to the annual
salary paid to the Executive by the Company and any of its
affiliated companies immediately prior to the Effective Date. 
The Base Salary shall be reviewed at least once each year after
the Effective Date, and may be increased (but not decreased) at
any time and from time to time by action of the Board or any
committee thereof or any individual having authority to take such
action in accordance with the Company's regular practices.  Once
increased, any reference to Base Salary herein shall be a
reference to such increased amount.  Neither the Base Salary nor
any increase in Base Salary after the Effective Date shall serve
to limit or reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance, at least equal to the target percentage of his Base
Salary that could have been earned by, or awarded to, the
Executive in respect of the fiscal year in which the Effective
Date occurs.  Without limiting the generality of the foregoing,
following any Change of Control, the amount actually payable to
the Executive as an annual bonus shall not be less than an amount
equal to the higher of the bonus paid to the Executive for the
most recently ended fiscal year of the Company or the target
bonus for the relevant fiscal year (the "Minimum Bonus Amount"). 
Any amount payable in respect of the Annual Bonus Opportunity or
the Minimum Bonus Amount shall be paid not later than sixty (60)
days after the close of the fiscal year for which the amount (or
prorated portion) is earned or awarded, unless electively
deferred by the Executive pursuant to any deferral programs or
arrangements that the Company may make available to the
Executive.

     (c)  Long-term Incentive Compensation Programs and Equity
Programs.  During the Employment Period, the Executive shall par-
ticipate in all long-term incentive compensation programs and
equity programs for key executives at a level that is
commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter; provided,
however, that, during the Pre-Change Effective Period, the
Company may reduce the Executive's level of participation to the
extent that such reduction is part of a cost reduction program
that applies generally to all officers of the Company and such
reduction is in proportion to similar reductions applicable to
such other officers within the terms of the respective plan(s).

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
retirement, supplemental retirement or excess benefit (it being
understood that Executive's participation in the Supplemental
Retirement or Excess Benefit Plans shall be limited to
participation in the Supplemental Excess Retirement Plan II) 
(collectively, the "Supplemental Retirement Benefits"), deferred
compensation, savings, medical, dental, health, disability, group
life, accidental death and travel accident insurance plans and
programs of the Company and its affiliated companies at a level
that is commensurate with the Executive's participation in such
plans immediately prior to the Effective Date (except for the
Medical Executive Reimbursement Plan (the "MERP"), it being
understood that the MERP shall be terminated as of September 30,
1995), or, if more favorable to the Executive, at the level made
available to the Executive or other similarly situated executive
officers of the Company at any time thereafter; provided,
however, that, during the Pre-Change Effective Period, the
Company may reduce the Executive's level of participation (and
that of his dependents) to the extent that such reduction is part
of a cost reduction program that applies generally to all
officers of the Company and such reduction is in proportion to
similar reductions applicable to such other officers within the
terms of the respective plan(s).

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time during the Pre-Change Effective Period and, after
the occurrence of a Change in Control, as in effect immediately
prior to the Change of Control Date.  Notwithstanding the
foregoing, the Company may apply the policies and procedures in
effect after the Change of Control Date to the Executive, if such
policies and procedures are more favorable to the Executive than
those in effect immediately prior to the Change of Control Date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
Subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"), provided that in no event shall the
protection afforded to the Executive hereunder be less than that
afforded under the Governing Documents as in effect immediately
prior to the Effective Date.

          6.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, following a Change of Control
the Executive may, upon not less than 60 days' written notice to
the Company, voluntarily terminate employment for any reason
(including early retirement under the terms of any of the
Company's retirement plans as in effect from time to time);
provided, however, that any termination by the Executive pursuant
to Section 6(d) on account of Good Reason (as defined therein)
shall not be treated as a voluntary termination under this
Section 6(b).  The Executive expressly acknowledges and agrees
that any voluntary termination (other than a retirement under the
terms of any of the Company's plans) during the Pre-Change
Effective Period shall constitute a material breach of this
Agreement.

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) the Executive's conviction or plea of nolo contendere
to a felony; (ii) the Executive's willful engagement in
misconduct in connection with employment which results in
material damage to the Company's business or reputation; or (iii)
material breach of Executive's duties hereunder which result in
material damage to the Company's business or reputation, in each
of (i) through (iii) above, upon 30 days written notice to the
Executive, the opportunity for the Executive to be heard by the
Board and the good faith determination by at least two-thirds of
the Company's non-employee directors that Cause exists.

          (d)  Good Reason.  Following the occurrence of a Change
of Control, the Executive may terminate his employment for Good
Reason.  For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following, without the express written
consent of the Executive, after the occurrence of a Potential
Change of Control or a Change of Control:

            (i   (A) the assignment to the Executive of any
     duties inconsistent in any material adverse respect with the
     Executive's position, authority or responsibilities as
     contemplated by Section 4 of this Agreement, or (B) any
     other material adverse change in such position, including
     titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 4 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

           (iv   any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b), provided,
     however, that the successor has had actual written notice of
     the existence of this Agreement and its terms and an op-
     portunity to assume the Company's responsibilities under
     this Agreement during a period of 10 business days after
     receipt of such notice.

In no event shall the mere occurrence of a Change of Control,
absent any further impact on the Executive, be deemed to
constitute Good Reason.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the later of (x) the
occurrence of a Change of Control and (y) the Executive's having
actual knowledge of the events giving rise to such termination,
and which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon as
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.

          7.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representatives under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i)  the Executive's full Base Salary through the Date
               of Termination (the "Earned Salary");

          (ii)  the Supplemental Retirement Benefits, it being
          understood that upon the occurrence of a Change of
          Control, Executive's vested interest in such benefits 
          shall accelerate, and the amount otherwise payable to
          or in respect of the Executive under the Company's
          otherwise applicable long-term incentive compensation
          and equity plans and programs (the "Incentive and
          Equity Amounts"), all of which shall be fully
          accelerated and deemed earned upon the occurrence of a
          Change of Control, prorated through the Date of
          Termination in the event of death or disability, and,
          in the event of retirement, prorated through the date
          of retirement; and

          (iii)  an amount (the "Pro-Rated Bonus") equal to the
          product of (x) times (y), minus (z):

               (x) the Minimum Bonus Amount;

               (y) a fraction, the numerator of which is the
               number of days in the then current calendar year
               which have elapsed as of the Date of Termination,
               and the denominator of which is 365;

               (z) if Executive's termination occurs in the same
               calendar year as the Change of Control Date, an
               amount equal to the amount paid to the Executive
               under the Company's applicable bonus plan (the
               "Actual Bonus Payment")
     
          (iv)  all other vested amounts or benefits owing to the
          Executive under the Company's otherwise applicable
          employee benefit plans and programs, including any
          compensation previously deferred by the Executive
          (together with any accrued earnings thereon) and not
          yet paid by the Company and any accrued vacation pay
          not yet paid by the Company (the "Accrued
          Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall
be paid in cash in a single lump sum as soon as practicable (but
in no event more than 20 days) following the Date of Termination.

Any Incentive and Equity Amounts and Supplemental Retirement
Benefits accrued by the Executive shall be payable in accordance
with the terms of the underlying plans.

          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason following a Change of Control), the
Company shall pay the Executive the Earned Salary and the Accrued
Obligations (including, but not limited to, the Incentive and
Equity Amounts and Supplemental Retirement Benefits, each in
accordance with the terms of the underlying plan) in cash in a
single lump sum as soon as practicable (but in no event more than
20 days) following the Date of Termination, or in accordance with
the terms of the underlying plan.

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

            (i   Payments.  If, during the Employment Period, the
     Company terminates the Executive's employment other than for
     Cause, or after the occurrence of a Change of Control the
     Executive terminates his employment for Good Reason, the
     Company shall pay to the Executive the following amounts,
     either in a lump sum or in such other form of payment as is
     provided or elected by the Executive under the operative
     plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               two times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of two years and, after such
               credit has been granted, to be computed based upon
               the deemed age of the Executive at the end of such
               two year period, it being understood that upon the
               occurrence of a Change of Control, Executive's
               vested interest in such benefits shall accelerate
               and that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to the Final Compensation as of the
               Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein), and the elections of the Executive thereunder.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     his employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or (ii) the
               date on which the Executive is covered under any
               comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, excluding the
               Supplemental Retirement Benefits (the "Benefit
               Plans").  To the extent any such benefits cannot
               be provided under the terms of the applicable
               plan, policy or program, the Company shall provide
               a comparable benefit under another plan or from
               the Company's general assets.  The Executive's
               participation in the Benefit Plans will be on the
               same terms and conditions that would have applied
               had the Executive continued to be employed by the
               Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time permitted in
               accordance with the generally applicable terms of
               the governing Equity Documents after the Date of
               Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
7(d), the amounts payable to the Executive pursuant to this
Section 7 following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under
this Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 7(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e) Limitation on Payments.

          (i)  If any amounts payable to Executive pursuant to
     this Agreement are deemed to constitute Parachute Payments
     (as hereinafter defined) when added to any other payments
     which are deemed to constitute Parachute Payments, would
     result in the imposition on Executive of an excise tax under
     Section 4999 of the Code, such amounts shall be reduced by
     the smallest amount necessary to avoid the imposition of
     such excise tax; provided, however, that such amounts shall
     be so reduced only if, by reason of such reduction,
     Executive's Net After Tax Benefit (as hereinafter defined)
     shall exceed the Net After Tax Benefit if such reduction
     were not made.  The foregoing calculations (including any
     calculations required pursuant to the definition of Net
     After-Tax Benefit) shall be made by a certified public
     accountant mutually agreeable to the Company and the
     Executive.  In the event it becomes necessary to limit any
     payments to the Executive under this Agreement, Executive's
     health and life insurance shall be the last payments so
     limited.

          (ii)  For purposes of subparagraph (e)(i) above, the
     terms "Net After Tax Benefit" and "Parachute Payment" shall
     have the meanings set forth below:

          (a)  "Net After Tax Benefit" means the sum of (i) the
          total amounts payable to Executive under this
          Agreement, plus (ii) all other payments and benefits
          which Executive receives or is entitled to receive from
          the Company which would constitute a Parachute Payment,
          less (iii) the amount of federal income taxes payable
          with respect to the foregoing calculated at the maximum
          marginal income tax rate for each year in which the
          foregoing shall be paid to Executive (based upon the
          rate in effect for such year as set forth in the Code
          on the Date of Termination), less (iv) the amount of
          excise taxes imposed with respect to the payments and
          benefits described in (i) and (ii) above by Section
          4999 of the Code;

          (b)  "Parachute Payment" means any payment deemed to
          constitute a "parachute payment" as defined in Section
          280G of the Code.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or
otherwise, provided that, if the Executive's employment is
terminated during the Pre-Change Effective Period, the Company
reserves the right to assert any counterclaim it has against
Executive arising out of Executive's intentional or willful
misconduct (including, without limitation, fraud).  In the event
that the Executive shall in good faith give a Notice of
Termination for Good Reason and it shall thereafter be determined
that Good Reason did not exist, the employment of the Executive
shall, unless the Company and the Executive shall otherwise mu-
tually agree, be deemed to have terminated, at the date of giving
such purported Notice of Termination, by mutual consent of the
Company and the Executive and, except as provided in the last
preceding sentence, the Executive shall be entitled to receive
only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 12
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City
of Atlantic City, New Jersey or in the City of Pennsylvania and
except to the extent inconsistent with this Agreement, shall be
conducted in accordance with the Voluntary Labor Arbitration
Rules of the American Arbitration Association then in effect at
the time of the arbitration, and otherwise in accordance with
principles which would be applied by a court of law or equity. 
The arbitrator shall be acceptable to both the Company and the
Executive.  If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three
arbitrators, one appointed by each of the parties and the third
appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey  08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.
 (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.

          IN WITNESS WHEREOF, the Executive has hereunto set her
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.


                                 By:/s/ J. Michael Galvin, Jr.    
        
     Secretary                          J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel &
                                         Benefits Committee


                                 By:/s/ J. L. Jacobs           
                                        J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:


                                 /s/ Marilyn T. Powell      
                                     Marilyn T. Powell

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
                ATLANTIC ENERGY, INC. and MARILYN T. POWELL
                          Dated November 9, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 9th day of
November, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and MARILYN T. POWELL (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________________       
BY:______________________________
                                   J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits 
                              Committee

                              BY:/s/ J. L. Jacobs
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Marilyn T. Powell
                                  Marilyn T. Powell




EX-99.6
13


                                                 EXHIBIT 10A(6)1

                      ATLANTIC CITY ELECTRIC COMPANY 
                  SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                           Amendment No. 1995-1

          Atlantic City Electric Company, a New Jersey
corporation, hereby adopts this Amendment No. 1995-1 to the
Atlantic City Electric Company Supplemental Executive Retirement
Plan (the "Plan").  This amendment is adopted pursuant to the
provisions of Section 5.3 of the Plan.

          1.   Section 1.2 is added to the Plan and reads as
follows and the sections following such section shall be
renumbered accordingly as necessary:

               1.2  "Change of Control" means that one
          of the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii) when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.

          2.   Section 1.3 of the Plan is amended to read as
follows:

               1.3 "Company" means Atlantic City
          Electric Company, its successors (whether
          direct or indirect by purchase, merger,
          consolidation or otherwise) to all or
          substantially all of the business or assets
          of Atlantic City Electric Company or its
          assigns, except that for purposes of the
          definition of Change of Control it shall mean
          Atlantic Energy, Inc., and to the extent a
          participant is employed by Atlantic City
          Electric Company upon the occurrence of an
          event which constitutes a Change of Control,
          Atlantic City Electric Company.

          3.   Section 3.4 is added to the Plan and reads as
follows:

               3.4  Notwithstanding any other provision
          of the Plan, in the event of a Change of
          Control, the benefits described in sections
          3.1 through 3.3 shall become immediately
          vested to the extent not already vested.

          4.  Section 5.3 is amended to read as follows:

               5.3  Amendment and Termination.  In the
          event of a Change of Control, the SERP may
          not be amended, curtailed, or terminated.  In
          the absence of a Change of Control, the SERP
          may be amended, curtailed, or terminated at
          any time by the Board of Directors; provided,
          however, that at the time such action is
          taken, to the extent that a Qualified
          Executive or his Designated Beneficiary is
          then entitled to receive benefits pursuant to
          paragraph 2.1, 2.2 or 2.3, such benefits
          shall nonetheless be paid as if the SERP were
          still in existence and without reference to
          such change if the effect of such change
          would be to reduce the amount, frequency or
          duration of benefit payments; and further
          provided that no amendment or curtailment of
          the SERP pursuant hereto shall have the
          effect of reducing the accrued benefit under
          the SERP of any Qualified Executive.


          5.   The amendments memorialized in this instrument
were made by action of the Board of Directors of the Company on
August 10, 1995 and were effective on that date.


                              By:________________________


                              Title:_____________________
                                 RIDERS TO
                      ATLANTIC CITY ELECTRIC COMPANY
                SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - II
                                     
     
          1.   Section 1.2 of the Plan is modified to read as
follows:

               1.2  "Change of Control" means that one
          of the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii) when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.

          2.  Section 1.3 of the Plan is modified to read as
follows:

               1.3 "Company" means Atlantic City
          Electric Company, any of its subsidiaries
          authorized by the Board of Directors to
          participate in this Plan with respect to its
          employees, its successors (whether direct or
          indirect by purchase, merger, consolidation
          or otherwise) to all or substantially all of
          the business or assets of Atlantic City
          Electric Company, and its assigns, except
          that for purposes of the definition of Change
          of Control it shall mean Atlantic Energy,
          Inc., and to the extent a participant is
          employed by Atlantic City Electric Company
          upon the occurrence of an event which
          constitutes a Change of Control, Atlantic
          City Electric Company.

          3.  Section 2.1 of the Plan is modified to read as
follows:

          [1st paragraph and table remain, 2nd paragraph is
replaced with the following]

          Notwithstanding any other provision of the
          Plan, in the event of a Change of Control,
          each Qualified Executive shall be 100%
          vested.
          
          4.  Section 5.1 of the Plan is modified to read as
follows:

               5.1  Forfeitures.  In the event of a
          Change of Control this paragraph 5.1 of the
          Plan shall be void and of no force and
          effect.  In the absence of a Change of
          Control, notwithstanding anything contained
          in this Plan to the contrary, a Qualified
          Executive shall forfeit all benefits not yet
          paid from this Plan in the event the Company
          terminates his employment for Cause or for
          his breach of the Non-Competition or Non-
          Disclosure provisions specified in paragraphs
          5.2 and 5.3.  For purposes of this paragraph,
          "Cause" means:

          (i) willful and continuous failure by a
          participant to perform his duties (other than
          resulting from incapacity due to physical or
          mental illness), (ii) a participant's conviction
          or plea of nolo contendere to a felony; (iii) a
          participant's willful engagement in misconduct in
          connection with employment which results in
          material damage to the Company's business or
          reputation; or (iv) material breach of Executive's
          duties under any applicable employment agreement
          which results in material damage to the Company's
          business or reputation, in each of (ii) through
          (iv) above, upon 30 days written notice to the
          Executive, the opportunity for the Executive to be
          heard by the Board and the good faith
          determination by at least two-thirds of the
          Company's non-employee directors that Cause
          exists; provided, however, that after the
          occurrence of a Change of Control (as hereinafter
          defined), "Cause" shall be limited to (ii) through
          (iv) above.

          5.  Section 6.3 of the Plan is modified to read as
follows:

               6.3  Amendment and Termination.  In the
          event of a Change of Control, the Plan may
          not be amended, curtailed, or terminated.  In
          the absence of a Change of Control, the Plan
          may be amended, curtailed, or terminated at
          any time by the Board of Directors; provided,
          however, that at the time such action is
          taken, to the extent that a Qualified
          Executive or his Designated Beneficiary is
          then entitled to receive benefits pursuant to
          paragraph 2.1, 2.2 or 2.3, such benefits
          shall nonetheless be paid as if the Plan were
          still in existence and without reference to
          such change if the effect of such change
          would be to reduce the amount, frequency or
          duration of benefit payments; and further
          provided that no amendment or curtailment of
          the Plan pursuant hereto shall have the
          effect of reducing the accrued benefit under
          the Plan of any Qualified Executive.  



EX-99.7
14


                                                EXHIBIT 10a(14)1

                           ATLANTIC ENERGY, INC.
                       RETIREMENT PLAN FOR DIRECTORS

                           Amendment No. 1995-1

          Atlantic Energy, Inc. hereby adopts this Amendment No.
1995-1 to the instrument setting forth the Atlantic Energy, Inc.
Retirement Plan For Directors (the "Plan").  This amendment is
adopted pursuant to section 5.1 of the Plan.

          1.   Section 2.3 is added to the Plan and reads as
follows and sections following such section shall be renumbered
accordingly as necessary:

               2.3  "Change of Control" means that one
          of the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii) when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.

          2.   Section 3.5 is added to the Plan and reads as
follows:

               3.5  Change of Control.  Notwithstanding
          any other provision of the Plan, in the event
          of a Change of Control, the benefits
          described in this Article of the Plan shall
          become immediately vested to the extent not
          already vested for each Eligible Director. 
          In the event any Eligible Director has served
          less than five full years as of the Change of
          Control, he shall be considered as having
          five full years of service for purposes of
          the actuarial calculations described in this
          Article of the Plan.  
          
          3.  Section 5.1 of the Plan is amended to read as
follows:

               5.1  Amendment, suspension or
          termination.  In the event of a Change of
          Control, this Plan may not be amended,
          suspended or terminated.  In the absence of a
          Change of Control, the Board reserves the
          right to amend, suspend, or terminate the
          Plan, or any provision hereof, including
          without limitation this Section 5.1, without
          the consent of any Eligible Director.  Unless
          an Eligible Director shall consent thereto in
          writing, no amendment, suspension or
          termination shall reduce the Annual
          Retirement Benefit of (a) any Eligible
          Director who at such time is entitled to an
          Annual Retirement Benefit, whether or not
          such Eligible Director is receiving an Annual
          Retirement Benefit at such time, or (b) any
          Eligible Director who would have been
          entitled to an Annual Retirement Benefit if
          such Eligible Director had retired on that
          date, calculated on the basis of such
          Eligible Director's service as a director and
          the annual retainer in effect at such time. 
          Amendment, suspension or termination of the
          Plan notwithstanding, the Annual Retirement
          Benefit shall commence and be paid in
          accordance with the otherwise applicable
          provision of the Plan (Section 3.3).


          4.  The amendments memorialized in this instrument were
made by action of the Committee on August 10, 1995 and were
effective on that date.

                              By:_____________________


                              Title:__________________



EX-99.8
15


                                              Exhibit #10a(17)1
                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey
corporation (the "Company"), and Meredith I. Harlacher, Jr. (the
"Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  The term of this Agreement
shall commence on the date hereof (the "Effective Date") and
shall continue until the second anniversary of the Effective Date
(the "Employment Period"); provided, however, that the Employment
Period shall be automatically renewed for two years unless either
party shall send the other written notice of its intention to
terminate the agreement at the end of such Employment Period one
year prior to the end of such Employment Period; and, provided,
further, that upon the occurrence of a Change of Control, the
Employment Period shall become three years and shall commence on
the date of the Change of Control, and shall thereafter be
automatically renewed for two years unless either party shall
send the other written notice of its intention to terminate the
agreement one year prior to the end of the then current
Employment Period.
          
          2.  Place of Employment.  The Executive's services
during the term of this Agreement shall be performed primarily at
the principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably
require in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees
to employ the Executive as its Vice President, Power System and
as the Senior Vice President, Power System of Atlantic City
Electric Company ("Electric") for the Employment Period.  The
Executive shall exercise his reasonable best efforts in
furtherance of, and shall devote substantially all of his working
time and attention to the affairs of the Company and its
affiliates, and shall perform such duties and services as may
reasonably be assigned to him by, and shall report directly to
the Chief Executive Officer and the Board of Directors of the
Company (the "Board").
   
          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees on
which he served prior to the Effective Date, in each case only if
and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of
vacation and sick leave to which he is entitled.  It is expressly
understood and agreed that the Executive's continuing to serve on
any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the Effective Date
which is not in violation of any Company policy shall not be
deemed to interfere with the performance of the Executive's
services to the Company.  In addition, the Executive may commence
service as a director of other corporations or organizations
after the Effective Date upon approval by the Board which, in the
judgment of the Board, will not present any conflict of interest
with the Company or any subsidiary or affiliate thereof, and
which would not affect the performance of Executive's duties
pursuant to this Agreement, which approval shall not be
unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility
under the Federal Power Act, or any successor act, (ii) any bank,
trust company, banking association or firm that is authorized by
law to underwrite or participate in the marketing of securities
of a public utility, or (iii) any company supplying electrical
equipment to the Company, nor (b) accept any such position and
commence the performance of any duties or services in such
capacity (an "Interlock"), unless the Executive shall have first
(x) furnished the Board with at least thirty (30) days prior
written notice of his intention to create such Interlock and (y)
secured, if the Board shall request that such action be taken,
any necessary authorization for such Interlock, in form and
substance satisfactory to the Board, from the Federal Energy
Regulatory Commission, or successor regulatory agency, pursuant
to Section 305(b) of the Federal Power Act, or any supplement or
amendment thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall
be reviewed at least once each year after the Effective Date, and
may be increased (but not decreased) at any time and from time to
time by action of the Board or any committee thereof or any
individual having authority to take such action in accordance
with the Company's regular practices.  Once increased, any
reference to Base Salary herein shall be a reference to such
increased amount.  Neither the Base Salary nor any increase in
Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid
to the Executive for the most recently completed fiscal year of
the Company or the target bonus for the then current fiscal year
(the "Minimum Bonus Amount").  Any amount payable in respect of
the Annual Bonus Opportunity or the Minimum Bonus Amount shall be
paid no later than sixty (60) days after the close of the fiscal
year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to
any deferral programs or arrangements that the Company may make
available to the Executive.

          (c)  Long-term Incentive Compensation Programs and
Equity Programs.  During the Employment Period, the Executive
shall participate in all long-term incentive compensation
programs and equity programs for key executives at a level that
is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter.

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
supplemental retirement or excess benefit (collectively, the
"Supplemental Retirement Benefits"), deferred compensation,
savings, medical, dental, health, disability, group life,
accidental death and travel accident insurance plans and programs
of the Company and its affiliated companies at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive's participation in such plans
immediately prior to the Effective Date (except for the Medical
Executive Reimbursement Plan (the "MERP"), it being understood
that the MERP shall be terminated as of September 30, 1995), or,
if more favorable to the Executive, at the level made available
to the Executive or other similarly situated executive officers
of the Company and its affiliated companies at any time
thereafter.

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time; provided; however, that in no event shall such
policies and procedures after the occurrence of a Change of
Control be less favorable to the Executive than immediately prior
to a Change of Control.  Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the
Change of Control date to the Executive, if such policies and
procedures are more favorable to the Executive than those in
effect immediately prior to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to 
the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"); provided, however, that in no event shall
the protection afforded to the Executive hereunder be less than
that afforded under the Governing Documents as in effect im-
mediately prior to the Effective Date, or if later, the Change of
Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, the Executive may, upon not
less than 60 days' written notice to the Company, voluntarily
terminate employment for any reason (including early retirement
under the terms of any of the Company's retirement plans as in
effect from time to time); provided, however, any termination by
the Executive pursuant to Section 5(d) on account of Good Reason
(as defined therein) shall not be treated as a voluntary
termination under this Section 5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness),(ii) the
Executive's conviction or plea of nolo contendere to a felony;
(iii) the Executive's willful engagement in misconduct in
connection with employment which results in material damage to
the Company's business or reputation; or (iv) material breach of
Executive's duties hereunder which result in material damage to
the Company's business or reputation, in each of (ii) through
(iv) above, upon 30 days written notice to the Executive, the
opportunity for the Executive to be heard by the Board and the
good faith determination by at least two-thirds of the Company's
non-employee directors that Cause exists; provided, however, that
after the occurrence of a Change of Control (as hereinafter
defined), "Cause" shall be limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any
     duties inconsistent with the Executive's position, authority
     or responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

          (iv    any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the
     occurrence of a Change of Control; provided, however, the
     successor has had actual written notice of the existence of
     this Agreement and its terms and an opportunity to assume
     the Company's responsibilities under this Agreement during a
     period of 10 business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the Executive's having actual
knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.

          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representative under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i     the Executive's full Base Salary through the
     Date of Termination (the "Earned Salary");
     
          (ii    the Supplemental Retirement Benefits and the
     amount otherwise payable to or in respect of the Executive
     under the Company's otherwise applicable long-term incentive
     compensation and equity plans and programs (the "Incentive
     and Equity Amounts") it being understood that, in the event
     of death or disability, any applicable performance targets
     thereunder (to the extent not already determined as of the
     Termination Date) shall be deemed to have been met for the
     applicable performance period and that payments thereunder
     shall be pro-rated as of the Date of Termination; and in the
     event of a termination by reason of retirement, then the
     Supplemental Retirement Benefits and the Incentive and
     Equity Amounts, the Incentive and Equity Amounts being
     calculated and payable in accordance with the terms of the
     underlying plans and payable to the Executive when awards
     are payable to all other participants in such plans in
     accordance with the terms thereof, but prorated through the
     date of such retirement; and

          (iii   an amount (the "Pro-Rated Bonus") equal to the
     product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable
                    bonus plan (the "Actual Bonus Payment")
     
          (iv)        all vested amounts or benefits owing to the
     Executive under the Company's otherwise applicable employee
     benefit plans and programs, including any compensation
     previously deferred by the Executive (together with any
     accrued earnings thereon) and not yet paid by the Company
     and any accrued vacation pay not yet paid by the Company
     (the "Accrued Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall
be paid in cash in a single lump sum as soon as practicable ( but
in no event more than 20 days) following the Date of Termination. 
Any Incentive and Equity Amounts and Supplemental Retirement
Benefits accrued by the Executive shall be payable in accordance
with the terms of the underlying plans.


          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason), the Company shall pay the Executive
the Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the
Date of Termination, or in accordance with the terms of the
underlying plan. 

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A),
               Executive's vested interest in such benefits shall
               accelerate; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a
     Change of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or, (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, it being
               understood that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination (the "Benefit Plans").  To
               the extent any such benefits cannot be provided
               under the terms of the applicable plan, policy or
               program, the Company shall provide a comparable
               benefit under another plan or from the Company's
               general assets.  The Executive's participation in
               the Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time permitted in
               accordance with the generally applicable terms of
               the governing Equity Documents) after the Date of
               Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

     (B) After the Occurrence of a Change of Control.

            (i   Payments.  If, following a Change of Control,
     the Company terminates the Executive's employment other than
     for Cause, or the Executive terminates his employment for
     Good Reason, the Company shall pay to the Executive the
     following amounts, either in a lump sum or in such other
     form of payment as is provided or elected by the Executive
     under the operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the
               calculation of Supplemental Retirement Benefits,
               Final Annual Compensation (as defined in the
               underlying plans) shall be equal to Final Annual
               Compensation as of the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein) and the elections of the Executive thereunder.

          (ii)  Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer,
               (the "End Date"), to continue participation
               (including, but not limited to, vesting and
               accruals) in all of the Company's employee and
               executive pension, welfare and fringe benefit
               plans, excluding the Supplemental Retirement
               Benefits (the "Benefit Plans").  To the extent any
               such benefits cannot be provided under the terms
               of the applicable plan, policy or program, the
               Company shall provide a comparable benefit under
               another plan or from the Company's general assets. 
               The Executive's participation in the Benefit Plans
               will be on the same terms and conditions that
               would have applied had the Executive continued to
               be employed by the Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               Equity Documents for the period of time permitted
               in accordance with the generally applicable terms
               of the governing Equity Documents, after the Date
               of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
6(d), the amounts payable to the Executive pursuant to this
Section 6 following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under
this Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 6(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid
     or distributed to the Executive by the Company or any
     affiliated company (collectively, the "Covered Payments"),
     are or become subject to the tax (the "Excise Tax") imposed
     under Section 4999 of the Code or any similar tax that may
     hereafter be imposed, the Company shall pay to the Executive
     at the time specified in Section 6(e)(v) below an additional
     amount (the "Tax Reimbursement Payment") such that the net
     amount retained by the Executive with respect to such
     Covered Payments, after deduction of any Excise Tax on the
     Covered Payments and any Federal, state and local income,
     employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section 6(e), but
     before deduction for any Federal, state or local income or
     employment tax withholding on such Covered Payments, shall
     be equal to the amount of the Covered Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as
               "parachute payments" within the meaning of Section
               28OG of the Code, and all "parachute payments" in
               excess of the "base amount" (as defined under
               Section 28OG(b)(3) of the Code) shall be treated
               as subject to the Excise Tax, unless, and except
               to the extent that, in the good faith judgment of
               the Company's independent certified public
               accountants appointed prior to the Effective Date
               or tax counsel selected by such Accountants (the
               "Accountants"), the Company has a reasonable basis
               to conclude that such Covered Payments (in whole
               or in part) either do not constitute "parachute
               payments" or represent reasonable compensation for
               personal services actually rendered (within the
               meaning of Section 28OG(b)(4)(B) of the Code) in
               excess of the "base amount," or such "parachute
               payments" are otherwise not subject to such Excise
               Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the
     Tax Reimbursement Payment, the Executive shall be deemed to
     pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum
               reduction in Federal incomes taxes which could be
               obtained from the deduction of such state or local
               taxes if paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding
     or negotiations with the Internal Revenue Service to be less
     than the amount taken into account hereunder in calculating
     the Tax Reimbursement Payment made, the Executive shall
     repay to the Company, at the time that the amount of such
     reduction in the Excise Tax is finally determined, the
     portion of such prior Tax Reimbursement Payment that would
     not have been paid if such Excise Tax had been applied in
     initially calculating such Tax Reimbursement Payment, plus
     interest on the amount of such repayment at the rate
     provided in Section 1274(b)(2)(B) of the Code. 
     Notwithstanding the foregoing, in the event any portion of
     the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund
     or credit of such portion has been made to the Executive,
     and interest payable to the Company shall not exceed
     interest received or credited to the Executive by such tax
     authority for the period it held such portion.  The
     Executive and the Company shall mutually agree upon the
     course of action to be pursued (and the method of allocating
     the expenses thereof) if the Executive's good faith claim
     for refund or credit is denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service (the
     "Service") to exceed the amount taken into account hereunder
     at the time the Tax Reimbursement Payment is made
     (including, but not limited to, by reason of any payment the
     existence or amount of which cannot be determined at the
     time of the Tax Reimbursement Payment), the Company shall
     make an additional Tax Reimbursement Payment in respect of
     such excess (plus any interest or penalty payable with
     respect to such excess) at the time that the amount of such
     excess is finally determined, such that the net amount
     retained by the Executive with respect to the Covered
     Payments, after deduction of any Excise Tax on the Covered
     Payments and any Federal, state and local income, employment
     or other tax and Excise Tax on the Tax Reimbursement Payment
     provided for by this Section, but before deduction for any
     Federal, state or local income or employment tax withholding
     on such Covered Payments, shall be equal to the amount of
     the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises
     out of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for
     the cost of preparing the Executive's income tax returns for
     the year in which any payment by the Company may be
     characterized as a parachute payment.  The Executive shall
     notify the Company in writing of any such Claim as soon as
     practicable but in no event later than ten (10) business
     days after the Executive is informed of such Claim and shall
     cooperate with the Company in good faith to effectively
     contest the Claim.  The Company shall control all
     proceedings taken in connection with such contest and, at
     its sole option, may pursue or forego any and all
     administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect of such
     Claim and the Executive agrees to prosecute such contest as
     the Company shall determine.  Notwithstanding the foregoing,
     if the Company forgoes further prosecution of such contest,
     the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

          (v     The Tax Reimbursement Payment (or portion
     thereof) provided for in Section 6(e)(i) above shall be paid
     to the Executive not later than 10 business days following
     the payment of the Covered Payments; provided, however, that
     if the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date
     on which payment is due, the Company shall pay to the
     Executive by such date an amount estimated in good faith by
     the Accountants to be the minimum amount of such Tax Re-
     imbursement Payment and shall pay the remainder of such Tax
     Reimbursement Payment (together with interest at the rate
     provided in Section 1274(b)(2)(B) of the Code) as soon as
     the amount thereof can be determined, but in no event later
     than 45 calendar days after payment of the related Covered
     Payment.  In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

     7.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed  to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise
In the event that the Executive shall in good faith give a Notice
of Termination for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual
consent of the Company and the Executive and, except as provided
in the last preceding sentence, the Executive shall be entitled
to receive only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 11
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date, including,
but not limited to, that certain Employment Agreement between the
parties dated as of February 10th, 1994.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City
of Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of
law or equity.  The arbitrator shall be acceptable to both the
Company and the Executive.  If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators, one appointed by each of the parties and the
third appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey 08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.

          (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.


          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.

                                 By:  /s/ J. Michael Galvin, Jr.
Secretary                                J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee

                                 By:/s/  J. L. Jacobs          
                                         J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:

                              /s/  Meredith I. Harlacher, Jr.              
                                   Meredith I. Harlacher, Jr.
 
                   SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
           ATLANTIC ENERGY, INC. and MEREDITH I. HARLACHER, JR.
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and MEREDITH I. HARLACHER, JR. (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one  (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

__________________            BY:/s/ J. Michael Galvin, Jr.
                                     J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
Committee

                              BY:/s/ J. L. Jacobs         
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Meredith I. Harlacher, Jr.
                                  Meredith I. Harlacher, Jr.



EX-99.9
16


                                                 Exhibit 10a(24)

                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey corporation
(the "Company"), and Scott B. Ungerer, (the "Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  The term of this Agreement shall
commence on the date hereof (the "Effective Date") and shall
continue until the second anniversary of the Effective Date (the
"Employment Period"); provided, however, that the Employment Period
shall be automatically renewed for two years unless either party
shall send the other written notice of its intention to terminate
the agreement at the end of such Employment Period one year prior
to the end of such Employment Period; and, provided, further, that
upon the occurrence of a Change of Control, the Employment Period
shall become three years and shall commence on the date of the
Change of Control, and shall thereafter be automatically renewed
for two years unless either party shall send the other written
notice of its intention to terminate the agreement one year prior
to the end of the then current Employment Period.
          
          2.  Place of Employment.  The Executive's services during
the term of this Agreement shall be performed primarily at the
principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably require
in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees to
employ the Executive as its Vice President, Enterprise Activities
and as President and Chief Operating Officer of Atlantic Energy
Enterprises, Inc. for the Employment Period.  The Executive shall
exercise his reasonable best efforts in furtherance of, and shall
devote substantially all of his working time and attention to the
affairs of the Company and its affiliates, and shall perform such
duties and services as may reasonably be assigned to him by, and
shall report directly to the Chief Executive Officer and the Board
of Directors of the Company (the "Board") and the Board of
Directors of AEE.
   
          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during normal
business hours to the business and affairs of the Company and to
use his best efforts to perform faithfully and efficiently the
responsibilities assigned to him hereunder, to the extent necessary
to discharge such responsibilities, except for (i) time spent in
managing his personal, financial and legal affairs and serving on
corporate, civic or charitable boards or committees on which he
served prior to the Effective Date, in each case only if and to the
extent not substantially interfering with the performance of such
responsibilities, and (ii) periods of vacation and sick leave to
which he is entitled.  It is expressly understood and agreed that
the Executive's continuing to serve on any boards and committees on
which he is serving or with which he is otherwise associated im-
mediately preceding the Effective Date which is not in violation of
any Company policy shall not be deemed to interfere with the
performance of the Executive's services to the Company.  In
addition, the Executive may commence service as a director of other
corporations or organizations after the Effective Date upon
approval by the Board which, in the judgment of the Board, will not
present any conflict of interest with the Company or any subsidiary
or affiliate thereof, and which would not affect the performance of
Executive's duties pursuant to this Agreement, which approval shall
not be unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility under
the Federal Power Act, or any successor act, (ii) any bank, trust
company, banking association or firm that is authorized by law to
underwrite or participate in the marketing of securities of a
public utility, or (iii) any company supplying electrical equipment
to the Company, nor (b) accept any such position and commence the
performance of any duties or services in such capacity (an
"Interlock"), unless the Executive shall have first (x) furnished
the Board with at least thirty (30) days prior written notice of
his intention to create such Interlock and (y) secured, if the
Board shall request that such action be taken, any necessary
authorization for such Interlock, in form and substance
satisfactory to the Board, from the Federal Energy Regulatory
Commission, or successor regulatory agency, pursuant to Section
305(b) of the Federal Power Act, or any supplement or amendment
thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall be
reviewed at least once each year after the Effective Date, and may
be increased (but not decreased) at any time and from time to time
by action of the Board or any committee thereof or any individual
having authority to take such action in accordance with the
Company's regular practices.  Once increased, any reference to Base
Salary herein shall be a reference to such increased amount. 
Neither the Base Salary nor any increase in Base Salary after the
Effective Date shall serve to limit or reduce any other obligation
of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid to
the Executive for the most recently completed fiscal year of the
Company or the target bonus (which, if established in an affiliate
company, to be consistent with AEI shall mean one hundred percent
as the target rather than any greater percentage) for the then
current fiscal year (the "Minimum Bonus Amount").  Any amount
payable in respect of the Annual Bonus Opportunity or the Minimum
Bonus Amount shall be paid no later than sixty (60) days after the
close of the fiscal year for which the amount (or prorated portion)
is earned or awarded, unless electively deferred by the Executive
pursuant to any deferral programs or arrangements that the Company
may make available to the Executive.

          (c)  Long-term Incentive Compensation Programs and Equity
Programs.  During the Employment Period, the Executive shall par-
ticipate in all long-term incentive compensation programs and
equity programs for key executives at a level that is commensurate
with the Executive's participation in such plans immediately prior
to the Effective Date, or, if more favorable to the Executive, at
such level(s) as may be made available to the Executive and other
similarly situated executive officers of the Company or to
Executive as an Officer of an affiliated company, from time to time
thereafter.

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall be
entitled to participate in or be covered under all pension,
supplemental retirement or excess benefit (collectively, the
"Supplemental Retirement Benefits"), deferred compensation,
savings, medical, dental, health, disability, group life,
accidental death and travel accident insurance plans and programs
of the Company and its affiliated companies at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive's participation in such plans immediately
prior to the Effective Date (except for the Medical Executive
Reimbursement Plan (the "MERP"), it being understood that the MERP
shall be terminated as of September 30, 1995), or, if more
favorable to the Executive, at the level made available to the
Executive as an Officer of an affiliated company, from time to time
thereafter.

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the policies and procedures of the Company as in effect from time
to time; provided; however, that in no event shall such policies
and procedures after the occurrence of a Change of Control be less
favorable to the Executive than immediately prior to a Change of
Control.  Notwithstanding the foregoing, the Company may apply the
policies and procedures in effect after the Change of Control date
to the Executive, if such policies and procedures are more
favorable to the Executive than those in effect immediately prior
to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the Employment
Period, the Executive shall be entitled to paid vacation and fringe
benefits at a level that is commensurate with the paid vacation and
fringe benefits available to the Executive immediately prior to the
Effective Date, or, if more favorable to  the Executive, at the
level made available from time to time to the Executive or other
similarly situated executive officers at any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the "Governing
Documents"); provided, however, that in no event shall the
protection afforded to the Executive hereunder be less than that
afforded under the Governing Documents as in effect immediately
prior to the Effective Date, or if later, the Change of Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's death,
Permanent Disability (as defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), except that
a six month period shall be substituted for the twelve month period
provided for therein) or voluntary retirement under any of the
Company's retirement plans as in effect from time to time.

          (b)  Voluntary Termination.  Notwithstanding anything in
this Agreement to the contrary, the Executive may, upon not less
than 60 days' written notice to the Company, voluntarily terminate
employment for any reason (including early retirement under the
terms of any of the Company's retirement plans as in effect from
time to time); provided, however, any termination by the Executive
pursuant to Section 5(d) on account of Good Reason (as defined
therein) shall not be treated as a voluntary termination under this
Section 5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness),(ii) the Executive's
conviction or plea of nolo contendere to a felony; (iii) the
Executive's willful engagement in misconduct in connection with
employment which results in material damage to the Company's
business or reputation; or (iv) material breach of Executive's
duties hereunder which result in material damage to the Company's
business or reputation, in each of (ii) through (iv) above, upon 30
days written notice to the Executive, the opportunity for the
Executive to be heard by the Board and the good faith determination
by at least two-thirds of the Company's non-employee directors that
Cause exists; provided, however, that after the occurrence of a
Change of Control (as hereinafter defined), "Cause" shall be
limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any duties
     inconsistent with the Executive's position, authority or
     responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company of
     this Agreement;

          (iii   the Company's requiring the Executive to be based
     at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change of
     Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

          (iv    any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the occurrence
     of a Change of Control; provided, however, the successor has
     had actual written notice of the existence of this Agreement
     and its terms and an opportunity to assume the Company's
     responsibilities under this Agreement during a period of 10
     business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice given,
in the case of a termination for Cause, within 10 business days of
the Company's having actual knowledge of the events giving rise to
such termination, and in the case of a termination for Good Reason,
within 180 days of the Executive's having actual knowledge of the
events giving rise to such termination, and which (i) indicates the
specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment
under the provision so indicated, and (iii) if the termination date
is other than the date of receipt of such notice, specifies the
termination date of this Agreement (which date shall be not more
than 15 days after the giving of such notice).  The failure by the
Executive to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall
not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his
rights hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case of
a termination for which a Notice of Termination is required, the
date of receipt of such Notice of Termination or, if later, the
date specified therein, as the case may be, and (ii) in all other
cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon practicable
following the Date of Termination, the Executive shall return to
the Company all property of the Company and all copies thereof in
the Executive's possession or under his control.

          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the Executive's
employment is terminated during the Employment Period by reason of
the Executive's death, Permanent Disability or voluntary retirement
this Agreement shall terminate without further obligations to the
Executive or the Executive's legal representatives under this
Agreement other than those obligations accrued hereunder at the
Date of Termination, and the Company shall pay or provide to the
Executive or the Executive's legal representative under this
Agreement the following amounts either in a lump sum or in such
other form of payment as is provided or elected by the Executive
under the operative plan:

          (i     the Executive's full Base Salary through the Date
     of Termination (the "Earned Salary");
     
          (ii    the Supplemental Retirement Benefits and the
     amount otherwise payable to or in respect of the Executive
     under the Company's otherwise applicable long-term incentive
     compensation and equity plans and programs (the "Incentive and
     Equity Amounts") it being understood that, in the event of
     death or disability, any applicable performance targets
     thereunder (to the extent not already determined as of the
     Termination Date) shall be deemed to have been met for the
     applicable performance period and that payments thereunder
     shall be pro-rated as of the Date of Termination; and in the
     event of a termination by reason of retirement, then the
     Supplemental Retirement Benefits and the Incentive and Equity
     Amounts, the Incentive and Equity Amounts being calculated and
     payable in accordance with the terms of the underlying plans
     and payable to the Executive when awards are payable to all
     other participants in such plans in accordance with the terms
     thereof, but prorated through the date of such retirement; and

          (iii   an amount (the "Pro-Rated Bonus") equal to the
     product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable bonus
                    plan (the "Actual Bonus Payment")
     
          (iv)        all vested amounts or benefits owing to the
     Executive under the Company's otherwise applicable employee
     benefit plans and programs, including any compensation
     previously deferred by the Executive (together with any
     accrued earnings thereon) and not yet paid by the Company and
     any accrued vacation pay not yet paid by the Company (the
     "Accrued Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall be
paid in cash in a single lump sum as soon as practicable ( but in
no event more than 20 days) following the Date of Termination.  Any
Incentive and Equity Amounts and Supplemental Retirement Benefits
accrued by the Executive shall be payable in accordance with the
terms of the underlying plans.


          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than on
account of Good Reason), the Company shall pay the Executive the
Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the Date
of Termination, or in accordance with the terms of the underlying
plan. 

          (c)  Termination by the Company other than for Cause and
Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of payment
     as is provided or elected by the Executive under the operative
     plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A), Executive's
               vested interest in such benefits shall accelerate;
               and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a Change
     of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or, (ii) the
               date on which the Executive is covered under any
               comparable plans of a subsequent employer (the "End
               Date"), to continue participation (including, but
               not limited to, vesting and accruals) in all of the
               Company's employee and executive pension, welfare
               and fringe benefit plans, it being understood that
               for purposes of the calculation of Supplemental
               Retirement Benefits, Final Annual Compensation (as
               defined in the underlying plans) shall be equal to
               Final Annual Compensation as of the Date of
               Termination (the "Benefit Plans").  To the extent
               any such benefits cannot be provided under the
               terms of the applicable plan, policy or program,
               the Company shall provide a comparable benefit
               under another plan or from the Company's general
               assets.  The Executive's participation in the
               Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase shares
               of Common Stock of the Company then exercisable by
               the Executive or which would become exercisable in
               accordance with the applicable option agreement and
               the applicable equity incentive plan of the Company
               (such agreements and plans referred to collectively
               as the "Equity Documents") for the period of time
               permitted in accordance with the generally
               applicable terms of the governing Equity Documents)
               after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

     (B) After the Occurrence of a Change of Control.

            (i   Payments.  If, following a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of payment
     as is provided or elected by the Executive under the operative
     plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder shall
               be deemed to have been met upon the occurrence of a
               Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the calculation
               of Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations, and
     Pro-Rated Bonus shall be paid in cash, or in the case of the
     Incentive and Equity Amounts, in kind if so provided under the
     relevant plan, in a single lump sum as soon as practicable
     (but in no event more than 20 days) following the Date of
     Termination.  The Supplemental Retirement Benefits shall be
     payable in accordance with the terms of the underlying plans
     (after giving effect to the acceleration and granting of
     service credit provided for herein) and the elections of the
     Executive thereunder.

          (ii)  Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii) the
               date on which the Executive is covered under any
               comparable plans of a subsequent employer, (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all of
               the Company's employee and executive pension,
               welfare and fringe benefit plans, excluding the
               Supplemental Retirement Benefits (the "Benefit
               Plans").  To the extent any such benefits cannot be
               provided under the terms of the applicable plan,
               policy or program, the Company shall provide a
               comparable benefit under another plan or from the
               Company's general assets.  The Executive's
               participation in the Benefit Plans will be on the
               same terms and conditions that would have applied
               had the Executive continued to be employed by the
               Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase shares
               of Common Stock of the Company then exercisable by
               the Executive or which would become exercisable in
               accordance with the applicable Equity Documents for
               the period of time permitted in accordance with the
               generally applicable terms of the governing Equity
               Documents, after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
6(d), the amounts payable to the Executive pursuant to this Section
6 following termination of his employment shall be in full and
complete satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such amounts
shall constitute liquidated damages with respect to any and all
such rights and claims and, upon the Executive's receipt of such
amounts, the Company shall be released and discharged from any and
all liability to the Executive in connection with this Agreement or
otherwise in connection with the Executive's employment with the
Company and its Subsidiaries.  Nothing in this Section 6(d) shall
be construed to release the Company from its commitment to
indemnify the Executive and hold the Executive harmless from and
against any claim, loss or cause of action arising from or out of
the Executive's performance as an officer, director or employee of
the Company or any of its Subsidiaries or in any other capacity,
including any fiduciary capacity, in which the Executive served at
the request of the Company to the maximum extent permitted by
applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid or
     distributed to the Executive by the Company or any affiliated
     company (collectively, the "Covered Payments"), are or become
     subject to the tax (the "Excise Tax") imposed under Section
     4999 of the Code or any similar tax that may hereafter be
     imposed, the Company shall pay to the Executive at the time
     specified in Section 6(e)(v) below an additional amount (the
     "Tax Reimbursement Payment") such that the net amount retained
     by the Executive with respect to such Covered Payments, after
     deduction of any Excise Tax on the Covered Payments and any
     Federal, state and local income, employment or other tax and
     Excise Tax on the Tax Reimbursement Payment provided for by
     this Section 6(e), but before deduction for any Federal, state
     or local income or employment tax withholding on such Covered
     Payments, shall be equal to the amount of the Covered
     Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as "parachute
               payments" within the meaning of Section 28OG of the
               Code, and all "parachute payments" in excess of the
               "base amount" (as defined under Section 28OG(b)(3)
               of the Code) shall be treated as subject to the
               Excise Tax, unless, and except to the extent that,
               in the good faith judgment of the Company's
               independent certified public accountants appointed
               prior to the Effective Date or tax counsel selected
               by such Accountants (the "Accountants"), the
               Company has a reasonable basis to conclude that
               such Covered Payments (in whole or in part) either
               do not constitute "parachute payments" or represent
               reasonable compensation for personal services
               actually rendered (within the meaning of Section
               28OG(b)(4)(B) of the Code) in excess of the "base
               amount," or such "parachute payments" are otherwise
               not subject to such Excise Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the Tax
     Reimbursement Payment, the Executive shall be deemed to pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum reduction
               in Federal incomes taxes which could be obtained
               from the deduction of such state or local taxes if
               paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service to be less than
     the amount taken into account hereunder in calculating the Tax
     Reimbursement Payment made, the Executive shall repay to the
     Company, at the time that the amount of such reduction in the
     Excise Tax is finally determined, the portion of such prior
     Tax Reimbursement Payment that would not have been paid if
     such Excise Tax had been applied in initially calculating such
     Tax Reimbursement Payment, plus interest on the amount of such
     repayment at the rate provided in Section 1274(b)(2)(B) of the
     Code.  Notwithstanding the foregoing, in the event any portion
     of the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund or
     credit of such portion has been made to the Executive, and
     interest payable to the Company shall not exceed interest
     received or credited to the Executive by such tax authority
     for the period it held such portion.  The Executive and the
     Company shall mutually agree upon the course of action to be
     pursued (and the method of allocating the expenses thereof) if
     the Executive's good faith claim for refund or credit is
     denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or negotiations
     with the Internal Revenue Service (the "Service") to exceed
     the amount taken into account hereunder at the time the Tax
     Reimbursement Payment is made (including, but not limited to,
     by reason of any payment the existence or amount of which
     cannot be determined at the time of the Tax Reimbursement
     Payment), the Company shall make an additional Tax
     Reimbursement Payment in respect of such excess (plus any
     interest or penalty payable with respect to such excess) at
     the time that the amount of such excess is finally determined,
     such that the net amount retained by the Executive with
     respect to the Covered Payments, after deduction of any Excise
     Tax on the Covered Payments and any Federal, state and local
     income, employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section, but before
     deduction for any Federal, state or local income or employment
     tax withholding on such Covered Payments, shall be equal to
     the amount of the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises out
     of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for the
     cost of preparing the Executive's income tax returns for the
     year in which any payment by the Company may be characterized
     as a parachute payment.  The Executive shall notify the
     Company in writing of any such Claim as soon as practicable
     but in no event later than ten (10) business days after the
     Executive is informed of such Claim and shall cooperate with
     the Company in good faith to effectively contest the Claim. 
     The Company shall control all proceedings taken in connection
     with such contest and, at its sole option, may pursue or
     forego any and all administrative appeals, proceedings,
     hearings and conferences with the taxing authority in respect
     of such Claim and the Executive agrees to prosecute such
     contest as the Company shall determine.  Notwithstanding the
     foregoing, if the Company forgoes further prosecution of such
     contest, the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

          (v     The Tax Reimbursement Payment (or portion thereof)
     provided for in Section 6(e)(i) above shall be paid to the
     Executive not later than 10 business days following the
     payment of the Covered Payments; provided, however, that if
     the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date on
     which payment is due, the Company shall pay to the Executive
     by such date an amount estimated in good faith by the Ac-
     countants to be the minimum amount of such Tax Reimbursement
     Payment and shall pay the remainder of such Tax Reimbursement
     Payment (together with interest at the rate provided in
     Section 1274(b)(2)(B) of the Code) as soon as the amount
     thereof can be determined, but in no event later than 45
     calendar days after payment of the related Covered Payment. 
     In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

     7.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9) of
     the Securities Exchange Act of 1934, as amended (the "Exchange
     Act") and as used in Section 13(d) and 14(d) thereof,
     including a "group" as defined in Section 13(d) of the
     Exchange Act but excluding the Company and any subsidiary and
     any employee benefit plan sponsored or maintained by the
     Company or any subsidiary (including any trustee of such plan
     acting as trustee), directly or indirectly, becomes the
     "beneficial owner" (as defined in Rule 13d-3 under the
     Exchange Act), of securities of the Company representing 20
     percent or more of the combined voting power of the Company's
     then outstanding securities; or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the "Incumbent
     Directors") cease for any reason other than death to
     constitute at least a majority thereof; provided, however,
     that a director who is not a director at the beginning of such
     24-month period shall be deemed  to have satisfied such 24-
     month requirement (and be an Incumbent Director) if such
     director was elected by, or on the recommendation of or with
     the approval of, at least two-thirds of the directors who then
     qualified as Incumbent Directors either actually (because they
     were directors at the beginning of such 24-month period) or by
     prior operation of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by an
     entity other than the Company or a subsidiary through purchase
     of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Atlantic City Electric Company ("Electric") in the event
that the Executive is employed by Electric, "Company" shall include
Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company
or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise prejudice
such rights as the Executive may have under any other agreements
with the Company or any of its affiliated companies, including
employment agreements or stock option agreements.  Amounts which
are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any of its
affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company
may have against the Executive or others whether by reason of the
subsequent employment of the Executive or otherwise In the event
that the Executive shall in good faith give a Notice of Termination
for Good Reason and it shall thereafter be determined that Good
Reason did not exist, the employment of the Executive shall, unless
the Company and the Executive shall otherwise mutually agree, be
deemed to have terminated, at the date of giving such purported
Notice of Termination, by mutual consent of the Company and the
Executive and, except as provided in the last preceding sentence,
the Executive shall be entitled to receive only his Earned Salary
and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or by
the Company) as to the validity, enforceability or interpretation
of any provision of this Agreement, the Company shall pay the
Executive's legal expenses (or cause such expenses to be paid)
including, without limitation, his reasonable attorney's fees, on
a quarterly basis, upon presentation of proof of such expenses in
a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By and
in consideration of the salary and benefits to be provided by the
Company hereunder, including the severance arrangements set forth
herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, (i) obtained by the Executive during his employment by
the Company or any of its affiliated companies and (ii) not
otherwise public knowledge (other than by reason of an unauthorized
act by the Executive).  After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company, unless compelled pursuant to
an order of a court or other body having jurisdiction over such
matter, communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect to
Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique and
extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause the Company irreparable
injury for which adequate remedies are not available at law. 
Therefore, the Executive agrees that the Company shall (i) be
entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond) restraining
Executive from committing any violation of the covenants and
obligations contained in this Section 11 and (ii) have no further
obligation to make any payments to the Executive hereunder
following any material violation of the covenants and obligations
contained in this Section 11.  These remedies are cumulative and
are in addition to any other rights and remedies the Company may
have at law or in equity.  In connection with the foregoing
provisions of this Section 11, the Executive represents that his
economic means and circumstances are such that such provisions will
not prevent him from providing for himself and his family on a
basis satisfactory to him.  In no event shall an asserted violation
of the provisions of this Section 11 constitute a basis for
deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution.  This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.

          (b)  This Agreement shall inure to the benefit of and be
binding upon the Company and its successors.  The Company shall
require any successor to all or substantially all of the business
and/or assets of the Company, whether direct or indirect, by
purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance satisfactory to
the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company
would be required to perform if no such succession had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date.

          (b)  Applicable Law.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City of
Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of law
or equity.  The arbitrator shall be acceptable to both the Company
and the Executive.  If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three
arbitrators, one appointed by each of the parties and the third
appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is sought. 
There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained
herein.  The Executive acknowledges that he is entering into this
Agreement of his own free will and accord, and with no duress, that
he has read this Agreement and that he understands it and its legal
consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the Executive
                              noted on the records of the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey 08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from any
amounts payable under this Agreement such Federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one or
more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not be affected thereby.  In the event that any of the provisions
of any of Section 11(a) are not enforceable in accordance with its
terms, the Executive and the Company agree that such Section shall
be reformed to make such Section enforceable in a manner which
provides the Company the maximum rights permitted at law.

          (i)  Waiver.  Waiver by any party hereto of any breach or
default by the other party of any of the terms of this Agreement
shall not operate as a waiver of any other breach or default,
whether similar to or different from the breach or default waived. 
No waiver of any provision of this Agreement shall be implied from
any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights
hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.


          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.


ATTEST:                          Atlantic Energy, Inc.

                                 By:/s/ J. Michael Galvin, Jr.
Secretary                                J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee

                                 By:/s/ J. L. Jacobs             
                                        J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:

                              /s/ Scott B. Ungerer                         
                                   Scott B. Ungerer

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
                ATLANTIC ENERGY, INC. and SCOTT B. UNGERER
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and SCOTT B. UNGERER (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________          BY:/s/ J. Michael Galvin, Jr.
                                 J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
Committee

                              BY:/s/ J. L. Jacobs
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Scott B. Ungerer
                                  Scott B. Ungerer



EX-99.10
17


                                                     EXHIBIT 4F(6)
     [Conformed Copy]



                  REVOLVING CREDIT AGREEMENT (FACILITY A)



                               by and among



                          ATLANTIC ENERGY, INC.,

                         THE LENDERS PARTY HERETO,


                                    AND


                      THE BANK OF NEW YORK, AS AGENT




                             ________________

                                $35,000,000
                             ________________



                                                      Facilty A

                      Dated as of September 28, 1995

                             TABLE OF CONTENTS


1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION               1

  1.1.  Definitions                                          1
  1.2.  Principles of Construction                          15

2.  AMOUNT AND TERMS OF LOANS                               16

  2.1.  Revolving Credit Loans                              16
  2.2.  Revolving Credit Notes                              16
  2.3.  Procedure for Borrowing Revolving Credit Loans      17
  2.4.  Competitive Bid Loans; Procedure                    18
  2.5.  Voluntary Reduction or Termination of Aggregate
        Commitments                                         21
  2.6.  Prepayments of the Loans                            21
  2.7.  Conversions and Continuations                       22
  2.8.  Interest Rate and Payment Dates                     23
  2.9.  Substituted Interest Rate                           24
  2.10. Taxes                                               25
  2.11. Illegality                                          27
  2.12. Increased Costs                                     27
  2.13. Indemnification for Loss                            28
  2.14. Survival of Certain Obligations                     29
  2.15. Use of Proceeds                                     29
  2.16. Capital Adequacy                                    29
  2.17. Change of Lending Office; Right to Substitute
        Lender                                              29 
  2.18. Extension of Maturity Date                          30
  2.19. Change in Control                                   32
  2.20. Agent's Records                                     33

3.  FEES; PAYMENTS                                          33

  3.1.  Facility Fee                                        33
  3.2.  Agent's Fees                                        33
  3.3.  Pro Rata Treatment and Application of Principal
        Payments                                            33

4.  REPRESENTATIONS AND WARRANTIES                          34

  4.1.  Subsidiaries                                        34
  4.2.  Existence and Power                                 34
  4.3.  Authority; Enforceability                           34
  4.4.  Required Consents                                   34
  4.5.  No Conflicting Agreements, Compliance with
        Laws; Taxes                                         35
  4.6.  Franchises, Licenses, Etc.                          35

                                                      Facility A

  4.7.   Investment Company Act                             35
  4.8.   Public Utility Status                              35
  4.9.   Federal Reserve Regulations; Use of Loan
         Proceeds                                           35
  4.10.  Litigation                                         36
  4.11.  Financial Statements                               36
  4.12.  Plans                                              36
  4.13.  Ownership of Property; Liens                       36
  4.14.  Security Interests                                 37
  4.15.  Environmental Matters                              37
  4.16.  Certain Business Activities                        37

5.  CONDITIONS TO FIRST LOANS                               37

  5.1.  Evidence of Action                                  37
  5.2.  This Agreement; Notes                               38
  5.3.  Certificate as to Approvals and Liens               38
  5.4.  Pledge Agreement                                    38
  5.5.  Facility B Loan Documents                           38
  5.6.  Other Credit Facilities                             38
  5.7.  ACE Preferred Stock                                 39
  5.8.  Opinions of Counsel                                 39
  5.9.  Opinion of Special Counsel                          39
  5.10. Fees                                                39

6.  CONDITIONS OF LENDING - ALL LOANS                       39

  6.1.  Compliance                                          39
  6.2.  Borrowing Request; Competitive Bid Request          40

7.  AFFIRMATIVE COVENANTS                                   40

  7.1.  Financial Statements                                40
  7.2.  Certificates; Other Information                     40
  7.3.  Legal Existence                                     41
  7.4.  Taxes                                               41
  7.5.  Insurance                                           42
  7.6.  Condition of Property                               42
  7.7.  Observance of Legal Requirements                    42
  7.8.  Inspection of Property; Books and Records;
        Discussions                                         42
  7.9.  Licenses, Franchises, Intellectual Property,
        Etc.                                                42
  7.10. Indebtedness Capitalization Ratio                   42
  7.11. Ratio of Indebtedness to Annualized ACE
        Dividends                                           43

                                                      Facility A

8.  NEGATIVE COVENANTS                                      43

  8.1.  Indebtedness                                        43
  8.2.  Liens                                               43
  8.3.  Merger; Consolidation                               44
  8.4.  Restricted Payments                                 44
  8.5.  Investments, Acquisitions, Loans, Etc.              45
  8.6.  Amendments, Etc. of Intercompany Notes              46
  8.7.  Designation of Operating Subsidiaries               46
  8.8.  Certain Business Activities                         46

9.  DEFAULT                                                 46

  9.1.  Events of Default                                   46

10.  THE AGENT                                              49

  10.1.  Appointment                                        49
  10.2.  Delegation of Duties                               49
  10.3.  Exculpatory Provisions                             50
  10.4.  Reliance by Agent                                  50
  10.5.  Notice of Default                                  50
  10.6.  Non-Reliance on Agent and Other Lenders            51
  10.7.  Indemnification                                    51
  10.8.  Agent in Its Individual Capacity                   52
  10.9.  Successor Agent                                    52

11.  OTHER PROVISIONS                                       53

  11.1.  Amendments and Waivers                             53
  11.2.  Notices                                            53
  11.3.  No Waiver; Cumulative Remedies                     54
  11.4.  Survival of Representations and Warranties         55
  11.5.  Payment of Expenses and Taxes                      55
  11.6.  Lending Offices                                    55
  11.7.  Assignments and Participations                     56
  11.8.  Counterparts                                       57
  11.9.  Adjustments; Set-off                               58
  11.10. Indemnity                                          59
  11.11. Governing Law                                      59
  11.12. Headings Descriptive                               59
  11.13. Severability                                       59
  11.14. Integration                                        60
  11.15. Consent to Jurisdiction                            60
  11.16. Service of Process                                 60
  11.17. No Limitation on Service or Suit                   60
  11.18. WAIVER OF TRIAL BY JURY                            60

EXHIBITS

Exhibit A       List of Commitments
Exhibit B-1     Form of Revolving Credit Note
Exhibit B-2     Form of Competitive Bid Note
Exhibit C       Form of Borrowing Request
Exhibit D       Form of Competitive Bid Request
Exhibit E       Form of Invitation to Bid
Exhibit F       Form of Competitive Bid
Exhibit G       Form of Competitive Bid Accept/Reject Letter
Exhibit H       Form of Competitive Bid Loan Confirmation
Exhibit I       Form of Notice of Conversion/Continuation
Exhibit J       [Reserved]
Exhibit K       Form of Compliance Certificate
Exhibit L       Form of Pledge Agreement
Exhibit M       Form of Intercompany Note
Exhibit N       Form of Opinion of Counsel to the Borrower
Exhibit O       Form of Opinion of Special Counsel 
Exhibit P       Form of Assignment and Acceptance Agreement
Exhibit Q       Form of Guaranty


SCHEDULES

Schedule 1.1    List of Lending Offices
Schedule 4.1    List of Subsidiaries
Schedule 4.1    List of Existing Pension Plans
Schedule 8.1    List of Existing Indebtedness
Schedule 8.2    List of Existing Liens
Schedule 8.5    List of Existing Investments



 REVOLVING CREDIT AGREEMENT (FACILITY A), dated as of
  September 28, 1995, by and among ATLANTIC ENERGY, INC., a New
  Jersey corporation (the "Borrower"), the lenders party hereto
  (together with their respective assigns, the "Lenders", each a
  "Lender") and THE BANK OF NEW YORK, as agent for the Lenders (in
  such capacity, the "Agent").
  
  1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
  
      1.1. Definitions
  
           As used in this Agreement, terms defined in the preamble
  have the meanings therein indicated, and the following terms have
  the following meanings:
  
           "ABR Advances": the Revolving Credit Loans (or any
  portions thereof) at such time as they (or such portions) are
  made and/or being maintained at a rate of interest based upon the
  Alternate Base Rate.
  
           "ACE": Atlantic City Electric Company, a New Jersey
  corporation and a wholly owned Subsidiary of the Borrower.
  
           "ACE Preferred Stock": the Cumulative Preferred Stock,
  $100 par value, the No Par Preferred Stock and the Preference
  Stock, No Par Value of ACE outstanding from time to time.
  
           "Accountants": Deloitte & Touche LLP (or any successor
  thereto), or such other firm of certified public accountants of
  recognized national standing selected by the Borrower.
  
           "Acquisition": the acquisition of a business by the
  Borrower or any of its Subsidiaries through either a merger with
  another Person or the purchase of all or substantially all of the
  capital Stock of another Person or all or substantially all of
  the assets of another Person or of a division of another Person.
  
           "Accumulated Funding Deficiency": as defined in Section
  302 of ERISA.
  
           "Advance": with respect to a Revolving Credit Loan, an ABR
  Advance or a Eurodollar Advance, as the case may be.
  
           "Affected Advance": as defined in Section 2.9.
  
           "Affiliate": as to any Person, any other Person which,
  directly or indirectly, is in control of, is controlled by, or is
  under common control with, such Person.  For purposes of this
  definition, control of a Person shall mean the power, direct or
  indirect, (i) to vote 5% or more of the securities or other
  interests having ordinary voting power for the election of
  directors or other managing Persons thereof or (ii) to direct or
  cause the direction of the management and policies of such
  Person, whether by contract or otherwise.
  
           "Aggregate Commitments": on any date, the sum of all
  Commitments on such date.
  
           "Aggregate Credit Exposure": as of any date of
  determination, the sum of the aggregate outstanding principal
  balance of all Revolving Credit Loans and Competitive Bid Loans
  of all Lenders.
  
           "Aggregate Facility B Commitments": the aggregate of the
  Facility B Commitments of the Facility B Lenders.
  
           "Agreement": this Revolving Credit Agreement (Facility A),
  as the same may be amended, supplemented or otherwise modified
  from time to time.
  
           "Alternate Base Rate": on any date, a rate of interest per
  annum equal to the higher of (i) the Federal Funds Rate in effect
  on such date plus 1/2 of 1% or (ii) the BNY Rate in effect on
  such date.
  
           "Annualized ACE Dividends": at any date of determination,
  an amount equal to (i) the amount of dividends paid to the
  Borrower by ACE during the fiscal quarter ending on such date of
  determination or, if such date of determination is not a fiscal
  quarter ending date, the immediately preceding fiscal quarter,
  multiplied by (ii) four.
  
           "Applicable Fee Percentage": with respect to the amount of
  the Aggregate Commitments, at all times during which the
  applicable Pricing Level set forth below is in effect, the
  percentage set forth below next to such Pricing Level, subject to
  the provisos set forth below:
  
                                                   Applicable
              Pricing Level                        Fee Percentage
  
              Pricing Level I                      0.125%
              Pricing Level II                     0.150%
              Pricing Level III                    0.175%
              Pricing Level IV                     0.250%
  
  
  provided that (i) changes in the Applicable Fee Percentage
  resulting from a change in the Pricing Level shall become
  effective on the effective date of any change in the Senior Debt
  Rating by Moody's or S&P and (ii) in the event of a split in
  ratings resulting in the Senior Debt Rating by S&P and Moody's
  falling within different Pricing Levels, the Applicable Fee
  Percentage shall be the lower percentage.
  
           "Applicable Lending Office": in respect of any Lender, (i)
  in the case of such Lender's ABR Advances and Competitive Bid
  Loans, its Domestic Lending Office and (ii) in the case of such
  Lender's Eurodollar Advances, its Eurodollar Lending Office.
  
           "Applicable Margin": with respect to the unpaid principal
  amount of Eurodollar Advances, at all times during which the
  applicable Pricing Level set forth below is in effect, the
  percentage set forth below next to such Pricing Level, subject to
  the provisos set forth below:
  
                Pricing Level                    Applicable Margin
  
                Pricing Level I                  0.300%
                Pricing Level II                 0.325%
                Pricing Level III                0.425%
                Pricing Level IV                 0.500%
  
  provided that (i) changes in the Applicable Margin resulting from
  a change in the Pricing Level shall become effective on the
  effective date of any change in the Senior Debt Rating by Moody's
  or S&P and (ii) in the event of a split in ratings resulting in
  the Senior Debt Rating by each of S&P and Moody's falling within
  different Pricing Levels, the Applicable Margin shall be the
  lower percentage.
  
           "Approved Financial Institutions": collectively, (i) each
  Lender, (ii) those major United States and foreign commercial
  banks with which the Borrower or its affiliates have formal line-
  of-credit relationships as of the Effective Date, (iii) domestic
  branches of major Canadian banks and (iv) such other banks as
  appropriate officers of the Borrower may deem appropriate and
  with respect to which the Agent shall have received advance
  written notice.
    
      "Assignment and Acceptance Agreement": an assignment and
  acceptance agreement executed by an assignor and an assignee
  pursuant to which the assignor assigns to the assignee all or any
  portion of such assignor's (i) Notes, (ii) Commitment, (iii)
  Facility B Notes and (iv) Facility B Commitment, substantially in
  the form of Exhibit P.
  
           "Assignment Fee": as defined in Section 11.7(b).
  
           "Atlantic Thermal": Atlantic Thermal Systems, Inc., a New
  Jersey corporation and a wholly owned Subsidiary of the Borrower.
  
           "ATE": ATE Investment, Inc., a New Jersey corporation and
  a wholly owned Subsidiary of the Borrower.
  
           "ATE Credit Agreement": the Revolving Credit and Term Loan
  Agreement, dated as of May 24, 1988, as amended, between ATE and
  BNY.
  
           "Authorized Signatory": as to (i) any Person which is a
  corporation, the chairman of the board, the president, any vice
  president, the chief financial officer or any other duly
  authorized officer (acceptable to the Agent) of such Person and
  (ii) any Person which is not a corporation, the general partner
  or other managing Person thereof.
  
           "Benefited Lender": as defined in Section 11.9.
  
           "Bid Rate": as defined in Section 2.4(b).
  
           "BNY": The Bank of New York.
  
           "BNY Rate": a rate of interest per annum equal to the rate
  of interest publicly announced in New York City by BNY from time
  to time as its prime commercial lending rate, such rate to be
  adjusted automatically (without notice) on the effective date of
  any change in such publicly announced rate.
  
           "Borrowing Date": any Business Day on which (i) the
  Lenders make Revolving Credit Loans in accordance with a
  Borrowing Request or (ii) one or more Lenders make Competitive
  Bid Loans pursuant to Competitive Bids which have been accepted
  by the Borrower.
  
           "Borrowing Request": a request for Revolving Credit Loans
  in the form of Exhibit C.
  
           "Business Day": any day other than a Saturday, a Sunday or
  a day on which commercial banks located in New York City are
  authorized or required by law or other governmental action to
  close.
  
           "Capital Lease Obligations": with respect to any Person,
  obligations of such Person with respect to leases which, in
  accordance with GAAP, are required to be capitalized on the
  financial statements of such Person.
  
           "Change in Control": either (i) any "person" or "group"
  (within the meaning of Sections 13(d) and 14(d)(2) of the
  Exchange Act) becoming the "beneficial owner" (as defined in Rule
  13d-3 under the Exchange Act) of shares of capital Stock of the
  Borrower entitled to exercise more than 50% of the total voting
  power of all outstanding shares of capital Stock, unless such
  beneficial ownership is approved by the board of directors of the
  Borrower prior to the acquisition; or (ii) a majority of the
  board of directors of the Borrower are not Continuing Directors. 
  
           "Code": the Internal Revenue Code of 1986, as the same may
  be amended from time to time, or any successor thereto, and the
  rules and regulations issued thereunder, as from time to time in
  effect.
  
           "Collateral": collectively, the collateral under and as
  defined in the Pledge Agreement.
  
           "Commitment": in respect of any Lender, such Lender's
  undertaking during the Commitment Period to make Revolving Credit
  Loans, subject to the terms and conditions hereof, in an
  aggregate outstanding principal amount not exceeding the amount
  set forth next to the name of such Lender in Exhibit A under the
  heading "Commitment", as the same may be reduced pursuant to
  Section 2.5.
  
           "Commitment Period": the period from the Effective Date
  until the day before the Maturity Date.
  
           "Commitment Percentage": as to any Lender, the percentage
  set forth opposite the name of such Lender in Exhibit A under the
  heading "Commitment Percentage".
  
           "Competitive Bid": an offer by a Lender, in the form of
  Exhibit F, to make a Competitive Bid Loan.
  
           "Competitive Bid Accept/Reject Letter": a notification
  given by the Borrower pursuant to Section 2.4 in the form of
  Exhibit G.
  
           "Competitive Bid Loan": each Loan from a Lender to the
  Borrower pursuant to Section 2.4.
  
           "Competitive Bid Loan Confirmation": a confirmation by the
  Agent to a Lender of the acceptance by the Borrower of any
  Competitive Bid (or Portion thereof) made by such Lender,
  substantially in the form of Exhibit H.
  
           "Competitive Bid Note" and "Competitive Bid Notes": as
  defined in Section 2.4(g).
  
           "Competitive Bid Request": a request by the Borrower, in
  the form of Exhibit D, for Competitive Bids.
  
           "Competitive Interest Period": with respect to any
  Competitive Bid Loan, the period commencing on the date of such
  Competitive Bid Loan and ending on the date requested in the
  Competitive Bid Request with respect to such Competitive Bid
  Loan, which date shall not be earlier than 7 days after the date
  of such Competitive Bid Loan or later than 180 days after the
  date of such Competitive Bid Loan; provided, however, that if any
  Competitive Interest Period would end on a day other than a
  Business Day, such Interest Period shall be extended to the next
  succeeding Business Day, unless such next succeeding Business Day
  would be a date on or after the Maturity Date, in which case such
  Competitive Interest Period shall end on the next preceding
  Business Day, and provided further that no Competitive Interest
  Period shall end after the Maturity Date.  Interest shall accrue
  from and including the first day of a Competitive Interest Period
  to but excluding the last day of such Competitive Interest
  Period.
  
           "Compliance Certificate": a certificate in the form of
  Exhibit K.
  
           "Consenting Lenders": as defined in Section 2.18(b).
  
           "Consolidated": the Borrower and its Subsidiaries which
  are consolidated for financial reporting purposes.
  
           "Consolidated Total Indebtedness": at any date of
  determination, total Indebtedness of the Borrower and its
  Subsidiaries determined on a Consolidated basis in accordance
  with GAAP.
  
           "Consolidated Total Capitalization": at any date of
  determination with respect to the Borrower and its Subsidiaries
  on a Consolidated basis in accordance with GAAP, the sum of (i)
  the amount classified as common shareholders equity for purposes
  of balance sheet presentation in accordance with GAAP, plus (ii)
  the amount classified as preferred stock for purposes of balance
  sheet presentation in accordance with GAAP, plus (iii) all
  Indebtedness (net of unamortized premium and discount), less (iv)
  unamortized capital Stock expense.
  
           "Contingent Obligation": as to any Person (the "secondary
  obligor"), any obligation of such secondary obligor (i)
  guaranteeing or in effect guaranteeing any return on any
  investment made by another Person, or (ii) guaranteeing or in
  effect guaranteeing any Indebtedness, lease, dividend or other
  monetary obligation ("primary obligation") of any other Person
  (the "primary obligor") in any manner, whether directly or
  indirectly, including, without limitation, any obligation of such
  secondary obligor, whether contingent, (A) to purchase any such
  primary obligation or any Property constituting direct or
  indirect security therefor, (B) to advance or supply funds (x)
  for the purchase or payment of any such primary obligation or (y)
  to maintain working capital or equity capital of the primary
  obligor or otherwise to maintain the net worth or solvency of the
  primary obligor, (C) to purchase Property, securities or services
  primarily for the purpose of assuring the beneficiary of any such
  primary obligation of the ability of the primary obligor to make
  payment of such primary obligation, (D) otherwise to assure or
  hold harmless the beneficiary of such primary obligation against
  loss in respect thereof, and (E) in respect of the liabilities of
  any partnership in which such secondary obligor is a general
  partner, except to the extent that such liabilities of such
  partnership are nonrecourse to such secondary obligor and its
  separate Property, provided, however, that the term "Contingent
  Obligation" shall not include the indorsement of instruments for
  deposit or collection in the ordinary course of business.  The
  amount of any Contingent Obligation of a Person shall be deemed
  to be an amount equal to the stated or determinable amount of the
  primary obligation in respect of which such Contingent Obligation
  is made or, if not stated or determinable, the maximum reasonably
  anticipated liability in respect thereof as determined by such
  Person in good faith.
  
           "Continuing Director": at any date of determination, a
  member of the board of directors of the Borrower who (i) was a
  member of such board for the prior of 24 months prior to such
  date or (ii) was nominated for election or elected to such board
  with the affirmative vote of at least two-thirds of the
  Continuing Directors.
  
           "Control Person": as defined in Section 2.16.
  
           "Conversion/Continuation Date": the date on which (i) a
  Eurodollar Advance is converted to an ABR Advance, (ii) the date
  on which an ABR Advance is converted to a Eurodollar Advance or
  (iii) the date on which a Eurodollar Advance is continued as a
  new Eurodollar Advance.
  
           "Credit Exposure": with respect to any Lender as of any
  date, the sum as of such date of the outstanding principal
  balance of such Lender's Revolving Credit Loans.
  
           "Default": any event or condition which constitutes an
  Event of Default or which, with the giving of notice, the lapse
  of time, or any other condition, would, unless cured or waived,
  become an Event of Default.
  
           "District Heating and Cooling Project": a proposed
  centralized steam and chilled water production facility located
  in Atlantic City, New Jersey.
  
           "Dollars" and "$": lawful currency of the United States of
  America.
  
           "Domestic Lending Office": in respect of any Lender,
  initially, the office or offices of such Lender designated as
  such on Schedule 1.1; thereafter, such other office  of such
  Lender through which it shall be making or maintaining ABR
  Advances or Competitive Bid Loans, as reported by such Lender to
  the Agent and the Borrower, provided that any Lender may so
  report different Domestic Lending Offices for all of its ABR
  Advances and all of its Competitive Bid Loans, whereupon
  references to the Domestic Lending Office of such Lender shall
  mean either or both of such offices, as applicable.
  
           "Effective Date": September 28, 1995.
  
           "Employee Benefit Plan": an employee benefit plan within
  the meaning of Section 3(3) of ERISA maintained, sponsored or
  contributed to by the Borrower, any of its Subsidiaries or any
  ERISA Affiliate.
  
           "Environmental Laws": any and all federal, state and local
  laws relating to the environment, the use, storage, transporting,
  manufacturing, handling, discharge, disposal or recycling of
  hazardous substances, materials or pollutants or industrial
  hygiene, and including, without limitation, (i) the Comprehensive
  Environmental Response, Compensation and Liability Act, as
  amended, 42 USCA 9601 et seq.; (ii) the Resource Conservation
  and Recovery Act of 1976, as amended, 42 USCA 6901 et seq.;
  (iii) the Toxic Substance Control Act, as amended, 15 USCA 2601
  et seq.; (iv) the Water Pollution Control Act, as amended, 33
  USCA 1251 et seq.; (v) the Clean Air Act, as amended, 42 USCA
  7401 et seq.; (vi) the Hazardous Material Transportation
  Authorization Act of 1994, as amended, 49 USCA 5101 et seq. and
  (viii) all rules, regulations, judgments, decrees, injunctions
  and restrictions thereunder and any analogous state law.
  
           "ERISA": the Employee Retirement Income Security Act of
  1974, as amended from time to time, and the rules and regulations
  issued thereunder, as from time to time in effect.
  
           "ERISA Affiliate": when used with respect to an Employee
  Benefit Plan, ERISA, the PBGC or a provision of the Code
  pertaining to employee benefit plans, any Person that is a member
  of any group of organizations within the meaning of Sections
  414(b) or (c) of the Code (or, solely for purposes of potential
  liability under Section 302(c)(11) of ERISA and Section
  412(c)(11) of the Code and the lien created under Section 302(f)
  of ERISA and Section 412(n) of the Code, Sections 414(m) or (o)
  of the Code) of which the Borrower or any of its Subsidiaries is
  a member.
  
           "Eurodollar Advances": collectively, the Revolving Credit
  Loans (or any portions thereof) at such time as they (or such
  portions) are made and/or being maintained at a rate of interest
  based upon the Eurodollar Rate.
  
           "Eurodollar Interest Period": with respect to any
  Eurodollar Advance requested by the Borrower, the period
  commencing on, as the case may be, the Borrowing Date or
  Conversion/Continuation Date with respect to such Eurodollar
  Advance and ending one, two, three or six months thereafter, as
  selected by the Borrower in its irrevocable Borrowing Request or
  its irrevocable Notice of Conversion/Continuation, provided,
  however, that (i) if any Eurodollar Interest Period would
  otherwise end on a day which is not a Business Day, such
  Eurodollar Interest Period shall be extended to the next
  succeeding Business Day unless the result of such extension would
  be to carry such  Interest Period into another calendar month, in
  which event such Eurodollar Interest Period shall end on the
  immediately preceding Business Day, (ii) any Eurodollar Interest
  Period that begins on the last Business Day of a calendar month
  (or on a day for which there is no numerically corresponding day
  in the calendar month at the end of such Eurodollar Interest
  Period) shall end on the last Business Day of a calendar month
  and (iii) the Borrower shall select Interest Periods so as not to
  have more than three different Eurodollar Interest Periods
  outstanding at any one time for all Eurodollar Advances.
  
           "Eurodollar Lending Office": in respect of any Lender,
  initially, the office, branch or affiliate of such Lender
  designated as such on Schedule 1.1 (or, if no such office branch
  or affiliate is specified, its Domestic Lending Office);
  thereafter, such other office, branch or affiliate of such Lender
  through which it shall be making or maintaining Eurodollar
  Advances, as reported by such Lender to the Agent and the
  Borrower.
  
           "Eurodollar Rate": with respect to the Eurodollar Interest
  Period applicable to any Eurodollar Advance, a rate of interest
  per annum, as determined by the Agent, obtained by dividing (and
  then rounding to the nearest 1/16 of 1% or, if there is no
  nearest 1/16 of 1%, then to the next higher 1/16 of 1%):
  
                (a)  the rate, as reported by BNY to the Agent,
  quoted by BNY to leading banks in the interbank eurodollar market
  as the rate at which BNY is offering Dollar deposits in an amount
  equal approximately to the Eurodollar Advance of BNY to which
  such Interest Period shall apply for a period equal to such
  Interest Period, as quoted at approximately 11:00 a.m. two
  Business Days prior to the first day of such Interest Period, by
  
                (b)  a number equal to 1.00 minus the aggregate of
  the then stated maximum rates during such Interest Period of all
  reserve requirements (including, without limitation, marginal,
  emergency, supplemental and special reserves), expressed as a
  decimal, established by the Board of Governors of the Federal
  Reserve System and any other banking authority to which BNY and
  other major United States money center banks are subject, in
  respect of eurocurrency funding (currently referred to as
  "Eurocurrency liabilities" in Regulation D of the Board of
  Governors of the Federal Reserve System) or in respect of any
  other category of liabilities including deposits by reference to
  which the interest rate on Eurodollar Advances is determined or
  any category of extensions of credit or other assets which
  includes loans by non-domestic offices of any Lender to United
  States Residents.  Such reserve requirements shall include,
  without limitation, those imposed under such Regulation D. 
  Eurodollar Advances shall be deemed to constitute Eurocurrency
  liabilities and as such shall be deemed to be subject to such
  reserve requirements without benefit of credits for proration,
  exceptions or offsets which may be available from time to time to
  any Lender under such Regulation D. The Eurodollar Rate shall be
  adjusted automatically on and as of the effective date of any
  change in any such reserve requirement.
  
           "Event of Default": any of the events specified in Section
  9.1, provided that any requirement for the giving of notice, the
  lapse of time, or any other condition has been satisfied.
  
           "Exchange Act": the Securities and Exchange Act of 1934,
  as amended.
  
           "Existing Pension Plans": as defined in Section 4.12.
  
           "Extension Consent Period": the period which is less than
  35 days, but equal to or greater than 30 days, prior to the then
  current Maturity Date (provided, however, that if such 30th prior
  day falls on a day that is not a Business Day, such date shall be
  extended to the next following Business Day).
  
           "Extension Consent Required Lenders": Lenders having at
  least 66 2/3% of the Aggregate Commitments (without giving effect
  to any Loans outstanding).
  
           "Extension Request": as defined in Section 2.18.
  
           "Facility B": the $40,000,000 senior three-year revolving
  credit facility established pursuant to the Facility B Loan
  Documents.
  
           "Facility B Agent": The Bank of New York, in its capacity
  as agent for the Facility B Lenders under the Facility B Loan
  Documents.
  
           "Facility B Commitment": in respect of any Facility B
  Lender, such Facility B Lender's undertaking during the
  Commitment Period (as defined in the Facility B Credit Agreement)
  to make Facility B Loans, in an amount not in excess, and subject
  to the terms and conditions, of the Facility B Credit Agreement.
  
           "Facility B Commitment Percentage": as to any Facility B
  Lender, such Facility B Lender's Commitment Percentage as defined
  in the Facility B Credit Agreement.
  
           "Facility B Credit Agreement": the Revolving Credit
  Agreement (Facility B), dated as of the date hereof, among the
  Borrower, the Facility B Agent and the Facility B Lenders, as the
  same may be amended, supplemented or otherwise modified from time
  to time.
      
           "Facility B Lenders": the Lenders party to the Facility B
  Loan Documents.
  
           "Facility B Loan Documents": collectively, the Facility B
  Credit Agreement, the Facility B Notes and the Pledge Agreement.
  
           "Facility B Maturity Date": the maturity date under the
  Facility B Credit Agreement, as from time to time extended
  pursuant thereto.
  
           "Facility B Notes": collectively, (i) the Revolving Credit
  Notes (Facility B) and (ii) the Competitive Bid Notes (Facility
  B) made by the Borrower pursuant to the Facility B Credit
  Agreement, as indorsed or modified from time to time.
  
           "Facility Fee": as defined in Section 3.1.
  
           "Federal Funds Rate": for any day, a rate per annum
  (expressed as a decimal, rounded upwards, if necessary, to the
  next higher 1/100 of 1%), 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 by  the Federal Reserve Bank of New York on the
  Business Day next succeeding such day, provided that (i) if the
  day for which such rate is to be determined is not a Business
  Day, the Federal Funds Rate for such day shall be such rate on
  such transactions on the next preceding Business Day as so
  published on the next succeeding Business Day, and (ii) if such
  rate is not so published for any day, the Federal Funds Rate for
  such day shall be the average of the quotations for such day on
  such transactions received by BNY as determined by BNY and
  reported to the Agent.
  
           "Financial Statements": as defined in Section 4.11.
  
           "GAAP": generally accepted accounting principles set forth
  in the opinions and pronouncements of the Accounting Principles
  Board and the American Institute of Certified Public Accountants
  and in the statements and pronouncements of the Financial
  Accounting Standards Board or in such other statement by such
  other entity as may be approved by a significant segment of the
  accounting profession, which are applicable to the circumstances
  as of the date of determination, consistently applied.  If at any
  time any change in GAAP would affect the computation of any
  financial ratio or requirement set forth in this Agreement, the
  Agent, the Lenders and the Borrower shall negotiate in good faith
  to amend such ratio or requirement to reflect such change in GAAP
  (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 GAAP prior to such change therein
  and (ii) the Borrower shall provide to the Agent and the Lenders
  financial statements and other documents required under this
  Agreement or as reasonably requested hereunder setting forth a
  reconciliation between calculations of such ratio or requirement
  made before and after giving effect to such change in GAAP.
  
           "Governmental Authority": any nation or government, any
  state or other political subdivision thereof, any entity
  exercising executive, legislative, judicial, regulatory or
  administrative functions of or pertaining to government and any
  court or arbitrator.
  
           "Highest Lawful Rate": as to any Lender, the maximum rate
  of interest, if any, that at any time or from time to time may be
  contracted for, taken, charged or received by such Lender on the
  Notes, or which may be owing to such Lender pursuant the Loan
  Documents under the laws applicable to such Lender and this
  transaction.
  
           "Indebtedness": as to any Person, at a particular time,
  all items which constitute, without duplication, (i) indebtedness
  for borrowed money or the deferred purchase price of Property
  (other than trade payables incurred in the ordinary course of
  business), (ii) indebtedness evidenced by notes, bonds,
  debentures or similar instruments, (iii) obligations with respect
  to any conditional sale or title retention agreement, (iv)
  indebtedness arising under acceptance facilities and the amount
  available to be drawn under all letters of credit (other than
  trade letters of credit) issued for the account of such Person
  and, without duplication, all drafts drawn thereunder to the
  extent such Person shall not have reimbursed the issuer in
  respect of the issuer's payment of such drafts, (v) all
  liabilities secured by any Lien on any Property owned by such
  Person even though such Person has not assumed or otherwise
  become liable for the payment thereof (other than (A) carriers',
  warehousemen's, mechanics', repairmen's or other like non-
  consensual statutory Liens arising in the ordinary course of
  business and (B) liabilities of Subsidiaries (other than ACE and
  Operating Subsidiaries) for which recourse may be had by the 
  creditor only to the Property secured by the Lien), (vi) Capital
  Lease Obligations and (vii) Contingent Obligations.
  
           "Indebtedness Capitalization Ratio": the ratio of (i)
  Consolidated Total Indebtedness to (ii) Consolidated Total
  Capitalization.
  
           "Indemnified Person": as defined in Section 11.10.
  
           "Intercompany Loans": loans from time to time made by the
  Borrower to an Operating Subsidiary.
  
           "Intercompany Note": a promissory note made by an
  Operating Subsidiary to the Borrower evidencing the Intercompany
  Loans made by the Borrower to such Operating Subsidiary,
  substantially in the form of Exhibit M, as the same may be
  amended, modified or supplemented.
  
           "Interest Payment Date": (i) as to any ABR Advance, the
  last day of each March, June, September and December commencing
  on the first of such days to occur after such ABR Advance is made
  or any Eurodollar Advance is converted to an ABR Advance, (ii) as
  to any Eurodollar Advance in respect of which the Borrower has
  selected a Eurodollar Interest Period of one, two or three
  months, the last day of such Interest Period, (iii) as to any
  Eurodollar Advance in respect of which the Borrower has selected
  a Eurodollar Interest Period of six months, the day which is
  three months after the first day of such Interest Period and the
  last day of such Interest Period, (iv) as to any Competitive Bid
  Loan as to which the Borrower has selected an Interest Period of
  90 days or less, the last day of such Competitive Interest
  Period, and (v) as to any Competitive Bid Loan as to which the
  Borrower has selected a Competitive Interest Period of more than
  90 days, the day which is 90 days after the first day of such
  Competitive Interest Period and the last day of such Competitive
  Interest Period.
  
           "Interest Period": a Eurodollar Interest Period or a
  Competitive Interest Period, as the context may require.
  
           "Investments": as defined in Section 8.5.
  
           "Invitation to Bid": an invitation to make Competitive
  Bids in the form of Exhibit E.
  
           "Lien": any mortgage, pledge, hypothecation, assignment,
  deposit or preferential arrangement, encumbrance, lien (statutory
  or other), or other security agreement or security interest of
  any kind or nature whatsoever, including, without limitation, any
  conditional sale or other title retention agreement and any
  capital or financing lease having substantially the same economic
  effect as any of the foregoing.
  
           "Loan Documents": collectively, this Agreement, the Notes
  and the Pledge Agreement.
  
           "Loans": the Revolving Credit Loans and/or the Competitive
  Bid Loans, as the case may be.
      
           "Margin Stock": any "margin stock", as defined in
  Regulation U of the Board of Governors of the Federal Reserve
  System, as the same may be amended or supplemented from time to
  time.
  
           "Material Adverse Change": a material adverse change in
  (i) the financial condition, operations, business or Property of
  the Borrower and its Subsidiaries taken as a whole or (ii) the
  ability of the Borrower to perform its obligations under the Loan
  Documents.
  
           "Material Adverse Effect": a material adverse effect on
  (i) the financial condition, operations, business or Property of
  the Borrower and its Subsidiaries taken as a whole or (ii) the
  ability of the Borrower to perform its obligations under the Loan
  Documents.
  
           "Maturity Date": September 26, 1996, or any date
  subsequent thereto resulting from an extension of the Maturity
  Date pursuant to Section 2.18, or such earlier date on which the
  Notes shall become due and payable, whether by acceleration or
  otherwise.
  
           "Maximum Offer": as defined in Section 2.4(b).
  
           "Maximum Request": as defined in Section 2.4(a).
  
           "Moody's": Moody's Investors Service, Inc., or any
  successor thereto.
  
           "Multiemployer Plan": a Pension Plan which is a
  multiemployer plan as defined in Section 4001(a)(3) of ERISA.
  
           "Nonconsenting Lender": as defined in Section 2.18.
  
           "Note": a Revolving Credit Note or a Competitive Bid Note,
  as the case may be.
  
           "Notes": the Revolving Credit Notes and/or the Competitive
  Bid Notes, as the case may be.
  
           "Notice of Conversion/Continuation": a notice
  substantially in the form of Exhibit I.
  
           "Operating Subsidiaries": collectively (i) Atlantic
  Generation, Inc., (ii) ATE, (iii) Atlantic Thermal, (iv) Atlantic
  Jersey Thermal Systems, Inc., (v) Atlantic Energy Technologies,
  Inc. and (vi) and each other Subsidiary of the Borrower engaged
  in the conduct of an active trade or business which is designated
  as an Operating Subsidiary pursuant to Section 8.7.
  
           "PBGC": the Pension Benefit Guaranty Corporation
  established pursuant to Subtitle A of Title IV of ERISA, or any
  Governmental Authority succeeding to the functions thereof.
  
           "Pension Plan": at any date of determination, any Employee
  Benefit Plan (including a Multiemployer Plan), the funding
  requirements of which (under Section 302 of ERISA or Section 412
  of the Code) are, or at any time within the six years immediately
  preceding such date, were in whole or in part, the responsibility
  of the Borrower, any of its Subsidiaries or any ERISA Affiliate.
  
           "Permitted Investments": Investments permitted under
  Section 8.5.
  
           "Permitted Liens": Liens permitted to exist under Section
  8.2.
  
           "Permitted Recipient": a Person in which the Borrower owns
  50% or less of the Stock or voting power.
  
           "Permitted Recipient Loans": loans from time to time made
  to a Permitted Recipient by the Borrower to the extent permitted
  by Section 8.5.
  
           "Person": any individual, firm, partnership, joint
  venture, corporation, association, business enterprise, limited
  liability company, joint stock company, unincorporated
  association, trust, Governmental Authority or any other entity,
  whether acting in an individual, fiduciary, or other capacity,
  and for the purpose of the definition of "ERISA Affiliate", a
  trade or business.
  
           "Pledge Agreement": the Pledge Agreement, made by the
  Borrower in favor of the Agent, as collateral agent for itself,
  the Lenders, the Facility B Agent and the Facility B Lenders,
  substantially in the form of Exhibit L, as the same may be
  amended, supplemented or otherwise modified from time to time.
  
           "Portion": as defined in Section 2.4(b).
  
           "Pricing Level I": any time when the Senior Debt Rating is
  (i) A- or higher by S&P or (ii) A3 or higher by Moody's,
  provided, however, that in the event that (x) the Senior Debt
  Rating is not available from either S&P or Moody's, such rating
  agency shall be deemed to have assigned its lowest rating and (y)
  the Senior Debt Rating is not available from both S&P and
  Moody's, Pricing Level IV shall be applicable.
  
           "Pricing Level II": any time when (i) the Senior Debt
  Rating is (a) BBB or higher by S&P or (b) Baa2 or higher by
  Moody's and (ii) Pricing Level I does not apply, provided,
  however, that in the event that (x) the Senior Debt Rating is not
  available from either S&P or Moody's, such rating agency shall be
  deemed to have assigned its lowest rating and (y) the Senior Debt
  Rating is not available from both S&P and Moody's, Pricing Level
  IV shall be applicable.
  
           "Pricing Level III": any time when (i) the Senior Debt
  Rating is (a) BBB- or higher by S&P or (b) Baa3 or higher by
  Moody's and (ii) Pricing Levels I and II do not apply, provided,
  however, that in the event that (x) the Senior Debt Rating is not
  available from either S&P or Moody's, such rating agency shall be
  deemed to have assigned its lowest rating and (y) the Senior Debt
  Rating is not available from both S&P and Moody's, Pricing Level
  IV shall be applicable.
  
           "Pricing Level IV": any time when Pricing Levels I, II and
  III do not apply.
  
           "Prohibited Transaction": a transaction that is prohibited
  under Section 4975 of the Code or Section 406 of ERISA and not
  exempt under Section 4975 of the Code or Section 408 of ERISA.
  
           "Property": all types of real, personal, tangible,
  intangible or mixed property.
  
           "Real Property": all real property owned or leased (or
  previously owned or leased) by the Borrower or any of its
  Subsidiaries (or any of their respective predecessors).
  
           "Replacement Lender": as defined in Section 2.18.
  
           "Reportable Event": with respect to any Pension Plan, (i)
  any event set forth in Sections 4043(b) (other than a Reportable
  Event as to which the 30 day notice requirement is waived by the
  PBGC under applicable regulations), 4062(c) or 4063(a) of ERISA
  or the regulations thereunder, (ii) an event requiring the
  Borrower, any of its Subsidiaries or any ERISA Affiliate to
  provide security to a Pension Plan under Section 401(a)(29) of
  the Code, or (iii) any failure to make any payment required by
  Section 412(m) of the Code.
  
           "Required Lenders": (i) if the Commitments exist and no
  Revolving Credit Loans are outstanding, Lenders having
  Commitments equal to at least 66-2/3% of the sum of the Aggregate
  Commitments; (ii) if the Commitments exist and Revolving Credit
  Loans are outstanding, Lenders holding Revolving Credit Notes
  having an aggregate unpaid principal balance equal to at least
  66-2/3% of the aggregate of Revolving Credit Loans outstanding;
  and (iii) if the Commitments have been terminated or otherwise no
  longer exist, Lenders holding Notes having an aggregate unpaid
  principal balance equal to at least 66-2/3% of the aggregate of
  Loans outstanding.
  
           "Restricted Payment": as to any Person (i) any dividend or
  other distribution, direct or indirect, on account of any shares
  of any class of Stock or other equity interest in such Person now
  or hereafter outstanding (other than a dividend payable solely in
  shares of such Stock to the holders of such shares) and (ii) any
  redemption, retirement, sinking fund or similar payment, purchase
  or other acquisition, direct or indirect, of any shares of any
  class of Stock or other equity interest in such Person now or
  hereafter outstanding.
  
           "Restricted Subsidiaries": collectively, the Operating
  Subsidiaries and ACE. 
  
           "Revolving Credit Loans": as defined in Section 2.1.
  
           "Senior Debt Rating": the long-term senior secured debt
  rating of ACE as from time to time determined by S&P and/or
  Moody's.
  
           "S&P": Standard & Poor's Ratings Group, a division of
  McGraw-Hill, Inc., or any successor thereto.
  
           "SEC": the Securities and Exchange Commission or any
  Governmental Authority succeeding to the functions thereof.
  
           "Special Counsel": Emmet, Marvin & Martin, LLP, special
  counsel to the Agent.
  
           "Stock": any and all shares, rights, interests,
  participations, warrants or other equivalents (however
  designated) of corporate stock.
  
           "Submission Deadline": as defined in Section 2.4(b).
  
           "Subsidiary": as to any Person, any corporation,
  association, partnership, limited liability company, joint
  venture or other business entity of which such Person or any
  Subsidiary of such Person, directly or indirectly, either (i) in
  respect of a corporation, owns or controls more than 50% of the
  outstanding Stock having ordinary voting power to elect a
  majority of the board of directors or similar managing body,
  irrespective of whether a class or classes shall or might have
  voting power by reason of the happening of any contingency, or
  (ii) in respect of an association, partnership, joint venture or
  other business entity, is entitled to share in more than 50% of
  the profits and losses, however determined.
  
           "Tax": any present or future tax, levy, impost, duty,
  charge, fee, deduction or withholding of any nature and whatever
  called, by a Governmental Authority, on whomsoever and wherever
  imposed, levied, collected, withheld or assessed.
  
           "Tax on the Overall Net Income": as to any Person, a Tax
  imposed by the jurisdiction in which that Person's principal
  office (and/or, in the case of a Lender, its Domestic Lending
  Office) is located or by any political subdivision or taxing
  authority thereof or in which that Person is deemed to be doing
  business on all or part of the net income, profits or gains of
  that Person (whether worldwide, or only insofar as such income,
  profits or gains are considered to arise in or to relate to a
  particular jurisdiction, or otherwise).
  
           "Termination Event": with respect to any Pension Plan, (i)
  a Reportable Event, (ii) the termination of a Pension Plan, or
  the filing of a notice of intent to terminate a Pension Plan, or
  the treatment of a Pension Plan amendment as a termination under
  Section 4041(c) of ERISA, (iii) the institution of proceedings to
  terminate a Pension Plan under Section 4042 of ERISA, or (iv) the
  appointment of a trustee to administer any Pension Plan under
  Section 4042 of ERISA.
  
           "United States": the United States of America (including
  the States thereof and the District of Columbia).
  
      1.2. Principles of Construction
  
           (a)  All terms defined in a Loan Document shall have the
  meanings given such terms therein when used in the other Loan
  Documents or any certificate,  opinion or other document made or
  delivered pursuant thereto, unless otherwise defined therein.
  
           (b)  As used in the Loan Documents and in any certificate,
  opinion or other document made or delivered pursuant thereto,
  accounting terms not defined in Section 1.1, and accounting terms
  partly defined in Section 1.1, to the extent not defined, shall
  have the respective meanings given to them under GAAP.
  
           (c)  The words "hereof", "herein", "hereto" and
  "hereunder" and similar words when used in a Loan Document shall
  refer to such Loan Document as a whole and not to any particular
  provision thereof, and Section, schedule and exhibit references
  contained therein shall refer to Sections thereof or schedules or
  exhibits thereto unless otherwise expressly provided therein.
  
           (d)  The phrase "may not" is prohibitive and not
  permissive.
  
           (e)  Unless the context otherwise requires, words in the
  singular number include the plural, and words in the plural
  include the singular.
  
           (f)  Unless specifically provided in a Loan Document to
  the contrary, references to a time shall refer to New York City
  time.
  
           (g)  Unless specifically provided in a Loan Document to
  the contrary, in the computation of periods of time from a
  specified date to a later specified date, the word "from" means
  "from and including" and the words "to" and "until" each means
  "to but excluding".
  
           (h)  References in any Loan Document to a fiscal period
  shall refer to that fiscal period of the Borrower.
  
  
  2.  AMOUNT AND TERMS OF LOANS
  
      2.1. Revolving Credit Loans
  
           Subject to the terms and conditions hereof, each Lender
  severally agrees to make revolving credit loans (each a
  "Revolving Credit Loan" and, as the context may require,
  collectively with all other Revolving Credit Loans of such Lender
  and with the Revolving Credit Loans of all other Lenders, the
  "Revolving Credit Loans") to the Borrower from time to time
  during the Commitment Period, provided, however, that immediately
  after giving effect thereto (i) such Lender's Credit Exposure
  would not exceed such Lender's Commitment, and (ii) the Aggregate
  Credit Exposure would not exceed the Aggregate Commitments. 
  During the Commitment Period, the Borrower may borrow, prepay in
  whole or in part and reborrow under the Aggregate Commitments,
  all in accordance with the terms and conditions of this
  Agreement.
  
      2.2. Revolving Credit Notes
  
           The Revolving Credit Loans made by a Lender shall be
  evidenced by a promissory note of the Borrower, substantially in
  the form of Exhibit B-1, with  appropriate insertions therein as
  to date and principal amount (each, as indorsed or modified from
  time to time, a "Revolving Credit Note" and, collectively with
  the Revolving Credit Notes of all other Lenders, the "Revolving
  Credit Notes"), payable to the order of such Lender for the
  account of its Applicable Lending Office and representing the
  obligation of the Borrower to pay the lesser of (i) the original
  amount of the Commitment of such Lender and (ii) the aggregate
  unpaid principal balance of all Revolving Credit Loans made by
  such Lender, with interest thereon as prescribed in Section 2.8. 
  Each Revolving Credit Note shall (iii) be dated the first
  Borrowing Date, (iv) be stated to mature on the Maturity Date and
  (v) bear interest from the date thereof on the unpaid principal
  balance thereof at the applicable interest rate or rates per
  annum determined as provided in Section 2.8. Interest shall be
  payable as specified in Section 2.8.
  
      2.3. Procedure for Borrowing Revolving Credit Loans
  
           (a)  The Borrower may borrow Revolving Credit Loans under
  the Aggregate Commitments on any Business Day during the
  Commitment Period, provided, however, that the Borrower shall
  notify the Agent in writing by facsimile transmission no later
  than (i) 12:00 p.m., three Business Days prior to the requested
  Borrowing Date, in the case of Eurodollar Advances and (ii) 11:30
  a.m. on the requested Borrowing Date, in the case of ABR
  Advances, in each case specifying (A) the aggregate principal
  amount to be borrowed under the Aggregate Commitments, (B) the
  requested Borrowing Date, (C) whether such borrowing is to
  consist of one or more Eurodollar Advances, ABR Advances, or a
  combination thereof and (D) if the borrowing is to consist of one
  or more Eurodollar Advances, the length of the Eurodollar
  Interest Period for each such Eurodollar Advance, provided,
  however, that no Eurodollar Interest Period selected in respect
  of any Revolving Credit Loan shall end after the Maturity Date. 
  If the Borrower fails to give timely notice in connection with a
  request for a Eurodollar Advance, the Borrower shall be deemed to
  have elected that such Advance shall be made as an ABR Advance. 
  Each such notice shall be irrevocable and confirmed promptly (and
  in any event within five Business Days) by delivery to the Agent
  of a manually signed Borrowing Request.  Each ABR Advance shall
  be in an aggregate principal amount equal to $1,000,000 or an
  integral multiple of $1,000,000 in excess thereof (or, if the
  unused amount of the Aggregate Commitments is less than such
  amount, then such lesser amount of the Aggregate Commitments),
  and each Eurodollar Advance shall be in an aggregate principal
  amount equal to $1,000,000 or an integral multiple of $1,000,000
  in excess thereof.
  
           (b)  Upon receipt of each notice of borrowing from the
  Borrower, the Agent shall promptly notify each Lender thereof. 
  Subject to its receipt of the notice referred to in the preceding
  sentence, each Lender will make the amount of its Commitment
  Percentage of each borrowing available to the Agent for the
  account of the Borrower at the office of the Agent set forth in
  Section 11.2 not later than 2:00 p.m. on the relevant Borrowing
  Date requested by the Borrower, in funds immediately available to
  the Agent at such office.  The amounts so made available to the
  Agent on such Borrowing Date will then, subject to the
  satisfaction of the terms and conditions of this Agreement, as
  determined by the Agent, be made available on such date to the
  Borrower by the Agent at the office of the Agent specified in
  Section 11.2 by crediting the account of the Borrower on the
  books of such office with the aggregate of said amounts received
  by the Agent.
  
           (c)  Unless the Agent shall have received prior notice
  from a Lender (by telephone or otherwise, such notice to be
  promptly confirmed by fax or other writing) that such Lender will
  not make available to the Agent such Lender's Commitment
  Percentage of the Revolving Credit Loans requested by the
  Borrower, the Agent may assume that such Lender has made such
  share available to the Agent on the Borrowing Date in accordance
  with this Section, provided that such Lender received notice of
  the proposed borrowing from the Agent, and the Agent may, in
  reliance upon such assumption, make available to the Borrower on
  the Borrowing Date a corresponding amount.  If and to the extent
  such Lender shall not have so made its Commitment Percentage of
  such Loans available to the Agent, such Lender and the Borrower
  severally agree to pay to the Agent forthwith on demand such
  corresponding amount (to the extent not previously paid by the
  other), together with interest thereon for each day from the date
  such amount is made available to the Borrower to the date such
  amount is paid to the Agent, at a rate per annum equal to, in the
  case of the Borrower, the applicable interest rate set forth in
  Section 2.8 for such Loans, and, in the case of such Lender, the
  Federal Funds Rate in effect on each such day (as determined by
  the Agent).  Such payment by the Borrower, however, shall be
  without prejudice to its rights against such Lender.  If such
  Lender shall pay to the Agent such corresponding amount, such
  amount so paid shall constitute such Lender's Revolving Credit
  Loan as part of the Revolving Credit Loans for purposes of this
  Agreement, which Revolving Credit Loan shall be deemed to have
  been made by such Lender on the Borrowing Date applicable to such
  Revolving Credit Loans.
  
           (d)  If a Lender makes a new Revolving Credit Loan on a
  Borrowing Date on which the Borrower is to repay a Revolving
  Credit Loan or Competitive Bid Loan from such Lender, such Lender
  shall apply the proceeds of such new Revolving Credit Loan to
  make such repayment, and only the excess of the proceeds of such
  new Revolving Credit Loan over the Revolving Credit Loan or
  Competitive Bid Loan being repaid need be made available to the
  Agent.
  
           (e)  Notwithstanding the provisions of Section 2.3(a), the
  Agent may act without liability upon the basis of telephonic
  notice of borrowing believed by the Agent in good faith to be
  from an authorized officer of the Borrower prior to receipt of
  written notice and confirmation by facsimile or otherwise.  In
  each such case, the Borrower waives the right to dispute the
  Agent's record of the terms of such telephone notice of such
  borrowing.
  
      2.4. Competitive Bid Loans; Procedure
  
           (a)  The Borrower may make Competitive Bid Requests by
  12:00 p.m. at least one Business Day prior to the proposed
  Borrowing Date for one or more Competitive Bid Loans.  Each
  Competitive Bid Request given to the Agent (which shall promptly
  on the same day give notice thereof to each Lender by facsimile
  transmission of an Invitation to Bid if the Competitive Bid
  Request is not rejected pursuant to this Section), shall be given
  in writing by facsimile transmission (confirmed promptly, and in
  any event within five Business Days, by the delivery to the Agent
  of a Competitive Bid Request manually signed by the Borrower),
  and shall specify (i) the proposed Borrowing Date, which shall be
  a Business Day, (ii) the aggregate amount of the requested
  Competitive Bid Loans (the "Maximum Request") which amount (A)
  shall not exceed an amount which, on the proposed Borrowing Date
  and after giving effect to the requested Competitive Bid Loans,
  would cause the Aggregate Credit Exposure to exceed the 
  Aggregate Commitments and (B) shall be in a principal amount
  equal to $1,000,000 or an integral multiple of $1,000,000 in
  excess thereof, (iii) the Competitive Interest Period(s) therefor
  and the last day of each such Competitive Interest Period, and
  (iv) if more than one Competitive Interest Period is so
  specified, the principal amount allocable to each such
  Competitive Interest Period (which amount shall not be less than
  $1,000,000 or an integral multiple of $1,000,000 in excess
  thereof).  A Competitive Bid Request that does not conform
  substantially to the form of Exhibit D shall be rejected, and the
  Agent shall promptly notify the Borrower of such rejection. 
  Notwithstanding anything contained herein to the contrary, (1)
  not more than three Competitive Interest Periods may be requested
  pursuant to any Competitive Bid Request and (2) not more than
  three Competitive Bid Loans may be outstanding at any one time.
  
           (b)  Each Lender in its sole discretion may (but is not
  obligated to) submit one or more Competitive Bids to the Agent
  not later than 10:00 a.m. on the proposed Borrowing Date
  specified in such Competitive Bid Request (such time being herein
  called the "Submission Deadline"), by fax or other writing, and
  thereby irrevocably offer to make all or any part (any such part
  referred to as a "Portion") of any Competitive Bid Loan described
  in the relevant Competitive Bid Request at a rate of interest per
  annum (each a "Bid Rate") specified therein in an aggregate
  principal amount of not less than $1,000,000 or an integral
  multiple of $1,000,000 in excess thereof, provided that
  Competitive Bids submitted by BNY may only be submitted if BNY
  notifies the Borrower of the terms of its Competitive Bid not
  later than thirty minutes prior to the Submission Deadline. 
  Multiple Competitive Bids may be delivered to the Agent by a
  Lender.  The aggregate Portions of Competitive Bid Loans for any
  or all Competitive Interest Periods offered by each Lender in its
  Competitive Bid may exceed the Maximum Request contained in the
  relevant Competitive Bid Request, provided that each Competitive
  Bid shall set forth the maximum aggregate amount of the
  Competitive Bid Loans offered thereby which the Borrower may
  accept (the "Maximum Offer"), which Maximum Offer shall not
  exceed the Maximum Request.  If the Agent has not received a
  Competitive Bid from any Lender by the Submission Deadline, such
  Lender shall be deemed not to have made a Competitive Bid and
  shall not be permitted or obligated to make a Competitive Bid
  Loan on the proposed Borrowing Date.
  
           (c)  The Agent shall promptly give notice by telephone
  (promptly confirmed by fax or other writing) to the Borrower of
  all Competitive Bids received by the Agent prior to the
  Submission Deadline which comply in all material respects with
  this Section.  The Borrower shall, in its sole discretion but
  subject to Section 2.4(d), irrevocably accept or reject any such
  Competitive Bid (or any Portion thereof) not later than 10:30
  a.m. on the day of the Submission Deadline by notice to the Agent
  by telephone (confirmed by fax or other writing in the form of a
  Competitive Bid Accept/Reject Letter promptly the same day). 
  Promptly upon receipt by the Agent of such a Competitive Bid
  Accept/Reject Letter, the Agent will give notice to each Lender
  that submitted a Competitive Bid as to the extent, if any, that
  such Lender's Competitive Bid shall have been accepted.  If the
  Agent fails to receive notice from the Borrower of its acceptance
  or rejection of any Competitive Bids at or prior to 10:30 a.m. on
  the day of the Submission Deadline, all such Competitive Bids
  shall be deemed to have been rejected by the Borrower, and the
  Agent will give to each Lender that submitted a Competitive Bid
  notice of such rejection by telephone on such day.  In due course
  following the acceptance of any Competitive Bid, the Agent shall
  notify each Lender which submitted a  Competitive Bid, in the
  form of a Competitive Bid Loan Confirmation, of the amount,
  maturity date and Bid Rate for each Competitive Bid Loan.
  
           (d)  If the Borrower accepts a Portion of a proposed
  Competitive Bid Loan for a single Competitive Interest Period at
  the Bid Rate provided therefor in a Lender's Competitive Bid,
  such Portion shall be in a principal amount of $1,000,000 or an
  integral multiple of $1,000,000 in excess thereof (subject to
  such lesser allocation as may be made pursuant to the provisions
  of this Section 2.4(d)).  The aggregate principal amount of
  Competitive Bid Loans accepted by the Borrower following
  Competitive Bids responding to a Competitive Bid Request shall
  not exceed the Maximum Request.  The aggregate principal amount
  of Competitive Bid Loans accepted by the Borrower pursuant to a
  Lender's Competitive Bid shall not exceed the Maximum Offer
  therein contained.  If the Borrower accepts any Competitive Bid
  Loans or Portion offered in any Competitive Bid, the Borrower
  must accept Competitive Bids (and Competitive Bid Loans and
  Portions thereby offered) based exclusively upon the successively
  lowest Bid Rates within each Competitive Interest Period and no
  other criteria.  If two or more Lenders submit Competitive Bids
  with identical Bid Rates for the same Competitive Interest Period
  and the Borrower accepts any thereof, the Borrower shall, subject
  to the first three sentences of this Section 2.4(d), accept all
  such Competitive Bids as nearly as possible in proportion to the
  amounts of such Lender's respective Competitive Bids with
  identical Bid Rates for such Competitive Interest Period,
  provided, that if the amount of Competitive Bid Loans to be so
  allocated is not sufficient to enable each such Lender to make
  such Competitive Bid Loan (or Portions thereof) in an aggregate
  principal amount of $1,000,000 or an integral multiple of
  $1,000,000 in excess thereof, the Borrower shall round the
  Competitive Bid Loans (or Portions thereof) allocated to such
  Lender or Lenders as the Borrower shall select as necessary to a
  minimum of $1,000,000 or an integral multiple of $500,000 in
  excess thereof.
  
           (e)  Not later than 2:00 p.m. on the relevant Borrowing
  Date, each Lender whose Competitive Bid was accepted by the
  Borrower shall make available to the Agent at its office set
  forth in Section 11.2, in immediately available funds, the
  proceeds of such Lender's Competitive Bid Loan(s). The amounts so
  made available to the Agent on such Borrowing Date will then,
  subject to the satisfaction of the terms and conditions of this
  Agreement, as determined by the Agent, be made available on such
  date to the Borrower by the Agent at the office of the Agent
  specified in Section 11.2 by crediting the account of the
  Borrower on the books of such office with the aggregate of said
  amounts received by the Agent.
  
           (f)  All notices required by this Section 2.4 shall be
  given in accordance with Section 11.2.
  
           (g)  The Competitive Bid Loans made by each Lender shall
  be evidenced by a promissory note of the Borrower, substantially
  in the form of Exhibit B-2 (each, as indorsed or modified from
  time to time, a "Competitive Bid Note" and, collectively with the
  Competitive Bid Notes of all other Lenders, the "Competitive Bid
  Notes"), payable to the order of such Lender for the account of
  its Applicable Lending Office, and dated the first Borrowing
  Date.  Each Competitive Bid Loan shall be due and payable on the
  earlier of (i) the last day of the Competitive Interest Period
  applicable thereto and (ii) the Maturity Date.
  
      2.5. Voluntary Reduction or Termination of Aggregate
  Commitments
  
           The Borrower shall have the right, upon at least three
  Business Days' prior written notice to the Agent, at any time to
  terminate the Aggregate Commitments or from time to time to
  permanently reduce the Aggregate Commitments, provided, however,
  that each such reduction shall be in the amount of $5,000,000 or
  an integral multiple of $1,000,000 in excess thereof.  Each
  reduction of the Aggregate Commitments shall be applied pro rata
  according to the Commitment Percentage of each Lender. 
  Simultaneously with each reduction of the Aggregate Commitments
  under this Section, the Borrower shall (i) pay the Facility Fee
  accrued on the amount by which the Aggregate Commitments have
  been reduced and (ii) prepay the Loans as required by Section
  2.6.  The Aggregate Commitments shall not be reduced below an
  amount equal to the Aggregate Credit Exposure (after giving
  effect to any prepayment of the Loans made simultaneously with
  such reduction of the Aggregate Commitments). The Aggregate
  Commitments shall not be reduced to the extent that, immediately
  after giving effect thereto, the Commitment of any Lender would
  exceed the the aggregate principal amount of all Revolving Credit
  Loans then outstanding from such Lender.
  
      2.6. Prepayments of the Loans
  
           (a)  Voluntary Prepayments. The Borrower may, at its
  option, prepay the Revolving Credit Loans without premium or
  penalty, in full at any time or in part from time to time by
  notifying the Agent in writing no later than 11:30 a.m. on the
  date of the proposed prepayment date, in the case of Revolving
  Credit Loans consisting of ABR Advances and no later than 12:00
  p.m. on the third Business Day prior to the proposed prepayment
  date, in the case of Revolving Credit Loans consisting of
  Eurodollar Advances, specifying the Revolving Credit Loans to be
  prepaid, the amount to be prepaid and the date of prepayment. 
  Competitive Bid Loans may not be prepaid.  Such notice shall be
  irrevocable and the amount specified in such notice shall be due
  and payable on the date specified, together with accrued interest
  to the date of such payment on the amount prepaid.  Upon receipt
  of such notice, the Agent shall promptly notify each Lender
  thereof.  Each partial prepayment of Revolving Credit Loans shall
  be in an aggregate principal amount of (A) $1,000,000 or an
  integral multiple of $1,000,000 in excess thereof, or (B) if the
  outstanding principal balance of the Revolving Credit Loans is
  less that the minimum amounts set forth in clause (A), then such
  lesser outstanding principal balance.  After giving effect to any
  partial prepayment with respect to Eurodollar Advances which were
  made (whether as the result of a borrowing or a conversion) on
  the same date and which had the same Interest Period, the
  outstanding principal amount of such Eurodollar Advances shall
  exceed (subject to Section 2.7) $1,000,000 or an integral
  multiple of $1,000,000 in excess thereof.  If any prepayment is
  made in respect of any Eurodollar Advance or Competitive Bid
  Loan, in whole or in part, prior to the last day of the
  applicable Interest Period, the Borrower agrees to indemnify the
  applicable Lenders in accordance with Section 2.13.
  
           (b)  Mandatory Prepayments Relating to Reductions of the
  Aggregate Commitments. Simultaneously with each reduction of the
  Aggregate Commitments under Section 2.5, the Borrower shall
  prepay the Loans by the amount, if any, by which the aggregate
  unpaid principal balance of the Loans exceeds the amount of the
  Aggregate Commitments as so reduced.  Such prepayments shall be
  applied (i) first, to prepay the Revolving Credit Loans pro rata
  according to the Commitment of each Lender, and (ii)  then, to
  the extent of any excess remaining, to prepay the Competitive Bid
  Loans, pro rata according to the outstanding amount of each
  Competitive Bid Loan.
  
      2.7. Conversions and Continuations
  
           (a)  The Borrower may elect from time to time to convert
  Eurodollar Advances to ABR Advances by giving the Agent at least
  one Business Day's prior irrevocable notice in writing by
  facsimile transmission of such election (confirmed promptly, and
  in any event within five Business Days, by the delivery of a
  manually signed Notice of Conversion/Continuation), specifying
  the amount to be so converted, provided, that any such conversion
  of Eurodollar Advances shall only be made on the last day of the
  Interest Period applicable thereto.  In addition, the Borrower
  may elect from time to time to (i) convert ABR Advances to
  Eurodollar Advances and (ii) to continue Eurodollar Advances by
  selecting a new Interest Period therefor, in each case by giving
  the Agent at least three Business Days' prior irrevocable notice
  in writing by facsimile transmission of such election (confirmed
  promptly, and in any event within five Business Days, by the
  delivery of a manually signed Notice of Conversion/Continuation),
  in the case of a conversion to, or continuation of, Eurodollar
  Advances, specifying the amount to be so converted and the
  initial Interest Period relating thereto, provided that any such
  conversion of ABR Advances to Eurodollar Advances shall only be
  made on a Business Day and any such continuation of Eurodollar
  Advances shall only be made on the last day of the Interest
  Period applicable to the Eurodollar Advances which are to be
  continued as such new Eurodollar Advances.  The Agent shall
  promptly provide the Lenders with a copy of each such Notice of
  Conversion/Continuation.  ABR Advances and Eurodollar Advances
  may be converted or continued pursuant to this Section in whole
  or in part, provided that conversions of ABR Advances to
  Eurodollar Advances, or continuations of Eurodollar Advances
  shall be in an aggregate principal amount of $1,000,000 or such
  amount plus a whole multiple of $1,000,000 in excess thereof.
  
           (b)  Notwithstanding anything in this Section to the
  contrary, no ABR Advance may be converted to a Eurodollar Advance
  and no Eurodollar Advance may be continued, if the Borrower or
  the Agent has knowledge that a Default or Event of Default has
  occurred and is continuing either (i) at the time the Borrower
  shall notify the Agent of its election to convert or continue or
  (ii) on the requested Conversion/Continuation Date.  In such
  event, such ABR Advance shall be automatically continued as an
  ABR Advance, or such Eurodollar Advance shall be automatically
  converted to an ABR Advance on the last day of the Interest
  Period applicable to such Eurodollar Advance.  If an Event of
  Default shall have occurred and be continuing, the Agent shall,
  at the request of the Required Lenders, notify the Borrower (by
  telephone or otherwise) that all, or such lesser amount as the
  Required Lenders shall designate, of the outstanding Eurodollar
  Advances shall be automatically converted to ABR Advances, in
  which event such Eurodollar Advances shall be automatically
  converted to ABR Advances on the date such notice is given.
  
           (c)  No Interest Period selected in respect of conversion
  or continuation of any Eurodollar Advance shall end after the
  Maturity Date.
  
           (d)  Each conversion or continuation shall be effected by
  each Lender by applying the proceeds of its new ABR Advance or
  Eurodollar Advance, as the case may  be, to its Advances (or
  portion thereof) being converted (it being understood that such
  conversion shall not constitute a borrowing for purposes of
  Sections 4, 5 or 6).
  
           (e)  Notwithstanding the provisions of Section 2.7(a), the
  Agent may act without liability upon the basis of telephonic
  notice of such conversion or continuation believed by the Agent
  in good faith to be from an authorized officer of the Borrower
  prior to receipt of written notice and confirmation, by facsimile
  or otherwise.  In each such case, the Borrower waives the right
  to dispute the Agent's record of the terms of such telephone
  notice of such conversion or continuation.
  
      2.8. Interest Rate and Payment Dates
  
           (a)  Prior to Maturity. Except as otherwise provided in
  Section 2.8(b), prior to maturity, the Loans shall bear interest
  on the outstanding principal balance thereof at the applicable
  interest rate or rates per annum set forth below:
    
     ADVANCES                                RATE
  
  Each ABR Advance                      Alternate Base Rate.
  
  Each Eurodollar Advance               Eurodollar Rate for the     
                                        applicable Interest Period  
                                      plus the Applicable Margin.
  
  Each Competitive                      Bid Rate applicable thereto
  Bid Loan                              for the applicable
                                        Competitive Interest        
                                        Period.
  
  
  Late Charges. If all or any portion of the principal balance of
  or interest payable on any of the Loans or any other amount
  payable under the Loan Documents shall not be paid when due
  (whether at the stated maturity thereof, by acceleration or
  otherwise), such overdue balance or amount shall bear interest at
  a rate per annum (whether before or after the entry of a judgment
  thereon) equal to 2% plus the rate which would otherwise be
  applicable pursuant to Section 2.8(a), from the date of such
  nonpayment to, but not including, the date such balance is paid
  in full.  All such interest shall be payable on demand.
  
           (b)  In General. Interest on (i) ABR Advances to the
  extent based on the BNY Rate shall be calculated on the basis of
  a 365 or 366-day year (as the case may be), and (ii) ABR Advances
  to the extent based on the Federal Funds Rate, on Eurodollar
  Advances and on Competitive Bid Loans shall be calculated on the
  basis of a 360-day year, in each case, for the actual number of
  days elapsed, including the first day but excluding the last. 
  Except as otherwise provided in Section 2.8(b), interest shall be
  payable in arrears on each Interest Payment Date and upon each
  payment (including prepayment) of the Loans.  Any change in the
  interest rate on the Loans resulting from a change in the
  Alternate Base Rate or reserve requirements shall become
  effective as of the opening of business on the day on which such
  change shall become effective.  The Agent shall, as soon as
  practicable, notify the Borrower and the Lenders of the effective
  date and the amount of each such change in the BNY Rate, but any
  failure to so notify shall not in any manner affect the
  obligation of the Borrower to pay interest on the Loans in the
  amounts and on the dates required.  Each determination of the
  Alternate Base Rate or a  Eurodollar Rate by the Agent pursuant
  to this Agreement shall be conclusive and binding on all parties
  hereto absent manifest error.  At no time shall the interest rate
  payable on the Loans, together with the Facility Fee and all
  other amounts payable under the Loan Documents, to the extent the
  same are construed to constitute interest, exceed the Highest
  Lawful Rate.  If any amount paid hereunder would exceed the
  maximum amount of interest permitted by the Highest Lawful Rate,
  then such amount shall automatically be reduced to such maximum
  permitted amount, and interest for any subsequent period, to the
  extent less than the maximum amount permitted for such period by
  the Highest Lawful Rate, shall be increased by the unpaid amount
  of such reduction.  Any interest actually received for any period
  in excess of such maximum allowable amount for such period shall
  be deemed to have been applied as a prepayment of the Loans.  The
  Borrower acknowledges that to the extent interest payable on ABR
  Advances is based on the BNY Rate, the BNY Rate is only one of
  the bases for computing interest on loans made by the Lenders,
  and by basing interest payable on ABR Advances on the BNY Rate,
  the Lenders have not committed to charge, and the Borrower has
  not in any way bargained for, interest based on a lower or the
  lowest rate at which the Lenders may now or in the future make
  loans to other borrowers.
  
      2.9. Substituted Interest Rate
  
           In the event that (i) the Agent shall have determined
  (which determination shall be conclusive and binding upon the
  Borrower) that by reason of circumstances affecting the interbank
  eurodollar market either adequate and reasonable means do not
  exist for ascertaining the Eurodollar Rate or (ii) any Lender
  shall have notified the Agent that it has determined (which
  determination shall be conclusive and binding on the Borrower)
  that the applicable Eurodollar Rate will not adequately and
  fairly reflect the cost to such Lender of maintaining or funding
  loans bearing interest based on such Eurodollar Rate, with
  respect to any portion of the Revolving Credit Loans that the
  Borrower has requested be made as Eurodollar Advances or
  Eurodollar Advances that will result from the requested
  conversion or continuation of any portion of the Advances into or
  as Eurodollar Advances (each, an "Affected Advance"), the Agent
  shall promptly notify the Borrower and the Lenders (by telephone
  or otherwise, to be promptly confirmed in writing) of such
  determination on or, to the extent practicable, prior to the
  requested Borrowing Date or Conversion/Continuation Date for such
  Affected Advances.  If the Agent shall give such notice, (a) any
  Affected Advances shall be made as ABR Advances, (b) the Advances
  (or any portion thereof) that were to have been converted to or
  continued as Affected Advances shall be converted to or continued
  as ABR Advances and (c) any outstanding Affected Advances shall
  be converted, on the last day of the then current Interest Period
  with respect thereto, to ABR Advances.  Until any notice under
  clauses (i) or (ii), as the case may be, of this Section has been
  withdrawn by the Agent (by notice to the Borrower promptly upon
  either (1) the Agent having determined that such circumstances
  affecting the interbank eurodollar market no longer exist and
  that adequate and reasonable means do exist for determining the
  Eurodollar Rate pursuant to Section 2.8 or (2) the Agent having
  been notified by such Lender that circumstances no longer render
  the Advances (or any portion thereof) Affected Advances, no
  further Eurodollar Advances shall be required to be made by the
  Lenders, nor shall the Borrower have the right to convert or
  continue all or any portion of the Loans to Eurodollar Advances.
  
      2.10.     Taxes
  
           (a)  Payments to Be Free and Clear. Provided that all
  documentation, if any, then required to be delivered by any
  Lender or the Agent pursuant to subsection (c) has been
  delivered, all sums payable by the Borrower under the Loan
  Documents shall (except to the extent required by law) be paid
  free and clear of and without any deduction or withholding on
  account of any Tax (other than a Tax on the Overall Net Income of
  any Lender (for which payment need not be free and clear but no
  deduction or withholding shall be made unless then required by
  applicable law)) imposed, levied, collected, withheld or assessed
  by or within the United States or any political subdivision in or
  of the United States or any other jurisdiction from or to which a
  payment is made by or on behalf of the Borrower or by any
  federation or organization of which the United States or any such
  jurisdiction is a member at the time of payment.
  
           (b)  Grossing-up of Payments. If the Borrower or any other
  Person is required by law to make any deduction or withholding on
  account of any such Tax (other than a Tax on the Overall Net
  Income of a Lender) from any sum paid or payable by the Borrower
  to the Agent or any Lender under any of the Loan Documents:
  
                (i) the Borrower shall notify the Agent and such
        Lender of any such requirement or any change in any such
        requirement as soon as the Borrower becomes aware of it;
      
                (ii) the Borrower shall pay any such Tax before the
        date on which penalties attach thereto, such payment to be made
        (if the liability to pay is imposed on the Borrower) for its
        own account or (if that liability is imposed on the Agent or
        such Lender, as the case may be) on behalf of and in the name
        of the Agent or such Lender;
      
                (iii) the sum payable by the Borrower to the Agent or
        a Lender in respect of which the relevant deduction,
        withholding or payment is required shall be increased to the
        extent necessary to ensure that, after the making of that
        deduction, withholding or payment, the Agent or such Lender, as
        the case may be, receives on the due date therefor a net sum
        equal to what it would have received had no such deduction,
        withholding or payment been required or made; and
      
                (iv) within 30 days after paying any sum from which
        it is required by law to make any deduction or withholding, and
        within 30 days after the due date of payment of any Tax which
        it is required by clause (b) above to pay, the Borrower shall
        deliver to the Agent and the applicable Lender evidence
        satisfactory to the other affected parties of such deduction,
        withholding or payment and of the remittance thereof to the
        relevant Governmental Authority;
  
  provided that no such additional amount shall be required to be
  paid to any Lender under clause (iii) above except to the extent
  that any change after the date hereof (in the case of each Lender
  listed on the signature pages hereof) or after the date of the
  Assignment and Acceptance Agreement pursuant to which such Lender
  became a Lender (in the case of each other Lender) in any such
  requirement for a deduction, withholding or payment as is
  mentioned therein shall result in an increase in the rate of such
  deduction, withholding or  payment from that in effect at the
  date of this Agreement or at the date of such Assignment and
  Acceptance, as the case may be, in respect of payments to such
  Lender.
  
           (c)  Refunds and Credits. If the Borrower makes any
  additional payment to any Lender pursuant to this Section 2.10 in
  respect of any Tax, and such Lender determines that it has
  received (i) a refund of such Tax or (ii) a credit against or
  relief or remission for, or a reduction in the amount of, any tax
  or other governmental charge attributable solely to any deduction
  or credit for any Tax with respect to which it has received
  payments under this Section 2.10, such Lender shall to the extent
  that it can do so without prejudice to the retention of such
  refund, credit, relief, remission or reduction, pay to the
  Borrower such amount as such Lender shall have determined to be
  attributable to the deduction or withholding of such Tax.  If,
  within one year after the payment of any such amount to the
  Borrower, such Lender determines that it was not entitled to such
  refund, credit, relief, remission or reduction to the full extent
  of any payment made pursuant to the first sentence of this
  Section 2.10(c), the Borrower shall upon notice and demand of
  such Lender promptly repay the amount of such overpayment.  Any
  determination made by such Lender pursuant to this Section
  2.10(c) shall in the absence of bad faith or manifest error be
  conclusive, and nothing in this Section 2.10(c) shall be
  construed as requiring any Lender to conduct its business or to
  arrange or alter in any respect its tax or financial affairs
  (except as required by Section 2.17(a)) so that it is entitled to
  receive such a refund, credit or reduction or as allowing any
  person to inspect any records, including tax returns of any
  Lender.
  
           (d)  Limitation of Liability. No Lender shall be entitled
  to demand any payment under this Section 2.10 more than six
  months following the payment to or for the account of such Lender
  of all other amounts payable hereunder and under any Note held by
  such Lender and the termination of such Lender's Commitment;
  provided, however, that the foregoing proviso shall in no way
  limit the right of any Lender to demand or receive any payment
  under this Section 2.10 to the extent that such payment relates
  to the retroactive application of any Tax if such demand is made
  within six months after the implementation of such Tax.
  
           (e)  U.S. Tax Certificates. Each Lender that is organized
  under the laws of any jurisdiction other than the United States
  shall deliver to the Agent for transmission to the Borrower, on
  or prior to the Effective Date (in the case of each Lender listed
  on the signature pages hereof) or on the effective date of the
  Assignment and Acceptance Agreement pursuant to which it becomes
  a Lender (in the case of each other Lender), and at such other
  times as may be necessary in the determination of the Borrower or
  the Agent (each in the reasonable exercise of its discretion),
  such certificates, documents or other evidence, properly
  completed and duly executed by such Lender (including, without
  limitation, Internal Revenue Service Form W-8, Form 1001 or Form
  4224 or any other certificate or statement of exemption required
  by Treasury Regulations Section 1.1441-4(a) or Section
  1.1441-6(c), or Temporary Treasury Regulations Section 35a9999-4T
  or Section 35a9999-5, or any successor thereto) to establish that
  such Lender is not subject to deduction or withholding of United
  States federal income tax under Section 1441 or 1442 of the Code
  or otherwise (or under any comparable provisions of any successor
  statute) with respect to any payments to such Lender of
  principal, interest, fees or other amounts payable under any of
  the Loan Documents.  The Borrower shall not be required to pay
  any additional amount to any such Lender under subsection
  (b)(iii) above if such Lender shall have failed to satisfy the
  requirements of the immediately preceding  sentence; provided
  that if such Lender shall have satisfied such requirements on the
  Effective Date (in the case of each Lender listed on the
  signature pages hereof) or on the effective date of the
  Assignment and Acceptance Agreement pursuant to which it became a
  Lender (in the case of each other Lender), nothing in this
  subsection shall relieve the Borrower of its obligation to pay
  any additional amounts pursuant to subsection (b)(iii) in the
  event that, as a result of any change in applicable law, such
  Lender is no longer properly entitled to deliver certificates,
  documents or other evidence at a subsequent date establishing the
  fact that such Lender is not subject to withholding as described
  in the immediately preceding sentence.
  
      2.11.     Illegality
  
           Notwithstanding any other provisions herein, if any law,
  regulation, treaty or directive, or any change therein or in the
  interpretation or application thereof, shall make it unlawful for
  any Lender to make or maintain its Eurodollar Advances as
  contemplated by this Agreement, (i) the commitment of such Lender
  hereunder to make Eurodollar Advances or convert ABR Advances to
  Eurodollar Advances shall forthwith be suspended and (ii) such
  Lender's Loans then outstanding as Eurodollar Advances affected
  hereby, if any, shall be converted automatically to ABR Advances
  on the last day of the then current Interest Period applicable
  thereto or within such earlier period as required by law.  If the
  commitment of any Lender with respect to Eurodollar Advances is
  suspended pursuant to this Section and such Lender shall notify
  the Agent and the Borrower that it is once again legal for such
  Lender to make or maintain Eurodollar Advances, such Lender's
  commitment to make or maintain Eurodollar Advances shall be
  reinstated.
  
           Increased Costs
  
           In the event that any law, regulation, treaty or directive
  hereafter enacted, promulgated, approved or issued or any change
  in any presently existing law, regulation, treaty or directive
  therein or in the interpretation or application thereof by any
  Governmental Authority charged with the administration thereof or
  compliance by any Lender (or any corporation directly or
  indirectly owning or controlling such Lender) with any request or
  directive from any Governmental Authority:
  
      (a)  does or shall subject any Lender to any Taxes of any kind
  whatsoever with respect to any Eurodollar Advances or its
  obligations under this Agreement to make Eurodollar Advances, or
  change the basis of taxation of payments to any Lender of
  principal, interest or any other amount payable hereunder in
  respect of its Eurodollar Advances, including any Taxes required
  to be withheld from any amounts payable under the Loan Documents
  (except for imposition of, or change in the rate of, Tax on the
  Overall Net Income of such Lender or its Applicable Lending
  Office for any of such Advances by the jurisdiction in which such
  Lender is incorporated or has its principal office or such
  Applicable Lending Office, including, in the case of Lenders
  incorporated in any State of the United States, such tax imposed
  by the United States); or
      
      (b)  does or shall impose, modify or make applicable any
  reserve, special deposit, compulsory loan, assessment, increased
  cost or similar requirement against assets held by, or deposits
  of, or advances or loans by, or other credit extended by, or any
  other acquisition of funds by, any office of such Lender in 
  respect of its Eurodollar Advances which is not otherwise
  included in the determination of a Eurodollar Rate;
  
  and the result of any of the foregoing is to increase the cost to
  such Lender of making, renewing, converting, continuing or
  maintaining its Eurodollar Advances or its commitment to make
  such Eurodollar Advances, or to reduce any amount receivable
  hereunder in respect of its Eurodollar Advances, then, in any
  such case, the Borrower shall pay such Lender, upon its demand,
  any additional amounts necessary to compensate such Lender for
  such additional cost or reduction in such amount receivable which
  such Lender deems to be material as determined by such Lender;
  provided, however, that (i) nothing in this Section shall require
  the Borrower to indemnify the Lenders with respect to withholding
  Taxes for which the Borrower has no obligation under Section
  2.10, and (ii) no Lender shall be entitled to demand any payment
  under this Section 2.12 more than six months following the
  payment to or for the account of such Lender of all other amounts
  payable hereunder and under any Note held by such Lender and the
  termination of such Lender's Commitment; provided, however, that
  the foregoing proviso shall in no way limit the right of any
  Lender to demand or receive any payment under this Section 2.12
  to the extent that such payment relates to the retroactive
  application of any law, regulation, treaty or directive if such
  demand is made within six months after the implementation of such
  retroactive application.  A statement setting forth the
  calculations of any additional amounts payable pursuant to the
  foregoing sentence submitted by a Lender to the Borrower shall be
  conclusive absent manifest error.
  
      2.12.     Indemnification for Loss
  
           Notwithstanding anything contained herein to the contrary,
  if the Borrower shall fail to borrow, convert or continue an
  Advance after it shall have given notice to do so in which it
  shall have requested a Eurodollar Advance pursuant to Section 2.3
  or 2.7, as the case may be, or if the Borrower shall fail to
  borrow a Competitive Bid Loan after it shall have accepted one or
  more offers therefor pursuant to Section 2.4, or if a Eurodollar
  Advance or a Competitive Bid Loan shall be terminated for any
  reason prior to the last day of the Interest Period applicable
  thereto, or if any repayment or prepayment of the principal
  amount of a Eurodollar Advance or a Competitive Bid Loan is made
  for any reason on a date which is prior to the last day of the
  Interest Period applicable thereto, the Borrower agrees to
  indemnify each Lender against, and to pay on written demand
  directly to such Lender the amount (calculated by such Lender
  using any method chosen by such Lender which is reasonable and
  customarily used by such Lender for such purpose) equal to any
  loss or out-of-pocket expense suffered by such Lender as a result
  of such failure to borrow, convert or continue, or such
  termination, repayment or prepayment, including any loss, cost or
  expense suffered by such Lender in liquidating or employing
  deposits acquired to fund or maintain the funding of such
  Eurodollar Advance or Competitive Bid Loan, as the case may be,
  or redeploying funds prepaid or repaid, in amounts which
  correspond to such Eurodollar Advance or Competitive Bid Loan, as
  the case may be, and any internal processing charge customarily
  charged by such Lender in connection therewith.  Calculations of
  all amounts payable under this Section shall be made on the
  assumption that each Lender has funded each of its relevant
  Eurodollar Advances and Competitive Bid Loans through the
  purchase of deposits bearing interest at the applicable rate of
  interest for, in an amount equal to the principal amount of, and
  with a maturity equivalent to the Interest Period applicable to,
  such Eurodollar Advance or Competitive Bid Loan, as the case may
  be.
  
      2.13.     Survival of Certain Obligations
  
           The obligations of the Borrower under Sections 2.10, 2.12,
  2.13, 2.16, 11.5 and 11.10 shall survive the termination of the
  Aggregate Commitments and the payment of the Loans and all other
  amounts payable under the Loan Documents.
  
      2.14.     Use of Proceeds
  
           The proceeds of the Loans shall be used solely to (i) pay
  all of the fees due hereunder, (ii) pay the reasonable
  out-of-pocket fees and expenses incurred by the Borrower in
  connection with the Loan Documents, (iii) for the general
  corporate purposes of the Borrower, including, without
  limitation, the making of Intercompany Loans to Operating
  Subsidiaries of the Borrower and Permitted Recipient Loans to
  Permitted Recipients to the extent permitted by Section 8.5 and
  (iv) to make repurchases of its stock to the extent permitted by
  Section 8.4. Notwithstanding anything to the contrary contained
  in any Loan Document, the Borrower agrees that no part of the
  proceeds of any Loan will be used, directly or indirectly, for a
  purpose which violates any law, including, without limitation,
  the provisions of Regulations G, U or X of the Board of Governors
  of the Federal Reserve System, as amended.
  
      2.15.     Capital Adequacy
  
           If the amount of capital required or expected to be
  maintained by any Lender or any Person directly or indirectly
  owning or controlling such Lender (each a "Control Person"),
  shall be affected by (i) the introduction or phasing in of any
  law, rule or regulation after the Effective Date, (ii) any change
  after the Effective Date in the interpretation of any existing
  law, rule or regulation by any Governmental Authority charged
  with the administration thereof, or (iii) compliance by such
  Lender or such Control Person with any directive, guideline or
  request from any Governmental Authority (whether or not having
  the force of law) promulgated or made after the Effective Date,
  and such Lender shall have determined that such introduction,
  phasing in, change or compliance shall have had or will
  thereafter have the effect of reducing (A) the rate of return on
  such Lender's or such Control Person's capital, or (B) the asset
  value to such Lender or such Control Person of the Loans made or
  maintained by such Lender, in either case to a level below that
  which such Lender or such Control Person could have achieved or
  would thereafter be able to achieve but for such introduction,
  phasing in, change or compliance (after taking into account such
  Lender's or such Control Person's policies regarding capital
  adequacy) by an amount deemed by such Lender to be material to
  such Lender or Control Person, then, within ten days after demand
  by such Lender, the Borrower shall pay to such Lender or such
  Control Person such additional amount or amounts as shall be
  sufficient to compensate such Lender or such Control Person, as
  the case may be, for such reduction.
  
      2.16.     Change of Lending Office; Right to Substitute Lender
  
           (a)  Each Lender agrees that, upon the occurrence of any
  event giving rise to the operation of Section 2.12 or 2.13  or to
  a requirement under Section 2.10 to withhold and deduct taxes, it
  will, if requested by the Borrower, use reasonable efforts
  (subject to overall policy considerations of such Lender) to
  designate another Applicable Lending Office for any Loans
  affected by such event, provided that such designation is  made
  on such terms that such Lender and its Applicable Lending Office
  suffer no economic, legal or regulatory disadvantage, with the
  object of avoiding the consequence of the event giving rise to
  the operation of any such Section.  Except in the case of a
  change of Applicable Lending Office made at the request of the
  Borrower, no change in Applicable Lending Office will be made if
  greater costs and expenses would result under Section 2.12 or
  2.13 or if the aforementioned requirement under Section 2.10
  would result from any such change in designation.  Nothing in
  this Section shall affect or postpone any of the obligations of
  the Borrower or the rights of any Lender provided in Section
  2.10, 2.12, or 2.16.
  
           (b)  In addition to the Borrower's rights under subsection
  (a) of this Section, upon the occurrence of any event giving rise
  to the operation of Section 2.10, 2.12 or 2.13, the Borrower may,
  within a period of 60 days following the Borrower's obtaining
  knowledge of the occurrence of the event giving rise to the
  operation of such provisions, at its own expense, make
  arrangements for another bank or financial institution reasonably
  acceptable to the Agent to purchase and accept the rights and
  obligations under this Agreement of any Lender entitled to
  payment under Section 2.10, 2.12 or 2.13, whereupon such Lender
  shall assign to the bank or financial institution designated by
  the Borrower its rights and obligations hereunder pursuant to the
  provisions of Section 11.7 of this Agreement.
  
      2.17.     Extension of Maturity Date
  
           (a)  Provided that no Default or Event of Default exists
  during the periods set forth below, the Borrower may request that
  the Maturity Date be extended for additional 329-day periods by
  giving written notice of such request (each, an "Extension
  Request") to the Agent during the period not more than 90 days
  but not less than 60 days prior to the then Maturity Date and,
  upon the receipt of such notice, the Agent shall promptly notify
  each Lender of such Extension Request.
  
                (i)  If all Lenders consent to an Extension Request
  during the Extension Consent Period by giving written notice
  thereof to the Borrower and the Agent, then, effective on the
  then current Maturity Date, such Maturity Date shall be extended
  by 329 days from and including the then current Maturity Date,
  provided, however, that if the 329th day of such extension falls
  on a day that is not a Business Day, such Maturity Date shall be
  the next following Business Day.
  
                (ii) If at least Extension Consent Required Lenders
  (but not all Lenders) consent to an Extension Request during the
  Extension Consent Period (by giving written notice thereof to the
  Borrower and the Agent) the Maturity Date shall be extended by
  329 days (subject to the proviso in subsection (a)(i) above) from
  and including the then current Maturity Date, with respect to the
  Commitments of the Lenders consenting to such Extension Request.
  
                (iii) If Lenders (each a "Nonconsenting Lender") hav-
  ing Commitments equal to less than 33 1/3% of the Aggregate
  Commitments (without giving effect to any Loans outstanding) do
  not consent to an Extension Request during the Extension Consent
  Period, the Borrower may elect to (A) withdraw such Extension
  Request, (B) terminate the Commitment of each Nonconsenting
  Lender effective on the then current Maturity Date (with the
  Commitments of each other Consenting Lender continuing in full 
  force and effect) and, on such Maturity Date, pay to the Agent
  for distribution to each such Nonconsenting Lender the out-
  standing principal balance, if any, of the Notes of each such
  Nonconsenting Lender, together with any accrued and unpaid inter-
  est thereon to the date of such payment, any accrued and unpaid
  Facility Fees due to such Lender, and any other amount due to
  such Lender whereupon (1) effective on such then current Maturity
  Date, such Maturity Date shall be extended for 329 days (subject
  to the proviso in subsection (a)(i) above), and (2) each
  Nonconsenting Lender shall cease to be a "Lender" for all pur-
  poses of this Agreement (except with respect to its rights
  hereunder to be reimbursed for costs and expenses in connection
  with, and to indemnification with respect to, matters at-
  tributable to events, acts or conditions occurring prior to such
  payment) and shall no longer have any obligations hereunder, (C)
  request one or more of the Consenting Lenders (each, a
  "Replacement Lender") to elect to increase its Commitment by an
  amount up to the amount of the Commitment of such Nonconsenting
  Lenders, or (D) designate another bank or banks (any such bank,
  also a "Replacement Lender") acceptable to the Agent and willing
  to assume the Commitments of any such Nonconsenting Lender or
  Lenders.  Upon the Commitment of a Nonconsenting Lender being as-
  sumed by a Replacement Lender under clauses (C) or (D) above,
  effective on the then current Maturity Date or such earlier date
  as shall be determined by the Borrower and the Agent, each such
  Replacement Lender shall assume the Commitment of each such
  Nonconsenting Lender by executing and delivering an Assignment
  and Acceptance Agreement and, if such Nonconsenting Lender is the
  holder of Notes, by purchasing such Notes of such Nonconsenting
  Lender, which shall sell the same without recourse or warranty
  (except as to the amount due thereon, its title to such Notes and
  its right to sell the same) to such Replacement Lender at a price
  in immediately available funds equal to the amount payable under
  clause (B) above, whereupon (x) effective on the then current
  Maturity Date, such Maturity Date shall be extended by 329 days
  (subject to the proviso in subsection (a)(i) above) from and
  including the then current Maturity Date, (y) each Replacement
  Lender, if applicable, shall be deemed to be a "Lender" for all
  purposes of this Agreement, and (z) each Nonconsenting Lender
  shall cease to be a "Lender" for all purposes of this Agreement
  (except with respect to its rights hereunder to be reimbursed for
  costs and expenses in connection with, and to indemnification
  with respect to, matters attributable to events, acts or
  conditions occurring prior to such assumption and purchase) and
  shall no longer have any obligations hereunder.
  
                (iv) If Extension Consent Required Lenders do not
  consent to an Extension Request during the Extension Consent
  Period, the Maturity Date shall not be extended.
  
                (v)  Each Lender will use its best efforts to respond
  during the Extension Consent Period to any Extension Request,
  provided that no Lender's failure to so respond shall create any
  claim against it or have the effect of extending the Maturity
  Date or such Lender's Commitment beyond the Maturity Date.
  
           (b)  In the event the Borrower elects to terminate the
  Commitment of a Nonconsenting Lender under Section
  2.18(a)(iii)(B) above, the Agent is authorized to amend Exhibit
  A, effective on the then current Maturity Date, and promptly
  distribute a copy thereof to the Borrower and the remaining
  Lenders (the "Consenting Lenders") reflecting the names of all
  Consenting Lenders and Replacement Lenders and the new Commitment
  Percentage of each such Consenting Lender and Replacement Lender
  (after  giving effect to the termination of each Nonconsenting
  Lender's Commitment and the assumption by any Replacement Lender
  of such Commitment).
  
           (c)  Notwithstanding anything to the contrary set forth
  herein, in the event that at the time of an Extension Request,
  the Facility B Credit Agreement is then in effect and the
  Borrower has requested an extension of the Facility B Maturity
  Date pursuant thereto, then (i) each Consenting Lender must
  consent to an extension of both this Agreement and the Facility B
  Credit Agreement, (ii) each Nonconsenting Lender whose Commitment
  is terminated shall also have its Facility B Commitment
  terminated and (iii) each Replacement Lender which assumes all or
  a portion of the Commitment of a Nonconsenting Lender shall
  assume all or a like portion of such Nonconsenting Lender's
  Facility B Commitment, it being the intention of the parties that
  at all times during which this Agreement and the Facility B
  Credit Agreement are both in effect, each Lender shall also be a
  Facility B Lender and its Commitment Percentage shall equal its
  Facility B Commitment Percentage.
  
      2.18.     Change in Control
  
           (a)  The Borrower will notify the Agent and the Lenders in
  writing within one Business Day after the occurrence of a Change
  in Control. Upon receipt of such notice, each Lender shall have
  the right to terminate its Commitment and Facility B Commitment
  within five Business Days of the receipt of such notice.  If a
  Lender so elects to terminate its Commitment and Facility B
  Commitment, the Borrower shall, not later than five Business Days
  after such Lender has given such notice, repay such Lender's
  Loans and Facility B Loans together with any accrued interest and
  fees and other amounts due such Lender under the Loan Documents
  and the Facility B Loan Documents.
  
           (b)  Notwithstanding the foregoing, in lieu of terminating
  the Commitments and Facility B Commitments of the Lenders and
  Facility B Lenders as provided in subsection (a) hereof, the
  Borrower may request one or more of the Lenders not terminating
  its Commitment and Facility B Commitment (also, a "Replacement
  Lender") to elect to increase its Commitment and Facility B
  Commitment by an amount up to the amount of the Commitment and
  Facility B Commitment of such terminating Lender, or may
  designate another bank or banks (any such bank, also a
  "Replacement Lender") reasonably acceptable to the Agent and
  willing to assume the Commitments and Facility B Commitments of
  any such terminating Lender or Lenders.  Upon the Commitment and
  Facility B Commitment of a terminating Lender being assumed by a
  Replacement Lender, each such Replacement Lender shall assume the
  Commitment and Facility B Commitment of each such terminating
  Lender by executing and delivering an Assignment and Acceptance
  Agreement and, if such terminating Lender is the holder of Notes
  or Facility B Notes, by purchasing such Notes or Facility B
  Notes, as the case may be, of such terminating Lender, which
  shall sell the same without recourse or warranty (except as to
  the amount due thereon, its title to such Notes or Facility B
  Notes, as the case may be, and its right to sell the same) to
  such Replacement Lender at a price in immediately available funds
  equal to the outstanding principal balance, if any, of the Notes
  and Facility B notes, as the case may be, of each such
  terminating Lender, together with any accrued and unpaid interest
  thereon to the date of such payment, any accrued and unpaid fees
  due to such Lender hereunder and under the Facility B Loan
  Documents, whereupon each Replacement Lender shall be deemed to
  be a "Lender" for all purposes of this Agreement, and (z) each
  terminating Lender shall cease to be a "Lender" for all purposes
  of this  Agreement (except with respect to its rights hereunder
  and under the Facility B Loan Documents to be reimbursed for
  costs and expenses in connection with, and to indemnification
  with respect to, matters attributable to events, acts or
  conditions occurring prior to such assumption and purchase) and
  shall no longer have any obligations hereunder.
  
      2.19.     Agent's Records
  
           The Agent's records regarding the amount of each Loan,
  each payment by the Borrower of principal and interest on the
  Loans and other information relating to the Loans shall be
  presumptively correct absent manifest error.
  
  
  3.  FEES; PAYMENTS
  
      3.1. Facility Fee
  
           The Borrower agrees to pay to the Agent, for the account
  of the Lenders in accordance with each Lender's Commitment
  Percentage, during the period from and including the Effective
  Date through but excluding the Maturity Date, a fee (the
  "Facility Fee") equal to the Applicable Fee Percentage per annum
  of the average daily sum of the Aggregate Commitments, regardless
  of usage, during such period. The Facility Fee shall be payable
  (i) quarterly in arrears on the last day of each March, June,
  September and December during such period, (ii) on the date of
  any reduction in the Aggregate Commitments (to the extent of such
  reduction) and (iii) on the Maturity Date. The Facility Fee shall
  be calculated on the basis of a 360-day year for the actual
  number of days elapsed.
  
      3.2. Agent's Fees
  
           The Borrower agrees to pay to the Agent, for its own
  account, such other fees as have been agreed to in writing by the
  Borrower and the Agent.
  
      3.3. Pro Rata Treatment and Application of Principal Payments
  
           Each payment, including each prepayment, of principal and
  interest on the Loans and of the Facility Fee shall be made by
  the Borrower to the Agent at its office set forth in Section 11.2
  in funds immediately available to the Agent at such office by
  12:00 p.m. on the due date for such payment, and, promptly upon
  receipt thereof by the Agent, shall be remitted by the Agent in
  like funds as received, to the Lenders according to the
  Commitment Percentage of each Lender, in the case of the Facility
  Fee and pro rata according to the aggregate outstanding principal
  balance of the Loans, in the case of principal and interest due
  thereon.  The failure of the Borrower to make any such payment by
  such time shall not constitute a default hereunder, provided that
  such payment is made on such due date, but any such payment made
  after 12:00 p.m. on such due date shall be deemed to have been
  made on the next Business Day for the purpose of calculating
  interest on amounts outstanding on the Loans.  If any payment
  hereunder or under the Notes shall be due and payable on a day
  which is not a Business Day, the due date thereof (except as
  otherwise provided in the definition of Interest Period) shall be
  extended to the next Business Day and (except with respect to
  payments in respect of the Facility Fee) interest  shall be
  payable at the applicable rate specified herein during such
  extension.  If any payment is made with respect to any Eurodollar
  Advance prior to the last day of the applicable Interest Period,
  the Borrower shall indemnify each Lender in accordance with
  Section 2.13.
  
  
  4.  REPRESENTATIONS AND WARRANTIES
  
      In order to induce the Agent and the Lenders to enter into this
  Agreement and to make the Loans, the Borrower makes the following
  representations and warranties to the Agent and each Lender:
  
      4.1. Subsidiaries
  
           On the Effective Date, the Borrower has only the
  Subsidiaries set forth on Schedule 4.1.  The shares of each
  Subsidiary are duly authorized, validly issued, fully paid and
  nonassessable and are owned free and clear of any Liens.
  
      4.2. Existence and Power
  
           Each of the Borrower and its Subsidiaries is duly
  organized or formed and validly existing in good standing under
  the laws of the jurisdiction of its incorporation or formation,
  has all requisite power and authority to own its Property and to
  carry on its business as now conducted, and is in good standing
  and authorized to do business as a foreign corporation in each
  jurisdiction in which the nature of the business conducted
  therein or the Property owned therein makes such qualification
  necessary, except where such failure to qualify, singly or in the
  aggregate, could not reasonably be expected to have a Material
  Adverse Effect.
  
      4.3. Authority; Enforceability
  
           The Borrower has full legal power and authority and has
  taken all necessary actions, including, without limitation, any
  necessary stockholder action, to enter into, execute, deliver and
  perform the terms of the Loan Documents and to make the
  borrowings contemplated hereby and by the Notes and to incur the
  obligations provided for herein and therein, all of which have
  are in full compliance with its articles of incorporation and by-
  laws or its other organization documents.  The Loan Documents
  (other than the Notes) constitute, and the Notes, when issued and
  delivered pursuant hereto for value received, will constitute,
  the valid and legally binding obligations of the Borrower,
  enforceable in accordance with their respective terms, except as
  such enforceability may be limited by applicable bankruptcy,
  insolvency, reorganization or other similar laws affecting the
  enforcement of creditors' rights generally.
  
      4.4. Required Consents
  
           Except for information filings required to be made in the
  ordinary course of business which are not a condition to the
  Borrower's performance under the Loan Documents, no consent,
  authorization or approval of, filing with, notice to, or
  exemption by, stockholders, any Governmental Authority or any
  other Person is required to authorize, or is required in
  connection with the execution, delivery and performance by  the
  Borrower of the Loan Documents or is required as a condition to
  the validity or enforceability of the Loan Documents against the
  Borrower.
  
      4.5. No Conflicting Agreements, Compliance with Laws; Taxes
  
           On the initial Borrowing Date, (i) neither the Borrower
  nor any of its Subsidiaries will be in default, (A) under any
  mortgage, indenture, contract or agreement to which it is a party
  or by which it or any of its Property is bound or (B) with
  respect to any judgment, order, writ, injunction, decree or
  decision of any Governmental Authority, the effect of which
  default could reasonably be expected to have a Material Adverse
  Effect, and (ii) the execution, delivery or carrying out of the
  terms of the Loan Documents will not constitute a default under,
  or require the mandatory repayment of, or result in the creation
  or imposition of, or obligation to create, any Lien upon any
  Property of the Borrower or any of its Subsidiaries pursuant to
  the terms of, any such mortgage, indenture, contract or
  agreement.
  
      4.6. Franchises, Licenses, Etc.
  
           Each of the Borrower and ACE possesses or has the right to
  use all franchises, licenses, privileges and other rights that
  are material and necessary for the conduct of its business, and
  with respect to which it is in compliance, with no known conflict
  with the valid rights of others which could reasonably be
  expected to have a Material Adverse Effect.
  
      4.7. Investment Company Act
  
           The Borrower is not an "investment company" or a company
  "controlled" by an "investment company" as defined in, or is
  otherwise subject to regulation under, the Investment Company Act
  of 1940, as amended.
  
      4.8. Public Utility Status
  
           The Borrower and each of its Subsidiaries are exempt from
  the provisions of the Public Utility Holding Company Act of 1935,
  as amended, except Section 9(a)(2) thereof, pursuant to Rule 2 of
  the General Rules and Regulations of the SEC under said Act.
  
      4.9. Federal Reserve Regulations; Use of Loan Proceeds
  
           Neither the Borrower nor any of its Subsidiaries is
  engaged principally, or as one of its important activities, in
  the business of extending credit for the purpose of purchasing or
  carrying any Margin Stock.  No part of the proceeds of the Loans
  will be used, directly or indirectly, for a purpose which
  violates any law, rule or regulation of any Governmental
  Authority, including, without limitation, the provisions of
  Regulations G, T, U or X of the Board of Governors of the Federal
  Reserve System, as amended.  No part of the proceeds of the Loans
  will be used, directly or indirectly, to purchase or carry Margin
  Stock or to extend credit to others for the purpose of purchasing
  or carrying Margin Stock.
  
      4.10.     Litigation
  
           Except as set forth in the Financial Statements or as
  disclosed after the date of the Financial Statements in the most
  recent annual report filed by the Borrower with the SEC pursuant
  to Section 13 or 15(d) of the Exchange Act, or in a quarterly or
  periodic report filed with the SEC pursuant to Section 13 or
  15(d) of the Exchange Act with respect to a period or date
  subsequent to the end of the fiscal year covered by such annual
  report, there are no actions, suits or proceedings at law or in
  equity or by or before any Governmental Authority (whether
  purportedly on behalf of the Borrower or any of its Subsidiaries)
  pending or, to the knowledge of the Borrower, threatened against
  the Borrower or any of its Subsidiaries or any of their
  respective Properties or rights, which (i) reasonably may be
  expected to have a Material Adverse Effect or (ii) call into
  question the validity or enforceability of any of the Loan
  Documents.
  
      4.11.     Financial Statements
  
           The Borrower has heretofore delivered to the Agent and the
  Lenders copies of its Form 10-K for the fiscal year ending
  December 31, 1994, containing the audited Consolidated Balance
  Sheets of the Borrower and its Subsidiaries and the related
  Consolidated Statements of Operations, Stockholder's Equity and
  Cash Flows for the period then ended, and its Form 10-Q for the
  fiscal quarter ended March 31, 1995, containing the unaudited
  Consolidated Balance Sheet of the Borrower and its Subsidiaries
  for such fiscal quarter, together with the related Consolidated
  Statements of Operations and Cash Flows for the fiscal quarter
  then ended (with the applicable related notes and schedules, the
  "Financial Statements").  The Financial Statements have been
  prepared in accordance with GAAP and fairly present the
  Consolidated financial condition and results of the operations of
  the Borrower and its Subsidiaries as of the dates and for the
  periods indicated therein.  Except as reflected in the Financial
  Statements or in the notes thereto, neither the Borrower nor any
  of its Subsidiaries has any obligation or liability of any kind
  (whether fixed, accrued, Contingent, unmatured or otherwise)
  which, in accordance with GAAP, should have been shown on the
  Financial Statements and was not.  Since December 31, 1994, there
  has been no Material Adverse Change.
  
      4.12.     Plans
  
           The only Pension Plans in effect as of the Effective Date
  (the "Existing Pension Plans") are listed on Schedule 4.12.  Each
  Employee Benefit Plan of the Borrower, its Subsidiaries and their
  respective ERISA Affiliates is in compliance with ERISA and the
  Code, where applicable, in all material respects and there is no
  event or condition existing or anticipated under or with respect
  to any Existing Pension Plan that could have a Material Adverse
  Effect.
  
      4.13.     Ownership of Property; Liens
  
           The Borrower has good and marketable title to, or a valid
  leasehold interest in, all of its Property, subject to no Liens,
  except Permitted Liens, and each Subsidiary has good and
  marketable title to, or a valid leasehold interest in, all of its
  Property, except to the extent that the failure to have such
  title or leasehold interest could not reasonably be expected to
  have a Material Adverse Effect.
  
      4.14.     Security Interests
  
           The Pledge Agreement is effective to create in favor of
  the Agent, for (i) the benefit of the Agent and the Facility B
  Agent and for the ratable benefit of the Lenders and the Facility
  B Lenders, a legal, valid and enforceable security interest in
  the Collateral, and, on and after the taking of possession of the
  Intercompany Notes by the Agent as collateral agent, and assuming
  the continued possession thereof by the Agent as collateral
  agent, the security interest granted by the Pledge Agreement
  shall at all times constitute a fully perfected Lien on, and
  security interest in, all right, title and interest of the
  Borrower in such Collateral, in each case prior and superior in
  right to any other Person.
  
      4.15.     Environmental Matters
  
           Except as disclosed in the most recent report filed by the
  Borrower with the SEC pursuant to Section 13 or 15(d) of the
  Exchange Act, or in a quarterly or periodic report filed with the
  SEC pursuant to Section 13 or 15(d) of the Exchange Act with
  respect to a period or date subsequent to the end of the fiscal
  year covered by such annual report, (i) the Borrower and each of
  its Subsidiaries is in compliance with the requirements of all
  applicable Environmental Laws, noncompliance with which
  reasonably may be expected to have a Material Adverse Effect,
  (ii) there have been no releases or disposals of hazardous
  wastes, hazardous substances or other substances in quantities or
  locations which might result in the Borrower or any of its
  Subsidiaries incurring any remedial obligations under applicable
  law which could, either singly or in the aggregate, reasonably be
  expected to have Material Adverse Effect, and (iii) neither the
  Borrower nor any of its Subsidiaries has received notice or order
  advising it that it has or may have any remedial obligation with
  respect to any such releases or disposals or that it is or may be
  responsible for the costs of any remedial action taken or to be
  taken by any other Persons with respect to any such releases or
  disposals, which obligation or cost, if fully payable could,
  either singly or in the aggregate, reasonably may be expected to
  have Material Adverse Effect.
  
      4.16.     Certain Business Activities
  
           The Borrower does not engage in any business other than
  the holding of Permitted Investments.
  
  
  5.  CONDITIONS TO FIRST LOANS
  
  
           In addition to the conditions precedent set forth in
  Section 6, the obligation of each Lender to make its first
  Revolving Credit Loan, or of any Lender to make the first
  Competitive Bid Loan, on the first Borrowing Date shall be
  subject to the fulfillment of the following conditions precedent:
  
      5.1. Evidence of Action
  
           The Agent shall have received a certificate, dated the
  Effective Date, of the Secretary or Assistant Secretary of the
  Borrower (i) attaching a true and complete copy of  the
  resolutions of its Board of Directors and of all documents
  evidencing other necessary corporate action (in form and
  substance satisfactory to the Agent) taken by it to authorize the
  Loan Documents and the transactions contemplated thereby, (ii)
  attaching a true and complete copy of its articles of
  incorporation and by-laws, (iii) setting forth the incumbency of
  its officer or officers who may sign the Loan Documents,
  including therein a signature specimen of such officer or
  officers and (iv) attaching a certificate of good standing of the
  Secretary of State of the jurisdiction of its incorporation and
  of each other jurisdiction in which it is qualified to do
  business.
  
      5.2. This Agreement; Notes
  
           The Agent shall have received (i) counterparts of this
  Agreement signed by each of the parties hereto (or receipt by the
  Agent from a party hereto of a fax signature page signed by such
  party which shall have agreed to promptly provide the Agent with
  originally executed counterparts hereof) and (ii) for each
  Lender, a Revolving Credit Note and a Competitive Bid Note, duly
  executed by an Authorized Signatory of the Borrower.
  
      5.3. Certificate as to Approvals and Liens
  
           The Agent shall have received a certificate of an
  Authorized Signatory of the Borrower certifying that (i) all
  approvals and consents of all Persons required to be obtained in
  connection with the consummation of the transactions contemplated
  by the Loan Documents and the Facility B Loan Documents have been
  duly obtained and are in full force and effect, and that all
  required notices have been given and all required waiting periods
  have expired and (ii) upon the making of the first Loans under
  the Agreement and under the Facility B Loan Documents there will
  exist no Liens on the Collateral other than Liens in favor of the
  Facility B Agent, the Facility B Lenders, the Agent and the
  Lenders under the Pledge Agreement.
  
      5.4. Pledge Agreement
  
           The Agent shall have received the Pledge Agreement, duly
  executed by an Authorized Signatory of the Borrower, together
  with Intercompany Notes duly executed by each Operating
  Subsidiary, duly indorsed by the Borrower to the order of the
  Agent, as collateral agent for itself, the Lenders, the Facility
  B Agent and the Facility B Lenders.
  
      5.5. Facility B Loan Documents
  
           Each of the Facility B Credit Agreement and the Facility B
  Notes shall have been duly executed and delivered by the parties
  thereto.
  
      5.6. Other Credit Facilities
  
           (a)  The Revolving Credit Commitment under the ATE Credit
  Agreement shall have been permanently reduced to an amount not in
  excess of $25,000,000, and the Agent shall have received
  satisfactory evidence thereof; and
  
           (b)  The Borrower shall have paid, or made arrangements
  satisfactory to the Agent to pay on the Borrowing Date, with the
  proceeds of a Loan under this Agreement, a borrowing under the
  Facility B Credit Agreement, or both, all principal and  accrued
  interest due to BNY under the Borrower's $20,000,000 unsecured
  line of credit with BNY.
  
      5.7. ACE Preferred Stock
  
           The Agent shall have received a copy of the relevant
  portions of the charter of ACE, and of each certificate of
  designation filed pursuant to such charter, setting forth the
  terms applicable to each class and series of the ACE Preferred
  Stock outstanding on the Effective Date, certified by an
  Authorized Signatory of the Borrower to be a true and complete
  copy thereof, and such terms shall be satisfactory to the Agent.
  
      5.8. Opinions of Counsel
  
           The Agent shall have received (i) an opinion of Ballard
  Spahr Andrews & Ingersoll, counsel to the Borrower, and (ii) an
  opinion of James E. Franklin II, Esq., general counsel of the
  Borrower, in each case addressed to the Facility B Agent, the
  Facility B Lenders, the Agent, the Lenders and Special Counsel
  and dated the Effective Date, covering the matters set forth in
  Exhibit N and satisfactory in form and substance to the Agent.
  
      5.9. Opinion of Special Counsel
  
           The Agent shall have received an opinion of Special
  Counsel, addressed to the Facility B Agent, the Facility B
  Lenders, the Agent, the Lenders and Special Counsel,
  substantially in the form of Exhibit O.
  
      5.10.     Fees
  
           All fees payable to the Agent on the first Borrowing Date,
  and the fees and expenses of Special Counsel incurred and
  recorded to date in connection with the preparation, negotiation
  and closing of the Loan Documents, shall have been paid.
  
  
  6.  CONDITIONS OF LENDING - ALL LOANS
  
      The obligation of each Lender to make any Loan is subject to
  the satisfaction of the following conditions precedent as of the
  date of such Loan:
  
      6.1. Compliance
  
           On each Borrowing Date and after giving effect to the
  Loans to be made thereon, (i) the Borrower shall have complied
  with all of the terms, covenants and conditions of this Agreement
  relating to such Loans, (ii) there shall exist no Event of
  Default, (iii) the representations and warranties contained in
  the Loan Documents shall be true and correct with the same effect
  as though such representations and warranties had been made on
  such Borrowing Date except to the extent such representations and
  warranties specifically relate to an earlier date, in which case
  such representations and warranties shall have been true and
  correct in all material respects on and as of such earlier date,
  and (iv) the Aggregate Credit Exposure will not exceed the
  Aggregate Commitments.  Each borrowing by the Borrower shall
  constitute a certification by the  Borrower as of such Borrowing
  Date that each of the foregoing matters is true and correct in
  all respects.
  
      6.2. Borrowing Request; Competitive Bid Request
  
           In the case of the borrowing of Revolving Credit Loans,
  the Agent shall have received a Borrowing Request, and in the
  case of a borrowing of a Competitive Bid Loan, the Agent shall
  have received a Competitive Bid Request and such other documents
  required to be delivered by the Borrower pursuant to Section 2.4,
  in each case duly executed by an Authorized Signatory of the
  Borrower.
  
  
  7.  AFFIRMATIVE COVENANTS
  
      The Borrower agrees that, so long as this Agreement is in
  effect, any Loan remains outstanding and unpaid, or any other
  amount is owing under any Loan Document to any Lender or the
  Agent, the Borrower shall:
  
      7.1. Financial Statements
  
           Maintain a standard system of accounting in accordance
  with GAAP, and furnish or cause to be furnished to the Agent and
  each Lender:
  
                (a)  As soon as available, but in any event not later
        than 5 days after the due date thereof, or if an extension of
        time to file has been obtained by the Borrower pursuant to Rule
        12b-25 under the Exchange Act, not later than 5 days after the
        expiration of such extension, (i) a complete copy of the
        Borrower's Annual Report on Form 10-K in respect of each fiscal
        year as filed by the Borrower with the SEC, together with a
        copy all financial statements and financial statement schedules
        incorporated therein by reference, and (ii) a complete copy of
        the Borrower's Quarterly Report on Form 10-Q in respect of each
        fiscal quarter as filed by the Borrower with the SEC, together
        with a copy of any financial statements incorporated therein by
        reference.
      
                (b)  Within 45 days after the end of each of the
        first three fiscal quarters (90 days after the end of the last
        fiscal quarter), a Compliance Certificate, duly executed by the
        chief financial officer of the Borrower (or such other officer
        as may be reasonably acceptable to the Agent).
      
                (c)  Such other information as the Agent or any
        Lender may reasonably request from time to time.
  
      7.2. Certificates; Other Information
  
           Furnish to the Agent and each Lender:
  
                (a)  Prompt written notice if any Default or Event of
        Default shall have occurred and be continuing;
      
                     (b)  Promptly upon becoming available, copies of
             all (i) annual reports to shareholders, proxy statements
             and other materials (other than reports specified in
             Section 7.1) which the Borrower or any of its Subsidiaries
             may now or hereafter be required to file with or deliver
             to any securities exchange or the SEC, or any other
             Governmental Authority succeeding to the functions thereof
             and (ii) material news releases and annual reports
             relating to the Borrower or any of its Subsidiaries;
      
                (c)  Prompt written notice of any change by either
        Moody's or S&P in the Senior Debt Rating;
      
                (d)  Prompt written notice of any agreement,
        indenture or other document or instrument entered into by, or
        which becomes binding upon, ACE which restricts or has the
        effect of restricting the payment by ACE of dividends with
        respect to its Stock;
      
                (e)  Prompt written notice of the forgiveness of any
        Intercompany Note or the conversion thereof to Stock or other
        instruments, in each case to the extent permitted by Section
        8.6, together with a total of all such forgiveness or
        conversions since the Effective Date; and
      
                (f)  Such other information as the Agent or any
        Lender shall reasonably request from time to time.
  
      7.3. Legal Existence
  
           Maintain, and cause each of its Restricted Subsidiaries so
  to maintain, its legal existence in good standing in the
  jurisdiction of its incorporation or formation and in each other
  jurisdiction in which the failure so to do could reasonably be
  expected to have a Material Adverse Effect.
  
      7.4. Taxes
  
           Pay and discharge when due, and cause each of its
  Restricted Subsidiaries so to do, all Taxes, assessments and
  governmental charges, license fees and levies upon, or with
  respect to the Borrower, such Restricted Subsidiary and all Taxes
  upon the income, profits and Property of the Borrower and its
  Restricted Subsidiaries which if unpaid, could reasonably be
  expected to have a Material Adverse Effect or become a Lien on
  the Property of the Borrower or such Restricted Subsidiary (other
  than a Lien described in Section 8.2(i)), unless and to the
  extent only that such Taxes, assessments, charges, license fees
  and levies shall be contested in good faith and by appropriate
  proceedings diligently conducted by the Borrower or such
  Restricted Subsidiary and provided that any such contested Tax,
  assessment, charge, license fee or levy shall not constitute, or
  create, a Lien on any Property of the Borrower or such Restricted
  Subsidiary senior to the Liens granted to the Agent and the
  Lenders under the Pledge Agreement on such Property, and,
  provided further, that the Borrower shall give the Agent prompt
  notice of such contest and that such reserve or other appropriate
  provision as shall be required by the Accountants in accordance
  with GAAP shall have been made therefor.
  
      7.5. Insurance
  
           Maintain, and cause each of its Restricted Subsidiaries to
  maintain insurance on all its Property in at least such amounts
  and against at least such risks (but including in any event
  public liability, product liability and business interruption
  coverage) as is consistent with industry standards followed by
  companies engaged in the same business; and furnish to the Agent,
  upon written request, full information as to insurance policies
  and reserves for self insurance.
  
      7.6. Condition of Property
  
           At all times, maintain, protect and keep in good repair,
  working order and condition (ordinary wear and tear excepted),
  and cause each of its Restricted Subsidiaries so to do, all
  Property necessary to the operation of the Borrower's or such
  Restricted Subsidiary's business.
  
      7.7. Observance of Legal Requirements
  
           Observe and comply, and cause each of its Restricted
  Subsidiaries so to do, with all laws, ordinances, orders,
  judgments, rules, regulations, certifications, franchises,
  permits, licenses, directions and requirements of all
  Governmental Authorities, which now or at any time hereafter may
  be applicable to it, including, without limitation, ERISA and all
  Environmental Laws, noncompliance with which could reasonably be
  expected to have a Material Adverse Effect.
  
      7.8. Inspection of Property; Books and Records; Discussions
  
           Keep proper books of record and account in which full,
  true and correct entries in conformity with GAAP and all
  requirements of law shall be made of all dealings and
  transactions in relation to its business and activities and
  permit representatives of the Agent and any Lender to visit its
  offices, to inspect any of its Property and examine and make
  copies or abstracts from any of its books and records at any
  reasonable time and as often as may reasonably be desired, and to
  discuss the business, operations, prospects, licenses, Property
  and financial condition of the Borrower and its Restricted
  Subsidiaries with the officers thereof and the Accountants.
  
      7.9. Licenses, Franchises, Intellectual Property, Etc.
  
           Obtain or maintain, as applicable, and cause ACE to obtain
  or maintain, as applicable, in full force and effect, all
  licenses, franchises, Intellectual Property, permits,
  authorizations and other rights as are necessary for the conduct
  of its business and the failure of which to obtain or maintain
  could reasonably be expected to have a Material Adverse Effect.
  
      7.10.     Indebtedness Capitalization Ratio
  
           Maintain as of the last day of each fiscal quarter of the
  Borrower, an Indebtedness Capitalization Ratio of less than or
  equal to 0.65:1.00.
  
      7.11.     Ratio of Indebtedness to Annualized ACE Dividends
  
           Maintain at all times, a ratio of (i) Indebtedness of the
  Borrower to (ii) Annualized ACE Dividends of less than or equal
  to 2.50:1.00.
  
  
  8.  NEGATIVE COVENANTS
  
      The Borrower agrees that, so long as this Agreement is in
  effect, any Loan remains outstanding and unpaid, or any other
  amount is owing under any Loan Document to any Lender or the
  Agent, the Borrower shall not:
  
      8.1. Indebtedness
  
           Create, incur, assume or suffer to exist any liability for
  Indebtedness except (i) Indebtedness due under the Loan Documents
  and the Facility B Loan Documents, (ii) Indebtedness of the
  Borrower existing on the date hereof as set forth on Schedule
  8.1, excluding increases and refinancings thereof, (iii) provided
  that no Default or Event of Default would exist before and after
  giving effect thereto, Contingent Obligations of the Borrower not
  in excess of $70,000,000 in respect of Indebtedness for borrowed
  money of Atlantic Thermal or any of its Subsidiaries in
  connection with its District Heating and Cooling Project,
  provided that any Contingent Obligation of the Borrower with
  respect to such Indebtedness is unsecured and (iv) provided no
  Default or Event of Default would exist before and after giving
  effect thereto other Indebtedness and Contingent Obligations of
  the Borrower in an aggregate amount not in excess of $10,000,000
  provided that any such Indebtedness constituting a Contingent
  Obligation shall be unsecured.
  
      8.2. Liens
  
           Create, incur, assume or suffer to exist any Lien upon any
  of its Property, whether now owned or hereafter acquired except
  (i) Liens for Taxes, assessments or similar charges incurred in
  the ordinary course of business which are not delinquent or which
  are being contested in accordance with Section 7.4, provided that
  enforcement of such Liens is stayed pending such contest, (ii)
  Liens in connection with workers' compensation, unemployment
  insurance or other social security obligations (but not ERISA),
  (iii) deposits or pledges to secure bids, tenders, contracts
  (other than contracts for the payment of money), leases,
  statutory obligations, surety and appeal bonds and other
  obligations of like nature arising in the ordinary course of
  business, (iv) zoning ordinances, easements, rights of way, minor
  defects, irregularities, and other similar restrictions affecting
  real Property which do not adversely affect the value of such
  real Property or the financial condition of the Borrower or
  impair its use for the operation of the business of the Borrower,
  (v) Liens arising by operation of law such as mechanics',
  materialmen's, carriers', warehousemen's liens incurred in the
  ordinary course of business which are not delinquent or which are
  being contested in good faith and by appropriate proceedings
  diligently conducted by it, provided that enforcement of such
  Liens is stayed pending such contest, (vi) Liens arising out of
  judgments or decrees which are being contested in good faith and
  by appropriate proceedings diligently conducted by it, provided
  that enforcement of such Liens is stayed pending such contest,
  (vii) Liens in favor of the Agent and the Lenders under the Loan
  Documents and the Facility B Agent and the Facility B Lenders
  under the Facility B Loan Documents, (viii) Liens on Property  of
  the Borrower existing on the Effective Date as set forth on
  Schedule 8.2 as renewed from time to time, but not any increases
  in the amounts secured thereby, (ix) Liens on Property of the
  Borrower acquired after the Effective Date provided that such
  Liens are limited to the Property so acquired and were not
  created in contemplation of such acquisition and (x) Liens
  securing Indebtedness for borrowed money (or Contingent
  Obligations in connection therewith) of the Borrower provided
  that the Agent, the Lenders, the Facility B Agent and the
  Facility B Lenders are ratably secured pursuant to documentation
  in form and substance satisfactory to the Agent and the Facility
  B Agent.
  
      8.3. Merger; Consolidation
  
           (a)  Consolidate with, be acquired by, or merge into or
  with any Person, or permit any of its Restricted Subsidiaries so
  to do, except that if no Default or Event of Default would exist
  before and after giving effect thereto, (i) the Borrower or any
  Restricted Subsidiary may merge with another entity provided that
  the resulting corporation shall have a net worth not less than
  the net worth of the Borrower or Restricted Subsidiary involved
  in such merger, (ii) the entity to be merged with is in the same
  business as a Restricted Subsidiary of the Borrower or in a
  related business (including other types of utilities), (iii) in
  the case of a merger involving the Borrower, the Borrower is the
  survivor and (iv) in the case of a merger involving an Operating
  Subsidiary, the survivor (if not such Operating Subsidiary) shall
  assume the obligations of such Operating Subsidiary under the
  Intercompany Note theretofore delivered by such Operating
  Subsidiary to the Borrower by an instrument in form and substance
  satisfactory to the Agent.
  
           (b)  Sell, lease or otherwise dispose of all or any part
  of its Property, or enter into any sale-leaseback transaction
  except:
  
                (i)  Sales or other dispositions of inventory in the
        ordinary course of business;
      
                (ii) Sales or other dispositions of equipment and
        materials in the ordinary course of business which, in the
        reasonable opinion of the Borrower, is obsolete or no longer
        useful in the conduct of its business; and
      
                (iii)     Sales or other dispositions of other
        Property for consideration not in excess of $25,000,000 per
        sale or other disposition provided that no Default or Event of
        Default shall exist immediately before or after giving effect
        thereto.
  
      8.4. Restricted Payments
  
           Declare or pay any Restricted Payments payable in cash or
  otherwise or apply any of its Property thereto or set apart any
  sum therefor, or permit any of its Restricted Subsidiaries so to
  do, except that (i) a Restricted Subsidiary may declare and pay
  Restricted Payments to its parent or to the Borrower, (ii)
  provided that no Default or Event of Default has occurred and is
  then continuing or would occur giving effect thereto, (A) the
  Borrower may (1) declare and pay cash dividends on its common
  Stock in any fiscal year and (2) repurchase its Stock, and (B)
  ACE may declare and pay cash dividends  on, and make mandatory
  and optional sinking fund payments with respect to, the ACE
  Preferred Stock.
  
      8.5. Investments, Acquisitions, Loans, Etc.
  
           At any time, purchase or otherwise acquire, hold or invest
  in the Stock of, or any other interest in, any Person, or make
  any loan or advance to, or enter into any arrangement for the
  purpose of providing funds or credit to, or make any other
  investment, whether by way of capital contribution, time deposit
  or otherwise, in or with any Person, or make any Acquisition (all
  of which are sometimes referred to herein as "Investments")
  except:
  
                (a)  Investments in (i) obligations issued or
  guaranteed by the United States Government, (ii) obligations of
  Federal agencies; (iii) State general obligation or revenue bonds
  having a rating category not less than Aa or AA by Moody's or
  S&P, respectively; (iv) State bond anticipation, tax anticipation
  or revenue anticipation notes having a rating category not less
  than MIG-2 or AA by Moody's or S&P, respectively; (v) any of the
  following which, by their terms, mature within twelve months from
  the date of issuance: (A) commercial paper rated not less than
  Prime-1 or A-1 by Moody's or S&P, respectively; (B) bankers'
  acceptance drawn on and accepted by Approved Financial
  Institutions; (C) certificates of deposit issued by Approved
  Financial Institutions and (D) money market mutual funds
  investing in securities rated as "First Tier Eligible Securities"
  by Moody's or S&P.
  
                (b)  Investments existing on the Effective Date as
  set forth on Schedule 8.5.
  
                (c)  Investments consisting of Intercompany Loans to
  Operating Subsidiaries, provided that (i) no Default or Event of
  Default shall exist before and after giving effect thereto and
  (ii) such Operating Subsidiary shall have executed and delivered
  to the Borrower an Intercompany Note, which Intercompany Note
  shall be in form and substance satisfactory to the Agent, shall
  have been duly indorsed by the Borrower to the order of the
  Agent, as collateral agent for itself, the Lenders, the Facility
  B Agent and the Facility B Lenders and shall have been delivered
  to the Agent, as such collateral agent.
  
                (d)  Investments consisting of loans to Permitted
  Recipients, provided that (i) no Default or Event of Default
  shall exist before and after giving effect thereto, and (ii) the
  aggregate amount of all such Investments shall not exceed
  $10,000,000.
  
                (e)  Acquisitions provided that (i) no Default or
  Event of Default shall exist before and after giving effect
  thereto, (ii) the Person or business to be acquired is in the
  same or a related business to a Subsidiary of the Borrower
  (including other types of utilities) or the assets or to be
  acquired are devoted to or usable in such a business and (iii) no
  more than $25,000,000 of proceeds of Loans are used therefor.
  
                (f)  Equity Investments in Operating Subsidiaries,
  provided (i) that no Default or Event of Default would exist
  before or after giving effect thereto and (ii) not more than
  $20,000,000 of such Investments in the aggregate shall be made
  with  the proceeds of Loans or the forgiveness of Indebtedness or
  the conversion to equity of any such Indebtedness, in each case
  to the extent permitted by Section 8.6.
  
      8.6. Amendments, Etc. of Intercompany Notes
  
           Enter into or agree to any amendment, modification or
  waiver of any term or condition of any Intercompany Note or
  forgive all or any portion of any amount due thereunder or
  convert all or any portion thereof into Stock or other interests
  or instruments, provided, however, that if no Default or Event of
  Default exists before and after giving effect thereto, the
  Borrower may so convert or forgive such Intercompany Note or
  Intercompany Notes not in excess of $20,000,000 in the aggregate,
  provided further that any such conversion or forgiveness in
  excess thereof may only be made if the Agent shall have received
  30 days prior written notice thereof and the Operating Subsidiary
  whose Intercompany Note is to be forgiven or converted shall have
  executed and delivered to the Agent a guaranty substantially in
  the form of Exhibit Q hereto, together with such legal opinions,
  certificates and other documents as the Agent reasonably may
  request, each in form and substance satisfactory to the Agent.
  
      8.7. Designation of Operating Subsidiaries
  
           Designate any Subsidiary as an additional Operating
  Subsidiary to whom proceeds of Loans may be loaned by the
  Borrower unless (i) no Default or Event of Default shall exist
  before or after giving effect thereto, (ii) the prospective
  Operating Subsidiary is a Subsidiary of the Borrower, (iii) the
  prospective Operating Subsidiary is engaged in the conduct of an
  active trade or business, (iv) the prospective Operating
  Subsidiary executes an Intercompany Note, in favor of the
  Borrower and in form and substance satisfactory to the Agent,
  evidencing its obligation to repay Intercompany Loans made to it
  by the Borrower from time to time, which Intercompany Note has
  been duly indorsed by the Borrower to the order of the Agent, as
  collateral agent for itself, the Lenders, the Facility B Agent
  and the Facility B Lenders, and (v) the Agent shall have received
  a written certificate signed by an Authorized Signatory of the
  Borrower designating such Operating Subsidiary and certifying as
  to its status as described in clauses (ii) and (iii) above.
  
      8.8. Certain Business Activities
  
           Engage in any business other than the holding of Permitted
  Investments.
  
  
  9.  DEFAULT
  
      9.1. Events of Default
  
           The following shall each constitute an "Event of Default"
  hereunder:
  
                (a)  The failure of the Borrower to pay any
  installment of principal on any Note on the date when due and
  payable; or
  
                (b)  The failure of the Borrower to pay any
  installment of interest or any other fees or expenses payable
  under any Loan Document or otherwise to the Agent  with respect
  to the loan facilities established hereunder within three
  Business Days of the date when due and payable; or
  
                (c)  The use of the proceeds of any Loan in a manner
  inconsistent with or in violation of Section 2.15; or
  
                (d)  The failure of the Borrower to observe or
  perform any covenant or agreement contained in Sections 7.3,
  7.10, 7.11 or Section 8; or
  
                (e)  The failure of the Borrower to observe or
  perform any other term, covenant, or agreement contained in any
  Loan Document and such failure shall have continued unremedied
  for a period of 30 days after the Borrower shall have obtained
  knowledge thereof; or
  
                (f)  Any representation or warranty made in any Loan
  Document or in any certificate delivered or to be delivered
  pursuant thereto shall prove to have been incorrect or misleading
  (whether because of misstatement or omission) in any material
  respect when made; or
  
                (g)  Obligations of the Borrower (other than its
  obligations under the Notes), ACE or any of any Operating
  Subsidiary, whether as principal, guarantor, surety or other
  obligor, for the payment of any Indebtedness or operating leases
  in excess of $10,000,000 in the aggregate (i) shall become or
  shall be declared to be due and payable prior to the expressed
  maturity thereof, or (ii) shall not be paid when due or within
  any grace period for the payment thereof, or (iii) the holders of
  any such obligations shall have the right to declare such
  obligation due and payable prior to the expressed maturity
  thereof;
  
                (h)  The Borrower, ACE or any Operating Subsidiary
  shall (i) suspend or discontinue its business, (ii) make an
  assignment for the benefit of creditors, (iii) generally not be
  paying its debts as such debts become due, (iv) admit in writing
  its inability to pay its debts as they become due, (v) file a
  voluntary petition in bankruptcy, (vi) become insolvent (however
  such insolvency shall be evidenced), (vii) file any petition or
  answer seeking for itself any reorganization, arrangement,
  composition, readjustment of debt, liquidation or dissolution or
  similar relief under any present or future statute, law or
  regulation of any jurisdiction, (viii) petition or apply to any
  tribunal for any receiver, custodian or any trustee for any
  substantial part of its Property, (ix) be the subject of any such
  proceeding filed against it which remains undismissed for a
  period of 60 days, (x) file any answer admitting or not
  contesting the material allegations of any such petition filed
  against it or any order, judgment or decree approving such
  petition in any such proceeding, (xi) seek, approve, consent to,
  or acquiesce in any such proceeding, or in the appointment of any
  trustee, receiver, sequestrator, custodian, liquidator, or fiscal
  agent for it, or any substantial part of its Property, or an
  order is entered appointing any such trustee, receiver,
  custodian, liquidator or fiscal agent and such order remains in
  effect for 60 days, or (xii) take any formal action for the
  purpose of effecting any of the foregoing or looking to the
  liquidation or dissolution of the Borrower or such Subsidiary; or
  
                (i)  An order for relief is entered under the United
  States bankruptcy laws or any other decree or order is entered by
  a court having jurisdiction (i) adjudging the Borrower, ACE or
  any Operating Subsidiary bankrupt or insolvent, (ii)  approving
  as properly filed a petition seeking reorganization, liquidation,
  arrangement, adjustment or composition of or in respect of the
  Borrower or any of its Subsidiaries under the United States
  bankruptcy laws or any other applicable Federal or state law,
  (iii) appointing a receiver, liquidator, assignee, trustee,
  custodian, sequestrator (or other similar official) of the
  Borrower or any of its Subsidiaries or of any substantial part of
  the Property thereof, or (iv) ordering the winding up or
  liquidation of the affairs of the Borrower or any of its
  Subsidiaries, and any such decree or order continues unstayed and
  in effect for a period of 60 days; or
  
                (j)  Judgments or decrees against the Borrower or any
  of its Subsidiaries aggregating in excess of $10,000,000 shall
  remain unpaid, unstayed on appeal, undischarged, unbonded or
  undismissed for a period of 30 consecutive days from the entry
  thereof; or
  
                (k)  Any Loan Document shall cease, for any reason,
  to be in full force and effect or the Borrower shall so assert in
  writing or shall disavow any of its obligations thereunder; or
  
                (l)  The occurrence of an Event of Default under and
  as defined in the Pledge Agreement; or
  
                (m)  The occurrence of an Event of Default under and
  as defined in any Facility B Loan Document; or
  
                (n)  The Borrower shall own less than 100% of the
  issued and outstanding common Stock of ACE; or
  
                (o)  (i) any Termination Event shall occur; (ii) any
  Accumulated Funding Deficiency, whether waived, shall exist with
  respect to any Pension Plan; (iii) any Person shall engage in any
  Prohibited Transaction involving any Employee Benefit Plan; (iv)
  the Borrower, any of its Subsidiaries or any ERISA Affiliate
  shall fail to pay when due an amount which is payable by it to
  the PBGC or to a Pension Plan under Title IV of ERISA; or (v) any
  other event or condition shall occur or exist with respect to an
  Employee Benefit Plan; and the occurrence of any of such events
  would have a Material Adverse Effect.
  
           Upon the occurrence of an Event of Default or at any time
  thereafter during the continuance thereof, (a) if such event is
  an Event of Default specified in clause (h) or (i) above, the
  Aggregate Commitments shall immediately and automatically
  terminate and the Loans, all accrued and unpaid interest thereon,
  and all other amounts owing under the Loan Documents shall
  immediately become due and payable, and the Agent may, and, upon
  the direction of the Required Lenders shall, exercise any and all
  remedies and other rights provided in the Loan Documents, and (b)
  if such event is any other Event of Default, any or all of the
  following actions may be taken: (i) with the consent of the
  Required Lenders, the Agent may, and upon the direction of the
  Required Lenders shall, by notice to the Borrower, declare the
  Aggregate Commitments to be terminated forthwith, whereupon the
  Aggregate Commitments shall immediately terminate, and (ii) with
  the consent of the Required Lenders, the Agent may, and upon the
  direction of the Required Lenders shall, by notice of default to
  the Borrower, declare the Loans, all accrued and unpaid interest
  thereon, and all other amounts owing under the Loan  Documents to
  be due and payable forthwith, whereupon the same shall
  immediately become due and payable, and the Agent may, and upon
  the direction of the Required Lenders shall, exercise any and all
  remedies and other rights provided pursuant to the Loan
  Documents.  Except as otherwise provided in this Section,
  presentment, demand, protest and all other notices of any kind
  are hereby expressly waived.  The Borrower hereby further
  expressly waives and covenants not to assert any appraisement,
  valuation, stay, extension, redemption or similar laws, now or at
  any time hereafter in force which might delay, prevent or
  otherwise impede the performance or enforcement of any Loan
  Document.
  
           In the event that the Aggregate Commitments shall have
  been terminated or the Notes shall have been declared due and
  payable pursuant to the provisions of this Section, any funds
  received by the Agent and the Lenders from or on behalf of the
  Borrower shall be applied by the Agent and the Lenders in
  liquidation of the Loans and the obligations of the Borrower
  under the Loan Documents in the following manner and order, in
  each case pro rata in proportion to the amounts due to each
  Person entitled to payment: (i) first, to the payment of interest
  on, and then the principal portion of, any Loans which the Agent
  may have advanced on behalf of any Lender for which the Agent has
  not then been reimbursed by such Lender or the Borrower; (ii)
  second, to the payment of any fees or expenses due the Agent from
  the Borrower, (iii) third, to reimburse the Agent and the Lenders
  for any expenses (to the extent not paid pursuant to clause (ii)
  above due from the Borrower pursuant to the provisions of Section
  11.5; (iv) fourth, to the payment of accrued Facility Fees and
  all other fees, expenses and amounts due under the Loan Documents
  (other than principal and interest on the Notes); (v) fifth, to
  the payment of interest due on the Notes; (vi) sixth, to the
  payment of principal outstanding on the Revolving Credit Notes;
  (vii) seventh, to the payment of principal outstanding on the
  Competitive Bid Notes; and (viii) eighth, to the payment of any
  other amounts owing to the Agent and the Lenders under any Loan
  Document.
  
  
  10. THE AGENT
  
      10.1.     Appointment
  
           Each Lender hereby irrevocably designates and appoints BNY
  as the Agent of such Lender under the Loan Documents and each
  such Lender hereby irrevocably authorizes BNY, as the Agent for
  such Lender, to take such action on its behalf under the
  provisions of the Loan Documents and to exercise such powers and
  perform such duties as are expressly delegated to the Agent by
  the terms of the Loan Documents, together with such other powers
  as are reasonably incidental thereto.  Notwithstanding any
  provision to the contrary elsewhere in any Loan Document, the
  Agent shall not have any duties or responsibilities other than
  those expressly set forth therein, or any fiduciary relationship
  with any Lender, and no implied covenants, functions,
  responsibilities, duties, obligations or liabilities shall be
  read into the Loan Documents or otherwise exist against the
  Agent.
  
      10.2.     Delegation of Duties
  
           The Agent may execute any of its duties under the Loan
  Documents by or through agents or attorneys-in-fact and shall be
  entitled to rely upon the advice of counsel concerning all
  matters pertaining to such duties.
  
      10.3.     Exculpatory Provisions
  
           Neither the Agent nor any of its officers, directors,
  employees, agents, attorneys-in-fact or affiliates shall be (i)
  liable for any action lawfully taken or omitted to be taken by it
  or such Person under or in connection with the Loan Documents
  (except the Agent for its own gross negligence or willful
  misconduct), or (ii) responsible in any manner to any of the
  Lenders for any recitals, statements, representations or
  warranties made by the Borrower or any officer thereof contained
  in the Loan Documents or in any certificate, report, statement or
  other document referred to or provided for in, or received by the
  Agent under or in connection with, the Loan Documents or for the
  value, validity, effectiveness, genuineness, perfection,
  enforceability or sufficiency of any of the Loan Documents or for
  any failure of the Borrower or any other Person to perform its
  obligations thereunder.  The Agent shall not be under any
  obligation to any Lender to ascertain or to inquire as to the
  observance or performance of any of the agreements contained in,
  or conditions of, the Loan Documents, or to inspect the
  properties, books or records of the Borrower.  The Agent shall
  not be under any liability or responsibility whatsoever, as
  Agent, to the Borrower or any other Person as a consequence of
  any failure or delay in performance, or any breach, by any Lender
  of any of its obligations under any of the Loan Documents.
  
      10.4.     Reliance by Agent
  
           The Agent shall be entitled to rely, and shall be fully
  protected in relying, upon any writing, resolution, notice,
  consent, certificate, affidavit, opinion, letter, cablegram,
  telegram, fax, telex or teletype message, statement, order or
  other document or conversation believed by it to be genuine and
  correct and to have been signed, sent or made by the proper
  Person or Persons and upon advice and statements of legal counsel
  (including, without limitation, counsel to the Borrower),
  independent accountants and other experts selected by the Agent. 
  The Agent may treat each Lender, or the Person designated in the
  last notice filed with it under this Section, as the holder of
  all of the interests of such Lender in its Loans and in its Notes
  until written notice of transfer, signed by such Lender (or the
  Person designated in the last notice filed with the Agent) and by
  the Person designated in such written notice of transfer, in form
  and substance satisfactory to the Agent, shall have been filed
  with the Agent.  The Agent shall not be under any duty to examine
  or pass upon the validity, effectiveness, enforceability,
  perfection or genuineness of the Loan Documents or any
  instrument, document or communication furnished pursuant thereto
  or in connection therewith, and the Agent shall be entitled to
  assume that the same are valid, effective and genuine, have been
  signed or sent by the proper parties and are what they purport to
  be.  The Agent shall be fully justified in failing or refusing to
  take any action under the Loan Documents unless it shall first
  receive such advice or concurrence of the Required Lenders as it
  deems appropriate.  The Agent shall in all cases be fully
  protected in acting, or in refraining from acting, under the Loan
  Documents in accordance with a request or direction of the
  Required Lenders, and such request or direction and any action
  taken or failure to act pursuant thereto shall be binding upon
  all the Lenders and all future holders of the Notes.
  
      10.5.     Notice of Default
  
           The Agent shall not be deemed to have knowledge or notice
  of the occurrence of any Default or Event of Default unless the
  Agent has received written notice  thereof from a Lender or the
  Borrower.  In the event that the Agent receives such a notice,
  the Agent shall promptly give notice thereof to the Lenders and
  the Borrower.  The Agent shall take such action with respect to
  such Default or Event of Default as shall be directed by the
  Required Lenders, provided, however, that unless and until the
  Agent shall have received such directions, the Agent may (but
  shall not be obligated to) take such action, or refrain from
  taking such action, with respect to such Default or Event of
  Default as it shall deem to be in the best interests of the
  Lenders.
  
      10.6.     Non-Reliance on Agent and Other Lenders
  
           Each Lender expressly acknowledges that neither the Agent
  nor any of its respective officers, directors, employees, agents,
  attorneys-in-fact or affiliates has made any representations or
  warranties to it and that no act by the Agent hereinafter,
  including any review of the affairs of the Borrower, shall be
  deemed to constitute any representation or warranty by the Agent
  to any Lender.  Each Lender represents to the Agent that 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 evaluation of and investigation
  into the business, operations, Property, financial and other
  condition and creditworthiness of the Borrower and made its own
  decision to enter into this Agreement.  Each Lender also
  represents that it will, independently and without reliance upon
  the Agent 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 analyses, evaluations and decisions in taking
  or not taking action under any Loan Document, and to make such
  investigation as it deems necessary to inform itself as to the
  business, operations, Property, financial and other condition and
  creditworthiness of the Borrower.  Except for notices, reports
  and other documents expressly required to be furnished to the
  Lenders by the Agent hereunder, the Agent shall not have any duty
  or responsibility to provide any Lender with any credit or other
  information concerning the business, operations, Property,
  financial and other condition or creditworthiness of the Borrower
  which may come into the possession of the Agent or any of its
  officers, directors, employees, agents, attorneys-in-fact or
  affiliates.
  
      10.7.     Indemnification
  
           Each Lender agrees to indemnify and reimburse the Agent in
  its capacity as such (to the extent not promptly reimbursed by
  the Borrower and without limiting the obligation of the Borrower
  to do so), pro rata according to the outstanding principal
  balance of the Loans (or at any time when no Loans are
  outstanding, according to its Commitment Percentage), from and
  against any and all liabilities, obligations, losses, damages,
  penalties, actions, judgments, suits, costs, expenses or
  disbursements of any kind whatsoever including, without
  limitation, any amounts paid to the Lenders (through the Agent)
  by the Borrower pursuant to the terms of the Loan Documents, that
  are subsequently rescinded or avoided, or must otherwise be
  restored or returned) which may at any time (including, without
  limitation, at any time following the payment of the Notes) be
  imposed on, incurred by or asserted against the Agent in any way
  relating to or arising out of the Loan Documents or any other
  documents contemplated by or referred to therein or the
  transactions contemplated thereby or any action taken or omitted
  to be taken by the Agent under or in connection with any of the
  foregoing; provided, however, that no Lender shall be liable for
  the payment of any portion of such liabilities, obligations,
  losses, damages, penalties, actions, judgments, suits, costs,
  expenses or disbursements to  the extent resulting solely from
  the finally adjudicated gross negligence or willful misconduct of
  the Agent.  Without limitation of the foregoing, each Lender
  agrees to reimburse the Agent promptly upon demand for its pro
  rata share of any unpaid fees owing to the Agent, and any costs
  and expenses (including, without limitation, reasonable fees and
  expenses of counsel) payable by the Borrower under Section 11.5,
  to the extent that the Agent has not been paid such fees or has
  not be reimbursed for such costs and expenses by the Borrower. 
  The failure of any Lender to reimburse the Agent promptly upon
  demand for its pro rata share of any amount required to be by the
  Lenders to the Agent as provided in this Section shall not
  relieve any other Lender of its obligation hereunder to reimburse
  the Agent for its pro rata share of such amount, but no Lender
  shall be responsible for the failure of other Lender to reimburse
  the Agent for such other Lender's pro rata share of such amount. 
  The agreements in this Section shall survive the payment of all
  amounts payable under the Loan Documents.
  
      10.8.     Agent in Its Individual Capacity
  
           BNY and its respective affiliates may make loans to,
  accept deposits from, issue letters of credit for the account of,
  and generally engage in any kind of business with, the Borrower
  as though BNY were not Agent hereunder.  With respect to the
  Commitment made or renewed by BNY and the Notes issued to BNY,
  BNY shall have the same rights and powers under the Loan
  Documents as any Lender and may exercise the same as though it
  were not the Agent, and the terms "Lender" and "Lenders" shall in
  each case include BNY.
  
      10.9.     Successor Agent
  
           If at any time the Agent deems it advisable, in its sole
  discretion, it may submit to each of the Lenders a written notice
  of its resignation as Agent under the Loan Documents, such
  resignation to be effective upon the earlier of (i) the written
  acceptance of the duties of the Agent under the Loan Documents by
  a successor Agent and (ii) on the 30th day after the date of such
  notice.  Upon any such resignation, the Required Lenders shall
  have the right, with the prior written consent of the Borrower
  (which consent shall not be unreasonably withheld or delayed and
  which consent of the Borrower shall not be required upon the
  occurrence and during the continuance of a Default or an Event of
  Default), to appoint from among the Lenders a successor Agent. 
  If no successor Agent shall have been so appointed by the
  Required Lenders and accepted such appointment in writing within
  30 days after the retiring Agent's giving of notice of
  resignation, then the retiring Agent may, on behalf of the
  Lenders, appoint a successor Agent, which successor Agent shall
  be a commercial bank organized under the laws of the United
  States of America or any State thereof and having a combined
  capital, surplus, and undivided profits 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 retiring Agent, and the retiring Agent's rights,
  powers, privileges and duties as Agent under the Loan Documents
  shall be terminated.  The Borrower and the Lenders shall execute
  such documents as shall be necessary to effect such appointment. 
  After any retiring Agent's resignation as Agent, the provisions
  of the Loan Documents shall inure to its benefit as to any
  actions taken or omitted to be taken by it while it was Agent
  under the Loan Documents.  If at any time there shall not be a
  duly appointed and acting Agent, the  Borrower agrees to make
  each payment due under the Loan Documents directly to the Lenders
  entitled thereto during such time.
  
  
  11. OTHER PROVISIONS
  
      11.1.     Amendments and Waivers
  
           With the written consent of the Required Lenders, the
  Agent and the Borrower may, from time to time, enter into written
  amendments, supplements or modifications of the Loan Documents
  and, with the consent of the Required Lenders, the Agent on
  behalf of the Lenders may execute and deliver to any such parties
  a written instrument waiving or a consent to a departure from, on
  such terms and conditions as the Agent may specify in such
  instrument, any of the requirements of the Loan Documents or any
  Default or Event of Default and its consequences; provided,
  however, that:
  
           (a)  no such amendment, supplement, modification, waiver
  or consent shall, without the written consent of all of the
  Lenders, (i) increase the Commitment of any Lender or the
  Aggregate Commitments, (ii) extend the Maturity Date (except as
  provided in Section 2.18); (iii) decrease the rate, or extend the
  time of payment, of interest of, or change or forgive the
  principal amount of, or change the pro rata allocation of
  payments under, any Note; (iv) release all or any part of the
  Collateral; (v) change the provisions of Sections 3.4, 11.1 or
  11.7(a) or (vi) change the definition of Required Lenders;
  
           (b)  without the written consent of BNY, no such
  amendment, supplement, modification or waiver shall amend, modify
  or waive any provision of Section 10 or otherwise change any of
  the rights or obligations of the Agent hereunder or under the
  Loan Documents.
  
           Any such amendment, supplement, modification or waiver
  shall apply equally to each of the Lenders and shall be binding
  upon the parties to the applicable Loan Document, the Lenders,
  the Agent and all future holders of the Notes.  In the case of
  any waiver, the parties to the applicable Loan Document, the
  Lenders and the Agent shall be restored to their former position
  and rights hereunder and under the outstanding Notes and other
  Loan Documents to the extent provided for in such waiver, and any
  Default or Event of Default waived shall not extend to any
  subsequent or other Default or Event of Default, or impair any
  right consequent thereon.  The Loan Documents may not be amended
  orally or by any course of conduct.
  
      11.2.     Notices
  
           All notices, requests and demands to or upon the
  respective parties to the Loan Documents to be effective shall be
  in writing and, unless otherwise expressly provided therein,
  shall be deemed to have been duly given or made when delivered by
  hand, or when deposited in the mail, first-class postage prepaid,
  or, in the case of notice by fax, when sent, addressed as follows
  in the case of the Borrower or the Agent, at the Domestic Lending
  Office, in the case of each Lender, or to such other addresses as
  to which the Agent may be hereafter notified by the respective
  parties thereto or any future holders of the Notes:
  
           The Borrower:
  
           Atlantic Energy, Inc.
           6801 Black Horse Pike
           Pleasantville, New Jersey 08232-4130
           Attention:     Louis M. Walters,
                     Treasurer
           Telephone:     (609) 645-4441
           Fax:      (609) 645-4550
  
           The Agent:
  
           The Bank of New York
           One Wall Street
           Agency Function Administration
           18th Floor
           New York, New York 10286
           Attention:     Patricia Clancy
           Telephone:     (212) 635-4696
           Fax:      (212) 635-6365 or 6366 or 6367
  
           with a copy to:
  
           The Bank of New York
           Energy Industries Division
           One Wall Street
           19th Floor
           New York, New York 10286
           Attention:     Mary Lou Bradley,
                     Vice President
           Telephone:     (212) 635-7533
           Fax:      (212) 635-7923
  
  except that any notice, request or demand by the Borrower to or
  upon the Agent or the Lenders pursuant to Sections 2.3, 2.4 or
  2.7 shall not be effective until received.  Any party to a Loan
  Document may rely on signatures of the parties thereto which are
  transmitted by fax or other electronic means as fully as if
  originally signed.
  
      11.3.     No Waiver; Cumulative Remedies
  
           No failure to exercise and no delay in exercising, on the
  part of the Agent or any Lender, any right, remedy, power or
  privilege under any Loan Document shall operate as a waiver
  thereof; nor shall any single or partial exercise of any right,
  remedy, power or privilege under any Loan Document preclude any
  other or further exercise thereof or the exercise of any other
  right, remedy, power or privilege.  The rights, remedies, powers
  and privileges under the Loan Documents are cumulative and not
  exclusive of any rights, remedies, powers and privileges provided
  by law.
  
      11.4.     Survival of Representations and Warranties
  
           All representations and warranties made under the Loan
  Documents and in any document, certificate or statement delivered
  pursuant thereto or in connection therewith shall survive the
  execution and delivery of the Loan Documents.
  
      11.5.     Payment of Expenses and Taxes
  
           The Borrower agrees, promptly upon presentation of a
  statement or invoice therefor, and whether any Loan is made (i)
  to pay or reimburse the Agent for all its out-of-pocket costs and
  expenses reasonably incurred in connection with the development,
  preparation, execution and syndication of, the Loan Documents and
  any amendment, supplement or modification thereto (whether or not
  executed), any documents prepared in connection therewith and the
  consummation of the transactions contemplated thereby, including,
  without limitation, the reasonable fees and disbursements of
  Special Counsel, (ii) to pay or reimburse the Agent and the
  Lenders for all of their respective costs and expenses,
  including, without limitation, reasonable fees and disbursements
  of counsel, incurred in connection with (A) any Default or Event
  of Default and any enforcement or collection proceedings
  resulting therefrom or in connection with the negotiation of any
  restructuring or "work-out" (whether consummated or not) of the
  obligations of the Borrower under any of the Loan Documents and
  (B) the enforcement of this Section, (iii) to pay, indemnify, and
  hold each Lender and the Agent harmless from and against, any and
  all recording and filing fees and any and all liabilities with
  respect to, or resulting from any delay in paying, stamp, excise
  and other similar taxes, if any, which may be payable or
  determined to be payable in connection with the execution and
  delivery of, or consummation of any of the transactions
  contemplated by, or any amendment, supplement or modification of,
  or any waiver or consent under or in respect of, the Loan
  Documents and any such other documents, and (iv) to pay,
  indemnify and hold each Lender and the Agent and each of their
  respective officers, directors and employees harmless from and
  against any and all other liabilities, obligations, claims,
  losses, damages, penalties, actions, judgments, suits, costs,
  expenses or disbursements of any kind or nature whatsoever
  (including, without limitation, reasonable counsel fees and
  disbursements) with respect to the enforcement and performance of
  the Loan Documents and the enforcement and performance of the
  provisions of any subordination agreement in favor of the Agent
  and the Lenders (all the foregoing, collectively, the
  "indemnified liabilities") and, if and to the extent that the
  foregoing indemnity may be unenforceable for any reason, the
  Borrower agrees to make the maximum payment permitted or not
  prohibited under applicable law; provided, however, that the
  Borrower shall have no obligation hereunder to pay indemnified
  liabilities to the Agent or any Lender arising from the finally
  adjudicated gross negligence or willful misconduct of the Agent
  or such Lender or claims between one indemnified party and
  another indemnified party.  The agreements in this Section shall
  survive the termination of the Aggregate Commitments and the
  payment of all amounts payable under the Loan Documents.
  
      11.6.     Lending Offices
  
           Each Lender shall have the right at any time and from time
  to time to transfer its Loans to a different office, provided
  that such Lender shall promptly notify the Agent and the Borrower
  of any such change of office.  Such office shall thereupon become
  such Lender's Domestic Lending Office or Eurodollar Lending
  Office, as the case  may be, provided, however, that no such
  Lender shall be entitled to receive any greater amount under
  Sections 2.10, 2.12 or 2.13 as a result of a transfer of any such
  Loans to a different office of such Lender than it would be
  entitled to immediately prior thereto unless such claim would
  have arisen even if such transfer had not occurred.
  
      11.7.     Assignments and Participations
  
           (a)  The Loan Documents shall be binding upon and inure to
  the benefit of the Borrower, the Lenders, the Agent, all future
  holders of the Notes and their respective successors and assigns,
  except that the Borrower may not assign, delegate or transfer any
  of its rights or obligations under the Loan Documents without the
  prior written consent of the Agent and each Lender.
  
           (b)  Each Lender shall have the right at any time, upon
  written notice to the Agent of its intent to do so, to sell,
  assign, transfer or negotiate all or any part of such Lender's
  rights under the Loan Documents and the Facility B Loan Documents
  to one or more of its affiliates, to one or more of the other
  Lenders (or to affiliates of such other Lenders) or, with the
  prior written consent of the Borrower and the Agent (which
  consent shall not be unreasonably withheld or delayed and which
  consent of the Borrower shall not be required upon the occurrence
  and during the continuance of an Event of Default), to sell,
  assign, transfer or negotiate all or any part of such Lender's
  rights and obligations under the Loan Documents and the Facility
  B Loan Documents to any other bank, insurance company, pension
  fund, mutual fund or other financial institution, provided that
  (i) each such sale, assignment, transfer or negotiation (other
  than sales, assignments, transfers or negotiations (x) to
  affiliates of such Lender or (y) of a Lender's entire interest)
  shall be in a minimum amount of $5,000,000, (ii) each such sale,
  assignment, transfer or negotiation shall be of an equal
  percentage of such Lenders interest under the Loan Documents and
  the Facility B Loan Documents (it being the intention of the
  parties that at all times during which the Loan Documents and the
  Facility B Loan Documents are both in effect, each Lender shall
  also be a Facility B Lender and its Commitment Percentage shall
  equal its Facility B Commitment Percentage) and (iii) there shall
  be paid to the Agent by the assigning Lender a fee (the
  "Assignment Fee") of $3,000 for the assignment of both the Loan
  Documents and the Facility B Loan Documents.  For each
  assignment, the parties to such assignment shall execute and
  deliver to the Agent for its acceptance and recording an
  Assignment and Acceptance Agreement.  Upon such execution,
  delivery, acceptance and recording by the Agent, from and after
  the effective date specified in such Assignment and Acceptance
  Agreement, the assignee thereunder shall be a party hereto and,
  to the extent provided in such Assignment and Acceptance
  Agreement, the assignor Lender thereunder shall be released from
  its obligations under the Loan Documents.  The Borrower agrees
  upon written request of the Agent and at the Borrower's expense
  to execute and deliver (A) to such assignee, a Revolving Credit
  Note, dated the effective date of such Assignment and Acceptance
  Agreement, in an aggregate principal amount equal to the Loans
  assigned to, and Commitments assumed by, such assignee, (B) to
  such assignee, a Competitive Bid Note, dated the effective date
  of such Assignment and Acceptance Agreement and (C) to such
  assignee, a Revolving Credit Note, dated the effective date of
  such Assignment and Acceptance Agreement, in an aggregate
  principal amount equal to the balance of such assignor Lender's
  Revolving Credit Loans and Commitments, if any, and each assignor
  Lender shall cancel and return to the Borrower its existing
  Revolving Credit Note.  Upon any such sale, assignment or other
  transfer, the Commitments and the  Commitment Percentages set
  forth in Exhibit A shall be adjusted accordingly by the Agent.
  
           (c)  Each Lender may grant participations in all or any
  part of its Loans, its Notes and its Commitment to one or more
  banks, insurance companies, financial institutions, pension funds
  or mutual funds, provided that (i) such Lender's obligations
  under the Loan Documents shall remain unchanged, (ii) such Lender
  shall remain solely responsible to the other parties to the Loan
  Documents for the performance of such obligations, (iii) the
  Borrower, the Agent and the other Lenders shall continue to deal
  solely and directly with such Lender in connection with such
  Lender's rights and obligations under the Loan Documents, (iv) no
  sub-participations shall be permitted and (v) the voting rights
  of any holder of any participation shall be limited to decisions
  that only do any of the following: (A) subject the participant to
  any additional obligation, (B) reduce the principal of, or
  interest on the Notes or any fees or other amounts payable
  hereunder, (C) postpone any date fixed for the payment of
  principal of, or interest on the Notes or any fees or other
  amounts payable hereunder, (D) release any security interest or
  Collateral except to the extent that such release is specifically
  provided for in any Loan Document or (E) release any guarantor
  under any guarantee.  The Borrower acknowledges and agrees that
  any such participant shall for purposes of Sections 2.10, 2.12,
  2.13 and 2.16 be deemed to be a "Lender"; provided, however, the
  Borrower shall not, at any time, be obligated to pay any
  participant in any interest of any Lender hereunder any sum in
  excess of the sum which the Borrower would have been obligated to
  pay to such Lender in respect of such interest had such Lender
  not sold such participation.
  
           (d)  If any (i) assignment is made pursuant to subsection
  (b) above or (ii) any participation is granted pursuant to
  subsection (c) above, shall be made to any Person that is not a
  U.S. Person, such Person shall furnish such certificates,
  documents or other evidence to the Borrower and the Agent, in the
  case of clause (i) and to the Borrower and the Lender which sold
  such participation in the case of clause (ii), as shall be
  required by Section 2.10(e).
  
           (e)  No Lender shall, as between and among the Borrower,
  the Agent and such Lender, be relieved of any of its obligations
  under the Loan Documents as a result of any sale, assignment,
  transfer or negotiation of, or granting of participations in, all
  or any part of its Loans, its Commitment or its Note, except that
  a Lender shall be relieved of its obligations to the extent of
  any such sale, assignment, transfer, or negotiation of all or any
  part of its Loans, its Commitment or its Notes pursuant to
  subsection (b) above.
  
           (f)  Notwithstanding anything to the contrary contained in
  this Section, any Lender may at any time or from time to time
  assign all or any portion of its rights under the Loan Documents
  to a Federal Reserve Bank, provided that any such assignment
  shall not release such assignor from its obligations thereunder.
  
      11.8.     Counterparts
  
           Each Loan Document (other than the Notes) may be executed
  by one or more of the parties thereto on any number of separate
  counterparts and all of said counterparts taken together shall be
  deemed to constitute one and the same document.  It shall not be
  necessary in making proof of any Loan Document to produce or
  account for  more than one counterpart signed by the party to be
  charged.  A counterpart of any Loan Document or to any document
  evidencing, and of any an amendment, modification, consent or
  waiver to or of any Loan Document transmitted by fax shall be
  deemed to be an originally executed counterpart.  A set of the
  copies of the Loan Documents signed by all the parties thereto
  shall be deposited with each of the Borrower and the Agent.  Any
  party to a Loan Document may rely upon the signatures of any
  other party thereto which are transmitted by fax or other
  electronic means to the same extent as if originally signed.
  
      11.9.     Adjustments; Set-off
  
           (a)  If any Lender (a "Benefited Lender") shall at any
  time receive any payment of all or any part of its Loans, or
  interest thereon, or receive any collateral in respect thereof
  (whether voluntarily or involuntarily, by set-off, pursuant to
  events or proceedings of the nature referred to in Section 9.1
  (h) or (i), or otherwise) in a greater proportion than any such
  payment to and collateral received by any other Lender in respect
  of such other Lender's Loans, or interest thereon, such Benefited
  Lender shall purchase for cash from each of the other Lenders
  such portion of each such other Lender's Loans, and shall provide
  each of such other Lenders with the benefits of any such
  collateral, or the proceeds thereof, as shall be necessary to
  cause such Benefited Lender to share the excess payment or
  benefits of such collateral or proceeds ratably with each of the
  Lenders, provided, however, that if all or any portion of such
  excess payment or benefits is thereafter recovered from such
  Benefited Lender, such purchase shall be rescinded, and the
  purchase price and benefits returned, to the extent of such
  recovery, but without interest.  The Borrower agrees that each
  Lender so purchasing a portion of another Lender's Loans may
  exercise all rights of payment (including, without limitation,
  rights of set-off, to the extent not prohibited by law) with
  respect to such portion as fully as if such Lender were the
  direct holder of such portion.
  
           (b)  In addition to any rights and remedies of the Lenders
  provided by law, upon the occurrence of an Event of Default and
  the acceleration of the obligations owing in connection with the
  Loan Documents, or at any time upon the occurrence and during the
  continuance of an Event of Default, under Section 9.1(a) or (b),
  each Lender shall have the right, without prior notice to the
  Borrower, any such notice being expressly waived by the Borrower
  to the extent not prohibited by applicable law, to set-off and
  apply against any indebtedness, whether matured or unmatured, of
  the Borrower to such Lender, any amount owing from such Lender to
  the Borrower, at, or at any time after, the happening of any of
  the above-mentioned events.  To the extent not prohibited by
  applicable law, the aforesaid right of set-off may be exercised
  by such Lender against the Borrower or against any trustee in
  bankruptcy, custodian, debtor in possession, assignee for the
  benefit of creditors, receiver, or execution, judgment or
  attachment creditor of the Borrower, or against anyone else
  claiming through or against the Borrower or such trustee in
  bankruptcy, custodian, debtor in possession, assignee for the
  benefit of creditors, receiver, or execution, judgment or
  attachment creditor, notwithstanding the fact that such right of
  set-off shall not have been exercised by such Lender prior to the
  making, filing or issuance, or service upon such Lender of, or of
  notice of, any such petition, assignment for the benefit of
  creditors, appointment or application for the appointment of a
  receiver, or issuance of execution, subpoena, order or warrant. 
  Each Lender agrees promptly to notify the Borrower and the Agent
  after any such set-off and application made by such Lender,
  provided that the failure to give such notice shall not affect
  the validity of such set-off and application.
  
      11.10.    Indemnity
  
           The Borrower agrees to indemnify and hold harmless the
  Agent and each Lender and their respective affiliates, directors,
  officers, employees, attorneys and agents (each an "Indemnified
  Person") from and against any loss, cost, liability, damage or
  expense (including the reasonable fees and disbursements of
  counsel of such Indemnified Person, including all local counsel
  hired by any such counsel) incurred by such Indemnified Person in
  investigating, preparing for, defending against, or providing
  evidence, producing documents or taking any other action in
  respect of, any commenced or threatened litigation,
  administrative proceeding or investigation under any federal
  securities law or any other statute of any jurisdiction, or any
  regulation, or at common law or otherwise, which is alleged to
  arise out of or is based upon (i) any untrue statement or alleged
  untrue statement of any material fact by the Borrower in any
  document or schedule executed or filed with any Governmental
  Authority by or on behalf of the Borrower; (ii) any omission or
  alleged omission to state any material fact required to be stated
  in such document or schedule, or necessary to make the statements
  made therein, in light of the circumstances under which made, not
  misleading; (iii) any acts, practices or omissions or alleged
  acts, practices or omissions of the Borrower or its agents
  relating to the use of the proceeds of any or all borrowings made
  by the Borrower which are alleged to be in violation of Section
  2.15, or in violation of any federal securities law or of any
  other statute, regulation or other law of any jurisdiction
  applicable thereto; or (iv) any acquisition or proposed
  acquisition by the Borrower of all or a portion of the Stock, or
  all or a portion of the assets, of any Person whether such
  Indemnified Person is a party thereto.  The indemnity set forth
  herein shall be in addition to any other obligations or
  liabilities of the Borrower to each Indemnified Person under the
  Loan Documents or at common law or otherwise, and shall survive
  any termination of the Loan Documents, the expiration of the
  Aggregate Commitments and the payment of all indebtedness of the
  Borrower under the Loan Documents, provided that the Borrower
  shall have no obligation under this Section to an Indemnified
  Person with respect to any of the foregoing to the extent found
  in a final judgment of a court having jurisdiction to have
  resulted primarily out of the gross negligence or wilful
  misconduct of such Indemnified Person or arising solely from
  claims between one such Indemnified Person and another such
  Indemnified Person.
  
      11.11.    Governing Law
  
           The Loan Documents and the rights and obligations of the
  parties thereunder shall be governed by, and construed and
  interpreted in accordance with, the internal laws of the State of
  New York, without regard to principles of conflict of laws.
  
      11.12.    Headings Descriptive
  
           Section headings have been inserted in the Loan Documents
  for convenience only and shall not be construed to be a part
  thereof.
  
      11.13.    Severability
  
           Every provision of the Loan Documents is intended to be
  severable, and if any term or provision thereof shall be invalid,
  illegal or unenforceable for any reason, the validity, legality
  and enforceability of the remaining provisions thereof shall not
  be  affected or impaired thereby, and any invalidity, illegality
  or unenforceability in any jurisdiction shall not affect the
  validity, legality or enforceability of any such term or
  provision in any other jurisdiction.
  
      11.14.    Integration
  
           All exhibits to a Loan Document shall be deemed to be a
  part thereof.  Except for agreements between the Agent and the
  Borrower with respect to certain fees, the Loan Documents embody
  the entire agreement and understanding among the Borrower, the
  Agent and the Lenders with respect to the subject matter thereof
  and supersede all prior agreements and understandings among the
  Borrower, the Agent and the Lenders with respect to the subject
  matter thereof.
  
      11.15.    Consent to Jurisdiction
  
           The Borrower hereby irrevocably submits to the
  jurisdiction of any New York State or Federal court sitting in
  the City of New York over any suit, action or proceeding arising
  out of or relating to the Loan Documents.  The Borrower hereby
  irrevocably waives, to the fullest extent permitted or not
  prohibited by law, any objection which it may now or hereafter
  have to the laying of the venue of any such suit, action or
  proceeding brought in such a court and any claim that any such
  suit, action or proceeding brought in such a court has been
  brought in an inconvenient forum.  The Borrower hereby agrees
  that a final judgment in any such suit, action or proceeding
  brought in such a court, after all appropriate appeals, shall be
  conclusive and binding upon it.
  
      11.16.    Service of Process
  
           The Borrower hereby irrevocably consents to the service of
  process in any suit, action or proceeding by sending the same by
  first class mail, return receipt requested or by overnight
  courier service, to the address of the Borrower set forth in
  Section 11.2.  The Borrower hereby agrees that any such service
  (i) shall be deemed in every respect effective service of process
  upon it in any such suit, action, or proceeding, and (ii) shall
  to the fullest extent enforceable by law, be taken and held to be
  valid personal service upon and personal delivery to it.
  
      11.17.    No Limitation on Service or Suit
  
           Nothing in the Loan Documents or any modification, waiver,
  consent or amendment thereto shall affect the right of the Agent
  or any Lender to serve process in any manner permitted by law or
  limit the right of the Agent or any Lender to bring proceedings
  against the Borrower in the courts of any jurisdiction or
  jurisdictions in which the Borrower may be served.
  
      11.18.    WAIVER OF TRIAL BY JURY
  
           THE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY,
  VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A
  TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER
  OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
  CONTEMPLATED THEREIN.  FURTHER, THE BORROWER  HEREBY CERTIFIES
  THAT NO REPRESENTATIVE OR AGENT OF THE AGENT, OR THE LENDERS, OR
  COUNSEL TO THE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY
  OR OTHERWISE, THAT THE AGENT OR THE LENDERS WOULD NOT, IN THE
  EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
  JURY TRIAL PROVISION.  THE BORROWER ACKNOWLEDGES THAT THE AGENT
  AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
  BY, INTER ALIA, THE PROVISIONS OF THIS SECTION.
  
  
             [Remainder of page intentionally left blank]
    
      IN WITNESS WHEREOF, the parties hereto have caused this
  Revolving Credit Agreement (Facility A) to be duly executed and
  delivered by their proper and duly authorized officers as of the
  day and year first above written.
  
  
                               ATLANTIC ENERGY, INC.
  
  
  
                               By:   /s/ Jerrold L. Jacobs
                               Name: Jerrold L. Jacobs
                               Title:                      President & Chief
                                     Executive Officer
  
  
                               THE BANK OF NEW YORK,
                               Individually and as Agent
  
  
  
                               By:   /s/ Mary Lou Bradley
                               Name: Mary Lou Bradley
                               Title:                      Vice President
  
  
  
                               THE FIRST NATIONAL BANK
                                 OF CHICAGO
  
  
  
                               By:   /s/ Kenneth J. Bauer
                               Name: Kenneth J. Bauer
                               Title:                      Authorized Agent
  
  
  
                               MELLON BANK, N.A.
  
  
                               By:   /s/ A. Gary Chace
                               Name: A. Gary Chace
                               Title:                      Senior Vice President
                       ATLANTIC ENERGY EXHIBIT A
  
                          LIST OF COMMITMENTS
  
                             (Facility A)
                                                         Commitment
  Lender                        Commitment               Percentage
  
  The Bank of New York         $18,666,000               53.3314%
  
  The First National Bank      $11,667,000               33.3343%
    of Chicago
  
  Mellon Bank, N.A.            $ 4,667,000               13.3343%
  
    Total                      $35,000,000              100.0000%
    
                      ATLANTIC ENERGY EXHIBIT B-1
                     FORM OF REVOLVING CREDIT NOTE
  
                             (Facility A)
  
  $________
                                       ______, 1995
                                       New York, New York
  
  
                               FOR VALUE RECEIVED, on the Maturity Date, 
ATLANTIC ENERGY,
  INC., a New Jersey corporation (the "Borrower"), hereby promises
  to pay to the order of ________________ (the "Lender"), at the
  office of THE BANK OF NEW YORK, as Agent (the "Agent"), located
  at One Wall Street, New York, New York or at such other place as
  the Agent may specify from time to time, in lawful money of the
  United States of America, the principal sum of $_____, or such
  lesser unpaid principal balance as shall be outstanding here-
  under, together with interest from the date hereof, on the unpaid
  principal balance hereof, payable at the rate or rates and at the
  time or times provided for in the Revolving Credit Agreement
  (Facility A), dated as of September 28, 1995, among the Borrower,
  the Lenders party thereto and the Agent (as the same may be
  amended, modified or supplemented from time to time, the
  "Agreement").  Capitalized terms used herein that are defined in
  the Agreement shall have the meanings therein defined.  In no
  event shall interest payable hereon exceed the Highest Lawful
  Rate.
  
                               This Note is one of the Revolving Credit Notes 
referred to in
  the Agreement and is entitled to the benefits of, and is subject
  to the terms set forth in, the Agreement.  The principal of this
  Note is payable in the amounts and under the circumstances, and
  its maturity is subject to acceleration upon the terms, set forth
  in the Agreement.  Except as otherwise provided in the Agreement,
  if any payment on this Note becomes due and payable on a day
  which is not a Business Day, the maturity thereof shall be
  extended to the next Business Day and interest shall be payable
  at the applicable rate or rates specified in the Agreement during
  such extension period.
  
                               The (i) date and amount of each Revolving Credit
 Loan made by
  the Lender, (ii) its character as an ABR Advance or a Eurodollar
  Advance, (iii) the Eurodollar Rate and Eurodollar Interest Period
  applicable to any Eurodollar Advances, and (iv) each payment and
  prepayment of the principal thereof, shall be recorded by the
  Lender on its books and, prior to any transfer of this Note, may
  be indorsed by the Lender on the schedule attached hereto or any
  continuation thereof, provided that the failure of the Lender to
  make any such recordation or indorsement shall not affect the
  obligations of the Borrower to make payment when due of any
  amount owing hereunder.
  
                               Presentment for payment, demand, protest, notice
 of protest and
  notice of dishonor and all other demands and notices in
  connection with the delivery, performance and enforcement of this
  Note are hereby waived, except as specifically otherwise provided
  in the Agreement.
  
                               This Note is being delivered in, is intended to
 be performed
  in, and shall be construed and interpreted in accordance with and
  be governed by the internal laws of, the State of New York,
  without regard to principles of conflicts of law.
  
                               This Note may only be amended by an instrument
 in writing
  executed pursuant to the provisions of Section 11.1 of the
  Agreement.
  
  
                                  ATLANTIC ENERGY, INC.
  
  
                                  By:                      
                                  Name:                    
                                  Title:                   
    
                              SCHEDULE TO
                          REVOLVING CREDIT NOTE
  
  
  
                                                      Interest
                                                      Rate on
                                                      Eurodollar
                                                      Advances
           Type of                       Amount of    (without
           Advance(ABR                   principal     regard to
           or Eurodollar    Amount of    paid or       Applicable
  Date     Rate)            Advance      prepaid       Margin    
    
                              SCHEDULE TO
                    REVOLVING CREDIT NOTE - continued
  
  
  
  
  
  
  
  
  Interest
  Period (if
  Eurodollar                      Notation 
  Advance)                        Made By  
  
  
    
                        ATLANTIC ENERGY EXHIBIT B-2

                       FORM OF COMPETITIVE BID NOTE

                               (Facility A)

                                                ________, 1995
                                            New York, New York


 FOR VALUE RECEIVED, ATLANTIC ENERGY, INC., a New Jersey cor-
poration (the "Borrower"), hereby promises to pay to the order of
____________________ (the "Lender"), at the office of THE BANK OF
NEW YORK, as Agent (the "Agent"), located at One Wall Street, New
York, New York or at such other place as the Agent may specify
from time to time, in lawful money of the United States of
America, the outstanding principal balance of the Lender's
Competitive Bid Loans, together with interest thereon payable at
the rate or rates and at the time or times provided for in the
Revolving Credit Agreement (Facility A), dated as of
September 28, 1995, among the Borrower, the Lenders party thereto
and the Agent (as the same may be amended, modified or
supplemented from time to time, the "Agreement").  Capitalized
terms used herein that are defined in the Agreement shall have
the meanings therein defined.  In no event shall interest payable
hereon exceed the Highest Lawful Rate.

 This Note is one of the Competitive Bid Notes referred to in
the Agreement and is entitled to the benefits of, and is subject
to the terms set forth in, the Agreement.  The principal of this
Note is payable in the amounts and under the circumstances, and
its maturity is subject to acceleration upon the terms, set forth
in the Agreement.  Except as otherwise provided in the Agreement,
if any payment on this Note becomes due and payable on a day
which is not a Business Day, the maturity thereof shall be
extended to the next Business Day and interest shall be payable
at the applicable rate or rates specified in the Agreement during
such extension period.

 The (i) date and amount of each Competitive Bid Loan made by
the Lender, (ii) the interest rate and Interest Period applicable
thereto and (iii) each payment and prepayment of the principal
thereof, shall be recorded by the Lender on its books and, prior
to any transfer of this Note, may be indorsed by the Lender on
the schedule attached hereto or any continuation thereof,
provided that the failure of the Lender to make any such
recordation or indorsement shall not affect the obligations of
the Borrower to make payment when due of any amount owing
hereunder.

 Presentment for payment, demand, protest, notice of protest and
notice of dishonor and all other demands and notices in
connection with the delivery, performance and enforcement of this
Note are hereby waived, except as specifically otherwise provided
in the Agreement.

 This Note is being delivered in, is intended to be performed
in, and shall be construed and interpreted in accordance with and
be governed by the internal laws of, the State of New York,
without regard to principles of conflicts of law.

      This Note may only be amended by an instrument in writing
executed pursuant to the provisions of Section 11.1 of the
Agreement.


                          ATLANTIC ENERGY, INC.


                          By:                            
                          Name:                          
                          Title:                         


                                SCHEDULE TO
                           COMPETITIVE BID NOTE


                                  Amount of
 Amount of                                     Principal
 Competitive          Interest     Bid         Payment or        Notation
Date   Loan           Period       Rate        Prepayment        Made by 


                           ATLANTIC ENERGY EXHIBIT C

                           FORM OF BORROWING REQUEST

                                  (Facility A)

                                                                      
     _______ __ 
                                                       ,199_


The Bank of New York, as Agent
Agency Function Administration
One Wall Street
18th Floor
New York, New York 10286
Attention:  Patricia Clancy

The Bank of New York, as Agent
Energy Industries Division
One Wall Street
19th Floor
New York, New York 10286
Attention:  Mary Lou Bradley,
     Vice President

       Re: Revolving Credit Agreement (Facility A),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
           
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      (a)  Pursuant to Section 2.3 of the Agreement, the Bor-
  rower hereby gives notice of its intention to borrow
  Revolving Credit Loans in an aggregate principal amount of
  $_______ on ______ __, 19__, which borrowing(s) shall consist
  of the following Advances:
                                           Initial Interest
  Type of Advance                                          
  Period for Eurodollar
  (Eurodollar or ABR)                      Amount          
  Advances              
  
  (a)
  (b)
  
      (b)  The Borrower hereby certifies that on the date
  hereof and, after giving effect to the Loans requested hereby
  on the Borrowing Date set forth above:
  
           (a)  The Borrower is and shall be in compliance
  with all of the terms, covenants and conditions of the
  Agreement relating to such Loan.
  
           (b)  There exists and there shall exist no Event of
  Default under the Agreement.
  
           (c)  Each of the representations and warranties
  contained in the Agreement shall be true and correct with the
  same effect as though such representations and warranties had
  been made on such Borrowing Date, except to the extent such
  representations and warranties specifically relate to an
  earlier date, in which case such representations and
  warranties are true and correct in all material respects on
  and as of such earlier date.
  
           (d)  After giving effect to the Revolving Credit
  Loans requested to be made hereby, the Aggregate Credit
  Exposure will not exceed the Aggregate Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                             By:                         
                             Name:                       
                             Title:                      
    
                      ATLANTIC ENERGY EXHIBIT D
  
                   FORM OF COMPETITIVE BID REQUEST
  
                             (Facility A)
  
                                         [Date]
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:    Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention: Mary Lou Bradley
           Vice President
  
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
                Capitalized terms used herein which defined in the
  Agreement shall have the meanings therein defined.
  
           Pursuant to Section 2.4 of the Agreement, the Bor-
  rower hereby gives notice of its request to borrow
  Competitive Bid Loans in the aggregate sum of $____________
  on ____________, which borrowing shall consist of the
  following Competitive Interest Periods and amounts
  corresponding thereto:
  
  Competitive
  Interest Period                        Amount
  (1)
  (2)
  (3)
  
      The Borrower hereby certifies that on the date hereof
  and, after giving effect to the Competitive Bid Loans requested
  hereby, on the Borrowing Date set forth above:
  
           (a)  The Borrower is and shall be in compliance
  with all of the terms, covenants and conditions of the
  Agreement relating to such Loans.
  
           (b)  There exists and there shall exist no Event of
  Default under the Agreement.
  
           (c)  Each of the representations and warranties
  contained in the Agreement shall be true and correct with the
  same effect as though such representations and warranties had
  been made on such Borrowing Date, except to the extent such
  representations and warranties specifically relate to an
  earlier date, in which case such representations and
  warranties are true and correct in all material respects on
  and as of such earlier date.
  
           (d)  After giving effect to the Competitive Bid
  Loans requested to be made hereby, the Aggregate Credit
  Exposure will not exceed the Aggregate  Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                             By:                         
                             Name:                       
                             Title:                      
    
                       ATLANTIC ENERGY EXHIBIT E
  
                       FORM OF INVITATION TO BID
  
                             (Facility A)
  
                                           _____ __, 199_
  
  To the Lenders under the Credit
  Agreement referred to below
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
           
           
                Capitalized terms used herein which are defined in
  the Agreement shall have the meanings therein defined.
  
           Pursuant to a Competitive Bid Request, a copy of
  which is appended hereto or enclosed herewith, the Borrower
  has given notice of its request to borrow Competitive Bid
  Loans in the aggregate sum of $____________ on ____________
  
           The Lenders are hereby invited to bid to make such
  Competitive Bid Loans by 10:00 a.m. on the proposed Borrowing
  Date, pursuant to the terms and conditions of the Agreement.
  
                               Very truly yours,
  
                               THE BANK OF NEW YORK,
                               as Agent
  
  
                               By:                       
                               Name:                     
                               Title:                    
    
                       ATLANTIC ENERGY EXHIBIT F
                        FORM OF COMPETITIVE BID
                             (Facility A)
  
                                               _____ __, 199_
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:  Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:  Mary Lou Bradley,
              Vice President
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
           In response to a Competitive Bid Request, the
  undersigned Lender hereby offers to lend Competitive Bid
  Loans in the aggregate sum of $____________ on ____________,
  which borrowing shall consist of the following Competitive
  Interest Periods and the amounts and Bid Rates corresponding
  thereto:
  
  Competitive
  Interest Period           Amount               Bid Rate 
  
  (1)
  (2)
  (3)
   
                                    Very truly yours,
                                    [LENDER]
                                    By:                  
                                    Name:                
                                    Title:               
    
                       ATLANTIC ENERGY EXHIBIT G
             FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
                             (Facility A)
  
                          _______ __, 199_
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:    Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:    Mary Lou Bradley,
           Vice President
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
       
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      Pursuant to Section 2.4(c) of the Agreement, the Bor-
  rower hereby gives notice of its [rejection/acceptance] of
  [Lender's] Competitive Bid, dated _____ __, 199_, in the
  aggregate sum of $_________ on ________, which borrowing
  shall consist of the following Competitive Interest Periods
  and the amounts and Bid Rates corresponding thereto:
    Competitive
  Interest Period           Amount                Bid Rate  
  (1)
  (2)
  (3)                                                        
                                  Very truly yours,
                                  ATLANTIC ENERGY, INC.
                                  By:    
                                  Name:  
                                  Title:                        
                      ATLANTIC ENERGY EXHIBIT H
  
              FORM OF COMPETITIVE BID LOAN CONFIRMATION
  
                             (Facility A)
  
  
                                         _____ __, 199_
  To [Lender]
  
  Re: Revolving Credit Agreement (Facility A), dated as of
        September 28, 1995, by and among ATLANTIC ENERGY, INC.
        (the "Borrower"), the Lenders party thereto, and THE
        BANK OF NEW YORK, as Agent (the "Agreement")            
      
      
      
           Capitalized terms used herein that are defined in
  the Agreement shall have the meanings therein defined.
  
           In accordance with Section 2.4(c) of the Agreement
  we hereby notify you that pursuant to a Competitive Bid
  Accept Letter, the Borrower gave notice of its acceptance of
  [Lender's] Competitive Bid, dated _____________, in the
  aggregate sum of $____________ on ____________, which
  borrowing shall consist of the following Competitive Interest
  Periods and the following amounts and Bid Rates corresponding
  thereto:
  
  Competitive
  Interest Period             Amount              Bid Rate
  
  (1)
  (2)
  (3)
  
      Pursuant to Section 2.4(e) of the Agreement, [Lender]
  is required to make available to the Agent at its office the
  proceeds of Lender's Competitive Bid Loan(s) set forth in
  Section 11.2 of the Agreement, in immediately available
  funds, not later than 2:00 p.m. on the Borrowing Date
  specified above.
  
                                  Very truly yours,
  
                                  THE BANK OF NEW YORK,
                                  as Agent
  
                                  By:                    
                                  Name:                  
                                  Title:                 
                       ATLANTIC ENERGY EXHIBIT I
  
               FORM OF NOTICE OF CONVERSION/CONTINUATION
  
                             (Facility A)
  
                                         _______ __, 199_
  
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:    Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:    Mary Lou Bradley,
           Vice President
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
           
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      1.   Pursuant to Section 2.7 of the Agreement, the Bor-
  rower requests to convert or continue Advances as set forth
  below:
  
           (a) on ____ __, 199_, to convert $_______ in
  principal amount of presently outstanding Eurodollar Advances
  having an Interest Period that expires on ____ __, 199_ to
  ABR Advances.
  
           (b) on ____ __, 199_, to continue as Eurodollar Ad-
  vances, $_______ in principal amount of presently outstanding
  Eurodollar Advances having an Interest Period that expires on
  ____ __, 199_ for an additional Interest Period of __ months;
  
           (c) on ____ __, 199_, to convert $_______ in
  principal amount of presently outstanding ABR Advances to
  Eurodollar Advances that have an initial Interest Period of
  __ months.
  
      2.   The Borrower hereby certifies that on the date
  hereof and on the requested Conversion/Continuation Date set
  forth above, there exists and there shall exist no Default or
  Event of Default under the Agreement.
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                             By:  
                             Name:     
                             Title:    
    
                       ATLANTIC ENERGY EXHIBIT K
  
                    FORM OF COMPLIANCE CERTIFICATE
  
                             (Facility A)
  
  I, ______________, do hereby certify that I am the
  ___________ of ATLANTIC ENERGY, INC., a New Jersey
  corporation (the "Borrower"), and that, as such, I am duly
  authorized to execute and deliver this Compliance Certificate
  on the Borrower's behalf pursuant to Section 7.1(c) of each
  of (i) the Revolving Credit Agreement (Facility A), dated as
  of September 28, 1995, among the Borrower, the Lenders party
  thereto and The Bank of New York, as Agent (as the same may
  be amended, supplemented or otherwise modified from time to
  time, the "Facility A Agreement") and (ii) the Revolving
  Credit Agreement (Facility B), dated as of September 28,
  1995, among the Borrower, the Lenders party thereto and The
  Bank of New York, as Agent (as the same may be amended,
  supplemented or otherwise modified from time to time, the
  "Facility B Agreement" and, together with the Facility A
  Agreement, the "Agreements").  Capitalized terms used herein
  that are defined in the Agreements shall have the meanings
  therein defined.
  
  I hereby certify that:
  
  1.  The Indebtedness Capitalization Ratio as of ______ __,
  199_ , is _.__:1.00, calculated as set forth on Schedule 1.
  
  2  The Ratio of Indebtedness of the Borrower to Annualized
  ACE Dividends as of ______ __, 199_, is _.__:1.00, calculated
  as set forth on Schedule 2.
  
  3.  There exists no Event of Default under the Agreement.
  
                             IN WITNESS WHEREOF, I have
  executed this Compliance Certificate on this ___ day of
  ______________, 19__.
  
  
                                                       
    _______________________
  
  
    
Schedule 1 to Compliance Certificate
dated __/__/__

             COMPUTATION OF INDEBTEDNESS CAPITALIZATION RATIO

1. Total Indebtedness of the Borrower
and its Subsidiaries determined
on a Consolidated basis
in accordance with GAAP                           $_________

2.  Preferred Stock and any premium
thereon of the Borrower and its
Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

3.  Common Stock and any premium
thereon of the Borrower and its
Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

4.  Retained earnings of the Borrower
and its Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

5.  All Indebtedness (net of unamortized
premium and discount) of the Borrower
and its Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

6.  Sum of Items 2 through 5                      $_________

7.  Unamortized capital Stock expense
of the Borrower and its Subsidiaries
determined on a Consolidated basis
in accordance with GAAP                           $_________

8.  Items 6 minus Item 7                          $_________

9.  Indebtedness Capitalization Ratio
Item 1:Item 8                                     _.__:1.00

11. Maximum permitted ratio
pursuant to Section 7.10 of
each of the Agreements                            0.65:1.00

Schedule 2 to Compliance Certificate
dated __/__/__

        CALCULATION OF RATIO OF TOTAL INDEBTEDNESS OF THE BORROWER
                        TO ANNUALIZED ACE DIVIDENDS


1.  Indebtedness of the Borrower
$_________

2.The amount of dividends paid
to the Borrower by ACE during
the fiscal quarter ending on
the date of determination or,
if such date of determination
is not a fiscal quarter ending
date, the immediately preceding
fiscal quarter                                    $_________

3.  Annualized ACE Dividends
(Item 2 multiplied by 4)                          $_________

4.  Ratio of Indebtedness to Annualized
ACE Dividends
(Item 1:Item 3)                                   _.__:1.00

5.  Maximum permitted ratio
pursuant to Section 7.11 of
each of the Agreements                            2.50:1.00.

                         ATLANTIC ENERGY EXHIBIT L

                         FORM OF PLEDGE AGREEMENT

                               (Facility A)


PLEDGE AGREEMENT (as amended, modified or supplemented from
time to time, this "Agreement"), dated as of ______ __, 1995,
made by ATLANTIC ENERGY, INC., a New Jersey corporation (the
"Borrower"), to THE BANK OF NEW YORK, in its capacity as
collateral agent (in such capacity, the "Secured Party") for
itself in its capacity as Agent and for the Lenders under and
as defined in each of the Facility A Credit Agreement as
defined below (in such capacity, the "Facility A Agent") and
the Facility B Credit Agreement as defined below (in such
capacity, the "Facility B Agent" and, together with the
Facility A Agent, the "Agents").

                                 RECITALS

         I.                     The Borrower has entered into
a. the Revolving Credit Agreement (Facility A), dated as of
the date hereof, among the Borrower, the Lenders party
thereto (each, a "Facility A Lender", and collectively, the
"Facility A Lenders") and the Facility A Agent (as the same
may be amended, supplemented or otherwise modified from time
to time, the "Facility A Credit Agreement") and b. the
Revolving Credit Agreement (Facility B), dated as of the date
hereof among the Borrower, the Lenders party thereto (each, a
"Facility B Lender", collectively, the "Facility B Lenders"
and together with the Facility A Lenders, the "Lenders") and
the Facility B Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the
"Facility B Credit Agreement" and, together with the Facility
B Credit Agreement, the "Credit Agreements").  Capitalized
terms used herein that are not defined herein and are defined
in the Credit Agreements shall have the meanings defined
therein.

         II.                    The Lenders have agreed a. to
make loans to the Borrower pursuant to, and upon the terms
and subject to the conditions specified in, the Facility A
Credit Agreement and b. to make loans to the Borrower and to
participate in Letters of Credit issued by Issuing Bank (as
defined in the Facility B Credit Agreement) pursuant to, and
upon the terms and subject to the conditions specified in,
the Facility B Credit Agreement.  The Borrower desires to
secure the prompt and complete payment, observance and
performance of all of its obligations of every kind and
nature now or hereafter incurred, existing or created under
or in respect of the Loan Documents (as defined in the
Facility A Credit Agreement which Loan Documents are herein
referred to as the "Facility A Loan Documents") and the Loan
Documents (as defined in the Facility B Credit Agreement
which Loan Documents are herein referred to as the "Facility
B Loan Documents" and, together with the "Facility A Loan
Documents", the "Loan Documents"), as such obligations may be
amended, increased, modified, renewed, refinanced, refunded
or extended from time to time, (collectively, the
"Obligations").

         III.                   The obligations of the
Lenders to make loans under the Credit Agreements and the
Issuing Bank to issue Letters of Credit under the Facility B
Credit Agreement and the Facility B Lenders to participate
therein are conditioned upon, among other things, the
execution and delivery by the Borrower of this Agreement.

         In consideration of the premises
and in order to induce the Secured Party and the Lenders to
enter into the Credit Agreements and make the loans under the
Credit Agreements and the Issuing Bank to issue the Letters
of Credit under the Facility B Credit Agreement and the
Facility B Lenders to participate therein, the Borrower
hereby agrees with the Secured Party for its benefit and for
the ratable benefit of the Lenders as follows:

A.Grant of Security

                                To secure the prompt and complete
payment, observance and performance of all of the
Obligations, the Borrower hereby assigns and pledges to the
Secured Party, for its benefit, for the benefit of the
Agents, for the benefit of the Issuing Bank and for the
ratable benefit of the Lenders, and hereby grants to the
Secured Party, for its benefit, for the benefit of the
Agents, for the benefit of the Issuing Bank and for the
ratable benefit of the Lenders, a continuing first priority
security interest in all of the Borrower's right, title and
interest in and to all promissory notes and other debt
instruments evidencing Indebtedness owed by any of the
Borrower's Operating Subsidiaries to the Borrower (each, an
"Intercompany Note"), in each case whether now owned or
hereafter acquired, including, without limitation, the
Intercompany Notes owned on the date hereof as set forth on
Schedule 1, and all interest and other payments thereunder
and instruments and other Property from time to time
delivered in respect thereof or in exchange therefor, and all
additions thereto, substitutions and replacements therefor,
and the products and Proceeds thereof (the "Collateral").

                                As used herein, the term
"Proceeds" shall have the meaning as set forth in Article 9
of the New York Uniform Commercial Code (as the same is
amended from time to time, the "UCC") and, to the extent not
otherwise included, shall include, but not be limited to, a.
distributions payable in Property; b. any and all proceeds of
causes and rights of action or settlements thereof, escrowed
amounts or Property, judicial and arbitration judgments and
awards, payable to the Borrower from or in respect of any
Person from time to time; c. all claims of the Borrower for
losses or damages arising out of or relating to or for any
breach of any agreements, covenants, representations or
warranties or any default whether or not with respect to or
under any of the foregoing Collateral (without limiting any
direct or independent rights of the Secured Party or any
Lender with respect to the Collateral); and d. any and all
other amounts from time to time paid or payable under or in
connection with the Collateral.

         B.                     Delivery of Collateral

                                All notes and other instruments
representing or evidencing the Collateral at any time owned
or acquired by the Borrower shall be delivered to and held by
or on behalf of the Secured Party pursuant hereto and shall
be in suitable form for transfer by delivery, and shall bear
appropriate indorsements or shall be accompanied by duly
executed instruments of transfer or assignments in blank, all
in form and substance satisfactory to the Secured Party. 
Upon the occurrence and during the continuance of an Event of
Default, the Secured Party shall have the right, at any time
in its discretion and without notice to the Borrower, to
transfer to or to register in the name of the Secured Party
or any of its nominees any or all of the Collateral.  In
addition, upon the occurrence and during the continuance of
an Event of Default, the Secured Party shall have the right
at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.

         C.                     Representations and Warranties

The Borrower represents and warrants as follows:

                      1.    The Borrower is the legal and
beneficial owner of the Collateral, free and clear of all
Liens other than the Lien created by this Agreement.

                         2.   This Agreement creates a valid
security interest in the Collateral, securing the payment of
the Obligations. The delivery and pledge of the Collateral
pursuant to this Agreement create a valid and perfected first
priority security interest in the Collateral securing the
payment of the Obligations.

                           3.    The Intercompany Notes listed
on Schedule 1 constitute all of the Intercompany Notes held
by the Borrower on the date of this Agreement.  To the best
of the Borrower's knowledge, each of such Intercompany Notes
has been duly authorized, issued and delivered, and
constitutes the legal, valid, binding and enforceable
obligations of the respective makers thereof.

         D.                     Further Assurances

                            1.  The Borrower agrees that from
time to time, at its expense, the Borrower shall promptly
execute and deliver all further instruments and documents,
and take all further action, that the Secured Party may
reasonably request, in order to perfect and protect any
security interests granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.  Without limiting
the generality of the foregoing, the Borrower shall promptly
execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices,
and promptly take such other action as the Secured Party may
reasonably request, in order to perfect and preserve the
security interests granted hereby.

                                2.     The Borrower hereby authorizes
the Secured Party to file one or more financing or
continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of
the Borrower where permitted by law.  The Secured Party shall
provide the Borrower with a copy of any such statement or
amendment, provided that no failure to do so shall affect the
rights of the Secured Party hereunder, result in any
liability of the Secured Party or the Lenders to the Borrower
or in any way affect the validity of such filing.  A
photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where
permitted by law.

                                3.     The Borrower shall furnish to
the Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such
other reports in connection with the Collateral as the
Secured Party may reasonably request, all in reasonable
detail.

E.  Certain Rights as to the Collateral

                            4.        So long as no Event of Default
shall have occurred and be continuing:

                             a.   The Borrower shall be entitled
to exercise any and all consensual rights pertaining to the
Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement and the Credit
Agreements, provided, however, that the Borrower shall not
exercise or refrain from exercising any such right without
the consent of the Secured Party if such action or inaction
would have a material adverse effect on the fair market value
of any part of the Collateral or the validity, priority or
perfection of the security interests granted hereby or the
remedies of the Secured Party hereunder.

                     b.   The Borrower shall be entitled
to receive and retain any and all principal, interest and
other distributions paid in respect of the Collateral to the
extent not prohibited by this Agreement, provided, however,
that any and all principal, interest and other distributions
paid or payable other than in cash in respect of, and
instruments and other Property received, receivable or
otherwise distributed in respect of, or in exchange for,
Collateral, shall forthwith be delivered to the Secured Party
to be held as Collateral and shall, if received by the
Borrower, be received in trust for the benefit of the Secured
Party, be segregated from the other Property of the Borrower,
and be forthwith delivered to the Secured Party, as
Collateral in the same form as so received (with any
necessary indorsement).

                     c.   The Secured Party shall execute
and deliver (or cause to be executed and delivered) to the
Borrower all instruments as the Borrower may reasonably
request for the purpose of enabling the Borrower to exercise
the rights which it is entitled to exercise pursuant to
clause (i) above and to receive the principal or interest
payments, or other distributions which it is authorized to
receive and retain pursuant to clause (ii) above.

        5.                              Upon the occurrence and during
the continuance of an Event of Default and at the Secured
Party's option and following written notice by the Secured
Party to the relevant Borrower:

                            a.   All rights of
the Borrower to
exercise the consensual rights which it would otherwise be
entitled to exercise pursuant to Section 5(a)(i) and to
receive the principal, and interest payments and other
distributions which it would otherwise be authorized to
receive and retain pursuant to Section 5(a)(ii) shall cease,
and all such rights shall thereupon become vested in the
Secured Party, who shall thereupon have the sole right to
exercise such consensual rights and to receive and hold as
Collateral such principal or interest payments and
distributions.

                         b.   All principal and interest
payments and other distributions which are received by the
Borrower contrary to the provisions of Section 5(b)(i) shall
be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of the Borrower and
shall be forthwith paid over to the Secured Party as
Collateral in the same form as so received (with any
necessary indorsement).

                        6.                     In the event that all or any
part of the instruments constituting the Collateral are lost,
destroyed or wrongfully taken while such instruments are in
the possession of the Secured Party, the Borrower agrees that
it will cause the delivery of new instruments in place of the
lost, destroyed or wrongfully taken securities or instruments
upon request therefor by the Secured Party without the
necessity of any indemnity bond or  other security other than
the Secured Party's agreement or indemnity therefor customary
for security agreements similar to this Agreement.

         E.                     Other Covenants and Agreements
of the Borrower

                                The Borrower covenants and agrees
that on and after the date hereof until the indefeasible cash
payment in full of the Obligations, unless the Secured Party
shall otherwise consent in writing:

       1.                              Defense of Collateral. It will
defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein
adverse to the interests of the Secured Party.

      2.                              Security Interest. The security
interest granted hereby constitutes and will at all times
constitute a continuing (and so long as the Secured Party has
possession of the Collateral) perfected first priority
security interests in the Collateral.

    3.                              Encumbrances; Filings. It will
not (i) further hypothecate, pledge, encumber, transfer, sell
or otherwise suffer to exist a security interest in, or a
Lien on, the Collateral or any portion thereof in favor of
any Person other than the Secured Party as provided herein,
except for transfers or sales to the extent permitted under
the Credit Agreements or (ii) sign or file or authorize the
signing or filing of any document or instrument perfecting
any Lien on the Collateral. The inclusion of "Proceeds" of
the Collateral under the security interest granted herein
shall not be deemed a consent by the Secured Party to any
sale or other disposition of any Collateral.

         F.                     Secured Party Appointed
Attorney-in-Fact

                                Effective upon the occurrence and
during the continuance of an Event of Default, the Borrower
hereby irrevocably appoints the Secured Party the Borrower's
attorney-in-fact, with full authority in the place and stead
of the Borrower and in the name of the Borrower or otherwise,
from time to time in the Secured Party's discretion, to take
any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:

                            1.   to ask, demand, collect, sue
for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in respect
of any of the Collateral,

                               2.   to file any claims or take any
action or institute any proceedings which the Secured Party
may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the
Secured Party with respect to any of the Collateral, and

                        3.   to receive, indorse and collect
all instruments made payable to the Borrower representing any
principal payment, interest payment or other distribution in
respect of the Collateral or any part thereof and to give
full discharge for the same. The powers granted to the
Secured Party under this Section constitute a power coupled
with an interest which shall survive until all of the
Obligations have been indefeasibly paid in full in cash.

         G.                     The Secured Party May Perform

                                If the Borrower fails to perform
any agreement contained herein, the Secured Party may itself
perform, or cause performance of, such agreement, and the
reasonable expenses of the Secured Party incurred in
connection therewith shall be payable by the Borrower under
Section 12.

         H.                     The Secured Party's Duties

                                The powers conferred on the
Secured Party hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to
exercise any such powers.  Except for the safe custody of any
Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall
have no duty as to any Collateral.  The Secured Party shall
be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that
which the Secured Party accords its own property, it being
understood that the Secured Party shall not be under any
obligation to (i) ascertain or take action with respect to
exchanges, maturities, tenders or other matters relative to
any Collateral, whether the Secured Party or any Lender has
or is deemed to have knowledge of such matters, or (ii) take
any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral, but may do
so at its option, and all reasonable expenses incurred in
connection therewith shall be for the sole account of the
Borrower and shall be added to the Obligations.

         I.                     Events of Default

                                The following shall each
constitute an "Event of Default" hereunder:

                             1.   If any representation or
warranty made herein or in any certificate furnished by the
Borrower in connection with this Agreement shall prove to
have been incorrect or misleading (whether because of
misstatement or omission) in any material respect when made;
or

                                  2.   If the Borrower shall fail to
observe or perform any term, covenant or agreement contained
in Section 6(c) of this Agreement; or

                                  3.   If the Borrower shall fail to
perform or observe any other covenant or agreement on its
part to be performed or observed pursuant to this Agreement
and such failure shall have continued unremedied for a period
of thirty days after the Borrower shall become aware of such
failure; or

                                4.   The occurrence of an Event of
Default under and as defined in either of the Credit
Agreements; or

                                 5.   If the Borrower shall contest
or disavow its obligations under this Agreement or this
Agreement shall not remain in full force and effect.

         J.                     Remedies

                                Upon the occurrence of an Event
of Default or at any time thereafter during the continuance
thereof, the Secured Party may, and upon direction of the
Required Lenders shall, exercise any and all remedies and
other rights provided under this Agreement, including,
without limitation, the following:

                          1.   The Secured Party may exercise
in respect of the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default
under the UCC (whether or not the UCC applies to the
Collateral) and also may without notice, except as specified
below, sell, assign, grant an option or options to purchase
or otherwise dispose of the Collateral or any part thereof at
public or private sale, at any exchange, broker's board or at
any of the Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as
may be commercially reasonable.  The Borrower agrees that, to
the extent notice of sale shall be required by law, at least
five Business Days' notice to the Borrower of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. 
The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. 
The Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.

                                 2.   Any cash held by the Secured
Party as Collateral and all cash proceeds received by the
Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may,
in the discretion of the Secured Party, be held by the
Secured Party as Collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to
the Secured Party pursuant to Section 12) in whole or in part
by the Secured Party, for the ratable benefit of the Lenders,
against all or any part of the Obligations in accordance with
Section 9.1 of each Credit Agreement.  Any surplus of such
cash or cash proceeds held by the Secured Party and remaining
after payment in full of all the Obligations shall be
promptly paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.

                           3.   The Borrower hereby expressly
waives and covenants not to assert any appraisement,
valuation, stay, extension, redemption or similar laws, now
or at any time hereafter in force, which might delay, prevent
or otherwise impede the performance or enforcement of this
Agreement.

         K.                     No Segregation of Moneys; No
Interest

                                No moneys or any other Property
received by the Secured Party hereunder need be segregated in
any manner except to the extent required by law, and any such
moneys or other Property may be deposited under such general
conditions as may be prescribed by law applicable to the
Secured Party, and neither the Secured Party nor any Lender
shall be liable for any interest thereon.

         L.                     Notices

                                All notices and other
communications provided for hereunder shall be given in the
manner and to the addresses set forth in Section 11.2 of the
Facility A Credit Agreement.  Any notice given to the Secured
Party as Secured Party thereunder shall be deemed to have
been given to The Bank of New York as Agent under the
Facility B Credit Agreement.

         M.                     Continuing Security Interest;
Transfer of Notes

                                This Agreement shall create a
continuing security interest in the Collateral and shall (i)
remain in full force and effect until the indefeasible cash
payment in full of the Obligations and the termination of the
Credit Agreement, (ii) be binding upon the Borrower, its
successors and assigns and (iii) inure, together with the
rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party, any successor to Secured Party
as agent and the ratable benefit of the Lenders.  Except to
the extent not permitted by Section 11.7 of the Credit
Agreements, any Lender may assign or otherwise transfer the
notes held by it under the Credit Agreements to any other
Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such
Lender herein or otherwise.  Nothing set forth herein or in
any other Loan Document is intended or shall be construed to
give any other Person any right, remedy or claim under, to or
in respect of this Agreement, any other Loan Document, or any
Collateral.  The Borrower's successors and assigns shall
include, without limitation, a receiver, trustee or debtor-
in-possession thereof or therefor.

         N.                     Other Provisions

         1.                              This Agreement is the "Pledge
 Agreement" referred to in each of the Credit Agreements. 
Each of the Secured Party and the Borrower acknowledges that
certain provisions of each of the Credit Agreements,
including, without limitation, Sections 1.2 (Other
Definitional Provisions), 11.1 (Amendments and Waivers), 11.3
(No Waiver; Cumulative Remedies), 11.4 (Survival of
Representations and Warranties), 11.7 (Assignments and
Participations), 11.8 (Counterparts), 11.12 (Headings
Descriptive), 11.13 (Severability), 11.14 (Integration),
11.15 (Consent to Jurisdiction), 11.16 (Service of Process),
11.17 (No Limitation on Service or Suit) and 11.18 (WAIVER OF
TRIAL BY JURY) thereof, are made applicable to this Agreement
and all such provisions are incorporated by reference herein
as if fully set forth herein.

          2.                              All Schedules hereto shall be
deemed to be a part hereof. 

       3.                              Each and every right, remedy
and power granted to the Secured Party hereunder or allowed
at law or by any other agreement shall be cumulative and not
exclusive, and may be exercised by the Secured Party from
time to time.

         4.                              This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York without regard to conflict of laws rules,
except to the extent that the validity or perfection of the
security interest hereunder, or remedies hereunder, in
respect of any particular Collateral are governed by the laws
of a jurisdiction other than the State of New York.  Unless
otherwise defined herein, terms used in Articles 8 and 9 of
the UCC are used herein as therein defined.

         The parties hereto have caused
this Pledge Agreement to be duly executed and delivered by
its officer thereunto duly authorized as of the date first
above written.

                          ATLANTIC ENERGY, INC.



                          By:  
                          Name:                         
                          Title:                        


                          THE BANK OF NEW YORK,
                           as Collateral Agent for the
                           Facility A Lenders under the
                           Facility A Credit Agreement
                           and the Facility B Lenders
                           under the Facility B Credit
                           Agreement


                          By:  
                          Name:                         
                          Title:                        

                              Schedule 1
                       to the Pledge Agreement,
                      Dated as of _____ __, 1995
  
  
                      LIST OF INTERCOMPANY NOTES
  
  
  Maker                                       Date
  
  Atlantic Generation, Inc.                   _____ __, 1995
  
  
  ATE Investment, Inc.                        _____ __, 1995
  
  
  Atlantic Thermal Systems, Inc.              _____ __, 1995
  
  
  Atlantic Jersey Thermal Systems, Inc.       _____ __, 1995
  
  
  Atlantic Energy Technologies, Inc.          _____ __, 1995
    
                       ATLANTIC ENERGY EXHIBIT M
  
                       FORM OF INTERCOMPANY NOTE
  
                             (Facility A)
  
  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
  1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR
  QUALIFIED UNDER ANY SECURITIES OR BLUE SKY LAWS.  IT MAY NOT
  BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
  IN A TRANSACTION COMPLYING WITH OR EXEMPT FROM THE
  REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
  ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE.
  
  
                                         ____________ __, 199_
  
  
      FOR VALUE RECEIVED, the undersigned, _________________,
  a __________ corporation (the "Borrower"), hereby promises to
  pay to the order of ATLANTIC ENERGY, INC. (the "Company"), at
  the office of the Company, upon demand by the Company, the
  aggregate unpaid principal amount of all loans made by the
  Company to the Borrower from time to time as reflected on the
  attached Schedule hereto, pursuant to an intercompany account
  or otherwise, in lawful money of the United States of America
  in same day funds, and to pay interest from the date set
  forth on the attached Schedule on which principal is advanced
  hereunder on the unpaid principal amount from time to time
  outstanding, in like funds, at said office, with each
  repayment of principal hereunder, at a rate per annum equal
  to 1/4% above the borrowing rate of the Company for amounts
  advanced hereunder and provided to the Borrower by the
  Company on the date of any such advance.  All interest
  hereunder shall be calculated on the basis of the actual
  number of days that principal is outstanding over a year of
  365 or 366 days, as appropriate.
  
      The unpaid principal amount hereof may be declared due
  and payable by the Company, whereupon the same shall
  immediately become due and payable, upon the occurrence or at
  any time during the continuance of an Event of Default under,
  and as defined in, either of the Revolving Credit Agreements
  (Facility A or Facility B) among the Company, the Lenders
  parties thereto, and The Bank of New York, as Agent.
  
      The Borrower hereby waives diligence, presentment, de-
  mand, protest and notice of any kind whatsoever.  The
  nonexercise by the holder of any of its rights hereunder in
  any particular instance shall not constitute a waiver thereof
  in that or any subsequent instance.
  
      All borrowings evidenced by this Intercompany Note and
  all payments and prepayments of the principal hereof and
  interest hereon and the respective dates thereof shall be
  endorsed by the holder hereof on the schedule attached hereto
  and made a part hereof, or on a continuation thereof which
  shall be attached hereto and made a part hereof, or otherwise
  recorded by such holder in its internal records; provided,
  however, that any failure of the holder hereof to make such a
  notation or any error in such notation shall not in any
  manner affect the obligation of the Borrower to make payments
  of principal and interest in accordance with the terms of
  this Intercompany Note.
  
      NEITHER THE BORROWER NOR ANY OTHER PERSONS LIABLE FOR
  THE INDEBTEDNESS TO THE COMPANY, NOR ANY ASSIGNEE, SURVIVOR,
  HEIR OR PERSONAL REPRESENTATIVE OF THE BORROWER OR ANY SUCH
  OTHER PERSON OR ENTITY SHALL SEEK A JURY TRIAL IN ANY
  LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
  PROCEDURE BASED UPON OR ARISING OUT OF THIS INTERCOMPANY
  NOTE, ANY RELATED INSTRUMENT OR AGREEMENT, ANY COLLATERAL FOR
  THE PAYMENT HEREOF OR THE DEALINGS OR THE RELATIONSHIP
  BETWEEN THE COMPANY AND SUCH PERSONS OR ENTITIES, OR ANY OF
  THEM.  NEITHER THE BORROWER NOR ANY SUCH PERSON OR ENTITY
  WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY
  TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY
  TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THE PROVISIONS OF
  THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BORROWER AND
  THE COMPANY AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO
  EXCEPTIONS.  THE BORROWER HAS NOT IN ANY WAY AGREED WITH OR
  REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
  PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
  
      THIS INTERCOMPANY NOTE SHALL BE CONSTRUED IN ACCORDANCE
  WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY AND
  ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
  
  
                               [BORROWER]
  
  
  
                               By:                       
                               Name:                     
                               Title:                    
  
    
                     SCHEDULE TO INTERCOMPANY NOTE
  
                              [BORROWER]
  
                       LOANS BALANCE OUTSTANDING
                         INTERCOMPANY ACCOUNT
  
                                              Loan Balance
  Date          Advance        Repayment           Outstanding
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
                              ENDORSEMENT
  
  
       The undersigned, ATLANTIC ENERGY, INC. a New Jersey
  corporation (the "Company"), hereby assigns, transfers and
  endorses to and makes payable to the order of The Bank of New
  York, as collateral agent for itself in its capacity as Agent
  and the Lenders under and as defined in each of the (i)
  Revolving Credit Agreement (Facility A), dated as of
  September 28, 1995, among the Borrower, the Lenders party
  thereto and the Agent (as the same may be amended,
  supplemented or otherwise modified from time to time) and
  (ii) Revolving Credit Agreement (Facility B), dated as of
  September 28, 1995, among the Borrower, the Lenders party
  thereto and the Agent (as the same may be amended,
  supplemented or otherwise modified from time to time), that
  certain Intercompany Note, dated ___________ __, ____, made
  by ___________________ to the order of the Company.  This
  endorsement is made with recourse to the undersigned for
  payment or collection.
  
  DATED:  __________ __, 199_
  
  

                                                                                
 ATLANTIC ENERGY, INC.
  
  
  
                               By:                        
                               Name:                      
                               Title:                     
  
    
                       ATLANTIC ENERGY EXHIBIT N
  
                  MEMORANDUM OF OPINIONS TO BE GIVEN
                      BY COUNSEL TO THE BORROWER
  
  
  
      In connection with the (i) Revolving Credit Agreement
  (Facility A) (the "Facility A Agreement"), dated as of
  September 28, 1995, by and among Atlantic Energy, Inc.  (the
  "Borrower"), the Lenders party thereto (the "Facility A
  Lenders") and The Bank of New York, as Agent (the "Facility A
  Agent") and (ii) Revolving Credit Agreement (Facility B) (the
  "Facility B Agreement" and, together with the Facility A
  Agreement, the "Agreements"), dated as of September 28, 1995,
  by and among the Borrower, the Lenders party thereto (the
  "Facility B Lenders"), The Bank of New York, as Issuing Bank
  and The Bank of New York, as Agent (the "Facility B Agent"),
  set forth below is the substance of the opinions to be
  included in the opinion letters referred to in Section 5.8 of
  the Facility B Agreement and the corresponding provision of
  the Facility A Agreement (collectively, the "Opinions"). 
  
           The opinion letters should be addressed to "The
  Bank of New York, as Agent and as Issuing Bank and the
  Lenders under the Credit Agreements referred to below".  It
  should specifically authorize Special Counsel's reliance
  thereon.
  
           Capitalized terms used in the Opinions and which
  are not otherwise defined therein shall have the respective
  meanings ascribed thereto in the Agreements.  For purposes
  of the opinions set forth below,  the term "Transaction
  Documents" means, collectively, the "Loan Documents" under
  and as defined in each of the Agreements and the term "Notes"
  means, collectively, the "Notes" under and as defined in each
  of the Agreements.
    
Opinions:
  
           1.   The Borrower has only the Subsidiaries set
  forth on Schedule 4.1 to each Agreement.  The shares of each
  Subsidiary are duly authorized, validly issued, fully paid
  and nonassessable and are owned free and clear of any Liens.
  
           2.   Each of the Borrower and its Subsidiaries is
  duly organized or formed and validly existing in good
  standing under the laws of the jurisdiction of its in-
  corporation or formation, has all requisite power and au-
  thority to own its Property and to carry on its business as
  now conducted, and is in good standing and authorized to do
  business as a foreign corporation in each jurisdiction in
  which the nature of the business conducted therein or the
  Property owned therein makes such qualification necessary,
  except where such failure to qualify, singly or in the
  aggregate, could not reasonably be expected to have a
  Material Adverse Effect.
  
           3.   The Borrower has full legal power and
  authority and has taken all necessary actions, including,
  without limitation, any necessary stockholder action, to
  enter into, execute, deliver and perform the terms of the
  Transaction Documents and to make the borrowings contemplated
  thereby and by the Notes, to execute, deliver and carry out
  the terms of the Notes and to incur the obligations provided
  for therein, all of which have been duly authorized by all
  proper and necessary corporate or other applicable action and
  are in full compliance with its charter and by-laws or its
  other organization documents. 
  
           4.   Each of the Transaction Documents (other than
  the Notes) constitutes, and the Notes, when issued and
  delivered pursuant to the applicable Agreement for value
  received, will constitute, the valid and legally binding
  obligations of the Borrower, enforceable in accordance with
  its respective terms.
  
           5.   To the best of counsel's knowledge after due
  inquiry, except as set forth in the Financial Statements,
  there are no actions, suits or proceedings at law or in
  equity or by or before any Governmental Authority (whether or
  not purportedly on behalf of the Borrower or any of its
  Subsidiaries) pending or threatened against the Borrower or
  any of its Subsidiaries or any of their respective Properties
  or rights, which (i) reasonably may be expected to have a
  Material Adverse Effect, or (ii) call into question the
  validity or enforceability of any of the Transaction Docu-
  ments.
  
           6.   Except for information filings required to be
  made in the ordinary course of business which are not a
  condition to the Borrower's performance under the Transaction
  Documents, no consent, authorization or approval of, filing
  with, notice to, or exemption by, stockholders, any
  Governmental Authority or any other Person is required to
  authorize, or is required in connection with the execution,
  delivery and performance of the Transaction Documents or is
  required as a condition to the validity or enforceability of
  the Transaction Documents.
  
           7.   To the best of counsel's knowledge after due
  inquiry, neither the Borrower nor any of its Subsidiaries is
  in default (x) under any mortgage, indenture, contract or
  agreement to which it is a party or by which it or any of its
  Property is bound or (y) with respect to any judgment, order,
  writ, injunction, decree or decision of any Governmental
  Authority, the effect of which default could reasonably be
  expected to have a Material Adverse Effect.
  
           8.   The execution, delivery or carrying out of the
  terms of the Transaction Documents will not constitute a
  default under, or require the mandatory repayment of, or
  result in the creation or imposition of, or obligation to
  create, any Lien upon any Property of the Borrower or any of
  its Subsidiaries pursuant to the terms of, any such mortgage,
  indenture, contract or agreement. 
  
           9.   To the best of counsel's knowledge after due
  inquiry, each of the Borrower and ACE possesses or has the
  right to use all franchises, licenses, privileges and other
  rights as are material and necessary for the conduct of its
  business, and with respect to which it is in compliance, with
  no known conflict with the valid rights of others which could
  reasonably be expected to have a Material Adverse Effect.
  
           10.  The Borrower is not an "investment company" or
  a company "controlled" by an "investment company" as defined
  in, or is otherwise subject to regulation under, the
  Investment Company Act of 1940, as amended.
  
           11.  The Borrower and each of its Subsidiaries are
  exempt from the provisions of the Public Utility Holding
  Company Act of 1935, as amended, except Section 9(a)(2)
  thereof, pursuant to Rule 2 of the General Rules and
  Regulations of the SEC under said Act.
  
           12.  To the best of counsel's knowledge after due
  inquiry, neither the Borrower nor any of its Subsidiaries is
  engaged principally, or as one of its important activities,
  in the business of extending credit for the purpose of
  purchasing or carrying any Margin Stock.  If used in
  accordance with Section 2.15 of each Agreement, no part of
  the proceeds of the Loans will be used, directly or indi-
  rectly, for a purpose which violates any law, rule or regula-
  tion of any Governmental Authority, including without limita-
  tion the provisions of Regulations G, T, U or X of the Board
  of Governors of the Federal Reserve System, as amended.  If
  used in accordance with Section 2.15 of each Agreement, no
  part of the proceeds of the Loans will be used, directly or
  indirectly, to purchase or carry Margin Stock or to extend
  credit to others for the purpose of purchasing or carrying
  Margin Stock.
  
           13.  The Pledge Agreement is effective to create in
  favor of The Bank of New York, as collateral agent for each
  of The Bank of New York, as Agent under the Facility A
  Agreement, The Bank of New York, as Agent under the Facility
  B Agreement, The Bank of New York, Issuing Bank under the
  Facility B Agreement and each of the Lenders under the
  Agreements in all of the Borrower's right, title and interest
  in and to all Intercompany Notes (as defined in the Pledge
  Agreement) when issued and delivered, provided that such
  Intercompany Notes remain in the continued possession of such
  collateral agent.
  
      14.  To the best of counsel's knowledge after due
  inquiry, no indenture, certificate of designation for pre-
  ferred Stock, agreement or instrument to which the Borrower
  or ACE is a party, prohibits or restrains, directly or indi-
  rectly, the payment of dividends or other payments by ACE to
  the Borrower except for the terms of the ACE Preferred Stock
  as in existence on the Effective Date.
    
                       ATLANTIC ENERGY EXHIBIT O
  
                  FORM OF OPINION OF SPECIAL COUNSEL
  
  
                                              _____ __, 1995
  
  
  The Bank of New York,
  as Agent and the other
  Lenders under the Credit
  Agreements referred to below
  
  
  Ladies and Gentlemen:
  
  
      We have acted as Special Counsel to (1) The Bank of New
  York, as Agent (in such capacity, the "Facility A Agent") in
  connection with the Revolving Credit Agreement (Facility A),
  dated as of September 28, 1995, by and among Atlantic Energy,
  Inc. (the "Borrower"), the Lenders party thereto and the
  Facility A Agent (the "Facility A Agreement") and (2) The
  Bank of New York, as Agent (in such capacity, the "Facility B
  Agent") in connection with the Revolving Credit Agreement
  (Facility B), dated as of September 28, 1995, by and among
  the Borrower, the Lenders party thereto and the Facility B
  Agent (the "Facility B Agreement" and, together with the
  Facility A Agreement, the "Agreements").  Capitalized terms
  used herein which are defined in the Facility A Agreement
  shall have the meanings therein defined, unless the context
  hereof otherwise requires.
      
      We have examined originals or copies certified to our
  satisfaction of the documents required to be delivered pursu-
  ant to the provisions of Sections 5 and 6 of each of the
  Agreements.  In conducting such examination, we have assumed
  the genuineness of all signatures, the authenticity of all
  documents submitted to us as originals, and the conformity to
  originals of all documents submitted to us as copies.
  
      Based upon the foregoing examination, and relying with
  your permission upon the opinions of Ballard Spahr Andrews &
  Ingersoll, special counsel to the Borrower, and James E.
  Franklin II, Esq., General Counsel of the Borrower, we are of
  the opinion that all legal preconditions to the making of the
  first Loans under and as defined in each of the Agreements
  and the issuance of the first Letter of Credit under and as
  defined in the Facility B Agreement have been satisfactorily met.
  
      This opinion is rendered solely for your benefit in
  connection with the transactions referred to herein and may
  not be relied upon by any other Person.
  
      In rendering the foregoing opinion, we express no
  opinion as to laws other than the laws of the State of New
  York and the federal laws of the United States of America.
  
  
                                    Very truly yours,
  
                                    
                                    EMMET, MARVIN & MARTIN,
                                      LLP
    
                       ATLANTIC ENERGY EXHIBIT P
  
              FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
  
  
      This Assignment and Acceptance Agreement is made and en-
  tered into as of _____ __, 19__, by and between ____________
  (the "Assignor") and ____________ (the "Assignee").
  
                            R E C I T A L S
  
      (i)  All capitalized terms not otherwise defined herein
  which are used herein shall have the meanings set forth in the
  Facility A Credit Agreement (as defined below).
  
      (ii) The Assignor, certain other lenders (together with
  any prior assignees, the "Facility A Lenders") and The Bank of
  New York, as agent (in such capacity the "Facility A Agent"),
  are parties to that certain Revolving Credit Agreement
  (Facility A), dated as of September 28, 1995 (the "Facility A
  Credit Agreement") with ATLANTIC ENERGY, INC., a New Jersey
  corporation (the "Borrower").  Pursuant to the Facility A
  Credit Agreement, the Facility A Lenders (i) agreed to make
  Revolving Credit Loans (the "Facility A Revolving Credit
  Loans") under the Aggregate Commitments (as defined in the
  Facility A Credit Agreement, which Aggregate Commitments are
  hereinafter referred to as the "Aggregate Facility A
  Commitments") in the aggregate amount of $35,000,000 and (ii)
  may, in their sole discretion and upon the Borrower's request,
  make Competitive Bid Loans to the Borrower from time to time
  (the "Facility A Competitive Bid Loans" and, together with the
  Facility A Revolving Credit Loans, the "Facility A Loans").
  
      (iii)     The amount of the Assignor's Facility A
  Commitment (without giving effect to the assignment effected
  hereby or to other assignments thereof which have not yet be-
  come effective) is specified in Item 1 of Schedule 1 hereto. 
  The outstanding principal amount of the Assignor's Facility A
  Loans (without giving effect to the assignment effected hereby
  or to other assignments thereof which have not yet become
  effective) is specified in Item 2 of Schedule 1 hereto. 
  
      (iv) The Assignor, certain other lenders (together with
  any prior assignees, the "Facility B Lenders") and The Bank of
  New York, as agent (in such capacity the "Facility B Agent"
  and, together with it in its capacity as Facility A Agent, the
  "Agent"), are parties to that certain Revolving Credit
  Agreement (Facility B), dated as of September 28, 1995 (the
  "Facility B Credit Agreement") with the Borrower.  Pursuant to
  the Facility B Credit Agreement, the Facility B Lenders (i)
  agreed to make Revolving Credit Loans (the "Facility B
  Revolving Credit Loans") under the Aggregate Commitments (as
  defined in the Facility B Credit Agreement, which Commitments
  are hereinafter referred to as the "Aggregate Facility B
  Commitments" and, together with the Aggregate Facility A Com-
  mitments, the "Aggregate Commitments") in the aggregate amount
  of $40,000,000 and to participate in Letters of Credit issued
  by the Issuing Bank (under and as defined in the Facility B
  Credit Agreement) and (ii) may, in their sole discretion and
  upon the Borrowers' request make Competitive Bid Loans to the
  Borrower from time to time (the "Facility B Competitive Bid
  Loans" and, together with the Facility B Revolving Credit
  Loans, the "Facility B Loans").
  
      (v)  The amount of the Assignor's Facility B Commitment,
  including its Letter of Credit Commitment (as defined in the
  Facility B Credit Agreement and without giving effect to the
  assignment effected hereby or to other assignments thereof
  which have not yet become effective), is specified in Item 1 of
  Schedule 1 hereto.  The outstanding principal amount of the
  Assignor's Facility B Loans, including its Letter of Credit
  Exposure (as defined in the Facility B Credit Agreement and
  without giving effect to the assignment effected hereby or to
  other assignments thereof which have not yet become effective),
  is specified in Item 2 of Schedule 1 hereto. 
  
      (vi) The Assignor wishes to sell and assign to the As-
  signee, and the Assignee wishes to purchase and assume from the
  Assignor, (i) the portion of the Assignor's Facility A
  Commitment and Facility B Commitment specified in Item 3 of
  Schedule 1 hereto (the "Assigned Commitment") and (ii) the
  portion of the Assignor's Facility A Revolving Credit Loans,
  Facility B Revolving Credit Loans and/or the portion of the
  Assignor's Facility A Competitive Bid Loans or Facility B
  Competitive Bid Loans specified in Item 5 of Schedule 1 hereto
  (the "Assigned Loans").
  
      The parties agree as follows:
  
      (a)  Assignment
  
           Subject to the terms and conditions set forth herein
  and in the Credit Agreements, the Assignor hereby sells and
  assigns to the Assignee, and the Assignee hereby purchases and
  assumes from the Assignor, without recourse, on the date set
  forth above (the "Assignment Date") (i) all right, title and
  interest of the Assignor to the Assigned Loans and (ii) all
  obligations of the Assignor under the Credit Agreements with
  respect to the Assigned Commitment.  As full consideration for
  the sale of the Assigned Loans and the Assigned Commitment, the
  Assignee shall pay to the Assignor on the Assignment Date the
  principal amount of the Assigned Loans (the "Purchase Price")
  [and the Assignor shall pay to the Assignee on the Assignment
  Date the fee specified in Item 6 of Schedule 1 hereto].  It is
  understood by the parties hereto that each sale, assignment,
  transfer or negotiation of rights under the Credit Agreements
  shall be of an equal percentage of such Lenders interest under
  in each of the Credit Agreements, it being the intention that
  at all times during which the Facility A Credit Agreement and
  Facility B Credit Agreement are both in effect, each Facility
  A Lender shall be a Facility B Lender and its Commitment
  Percentage in each thereof shall be identical.
  
      (b)  Representation and Warranties
  
           Each of the Assignor and the Assignee represents and
  warrants to the other that (i) it has full power and legal
  right to execute and deliver this Agreement and to perform the
  provisions of this Agreement; (ii) the execution, delivery and
  performance of this Agreement have been authorized by all
  action, corporate or otherwise, and do not violate any
  provisions of its charter or by-laws or any contractual
  obligations or requirement of law binding on it; and (iii) this
  Agreement constitutes its legal, valid and binding obligation,
  enforceable against it in accordance with its terms.  The
  Assignor further represents that it is the legal and beneficial
  owner of the interest being assigned by it  hereunder and that
  such interest is free and clear of any adverse claim created by
  the Assignor.
  
      (c)  Condition Precedent
  
           The obligations of the Assignor and the Assignee
  hereunder shall be subject to the fulfillment of the conditions
  that the Assignor shall have (i) received payment in full of
  the Purchase Price and (ii) complied with the other applicable
  provisions of Section 11.7 of each Credit Agreement.
  
      (d)  Notice of Assignment
  
           The Assignor agrees to give notice of the
  assignment and assumption of the Assigned Loans and the
  Assigned Commitment to the Agent and the Borrower and hereby
  instructs the Agent and the Borrower to make all payments
  with respect to the Assigned Loans and the Assigned Com-
  mitment directly to the Assignee at the applicable Lending
  Offices specified on Schedule 2 hereto; provided, however,
  that the Borrower and the Agent shall be entitled to continue
  to deal solely and directly with the Assignor in connection
  with the interests so assigned until the Agent, the Issuing
  Bank and the Borrower, to the extent required by Section 11.7
  of each Credit Agreements, shall have received notice of the
  assignment and  shall have consented in writing thereto by
  signing this Agreement and the Agent shall have recorded and
  accepted this Agreement and received the Assignment Fee
  required to be paid pursuant to Section 11.7 of each Credit
  Agreement.  From and after the date (the "Assignment Effec-
  tive Date") on which the Agent shall notify the Borrower and
  the Assignor that the requirements set forth in the foregoing
  sentence shall have occurred and all consents (if any)
  required shall have been given, (i) the Assignee shall be
  deemed to be a party to the Credit Agreements and, to the
  extent that rights and obligations thereunder shall have been
  assigned to the Assignee as provided in such notice of as-
  signment to the Agent, shall have the rights and obligations
  of a Lender under the Credit Agreements, and (ii) the
  Assignee shall be deemed to have appointed 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.  After the Assignment
  Effective Date, the Agent shall make all payments in respect
  of the interest assigned hereby (including payments of prin-
  cipal, interest, fees and other amounts) to the Assignee. 
  The Assignor and Assignee shall make all appropriate adjust-
  ment in payments under the Assigned Loans and the Assigned
  Commitment for periods prior to the Assignment Effective Date
  hereof directly between themselves.  If the Assignee is not a
  United States Person as defined in Section 7701(a)(30) of the
  Code, the Assignee shall deliver herewith the forms required
  by Section 2.10(c) of the Credit Agreements to evidence the
  Assignee's complete exemption from United States withholding
  taxes with respect to payments under the Loan Documents.
  
      (e)  Independent Investigation
  
           The Assignee acknowledges that it is purchasing the
  Assigned Loans and the Assigned Commitments from the Assignor
  totally without recourse and, except as provided in Section 2
  hereof, without representation or warranty.  The Assignee
  further acknowledges that it has made its own independent
  investigation and credit evaluation of the Borrower in
  connection with its purchase of the Assigned Loans and the
  Assigned  Commitments.  Except for the representations or
  warranties set forth in Section 2, the Assignee acknowledges
  that it is not relying on any representation or warranty of
  the Assignor, expressed or implied, including, without
  limitation, any representation or warranty relating to the
  legality, validity, genuineness, enforceability,
  collectibility, interest rate, repayment schedule or accrual
  status of the Assigned Loans or the Assigned Commitment, the
  legality, validity, genuineness or enforceability of any 
  Loan Document, or financial condition or creditworthiness of
  the Borrower or any other Person.  The Assignor has not and
  will not be acting as either the representative, agent or
  trustee of the Assignee with respect to matters arising out
  of or relating to the Credit Agreements or this Agreement. 
  From and after the Assignment Effective Date, except as set
  forth in Section 4 above, the Assignor shall have no rights
  or obligations with respect to the Assigned Loans or the
  Assigned Commitments.
  
      (f)  Consent of the Borrower; Issuance of Notes.
  
           1.   Pursuant to the provisions of Section 11.7 of
  each  Credit Agreement, and to the extent required thereby,
  the Borrower, by signing below, consents to this Agreement
  and to the assignment contemplated herein.  The Borrower
  further agrees to execute and deliver:
  
                (i)  to the Assignee, (a) a Facility A
  Revolving Credit Note, in an aggregate principal amount of
  $____, (b) a Facility B Revolving Credit Note, in an ag-
  gregate principal amount of $____, (c) a Facility A
  Competitive Bid Note and (d) a Facility B Competitive Bid
  Note; and
  
                (ii) to the Assignor, (a) a Facility A
  Revolving Credit Note, in an aggregate principal amount of
  $____, and (b) a Facility B Revolving Credit Note, in an ag-
  gregate principal amount of $____.
  
           2.   Upon receipt of its new Notes as set forth in
  subsection (a)(ii) above, the Assignor shall deliver its
  replaced Facility A Revolving Credit Note and Facility B
  Revolving Credit Note to the Borrower.
  
      (g)  Method of Payment
  
           All payments to be made by either party hereunder
  shall be in funds available at the place of payment on the
  same day and shall be made by wire transfer to the account
  designated by the party to receive payment.
  
      (h)  Integration
  
           This Agreement shall supersede any prior agreement
  or understanding between the parties (other than the Credit
  Agreements) as to the subject matter hereof.
  
      (i)  Counterparts
  
           This Agreement may be executed in any number of
  counterparts, each of which shall be deemed to be an original
  and shall be binding upon both parties, their successors and
  assigns.
  
      (j)  Headings
  
           Section headings have been inserted herein for
  convenience only and shall not be construed to be a part
  hereof.
  
      (k)  Amendments; Waivers
  
           This Agreement may not be amended, changed, waived
  or modified except by a writing executed by the parties
  hereto, and may not be amended, changed, waived or modified
  in any manner inconsistent with Section 11.7 of each  Credit
  Agreement without the prior written consent of the Agent.
  
      (l)  Governing Law.
  
           This Agreement shall be governed by, and construed
  and interpreted in accordance with, the internal laws of the
  State of New York, without regard to principles of conflict
  of laws.
  
    
 IN WITNESS WHEREOF, the parties hereto have caused this
  Assignment and Acceptance Agreement to be duly executed and
  delivered by their proper and duly authorized officers as of
  the day and year first above written.
  
  
                                               , as Assignor
  
  
                                  By:                       
                                  Name:                     
                                  Title:                    
  
  
                                               , as Assignee
  
  
                                  By:                       
                                  Name:                     
                                  Title:                    
  
  
  Consented to:
  
  ATLANTIC ENERGY, INC.
  
  
  By:                         
  Name:                       
  Title:                      
  
  
  Accepted:
  
  THE BANK OF NEW YORK, as Agent
  
  
  By:                         
  Name:                       
  Title:                      
  
  
  THE BANK OF NEW YORK, as Issuing Bank
  
  
  By:                         
  Name:                       
  Title:                      
  
                              SCHEDULE 1
  
                                  TO
  
                  ASSIGNMENT AND ACCEPTANCE AGREEMENT
  
                                between
                  _____________________, as Assignor
                                  and
                  _____________________, as Assignee
  
                              relating to
  
              Revolving Credit Agreement (Facility A) and
               Revolving Credit Agreement (Facility B),
                  each dated as of September 28, 1995
                                 among
                        ATLANTIC ENERGY, INC.,
                 the respective Lenders party thereto,
                                  and
                    The Bank of New York, as Agent,
  
  
  Item 1.  Assignor's Commitments*
  
      (a)  Facility A Commitment              $___________
      (b)  Facility B Commitment              $___________
  
  
  Item 2.  Assignor's Loans:                  
  
      (a)  Facility A Revolving
           Credit Loans* consisting
           of:
                ABR Advances                       $___________
           Eurodollar Advances                $___________
           Letter of Credit Exposure          $___________
  
  *   Without giving effect to the assisgnment contemplated
  hereby or other assignments which have not as yet become
    efective.
      (b)  Facility A Competitive
           Bid Loans* consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
  
      (c)  Facility B Revolving
           Credit Loans* consisting
           of:
           ABR Advances                       $___________
           Eurodollar Advances                $___________
  
      (d)  Facility B Competitive
           Bid Loans* consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___     $___________
           Rate: __% Interest Period: ___     $___________
           Rate: __% Interest Period: ___     $___________
  
  
  Item 3.  Amount of Assigned Commitments:
  
      (a)  Assigned Facility A Revolving
           Credit Commitment                  $___________
  
      (b)  Assigned Facility B Revolving
           Credit Commitment                  $___________
  
  Item 4.  Percentage of Assigned Commitments
           in Facility A as a percentage of
           the Aggregate Commitments
           of Facility A of all Facility
           A Lenders                                    ___%
  
           Percentage of Assigned Commitments
           in Facility B as a percentage of
           the Aggregate Commitments
           of Facility B of all Facility
           A Lenders                                    ___%
    
   Item 5. Amount of Assigned Loans:
  
      (a)  Assignor's Facility A Revolving
           Credit Loans consisting
           of:
           ABR Advances                       $___________
           Eurodollar Advances                $___________
           Letter of Credit Exposure          $___________
  
      (b)  Assignor's Facility A Competitive
           Bid Loans consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
  
      (c)  Assignor's Facility B Revolving
           Credit Loans consisting
           of:
           ABR Advances                       $___________
           Eurodollar Advances                $___________
      (d)  Assignor's Facility B Competitive
           Bid Loans consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
  
  
  Item 6.  Amount of Fee
           payable to Assignee           $___________
  
  
    
                              SCHEDULE 2
  
                                  TO
  
                  ASSIGNMENT AND ACCEPTANCE AGREEMENT
  
                                between
                  _____________________, as Assignor
                                  and
                  _____________________, as Assignee
  
                              relating to
  
              Revolving Credit Agreement (Facility A) and
               Revolving Credit Agreement (Facility B),
                  each dated as of September 28, 1995
                                 among
                        ATLANTIC ENERGY, INC.,
                 the respective Lenders party thereto,
                                  and
                    The Bank of New York, as Agent,
  
  
  DOMESTIC LENDING OFFICE         EURODOLLAR LENDING OFFICE
  
  ____________________            ____________________
  ____________________            ____________________
  ____________________            ____________________
  Attention: ______________       Attention: ______________
  Telephone: (___) ___-____       Telephone: (___) ___-____
  Telecopy:  (___) ___-____       Telecopy:  (___) ___-____
  
  
  ADDRESS FOR NOTICES
  ____________________
  ____________________
  ____________________
  Attention: ______________
  Telephone: (___) ___-____
  Telecopy:  (___) ___-____
    
  
                       ATLANTIC ENERGY EXHIBIT Q
  
             FORM OF GUARANTY AND SUBORDINATION AGREEMENT
  
      Guaranty and Subordination Agreement (as the same may be
  amended, supplemented or otherwise modified from time to
  time, this "Guaranty"), dated as of _____ __, 199_, made by
  _________, a ______ corporation ("         ") and each Person
  which becomes a party hereto pursuant to Section 10 hereof
  (together with _________, the "Guarantors", each, a
  "Guarantor") and ATLANTIC ENERGY, INC., a New Jersey
  corporation (the "Borrower") to THE BANK OF NEW YORK, as
  Agent (in such capacity, the "Agent") [(i)] for itself and
  for the ratable benefit of the Lenders.
  
      A.   The Borrower has entered into two Revolving Credit
  Agreements (Facility A and Facility B), dated as of
  September 28, 1995, among the Borrower, the signatory Lenders
  thereto and the Agent (as the same may be amended, extended,
  increased, modified, refunded or refinanced from time to
  time, the "Credit Agreements").  Section 8.7 of the Credit
  Agreements provides that the Guarantors and the Borrower
  shall execute and deliver this Guaranty in the event that the
  Borrower shall convert or forgive Intercompany Notes of the
  Guarantors.
  
      B.   The Guarantors have derived and expect to continue
  to derive substantial benefit from the Credit Agreements and
  the making of the Loans and the issuance of the Letters of
  Credit thereunder, including, without limitation, the
  lending, directly or indirectly, by the Borrower of a portion
  of the proceeds of the Loans to the Guarantors.  The
  Guarantors acknowledge that the Agent and the Lenders are
  relying on this Guaranty in agreeing to continue to make the
  Loans subsequent to the conversion or forgiveness of an
  Intercompany Note, and that the Agent and the Lenders would
  not do so without the execution and delivery of this
  Guaranty.
  
      C.   Each of the Guarantors wishes to (i) guarantee the
  obligations of the Borrower under the Loan Documents and (ii)
  subordinate, subject to the terms and conditions contained
  herein, any obligations due it from the Borrower to the prior
  indefeasible cash payment in full of the Borrower Obligations
  (as hereinafter defined).
  
      In consideration of the premises and agreements herein
  contained and other good and valuable consideration, the
  receipt and sufficiency of which are hereby acknowledged, and
  in order to induce the Agent and the Lenders to make the
  Loans and to induce BNY to issue the Letters of Credit and
  the Lenders to participate therein, the Borrower and each of
  the Guarantors covenant and agree as follows:
  
      1.  Definitions
  
           Except as otherwise provided herein, capitalized
  terms that are defined in the Credit Agreements and are not
  defined herein shall have the meanings assigned to such terms
  therein.  For purposes hereof, the following terms shall have
  the following meanings:
  
           "Additional Guarantor": each Guarantor which
  becomes a party hereto pursuant to Section 10 hereof.
  
           "Borrower Obligations": all obligations and
  liabilities, whether now existing or hereafter arising, of
  the Borrower under the Loan Documents, whether direct, 
  indirect or contingent, incurred as primary obligor or
  otherwise, secured or unsecured, and whether or not on open
  account, including all principal and interest thereon
  (whether arising or accruing before or after the occurrence
  of any Event of Default set forth in Section 9.1(i) or (j) of
  the Credit Agreements and whether allowed as a claim), and
  all reasonable costs and expenses of the Agent and the
  Lenders in enforcing, preserving and protecting any thereof,
  whether or not suit is instituted (as the same may be
  amended, increased, modified, renewed, refinanced, refunded
  or extended from time to time).
  
           "Consideration": as of any date of determination
  and with respect to each Guarantor, an amount equal to the
  lesser of (a) the total "value" (within the meaning of
  Section 548 of the Bankruptcy Code as in effect on the date
  hereof) given, directly or indirectly, to such Guarantor
  during the period commencing on the date such Guarantor
  became a party to this Guaranty and ending on such date of
  determination, in exchange for its execution and delivery of
  this Guaranty, and (b) the amount of "fair consideration"
  (within the meaning of Article 10 of the New York Debtor
  Creditor Law as in effect on the date hereof) given, directly
  or indirectly, to such Guarantor during the period commencing
  on the date such Guarantor became a party to this Guaranty
  and ending on such date of determination in exchange for its
  execution and delivery of this Guaranty.
  
           "Guarantor Obligations": with respect to each
  Guarantor, all of the obligations and liabilities of such
  Guarantor hereunder, whether fixed, contingent, now existing
  or hereafter arising, created, assumed, incurred or acquired.
  
           "Net Worth": as of any date and with respect to
  each Guarantor, the lesser of the following:
  
                (a)(i) all of such Guarantor's "property, at a
  fair valuation" (within the meaning of Section 101(32) of the
  Bankruptcy Code as in effect on the date hereof) on such
  date, minus (ii) the sum of such Guarantor's "debts" (within
  the meaning of Section 101(12) of the Bankruptcy Code as in
  effect on the date hereof) on such date, or
  
                (b)(i) the "fair salable value of the assets"
  (within the meaning of Article 10 of the New York Debtor
  Creditor Law as in effect on the date hereof) of such
  Guarantor on such date, minus (ii) "the amount that will be
  required to pay such Guarantor's probable liability on its
  existing debts as they become absolute and matured" (as such
  phrase would be construed under Article 10 of the New York
  Debtor Creditor Law as in effect on the date hereof) on such
  date.
  
           "Subordinated Debt": all indebtedness for borrowed
  money and any other obligations, contingent or otherwise, of
  the Borrower to any Guarantor, including, without limitation,
  all amounts, fees and expenses payable by the Borrower to any
  Guarantor in respect thereof, in each case whether
  outstanding on the date of execution of this Guaranty or
  hereafter arising or created.
  
           "Supplement": a Supplement to this Guaranty, duly
  completed, in the form of Annex 1 hereto.
  
      (e)  Guaranty
  
           (A)  Subject to Section 2(b) hereof, each Guarantor
  hereby absolutely, irrevocably and unconditionally guarantees
  the full and prompt payment when due (whether at stated
  maturity, by acceleration or otherwise) of the Borrower
  Obligations.   This Guaranty constitutes a guaranty of
  payment, and neither the Agent nor any Lender shall have any
  obligation to enforce any Loan Document or exercise any right
  or remedy with respect to any collateral security thereunder
  by any action, including, without limitation, making or
  perfecting any claim against any Person or any collateral
  security for any of the Borrower Obligations prior to being
  entitled to the benefits of this Guaranty.  The Agent may, at
  its option, proceed against the Guarantors, or any one or
  more of them, in the first instance to enforce the Guarantor
  Obligations without first proceeding against the Borrower or
  any other Person, and without first resorting to any other
  rights or remedies, as the Agent may deem advisable.  In
  furtherance hereof, if the Agent or any Lender is prevented
  by law from collecting or otherwise hindered from collecting
  or otherwise enforcing any Borrower Obligation in accordance
  with its terms, the Agent or such Lender, as the case may be,
  shall be entitled to receive hereunder from the Guarantors
  after demand therefor, the sums which would have been
  otherwise due had such collection or enforcement not been
  prevented or hindered.
  
           (B)  Notwithstanding anything to the contrary
  contained in this Guaranty, the maximum liability of each
  Guarantor hereunder shall not, as of any date of
  determination, exceed the lesser of (i) the highest amount
  that is valid and enforceable against such Guarantor under
  principles of New York State contract law, and (ii) the sum
  of (1) all Consideration received by such Guarantor as of
  such date of determination, plus (2) the lesser of (A) 95% of
  the Net Worth of such Guarantor on the date such Guarantor
  became a party to this Guaranty after giving effect to (1)
  this Guaranty and (2) the receipt by such Guarantor of any
  Consideration on the date such Guarantor became a party to
  this Guaranty, and (B) 95% of the Net Worth of such Guarantor
  on such date of determination.
  
           (C)  Each Guarantor agrees that its Guarantor
  Obligations may at any time and from time to time exceed the
  maximum liability of such Guarantor hereunder without
  impairing this Guaranty or affecting the rights and remedies
  of the Agent or any Lenders hereunder.
  
           (D)  Subject to the limitations contained in
  Section 2(b), the obligations hereunder of each Guarantor
  shall be joint and several with the obligations hereunder of
  the other Guarantors from time to time party hereto.
  
      (f)  Absolute Obligation
  
           Subject to Section 9, no Guarantor shall be
  released from liability hereunder unless and until the
  Maturity Date shall have occurred and either (a) the Borrower
  Obligations shall have been indefeasibly paid in full, in
  cash, or (b) the Guarantor Obligations of such Guarantor
  shall have been paid in full, in cash.  Each Guarantor
  acknowledges and agrees that (1) neither the Agent nor any
  Lender has made any representation or warranty to such
  Guarantor with respect to the Borrower, its Subsidiaries, any
  Loan Document or any agreement, instrument or document
  executed or delivered in connection therewith or any other
  matter whatsoever, and (2) such Guarantor shall be liable
  hereunder, and such liability shall not be affected or
  impaired, irrespective of (A) the validity or enforceability
  of any Loan Document or any agreement, instrument or document
  executed or delivered in connection therewith, or the
  collectability of any of the Borrower Obligations, (B) the
  preference or priority ranking with respect to any of the
  Borrower Obligations, (C) the existence, validity,
  enforceability or perfection of any security interest or
  collateral security under any Loan Document or the release,
  exchange, substitution or loss or impairment of any such
  security interest or collateral security, (D)  any failure,
  delay, neglect or omission by the Agent or any Lender to
  realize upon any direct or indirect collateral security,
  indebtedness, liability or obligation, any Loan Document or
  any agreement, instrument or document executed or delivered
  in connection therewith, or any of the Borrower Obligations,
  (E) the existence or exercise of any right of set-off by the
  Agent or any Lender, (F) the existence, validity or
  enforceability of any other guaranty with respect to any of
  the Borrower Obligations, the liability of any other Person
  in respect of any of the Borrower Obligations, or the release
  of any such Person or any other guarantor of any of the
  Borrower Obligations, (G) any act or omission of the Agent or
  any Lender in connection with the administration of any Loan
  Document or any of the Borrower Obligations, (H) the
  bankruptcy, insolvency, reorganization or receivership of, or
  any other proceeding for the relief of debtors commenced by
  or against, any Person, (I) the disaffirmance or rejection,
  or the purported disaffirmance or purported rejection, of any
  of the Borrower Obligations, any Loan Document or any
  agreement, instrument or document executed or delivered in
  connection therewith, in any bankruptcy, insolvency,
  reorganization or receivership, or any other proceeding for
  the relief of debtors, relating to any Person, (J) any law,
  regulation or decree now or hereafter in effect which might
  in any manner affect any of the terms or provisions of any
  Loan Document or any agreement, instrument or document
  executed or delivered in connection therewith or any of the
  Borrower Obligations, or which might cause or permit to be
  invoked any alteration in the time, amount, manner or payment
  or performance of any of the Borrower's obligations and
  liabilities (including, without limitation, the Borrower
  Obligations), (K) the merger or consolidation of the Borrower
  into or with any Person, (L) the sale by the Borrower of all
  or any part of its assets, (M) the fact that at any time and
  from time to time none of the Borrower Obligations may be
  outstanding or owing to the Agent or any Lender, (N) any
  amendment or modification of, or supplement to, any Loan
  Document or (O) any other reason or circumstance which might
  otherwise constitute a defense available to or a discharge of
  the Borrower in respect of its obligations or liabilities
  (including, without limitation, the Borrower Obligations) or
  of such Guarantor in respect of any of the Guarantor
  Obligations (other than by the performance in full thereof).
  
      (g)  Representations and Warranties
  
           Each of the Guarantors hereby makes the following
  representations and warranties to the Agent:
  
                (A)  Existence and Power. It is duly organized
  or formed and validly existing in good standing under the
  laws of the jurisdiction of its incorporation or formation,
  has all requisite power and authority to own its Property and
  to carry on its business as now conducted, and is in good
  standing and authorized to do business as a foreign
  corporation in each jurisdiction in which the nature of the
  business conducted therein or the Property owned therein
  makes such qualification necessary, except where such failure
  to qualify could not reasonably be expected to have a
  Material Adverse Effect.
  
                (B)  Authority. It has full legal power and
  authority to enter into, execute, deliver and perform the
  terms of the Loan Documents to which it is a party and the
  transactions contemplated thereby, all of which have been
  duly authorized by all proper and necessary corporate or
  other applicable action and are in full compliance with its
  Certificate of Incorporation or By-Laws or its other
  organization documents. 
  
                (C)  Binding Agreement. The Loan Documents to
  which its is a party constitute its valid and legally binding
  obligations, enforceable in accordance with its terms, except
  as such enforceability may be limited by applicable
  bankruptcy, insolvency, reorganization or other similar laws
  affecting the enforcement of creditors' rights generally.
  
                (D)  Litigation. Except as disclosed in a
  schedule to the Credit Agreements, there are no actions,
  suits or proceedings at law or in equity or by or before any
  Governmental Authority (whether purportedly on its behalf)
  pending or, to its knowledge, threatened against it or any of
  its Property or rights, which (i) if adversely determined,
  could reasonably be expected to have a Material Adverse
  Effect, (ii) call into question the validity or
  enforceability of any of the Loan Documents, (iii) could
  reasonably be expected to result in the rescission,
  termination or cancellation of any material franchise, right,
  license, permit or similar authorization held by it or (iv)
  might materially and adversely affect any of the
  Transactions.
  
                (E)  Required Consents. No consent,
  authorization or approval of, filing with, notice to, or
  exemption by, stockholders, any Governmental Authority or any
  other Person is required to authorize, or is required in
  connection with the execution, delivery and performance of
  the Loan Documents to which it is a party and the
  transactions contemplated thereby, or is required as a
  condition to the validity or enforceability of such Loan
  Documents.
  
                (F)  No Conflicting Agreements. It is not in
  default under any mortgage, indenture, contract or agreement
  to which it is a party or by which it or any of its Property
  is bound, the effect of which default could reasonably be
  expected to have a Material Adverse Effect.  The execution,
  delivery or carrying out of the terms of the Loan Documents
  to which it is a party and the transactions contemplated
  thereby, will not constitute a default under, or result in
  the creation or imposition of, or obligation to create, any
  Lien upon any of its Property or result in a breach of or
  require the mandatory repayment of or other acceleration of
  payment under or pursuant to the terms of any such mortgage,
  indenture, contract or agreement.
  
                (G) Compliance with Applicable Laws. It is not
  in default with respect to any judgment, order, writ,
  injunction, decree or decision of any Governmental Authority
  which default could reasonably be expected to have a Material
  Adverse Effect.  It is complying in all material respects
  with all statutes, regulations, rules and orders applicable
  to it of all Governmental Authorities a violation of which
  could reasonably be expected to have a Material Adverse
  Effect.
  
                (H) Property. It has good and marketable title
  to all of its Property, title to which is material to such
  Guarantor, subject to no Liens, except for Liens described in
  Section 8.2(i), (ii), (iii), (iv), (v), (vi) or (vii) of the
  Credit Agreements.
  
                (I) Franchises, Intellectual Property, Etc. It
  possesses or has the right to use all franchises,
  Intellectual Property, licenses and other rights as are
  material and necessary for the conduct of its business, and
  with respect to which it is in compliance, with no known
  conflict with the valid rights of others which could
  reasonably be expected to have a Material Adverse Effect.  No
  event has occurred which permits or, to the best of its
  knowledge, after notice or the lapse of time or both, or any
  other condition, could reasonably be expected to permit, the
  revocation or termination of any  such franchise,
  Intellectual Property, license or other right which
  revocation or termination could reasonably be expected to
  have a Material Adverse Effect.
  
                (J) No Misrepresentation. No representation or
  warranty contained in any Loan Document to which it is a
  party and no certificate or report furnished or to be
  furnished by it in connection with the transactions
  contemplated thereby, contains or will contain a misstatement
  of material fact, or, to the best of its knowledge, omits or
  will omit to state a material fact required to be stated in
  order to make the statements therein contained not misleading
  in the light of the circumstances under which made.
  
      (h)  Events of Default
  
           Each of the following shall constitute an "Event of
  Default" hereunder:
  
                (A)  Any of the Guarantors shall fail to
  observe or perform any term, covenant or agreement contained
  in Section 2 of this Guaranty; or
  
                (B)  Any of the Guarantors shall fail to
  perform or observe any other term, covenant or agreement on
  its part to be performed or observed pursuant to this
  Guaranty and such failure shall have continued unremedied for
  a period of 30 days after such Guarantor shall become aware
  of such failure; or
  
                (C)  Any representation of any Guarantor
  contained herein or in any certificate, report or notice
  delivered or to be delivered by such Guarantor pursuant
  hereto shall prove to have been incorrect or misleading in
  any material respect when made; or
  
                (D)  This Guaranty shall cease to be in full
  force and effect or any of the Guarantors shall so assert or
  shall disavow any of its obligations hereunder; or
  
                (E)  The occurrence of an "Event of Default"
  under and as defined in the Credit Agreements.
  
      (i)  Subordination
  
           (A)  No payment of any nature whatsoever due in
  respect of the Subordinated Debt payable to any of the
  Guarantors shall be made unless and until the Borrower
  Obligations have been first indefeasibly paid in full in
  cash.
  
           (B)  Upon any bankruptcy, insolvency, liquidation
  or reorganization of the Borrower, or upon the filing of a
  petition in bankruptcy or commencement of any proceeding in
  bankruptcy against the Borrower or upon any distribution of
  the assets of the Borrower or upon any dissolution, winding
  up, liquidation or reorganization of the Borrower, whether in
  bankruptcy, insolvency, reorganization, arrangement or
  receivership proceedings, or upon any assignment for the
  benefit of creditors, or any other marshalling of the assets
  and liabilities of the Borrower, or in the event any of the
  Subordinated Debt shall for any reason become or be declared
  due and payable or otherwise:
  
                (i)  the Agent shall first be entitled to
  receive indefeasible payment in full in cash of the Borrower
  Obligations (whenever arising) before any Guarantor shall be
  entitled to receive any payment on account of the
  Subordinated Debt;
  
                (ii)  any payment by, or distribution of the
  assets of, the Borrower of any kind or character, whether in
  cash, property or securities, to which any Guarantor would be
  entitled except for the provisions of this Guaranty, in
  connection with the Subordinated Debt, shall be paid or
  delivered by the Person making such payment or distribution
  (whether a trustee in bankruptcy, a receiver, custodian or
  liquidating trustee or otherwise) directly to the Agent to
  the extent necessary to make payment in full in cash of the
  Borrower Obligations remaining unpaid, after giving effect to
  any concurrent payment or distribution (or provision
  therefor) in cash to the Agent; and
  
                (iii) None of the Guarantors shall ask, demand
  by legal proceedings or otherwise, or take or receive from
  the Borrower, by set-off, counterclaim or in any other
  manner, any payment or distribution on account of the
  Subordinated Debt other than as expressly permitted
  hereunder;
  
                (iv) Each of the Guarantors agrees to declare
  the Subordinated Debt to be due and payable and, at least 30
  days before the time required by applicable law or rule, to
  file proof of claim therefor, in default of which the Agent
  is hereby irrevocably authorized so to declare and file in
  order to effectuate the provisions hereof; and
  
                (v)  The Agent shall have the right, and is
  hereby authorized, to vote the interest of each Guarantor
  with respect to the Subordinated Debt, including, without
  limitation, the right to make all acceptances, rejections,
  consents or approvals on its behalf (including the right to
  accept, approve or disapprove of any plan of reorganization)
  in connection with any insolvency or other proceeding, and to
  execute and deliver for and on behalf of the Guarantor any
  instrument, agreement or other document in connection
  therewith, and if for any reason this clause shall not be
  enforceable, each Guarantor agrees to vote and give or make
  such acceptances, rejections, consents or approvals in the
  manner directed by the Agent.  Each of the Guarantors hereby
  irrevocably appoints the Agent its attorney-in-fact for
  purposes of exercising the rights and authority granted to it
  under this clause.
  
           Notwithstanding the foregoing, in the event that
  any payment by, or distribution of the assets of, the
  Borrower of any kind or character prohibited hereby, whether
  in cash, property or securities, shall for any reason be
  received by any of the Guarantors in respect of the
  Subordinated Debt, such payment or distribution shall be held
  in trust for the benefit of the Agent, and shall be
  immediately paid over to the Agent, to the extent necessary
  to make payment in full in cash of the Borrower Obligations
  remaining unpaid, after giving effect to any concurrent
  payment or distribution (or provision therefor) in cash to
  the Agent.
  
           (C)  Without the prior written consent of the
  Agent, the Borrower will not give, and none of the Guarantors
  will receive or accept, any collateral of any nature
  whatsoever for the Subordinated Debt on any Property or
  assets, whether now existing or hereafter acquired, of the
  Borrower.
  
           (D)  Nothing contained in this Guaranty is intended
  to or shall impair, as between and among the Borrower, its
  creditors (other than the holders of the Borrower
  Obligations) and the Guarantors, the obligation of the
  Borrower to pay to the Guarantors any amount due in respect
  of the Subordinated Debt as and when the same shall become
  due and payable in accordance with the terms thereof, or
  affect the relative rights of the Guarantors and the
  creditors of the Borrower (other than the holders of the
  Borrower  Obligations), in each case subject to the rights of
  the holders of the Borrower Obligations under this Guaranty.
  
           (E)  Unless and until the Borrower Obligations have
  been indefeasibly paid in full in cash and the Credit
  Agreements have been terminated, each of the Guarantors
  agrees not to declare any part of the Subordinated Debt to be
  due and payable or exercise any of the rights or remedies
  which it may have, or bring (in its capacity as holder of the
  Subordinated Debt) or join with any other creditor in
  instituting, any proceedings against the Borrower under any
  bankruptcy, insolvency, reorganization, arrangement,
  receivership or other similar law, unless the Borrower
  Obligations shall have been declared immediately due and
  payable or, in the case of the institution of any such
  proceedings, the Agent shall have joined in the institution
  thereof or expressly consented thereto in writing.  In the
  event that the Agent shall have so declared the Borrower
  Obligations immediately due and payable, each of the
  Guarantors agrees to declare the Subordinated Debt then due
  to be due and payable, provided, however, if the Agent shall
  rescind any such declaration, each of the Guarantors shall
  automatically be deemed to have rescinded its declaration.
  
           (F)  No right of the Agent to enforce this Guaranty
  shall at any time or in any way be prejudiced or impaired by
  any act or failure to act on the part of any of the
  Guarantors, or by any noncompliance by the Guarantors with
  the terms, provisions and covenants herein, and the Agent are
  hereby expressly authorized to extend, waive, renew,
  increase, decrease, modify or amend the terms of the Borrower
  Obligations or any collateral security therefor, and to waive
  any default, modify, amend, rescind or waive any provision of
  any document executed and delivered in connection with the
  Borrower Obligations and to release, sell or exchange any
  such collateral security and otherwise deal freely with the
  Borrower, all without notice to or consent of the Guarantors
  and without affecting the liabilities and obligations of the
  parties hereto.
  
           (G)  The Borrower and the Guarantors each waives
  notice of acceptance of this Guaranty by the Agent and the
  Lenders, and each of the Guarantors waives notice of and
  consents to the making, amount and terms of the Borrower
  Obligations which may exist from time to time and any
  renewal, extension, increase, amendment or modification
  thereof and any other action which the Agent or the Lenders
  in its sole and absolute discretion, may take or omit to take
  with respect thereto.  This Section (g) shall constitute a
  continuing offer to the Agent and the Lenders, its provisions
  are made for the benefit of the Agent and the Lenders, and
  the Agent and the Lenders are made obligees hereunder and may
  enforce such provisions.
  
           (H)  Each of the Guarantors agrees that no payment
  or distribution to the Agent pursuant to the provisions of
  this Guaranty shall entitle any of the Guarantors to exercise
  any rights of subrogation in respect thereof until the
  Borrower Obligations shall have been indefeasibly paid in
  full in cash.  Each of the Guarantors agrees that the
  subordination provisions contained herein shall not be
  affected by any action or failure to act by the holders of
  the Borrower Obligations which results, or may result, in
  affecting, impairing or extinguishing any right of
  reimbursement or subrogation or other right or remedy of such
  Guarantor.
  
           (I)  None of the Guarantors shall sell, assign,
  transfer or otherwise dispose of all or any part of the
  Subordinated Debt without having first obtained the prior
  written consent of the Agent which consent may be withheld
  for any reason or for no reason.
  
           (J)  The Borrower agrees that it will not make any
  payment of any of the Subordinated Debt, or take any other
  action, in contravention of the provisions of this Guaranty.
  
           (K)  Each of the Guarantors agrees that the
  provisions of this Guaranty shall be applicable to the
  Borrower Obligations whenever the same may arise and
  notwithstanding the fact that no Borrower Obligations may be
  outstanding from time to time and may have paid down to zero
  at any time or from time to time, it being understood that
  the Credit Agreements permit the Borrower to borrow, repay
  and reborrow from time to time subject to the terms and
  conditions thereof, all or any of which terms and conditions
  may be waived.
  
           (L)  All rights and interests of the Agent
  hereunder, and all agreements and obligations of the Borrower
  and the Guarantors under this Guaranty, shall remain in full
  force and effect irrespective of:
  
                (i)  any lack of validity or enforceability of
  any of the Loan Documents;
  
                (ii) any change in the time, manner or place
  of payment of, or any other term of, all or any of the
  Borrower Obligations, or any other amendment or waiver of or
  any consent to departure from any of the Borrower
  Obligations;
  
                (iii) any exchange, release or non-perfection
  of the Collateral, or any release or amendment or waiver of
  or consent to or departure from any guaranty, for all or any
  of the Borrower Obligations; or
  
                (iv) any other circumstance which might
  otherwise constitute a defense available to, or a discharge
  of, the Borrower in respect of the Borrower Obligations or
  this Guaranty.  This Guaranty shall continue to be effective
  or be reinstated, as the case may be, if at any time any
  payment of any of the Borrower Obligations is rescinded or
  must otherwise be returned by the Agent upon the insolvency,
  bankruptcy or reorganization of the Borrower or otherwise,
  all as though such payment had not been made.
  
           (M)  Each of the Guarantors authorizes the Agent,
  without notice or demand and without affecting or impairing
  the obligations of any of the Guarantors, from time to time
  to (i) renew, compromise, extend, increase, accelerate or
  otherwise change the time for payment of, or otherwise change
  the terms of the Borrower Obligations, or any part thereof,
  including, without limitation, to increase or decrease the
  rate of interest thereon or the principal amount thereof;
  (ii) take or hold security for the payment of the Borrower
  Obligations and exchange, enforce, foreclose upon, waive and
  release any such security; (iii) apply such security and
  direct the order or manner of sale thereof as the Agent, in
  its sole discretion, may determine; (iv) release and
  substitute one or more indorsers, warrantors, borrowers or
  other obligors; and (v) exercise or refrain from exercising
  any rights against the Borrower or any other Person.
  
      (j)  Notices
  
           Except as otherwise specifically provided herein,
  all notices, requests, consents, demands, waivers and other
  communications hereunder shall be given in the manner
  provided in Section 11.2 of the Credit Agreements and, if to
  the Agent or the Borrower, at their respective addresses set
  forth therein or, if to the Guarantor, the address set forth
  below (or if to an Additional Guarantor, to the address set
  forth in the Supplement executed and delivered by such
  Additional Guarantor) or to such other addresses as to which
  the Agent may be hereafter notified by the respective parties
  hereto:
  
                                         
                                         
                                         
                Attention:              ,
                
                Telephone:  (   ) ___-____
                Fax:        (___) ___-____.
  
      (k)  Expenses
  
           The Guarantors will upon demand pay to the Agent
  any and all reasonable sums, costs and expenses which the
  Agent may pay or incur pursuant to the provisions of this
  Guaranty or in negotiating, executing or enforcing this
  Guaranty or in enforcing payment of its Guarantor
  Obligations, including, but not limited to court costs,
  reasonable collection charges, reasonable travel expenses,
  and reasonable attorneys' fees and disbursements.  All sums,
  costs and expenses which are due and payable pursuant to this
  Section shall bear interest, payable on demand, at the
  highest rate then payable on the Borrower Obligations.
  
      (l)  Repayment in Bankruptcy, etc.
  
           If, at any time or times subsequent to the payment
  of all or any part of the Borrower Obligations or the
  Guarantor Obligations, the Agent or any Lender shall be
  required to repay any amounts previously paid by or on behalf
  of the Borrower or any Guarantor in reduction thereof by
  virtue of an order of any court having jurisdiction in the
  premises, including, without limitation, as a result of an
  adjudication that such amounts constituted preferential
  payments or fraudulent conveyances, the Guarantors
  unconditionally agree to pay to the Agent within 10 days
  after demand a sum in cash equal to the amount of such
  repayment, together with interest on such amount from the
  date of such repayment by the Agent or such Lender, as the
  case may be, to the date of payment to the Agent at the
  applicable after-maturity rates set forth in the Credit
  Agreements.
  
      (m)  Additional Guarantors
  
           Upon the execution and delivery to the Agent of a
  Supplement by any Person, such Person shall be a Guarantor.
  
      (n)  Other Provisions
  
           (A)  This Guaranty is the "Guaranty" referred to in
  the Credit Agreements.  Each of the Agent and the Guarantors
  acknowledges that certain provisions of the Credit
  Agreements, including, without limitation, Sections 11.1
  (Amendments and  Waivers), 11.3 (No Waiver; Cumulative
  Remedies), 11.7 (Assignments and Participations), 11.8
  (Counterparts), 11.12 (Governing Law), 11.14 (Severability),
  11.15. (Integration), 11.16 (Consent to Jurisdiction), 11.17
  (Service of Process), 11.18 (No Limitation on Service or
  Suit) and 11.19 (WAIVER OF TRIAL BY JURY) thereof, are made
  applicable to this Guaranty and all such provisions are
  incorporated by reference herein as if fully set forth
  herein.
  
           (B)  All Schedules and Annexes hereto shall be
  deemed to be a part hereof. With respect to an Additional
  Guarantor, all references in this Agreement to (i) a Schedule
  hereof shall refer to the corresponding Schedule to the
  Supplement executed and delivered by such Additional
  Guarantor and (ii) the date hereof, shall refer to the date
  on which the Additional Guarantor became a Grantor hereunder
  by executing and delivering a Supplement.
  
           (C)  No failure by the Agent to exercise, and no
  delay by the Agent in exercising, any right or remedy
  hereunder shall operate as a waiver thereof.
  
           (D)  Each and every right, remedy and power granted
  to the Agent hereunder or allowed at law, in equity or by
  other agreement shall be cumulative and not exclusive, and
  may be exercised by the Agent from time to time.
  
           (E)  Each Guarantor hereby waives presentment,
  demand for payment, notice of default, nonperformance and
  dishonor, protest and notice of protest of or in respect of
  this Guaranty, the Loan Documents and the Borrower
  Obligations, notice of acceptance of this Guaranty and
  reliance hereupon by the Agent and each Lender, and the
  incurrence of any of the Borrower Obligations, notice of any
  sale of collateral security or any default of any sort and
  notice of any amendment, modification, increase or waiver of
  any Loan Document.
  
           (F)  No Guarantor is relying upon the Agent or any
  Lender to provide to such Guarantor any information
  concerning the Borrower or any Subsidiary of the Borrower,
  and each Guarantor has made arrangements satisfactory to such
  Guarantor to obtain from the Borrower on a continuing basis
  such information concerning the Borrower and its Subsidiaries
  as such Guarantor may desire.
  
           (G)  Each Guarantor agrees that any statement of
  account with respect to the Borrower Obligations from the
  Agent or any Lender to the Borrower which binds the Borrower
  shall also be binding upon such Guarantor, and that copies of
  said statements of account maintained in the regular course
  of the Agent's or such Lender's business, as the case may be,
  may be used in evidence against such Guarantor in order to
  establish its Guarantor Obligations.
  
           (H)  Each Guarantor acknowledges that it has
  received a copy of the Loan Documents.  In addition, such
  Guarantor acknowledges having read each Loan Document and
  having had the advice of counsel in connection with all
  matters concerning its execution and delivery of this
  Guaranty, and, accordingly, waives any right it may have to
  have the provisions of this Guaranty strictly construed
  against the Agent and the Lenders.
  
    
 The Guarantors and the Borrower have each caused this
  Guaranty to be duly executed and delivered by its duly
  authorized officer as of the date first above written.
  
                                                             
  
  
  
                               By:                           
                               Name:                         
                               Title:                        
  
  
                                                             
  
  
  
                               By:                           
                               Name:                         
                               Title:                        
  
  
  Accepted and Agreed to:
  
  
  THE BANK OF NEW YORK, as Agent
  
  
  
  By:                        
  Name:                      
  Title:                     
  
  
  
    
                             Annex 1 to the Guaranty and
                               Subordination Agreement
  
  
      FORM OF SUPPLEMENT TO GUARANTY AND SUBORDINATION AGREEMENT
  
  
  SUPPLEMENT, dated as of _____ __, 199_, made by ___________,
  a ______ corporation (the "New Guarantor") to the Guaranty
  (the "Guaranty"), dated as of ____ __, 1994, made by each
  Guarantor party thereto and ATLANTIC ENERGY, INC., a New
  Jersey corporation (the "Borrower") to THE BANK OF NEW YORK,
  as Agent (in such capacity, the "Agent").
  
  Reference is made to the Credit Agreements (Facility A and
  Facility B), dated as of September 28, 1995, by and among the
  Borrower, the Lenders party thereto (the "Lenders") and the
  Agent (as the same may be amended, extended, increased,
  modified, refunded or refinanced from time to time, the
  "Credit Agreements").
  
  Capitalized terms used herein and not otherwise defined
  herein shall have the meanings assigned to such terms in the
  Guaranty or the Credit Agreements, as the case may be.
  
  Accordingly, the Agent and the New Guarantor agree as
  follows:
  
  In accordance with Section 10 of the Guaranty, by signing
  this Supplement, the New Guarantor (a) shall be, and shall be
  deemed to be,  a "Guarantor" under, and as such term is
  defined in, the Guaranty with the same force and effect as if
  originally named therein as a Guarantor, (b) shall have made,
  and shall be deemed to have made, the representations and
  warranties contained in Section 4 of the Guaranty on and as
  of the date hereof, and (c) shall have made, and shall be
  deemed to have made, all of the covenants and agreements of a
  Guarantor set forth in the Guaranty.
  
  Except as expressly supplemented hereby, the Guaranty shall
  remain in full force and effect.
  
  This Supplement shall be governed by and construed in
  accordance with the laws of the State of New York without
  regard to conflicts of laws rules.
  
  Every provision of this Supplement is intended to be
  severable, and if any term or provision hereof shall be
  invalid, illegal or unenforceable for any reason, the
  validity, legality and enforceability of the remaining
  provisions hereof or thereof shall not be affected or
  impaired thereby, and any invalidity, illegality or
  unenforceability in any jurisdiction shall not affect the
  validity, legality or enforceability of any such term or
  provision in any other jurisdiction.
  
  (o)For purposes of Section 7 of the Guaranty, the address of the New
  Grantor is as follows:
  
                                 
                                 
                                 
           Attention:                  ,
  
  
           Telephone:  (___) ___-____
           Fax:        (___) ___-____.
  
  This Supplement may be executed in two or more counterparts,
  each of which shall constitute an original, but all of which,
  when taken together, shall constitute but one instrument. 
  This Supplement shall become effective when the Agent shall
  have received counterparts of this Supplement that, when
  taken together, bear the signatures of the New Grantor and
  the Agent.
  
           The New Grantor and the Agent have duly executed
  this Supplement to the Guaranty as of the day and year first
  above written.
  
                 [NAME OF NEW GUARANTOR]
  
  
           By:                          
           Name:                        
           Title:                       
  
           THE BANK OF NEW YORK, AS AGENT
  
  
           By:                          
           Name:                        
           Title:                       
    
                     ATLANTIC ENERGY SCHEDULE 1.1
              TO REVOLVING CREDIT AGREEMENT (FACILITY A)
                    DATED AS OF SEPTEMBER 28, 1995
                                   
  
                        LIST OF LENDING OFFICES
  
  
  DOMESTIC LENDING OFFICES             EURODOLLAR LENDING OFFICES

1.The Bank of New York            The Bank of New York
One Wall Street                   One Wall Street
Agency Function Administration    Agency Function Administration
18th Floor                        18th Floor
New York, NY 10286                New York, NY 10286
Attention:    Patricia Clancy     Attention:Patricia Clancy
Telephone:    (212) 635-4696      Telephone:(212) 635-4696
Telecopy:     (212) 635-6365 or   Telecopy: (212) 635-6365 or
              (212) 635-6366 or             (212) 635-6366 or
              (212) 635-6367                (212) 635-6367


2.The First National Bank         The First National Bank
  of Chicago                        of Chicago
One First National Plaza          One First National Plaza
Chicago, IL 60670                 Chicago, IL 60670
Attention:Peggy Corcoran or       Attention:Peggy Corcoran or
         Rita Bhatia                        Rita Bhatia
         Operating Services Dept.           Operating Services Dept.
Telephone:(312) 732-5957 or       Telephone:(312) 732-5957 or
              (312) 732-5205                (312) 732-5205
Telecopy:      (312) 732-4840                Telecopy: (312) 732-4840


3.Mellon Bank, N.A.               Mellon Bank, N.A.
Three Mellon Bank Center          Three Mellon Bank Center
Room 2302                         Room 2302
Pittsburgh, PA 15259-0003         Pittsburgh, PA 15259-0003
Attention:Sue Cooke               Attention:Sue Cooke
            Loan Administration             Loan Administration
     Telephone:(412) 236-0437 Telephone:(412) 236-0437
   Telecopy:  (412) 236-2027 or             Telecopy: (412) 236-2027 or
              (412) 236-2028                (412) 236-2028

                                                    Facility B


    [Conformed Copy]


                      REVOLVING CREDIT AGREEMENT (FACILITY B)



                                   by and among



                              ATLANTIC ENERGY, INC.,

                             THE LENDERS PARTY HERETO,


                                        AND


                          THE BANK OF NEW YORK, AS AGENT




                                 ________________

                                    $40,000,000
                                 ________________





                          Dated as of September 28, 1995







                                 TABLE OF CONTENTS


1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION                  1

   1.1.  Definitions                                           1
   1.2.  Principles of Construction                           16

2.  AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT           17

   2.1.  Revolving Credit Loans                               17
   2.2.  Revolving Credit Notes                               17
   2.3.  Procedure for Borrowing Revolving Credit Loans       17
   2.4.  Competitive Bid Loans; Procedure                     19
   2.5.  Voluntary Reduction or Termination of Aggregate
         Commitments; Letter of Credit                        21
   2.6.  Prepayments of the Loans                             22
   2.7.  Conversions and Continuations                        22
   2.8.  Interest Rate and Payment Dates                      23
   2.9.  Substituted Interest Rate                            25
   2.10  Taxes                                                25
   2.11  Illegality                                           27
   2.12  Increased Costs                                      28
   2.13  Indemnification for Loss                             29
   2.14  Survival of Certain Obligations                      29
   2.15  Use of Proceeds                                      29
   2.16  Capital Adequacy                                     30
   2.17  Change of Lending Office; Right to Substitute
         Lender                                               30
   2.18. Letter of Credit Sub-Facility                        31
   2.19. Letter of Credit Participation and Funding
         Commitments                                          32
   2.20. Absolute Obligation with respect to Letter of
         Credit Payments                                      33
   2.21. Increased Costs Based on Letters of Credit           33
   2.22. Extension of Maturity Date                           34
   2.23. Change in Control                                    36
   2.24. Agent's Records                                      37

3. FEES; PAYMENTS                                             37

  3.1.   Facility Fee                                         37
  3.2.   Letter of Credit Fees                                37
  3.3.   Agent's Fees                                         37
  3.4.   Pro Rata Treatment and Application of Principal
         Payments                                             38

4.  REPRESENTATIONS AND WARRANTIES                            38

  4.1.  Subsidiaries                                          38
  4.2.  Existence and Power                                   38
  4.3.  Authority; Enforceability                             39
  4.4.  Required Consents                                     39
  4.5.  No Conflicting Agreements, Compliance with
        Laws; Taxes                                           39
  4.6.  Franchises, Licenses, Etc.                            39
  4.7.  Investment Company Act                                39
  4.8.  Public Utility Status                                 40
  4.9.  Federal Reserve Regulations; Use of Loan
        Proceeds                                              40
  4.10. Litigation                                            40
  4.11. Financial Statements                                  40
  4.12. Plans                                                 41
  4.13. Ownership of Property; Liens                          41
  4.14. Security Interests                                    41
  4.15. Environmental Matters                                 41
  4.16. Certain Business Activities                           42

5.  CONDITIONS TO FIRST LOANS OR THE ISSUANCE OF FIRST
    LETTERS OF CREDIT                                        42

  5.1.  Evidence of Action                                   42
  5.2.  This Agreement; Notes                                42
  5.3.  Certificate as to Approvals and Liens                42
  5.4.  Pledge Agreement                                     43
  5.5.  Facility A Loan Documents                            43
  5.6.  Other Credit Facilities                              43
  5.7.  ACE Preferred Stock                                  43
  5.8.  Opinions of Counsel                                  43
  5.9.  Opinion of Special Counsel                           43
  5.10. Fees                                                 44

6.  CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF
    CREDIT                                                   44

  6.1.  Compliance                                           44
  6.2.  Borrowing Request; Competitive Bid Request           44
  6.3.  Letter of Credit Request                             44

7.  AFFIRMATIVE COVENANTS                                    44

  7.1.  Financial Statements                                 45
  7.2.  Certificates; Other Information                      45
  7.3.  Legal Existence                                      46
  7.4.  Taxes                                                46
  7.5.  Insurance                                            46

  7.6.  Condition of Property                                46
  7.7.  Observance of Legal Requirements                     47
  7.8.  Inspection of Property; Books and Records;
        Discussions                                          47
  7.9.  Licenses, Franchises, Intellectual Property,
        Etc.                                                 47
  7.10. Indebtedness Capitalization Ratio                    47
  7.11. Ratio of Indebtedness to Annualized ACE
        Dividends                                            47

8.  NEGATIVE COVENANTS                                       47

  8.1.  Indebtedness                                         47
  8.2.  Liens                                                48
  8.3.  Merger; Consolidation                                48
  8.4.  Restricted Payments                                  49
  8.5.  Investments, Acquisitions, Loans, Etc.               49
  8.6.  Amendments, Etc. of Intercompany Notes               50
  8.7.  Designation of Operating Subsidiaries                51
  8.8.  Certain Business Activities                          51

9.  DEFAULT                                                  51

  9.1.  Events of Default                                    51

10.  THE AGENT                                               54

  10.1. Appointment                                          54
  10.2. Delegation of Duties                                 54
  10.3. Exculpatory Provisions                               54
  10.4. Reliance by Agent                                    55
  10.5. Notice of Default                                    55
  10.6. Non-Reliance on Agent and Other Lenders              56
  10.7. Indemnification                                      56
  10.8. Agent in Its Individual Capacity                     57
  10.9. Successor Agent                                      57

11.  OTHER PROVISIONS                                        58

  11.1. Amendments and Waivers                               58
  11.2. Notices                                              58
  11.3. No Waiver; Cumulative Remedies                       59
  11.4. Survival of Representations and Warranties           60
  11.5. Payment of Expenses and Taxes                        60
  11.6. Lending Offices                                      60
  11.7. Assignments and Participations                       61
  11.8. Counterparts                                         62
  11.9. Adjustments; Set-off                                 63
  11.10 Indemnity                                            64

  11.11. Governing Law                                       64
  11.12. Headings Descriptive                                64
  11.13. Severability                                        64
  11.14. Integration                                         65
  11.15. Consent to Jurisdiction                             65
  11.16. Service of Process                                  65
  11.17. No Limitation on Service or Suit                    65
  11.18. WAIVER OF TRIAL BY JURY                             65

EXHIBITS

Exhibit A    List of Commitments
Exhibit B-1  Form of Revolving Credit Note
Exhibit B-2  Form of Competitive Bid Note
Exhibit C    Form of Borrowing Request
Exhibit D    Form of Competitive Bid Request
Exhibit E    Form of Invitation to Bid
Exhibit F    Form of Competitive Bid
Exhibit G    Form of Competitive Bid Accept/Reject Letter
Exhibit H    Form of Competitive Bid Loan Confirmation
Exhibit I    Form of Notice of Conversion/Continuation
Exhibit J    Form of Letter of Credit Request
Exhibit K    Form of Compliance Certificate
Exhibit L    Form of Pledge Agreement
Exhibit M    Form of Intercompany Note
Exhibit N    Form of Opinion of Counsel to the Borrower
Exhibit O    Form of Opinion of Special Counsel 
Exhibit P    Form of Assignment and Acceptance Agreement
Exhibit Q    Form of Guaranty


SCHEDULES

Schedule 1.1 List of Lending Offices
Schedule 4.1 List of Subsidiaries
Schedule 4.1 List of Existing Pension Plans
Schedule 8.1 List of Existing Indebtedness
Schedule 8.2 List of Existing Liens
Schedule 8.5 List of Existing Investments
   
      REVOLVING CREDIT AGREEMENT (FACILITY B), dated as of September 28,
1995, by and among ATLANTIC ENERGY, INC., a New Jersey corporation (the
"Borrower"), the lenders party hereto (together with their respective
assigns, the "Lenders", each a "Lender") and THE BANK OF NEW YORK, as
agent for the Lenders (in such capacity, the "Agent").


A.       DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

         1.   Definitions

              As used in this Agreement, terms defined in the preamble
have the meanings therein indicated, and the following terms have the
following meanings:

              "ABR Advances": the Revolving Credit Loans (or any
portions thereof) at such time as they (or such portions) are made
and/or being maintained at a rate of interest based upon the Alternate
Base Rate.

              "ACE": Atlantic City Electric Company, a New Jersey
corporation and a wholly owned Subsidiary of the Borrower.

              "ACE Preferred Stock": the Cumulative Preferred Stock,
$100 par value, the No Par Preferred Stock and the Preference Stock, No
Par Value of ACE outstanding from time to time.

              "Accountants": Deloitte & Touche LLP (or any successor
thereto), or such other firm of certified public accountants of
recognized national standing selected by the Borrower.

              "Acquisition": the acquisition of a business by the
Borrower or any of its Subsidiaries through either a merger with another
Person or the purchase of all or substantially all of the capital Stock
of another Person or all or substantially all of the assets of another
Person or of a division of another Person.

              "Accumulated Funding Deficiency": as defined in Section
302 of ERISA.

              "Advance": with respect to a Revolving Credit Loan, an
ABR Advance or a Eurodollar Advance, as the case may be.

              "Affected Advance": as defined in Section 2.9.

              "Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person.  For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (i) to
vote 5% or more of the securities or other interests having ordinary
voting power for the election of directors or other managing Persons
thereof or (ii) to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.

              "Aggregate Commitments": on any date, the sum of all
Commitments on such date.

              "Aggregate Credit Exposure": as of any date of
determination, the sum of (i) the aggregate outstanding principal
balance of all Revolving Credit Loans and Competitive Bid Loans of all
Lenders, plus (ii) an amount equal to Letter of Credit Exposure of all
Lenders.

              "Aggregate Facility A Commitments": the aggregate of the
Facility A Commitments of the Facility A Lenders.

              "Agreement": this Revolving Credit Agreement (Facility
B), as the same may be amended, supplemented or otherwise modified from
time to time.

              "Alternate Base Rate": on any date, a rate of interest
per annum equal to the higher of (i) the Federal Funds Rate in effect on
such date plus 1/2 of 1% or (ii) the BNY Rate in effect on such date.

              "Annualized ACE Dividends": at any date of determination,
an amount equal to (i) the amount of dividends paid to the Borrower by
ACE during the fiscal quarter ending on such date of determination or,
if such date of determination is not a fiscal quarter ending date, the
immediately preceding fiscal quarter, multiplied by (ii) four.

              "Applicable Fee Percentage": with respect to the amount
of the Aggregate Commitments, at all times during which the applicable
Pricing Level set forth below is in effect, the percentage set forth
below next to such Pricing Level, subject to the provisos set forth
below:

                                         Applicable
                Pricing Level            Fee Percentage

                Pricing Level I           0.150%
                Pricing Level II          0.175%
                Pricing Level III         0.200%
                Pricing Level IV          0.250%


provided that (i) changes in the Applicable Fee Percentage resulting
from a change in the Pricing Level shall become effective on the
effective date of any change in the Senior Debt Rating by Moody's or S&P
and (ii) in the event of a split in ratings resulting in the Senior Debt
Rating by S&P and Moody's falling within different Pricing Levels, the
Applicable Fee Percentage shall be the lower percentage.

              "Applicable Lending Office": in respect of any Lender,
(i) in the case of such Lender's ABR Advances and Competitive Bid Loans,
its Domestic Lending Office and (ii) in the case of such Lender's
Eurodollar Advances, its Eurodollar Lending Office.

              "Applicable Margin": with respect to (i) the unpaid
principal amount of Eurodollar Advances, and (ii) the daily amount
available to be drawn under each Letter of Credit in the case of the
Letter of Credit Fees, in each case at all times during which the
applicable Pricing Level set forth below is in effect, the percentage
set forth below next to such Pricing Level, subject to the provisos set
forth below:

                 Pricing Level              Applicable Margin

                 Pricing Level I             0.275%
                 Pricing Level II            0.300%
                 Pricing Level III           0.400%
                 Pricing Level IV            0.500%

provided that (i) changes in the Applicable Margin resulting from a
change in the Pricing Level shall become effective on the effective date
of any change in the Senior Debt Rating by Moody's or S&P and (ii) in
the event of a split in ratings resulting in the Senior Debt Rating by
each of S&P and Moody's falling within different Pricing Levels, the
Applicable Margin shall be the lower percentage.

      "Approved Financial Institutions": collectively, (i) each Lender,
(ii) those major United States and foreign commercial banks with which
the Borrower or its affiliates have formal line-of-credit relationships
as of the Effective Date, (iii) domestic branches of major Canadian
banks and (iv) such other banks as appropriate officers of the Borrower
may deem appropriate and with respect to which the Agent shall have
received advance written notice.

      "Assignment and Acceptance Agreement": an assignment and
acceptance agreement executed by an assignor and an assignee pursuant to
which the assignor assigns to the assignee all or any portion of such
assignor's (i) Notes, (ii) Commitment, (iii) Facility A Notes and (iv)
Facility A Commitment, substantially in the form of Exhibit P.

      "Assignment Fee": as defined in Section 11.7(b).

      "Atlantic Thermal": Atlantic Thermal Systems, Inc., a New Jersey
corporation and a wholly owned Subsidiary of the Borrower.

      "ATE": ATE Investment, Inc., a New Jersey corporation and a
wholly owned Subsidiary of the Borrower.

      "ATE Credit Agreement": the Revolving Credit and Term Loan
Agreement, dated as of May 24, 1988, as amended, between ATE and BNY.

      "Authorized Signatory": as to (i) any Person which is a
corporation, the chairman of the board, the president, any vice
president, the chief financial officer or any other duly authorized
officer (acceptable to the Agent) of such Person and (ii) any Person
which is not a corporation, the general partner or other managing Person
thereof.

      "Benefited Lender": as defined in Section 11.9.

      "Bid Rate": as defined in Section 2.4(b).

           "BNY": The Bank of New York.

      "BNY Rate": a rate of interest per annum equal to the rate of
interest publicly announced in New York City by BNY from time to time as
its prime commercial lending rate, such rate to be adjusted
automatically (without notice) on the effective date of any change in
such publicly announced rate.

      "Borrowing Date": any Business Day on which (i) the Lenders make
Revolving Credit Loans in accordance with a Borrowing Request, (ii) one
or more Lenders make Competitive Bid Loans pursuant to Competitive Bids
which have been accepted by the Borrower or (iii) the Issuing Bank
issues a Letter of Credit.

      "Borrowing Request": a request for Revolving Credit Loans in the
form of Exhibit C.

      "Business Day": any day other than a Saturday, a Sunday or a day
on which commercial banks located in New York City are authorized or
required by law or other governmental action to close.

      "Capital Lease Obligations": with respect to any Person,
obligations of such Person with respect to leases which, in accordance
with GAAP, are required to be capitalized on the financial statements of
such Person.

      "Change in Control": either (i) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becoming
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of shares of capital Stock of the Borrower entitled to exercise more
than 50% of the total voting power of all outstanding shares of capital
Stock, unless such beneficial ownership is approved by the board of
directors of the Borrower prior to the acquisition; or (ii) a majority
of the board of directors of the Borrower are not Continuing Directors. 

      "Code": the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.

      "Collateral": collectively, the collateral under and as defined
in the Pledge Agreement.

      "Commitment": in respect of any Lender, such Lender's undertaking
during the Commitment Period to make Revolving Credit Loans, subject to
the terms and conditions hereof, in an aggregate outstanding principal
amount not exceeding the amount set forth next to the name of such
Lender in Exhibit A under the heading "Commitment", as the same may be
reduced pursuant to Section 2.5.

      "Commitment Period": the period from the Effective Date until the
day before the Maturity Date.

      "Commitment Percentage": as to any Lender, the percentage set
forth opposite the name of such Lender in Exhibit A under the heading
"Commitment Percentage".

           "Competitive Bid": an offer by a Lender, in the form of Exhibit
F, to make a Competitive Bid Loan.

      "Competitive Bid Accept/Reject Letter": a notification given by
the Borrower pursuant to Section 2.4 in the form of Exhibit G.

      "Competitive Bid Loan": each Loan from a Lender to the Borrower
pursuant to Section 2.4.

      "Competitive Bid Loan Confirmation": a confirmation by the Agent
to a Lender of the acceptance by the Borrower of any Competitive Bid (or
Portion thereof) made by such Lender, substantially in the form of
Exhibit H.

      "Competitive Bid Note" and "Competitive Bid Notes": as defined in
Section 2.4(g).

      "Competitive Bid Request": a request by the Borrower, in the form
of Exhibit D, for Competitive Bids.

      "Competitive Interest Period": with respect to any Competitive
Bid Loan, the period commencing on the date of such Competitive Bid Loan
and ending on the date requested in the Competitive Bid Request with
respect to such Competitive Bid Loan, which date shall not be earlier
than 7 days after the date of such Competitive Bid Loan or later than
180 days after the date of such Competitive Bid Loan; provided, however,
that if any Competitive Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless such next succeeding Business Day would
be a date on or after the Maturity Date, in which case such Competitive
Interest Period shall end on the next preceding Business Day, and
provided further that no Competitive Interest Period shall end after the
Maturity Date.  Interest shall accrue from and including the first day
of a Competitive Interest Period to but excluding the last day of such
Competitive Interest Period.

      "Compliance Certificate": a certificate in the form of Exhibit K.

      "Consenting Lenders": as defined in Section 2.22(b).

      "Consolidated": the Borrower and its Subsidiaries which are
consolidated for financial reporting purposes.

      "Consolidated Total Indebtedness": at any date of determination,
total Indebtedness of the Borrower and its Subsidiaries determined on a
Consolidated basis in accordance with GAAP.

      "Consolidated Total Capitalization": at any date of determination
with respect to the Borrower and its Subsidiaries on a Consolidated
basis in accordance with GAAP, the sum of (i) the amount classified as
common shareholders equity for purposes of balance sheet presentation in
accordance with GAAP, plus (ii) the amount classified as preferred stock
for purposes of balance sheet presentation in accordance with GAAP, plus
(iii) all Indebtedness (net of unamortized premium and discount), less
(iv) unamortized capital Stock expense.

           "Contingent Obligation": as to any Person (the "secondary
obligor"), any obligation of such secondary obligor (i) guaranteeing or
in effect guaranteeing any return on any investment made by another
Person, or (ii) guaranteeing or in effect guaranteeing any Indebtedness,
lease, dividend or other monetary obligation ("primary obligation") of
any other Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of such
secondary obligor, whether contingent, (A) to purchase any such primary
obligation or any Property constituting direct or indirect security
therefor, (B) to advance or supply funds (x) for the purchase or payment
of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (C) to purchase Property,
securities or services primarily for the purpose of assuring the
beneficiary of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, (D) otherwise to
assure or hold harmless the beneficiary of such primary obligation
against loss in respect thereof, and (E) in respect of the liabilities
of any partnership in which such secondary obligor is a general partner,
except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate Property,
provided, however, that the term "Contingent Obligation" shall not
include the indorsement of instruments for deposit or collection in the
ordinary course of business.  The amount of any Contingent Obligation of
a Person shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.

      "Continuing Director": at any date of determination, a member of
the board of directors of the Borrower who (i) was a member of such
board for the prior of 24 months prior to such date or (ii) was
nominated for election or elected to such board with the affirmative
vote of at least two-thirds of the Continuing Directors.

      "Control Person": as defined in Section 2.16.

      "Conversion/Continuation Date": the date on which (i) a
Eurodollar Advance is converted to an ABR Advance, (ii) the date on
which an ABR Advance is converted to a Eurodollar Advance or (iii) the
date on which a Eurodollar Advance is continued as a new Eurodollar
Advance.

      "Credit Exposure": with respect to any Lender as of any date, the
sum as of such date of (i) the outstanding principal balance of such
Lender's Revolving Credit Loans, plus (ii) an amount equal to such
Lender's Letter of Credit Exposure.

      "Default": any event or condition which constitutes an Event of
Default or which, with the giving of notice, the lapse of time, or any
other condition, would, unless cured or waived, become an Event of
Default.

      "District Heating and Cooling Project": a proposed centralized
steam and chilled water production facility located in Atlantic City,
New Jersey.

      "Dollars" and "$": lawful currency of the United States of
America.

           "Domestic Lending Office": in respect of any Lender, initially,
the office or offices of such Lender designated as such on Schedule 1.1;
thereafter, such other office of such Lender through which it shall be
making or maintaining ABR Advances or Competitive Bid Loans, as reported
by such Lender to the Agent and the Borrower, provided that any Lender
may so report different Domestic Lending Offices for all of its ABR
Advances and all of its Competitive Bid Loans, whereupon references to
the Domestic Lending Office of such Lender shall mean either or both of
such offices, as applicable.

      "Effective Date": September 28, 1995.

      "Employee Benefit Plan": an employee benefit plan within the
meaning of Section 3(3) of ERISA maintained, sponsored or contributed to
by the Borrower, any of its Subsidiaries or any ERISA Affiliate.

      "Environmental Laws": any and all federal, state and local laws
relating to the environment, the use, storage, transporting,
manufacturing, handling, discharge, disposal or recycling of hazardous
substances, materials or pollutants or industrial hygiene, and
including, without limitation, (i) the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 USCA 9601 et
seq.; (ii) the Resource Conservation and Recovery Act of 1976, as
amended, 42 USCA 6901 et seq.; (iii) the Toxic Substance Control Act,
as amended, 15 USCA 2601 et seq.; (iv) the Water Pollution Control Act,
as amended, 33 USCA 1251 et seq.; (v) the Clean Air Act, as amended, 42
USCA 7401 et seq.; (vi) the Hazardous Material Transportation
Authorization Act of 1994, as amended, 49 USCA 5101 et seq. and (viii)
all rules, regulations, judgments, decrees, injunctions and restrictions
thereunder and any analogous state law.

      "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued
thereunder, as from time to time in effect.

      "ERISA Affiliate": when used with respect to an Employee Benefit
Plan, ERISA, the PBGC or a provision of the Code pertaining to employee
benefit plans, any Person that is a member of any group of organizations
within the meaning of Sections 414(b) or (c) of the Code (or, solely for
purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f)
of ERISA and Section 412(n) of the Code, Sections 414(m) or (o) of the
Code) of which the Borrower or any of its Subsidiaries is a member.

      "Eurodollar Advances": collectively, the Revolving Credit Loans
(or any portions thereof) at such time as they (or such portions) are
made and/or being maintained at a rate of interest based upon the
Eurodollar Rate.

      "Eurodollar Interest Period": with respect to any Eurodollar
Advance requested by the Borrower, the period commencing on, as the case
may be, the Borrowing Date or Conversion/Continuation Date with respect
to such Eurodollar Advance and ending one, two, three or six months
thereafter, as selected by the Borrower in its irrevocable Borrowing
Request or its irrevocable Notice of Conversion/Continuation, provided,
however, that (i) if any Eurodollar Interest Period would otherwise end
on a day  which is not a Business Day, such Eurodollar Interest Period
shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another
calendar month, in which event such Eurodollar Interest Period shall end
on the immediately preceding Business Day, (ii) any Eurodollar Interest
Period that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Eurodollar Interest Period) shall end on the
last Business Day of a calendar month and (iii) the Borrower shall
select Interest Periods so as not to have more than four different
Eurodollar Interest Periods outstanding at any one time for all
Eurodollar Advances.

      "Eurodollar Lending Office": in respect of any Lender, initially,
the office, branch or affiliate of such Lender designated as such on
Schedule 1.1 (or, if no such office branch or affiliate is specified,
its Domestic Lending Office); thereafter, such other office, branch or
affiliate of such Lender through which it shall be making or maintaining
Eurodollar Advances, as reported by such Lender to the Agent and the
Borrower.

      "Eurodollar Rate": with respect to the Eurodollar Interest Period
applicable to any Eurodollar Advance, a rate of interest per annum, as
determined by the Agent, obtained by dividing (and then rounding to the
nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the
next higher 1/16 of 1%):

           (a)  the rate, as reported by BNY to the Agent, quoted by
BNY to leading banks in the interbank eurodollar market as the rate at
which BNY is offering Dollar deposits in an amount equal approximately
to the Eurodollar Advance of BNY to which such Interest Period shall
apply for a period equal to such Interest Period, as quoted at
approximately 11:00 a.m. two Business Days prior to the first day of
such Interest Period, by

           (b)  a number equal to 1.00 minus the aggregate of the then
stated maximum rates during such Interest Period of all reserve
requirements (including, without limitation, marginal, emergency,
supplemental and special reserves), expressed as a decimal, established
by the Board of Governors of the Federal Reserve System and any other
banking authority to which BNY and other major United States money
center banks are subject, in respect of eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of the Board
of Governors of the Federal Reserve System) or in respect of any other
category of liabilities including deposits by reference to which the
interest rate on Eurodollar Advances is determined or any category of
extensions of credit or other assets which includes loans by non-
domestic offices of any Lender to United States Residents.  Such reserve
requirements shall include, without limitation, those imposed under such
Regulation D.  Eurodollar Advances shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed to be subject to
such reserve requirements without benefit of credits for proration,
exceptions or offsets which may be available from time to time to any
Lender under such Regulation D. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in any such
reserve requirement.

      "Event of Default": any of the events specified in Section 9.1,
provided that any requirement for the giving of notice, the lapse of
time, or any other condition has been satisfied.

           "Exchange Act": the Securities and Exchange Act of 1934, as
amended.

      "Existing Pension Plans": as defined in Section 4.12.

      "Extension Consent Period": the period which is less than 35
days, but equal to or greater than 30 days, prior to the then current
Maturity Date (provided, however, that if such 30th prior day falls on a
day that is not a Business Day, such date shall be extended to the next
following Business Day).

      "Extension Consent Required Lenders": Lenders having at least
66 2/3% of the Aggregate Commitments (without giving effect to any Loans
outstanding).

      "Extension Request": as defined in Section 2.22.

      "Facility A": the $35,000,000 senior 364-day revolving credit
facility established pursuant to the Facility A Loan Documents.

      "Facility A Agent": The Bank of New York, in its capacity as
agent for the Facility A Lenders under the Facility A Loan Documents.

      "Facility A Commitment": in respect of any Facility A Lender,
such Facility A Lender's undertaking during the Commitment Period (as
defined in the Facility A Credit Agreement) to make Facility A Loans, in
an amount not in excess, and subject to the terms and conditions, of the
Facility A Credit Agreement.

      "Facility A Commitment Percentage": as to any Facility A Lender,
such Facility A Lender's Commitment Percentage as defined in the
Facility A Credit Agreement.

      "Facility A Credit Agreement": the Revolving Credit Agreement
(Facility A), dated as of the date hereof, among the Borrower, the
Facility A Agent and the Facility A Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
 
      "Facility A Lenders": the Lenders party to the Facility A Loan
Documents.

      "Facility A Loan Documents": collectively, the Facility A Credit
Agreement, the Facility A Notes and the Pledge Agreement.

      "Facility A Maturity Date": the maturity date under the Facility
A Credit Agreement, as from time to time extended pursuant thereto.

      "Facility A Notes": collectively, (i) the Revolving Credit Notes
(Facility A) and (ii) the Competitive Bid Notes (Facility A) made by the
Borrower pursuant to the Facility A Credit Agreement, as indorsed or
modified from time to time.

      "Facility Fee": as defined in Section 3.1.

      "Federal Funds Rate": for any day, a rate per annum (expressed as
a decimal, rounded upwards, if necessary, to the next higher 1/100 of
1%), 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 by the Federal
Reserve Bank of New York on the Business Day next succeeding such day,
provided that (i) if the day for which such rate is to be determined is
not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is
not so published for any day, the Federal Funds Rate for such day shall
be the average of the quotations for such day on such transactions
received by BNY as determined by BNY and reported to the Agent.

      "Financial Statements": as defined in Section 4.11.

      "GAAP": generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and in the statements
and pronouncements of the Financial Accounting Standards Board or in
such other statement by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of the date of determination, consistently
applied.  If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in this Agreement, the
Agent, the Lenders and the Borrower shall negotiate in good faith to
amend such ratio or requirement to reflect such change in GAAP (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 GAAP prior to such change therein and (ii) the Borrower
shall provide to the Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change
in GAAP.

      "Governmental Authority": any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator.

      "Highest Lawful Rate": as to any Lender or the Issuing Bank, the
maximum rate of interest, if any, that at any time or from time to time
may be contracted for, taken, charged or received by such Lender on the
Notes or by the Issuing Bank on the Reimbursement Agreements held
thereby, as the case may be, or which may be owing to such Lender or the
Issuing Bank pursuant the Loan Documents under the laws applicable to
such Lender or the Issuing Bank and this transaction.

      "Indebtedness": as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed
money or the deferred purchase price of Property (other than trade
payables incurred in the ordinary course of business), (ii) indebtedness
evidenced by notes, bonds, debentures or similar instruments, (iii)
obligations with respect to any conditional sale or title retention
agreement, (iv) indebtedness arising under acceptance facilities and the
amount available to be drawn under all letters of credit (other than
trade letters of credit) issued for the account of such Person and,
without duplication, all drafts drawn thereunder to the extent such
Person shall not have reimbursed the issuer in respect of the issuer's
payment of such drafts, (v) all liabilities secured by any Lien on any
Property owned by such Person even though  such Person has not assumed
or otherwise become liable for the payment thereof (other than (1)
carriers', warehousemen's, mechanics', repairmen's or other like non-
consensual statutory Liens arising in the ordinary course of business
and (2) liabilities of Subsidiaries (other than ACE and Operating
Subsidiaries) for which recourse may be had by the creditor only to the
Property secured by the Lien), (vi) Capital Lease Obligations and (vii)
Contingent Obligations.

      "Indebtedness Capitalization Ratio": the ratio of (i)
Consolidated Total Indebtedness to (ii) Consolidated Total
Capitalization.

      "Indemnified Person": as defined in Section 11.10.

      "Intercompany Loans": loans from time to time made by the
Borrower to an Operating Subsidiary.

      "Intercompany Note": a promissory note made by an Operating
Subsidiary to the Borrower evidencing the Intercompany Loans made by the
Borrower to such Operating Subsidiary, substantially in the form of
Exhibit M, as the same may be amended, modified or supplemented.

      "Interest Payment Date": (i) as to any ABR Advance, the last day
of each March, June, September and December commencing on the first of
such days to occur after such ABR Advance is made or any Eurodollar
Advance is converted to an ABR Advance, (ii) as to any Eurodollar
Advance in respect of which the Borrower has selected a Eurodollar
Interest Period of one, two or three months, the last day of such
Interest Period, (iii) as to any Eurodollar Advance in respect of which
the Borrower has selected a Eurodollar Interest Period of six months,
the day which is three months after the first day of such Interest
Period and the last day of such Interest Period, (iv) as to any
Competitive Bid Loan as to which the Borrower has selected an Interest
Period of 90 days or less, the last day of such Competitive Interest
Period, and (v) as to any Competitive Bid Loan as to which the Borrower
has selected a Competitive Interest Period of more than 90 days, the day
which is 90 days after the first day of such Competitive Interest Period
and the last day of such Competitive Interest Period.

      "Interest Period": a Eurodollar Interest Period or a Competitive
Interest Period, as the context may require.

      "Investments": as defined in Section 8.5.

      "Invitation to Bid": an invitation to make Competitive Bids in
the form of Exhibit E.

      "Issuing Bank": The Bank of New York.

      "Letter of Credit": as defined in Section 2.18.

      "Letter of Credit Fees": as defined in Section 3.2.

      "Letter of Credit Commitment": the commitment of the Issuing Bank
to issue Letters of Credit having an aggregate outstanding face amount
up to $10,000,000,  and the commitment of the Lenders to participate in
the Letter of Credit Exposure as set forth in Section 2.19.

      "Letter of Credit Exposure": at any date, (i) in respect of all
the Lenders, the sum, without duplication, of (x) the aggregate undrawn
face amount of the outstanding Letters of Credit at such date, (y) the
aggregate amount of unpaid drafts drawn on all Letters of Credit at such
date, and (z) the aggregate unpaid reimbursement obligations in respect
of the Letters of Credit at such date (after giving effect to any Loans
made on such date to pay any such reimbursement obligations), and (ii)
in respect of any Lender, an amount equal to such Lender's Commitment
Percentage multiplied by the amount determined under clause (i) of this
definition.

      "Letter of Credit Request": a request in the form of Exhibit J.

      "Lien": any mortgage, pledge, hypothecation, assignment, deposit
or preferential arrangement, encumbrance, lien (statutory or other), or
other security agreement or security interest of any kind or nature
whatsoever, including, without limitation, any conditional sale or other
title retention agreement and any capital or financing lease having
substantially the same economic effect as any of the foregoing.

      "Loan Documents": collectively, this Agreement, the Notes, the
Pledge Agreement and the Reimbursement Agreements.

      "Loans": the Revolving Credit Loans and/or the Competitive Bid
Loans, as the case may be.
 
      "Margin Stock": any "margin stock", as defined in Regulation U of
the Board of Governors of the Federal Reserve System, as the same may be
amended or supplemented from time to time.

      "Material Adverse Change": a material adverse change in (i) the
financial condition, operations, business or Property of the Borrower
and its Subsidiaries taken as a whole or (ii) the ability of the
Borrower to perform its obligations under the Loan Documents.

      "Material Adverse Effect": a material adverse effect on (i) the
financial condition, operations, business or Property of the Borrower
and its Subsidiaries taken as a whole or (ii) the ability of the
Borrower to perform its obligations under the Loan Documents.

      "Maturity Date": September 27, 1998, or any date subsequent
thereto resulting from an extension of the Maturity Date pursuant to
Section 2.22, or such earlier date on which the Notes shall become due
and payable, whether by acceleration or otherwise.

      "Maximum Offer": as defined in Section 2.4(b).

      "Maximum Request": as defined in Section 2.4(a).

      "Moody's": Moody's Investors Service, Inc., or any successor
thereto.

           "Multiemployer Plan": a Pension Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.

      "Nonconsenting Lender": as defined in Section 2.22.

      "Note": a Revolving Credit Note or a Competitive Bid Note, as the
case may be.

      "Notes": the Revolving Credit Notes and/or the Competitive Bid
Notes, as the case may be.

      "Notice of Conversion/Continuation": a notice substantially in
the form of Exhibit I.

      "Operating Subsidiaries": collectively (i) Atlantic Generation,
Inc., (ii) ATE, (iii) Atlantic Thermal, (iv) Atlantic Jersey Thermal
Systems, Inc., (v) Atlantic Energy Technologies, Inc. and (vi) and each
other Subsidiary of the Borrower engaged in the conduct of an active
trade or business which is designated as an Operating Subsidiary
pursuant to Section 8.7.

      "PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental
Authority succeeding to the functions thereof.

      "Pension Plan": at any date of determination, any Employee
Benefit Plan (including a Multiemployer Plan), the funding requirements
of which (under Section 302 of ERISA or Section 412 of the Code) are, or
at any time within the six years immediately preceding such date, were
in whole or in part, the responsibility of the Borrower, any of its
Subsidiaries or any ERISA Affiliate.

      "Permitted Investments": Investments permitted under Section 8.5.

      "Permitted Liens": Liens permitted to exist under Section 8.2.

      "Permitted Recipient": a Person in which the Borrower owns 50% or
less of the Stock or voting power.

      "Permitted Recipient Loans": loans from time to time made to a
Permitted Recipient by the Borrower to the extent permitted by Section
8.5.

      "Person": any individual, firm, partnership, joint venture,
corporation, association, business enterprise, limited liability
company, joint stock company, unincorporated association, trust,
Governmental Authority or any other entity, whether acting in an
individual, fiduciary, or other capacity, and for the purpose of the
definition of "ERISA Affiliate", a trade or business.

      "Pledge Agreement": the Pledge Agreement, made by the Borrower in
favor of the Agent, as collateral agent for itself, the Lenders, the
Facility A Agent and the Facility A Lenders, substantially in the form
of Exhibit L, as the same may be amended, supplemented or otherwise
modified from time to time.

           "Portion": as defined in Section 2.4(b).

      "Pricing Level I": any time when the Senior Debt Rating is (i) A-
or higher by S&P or (ii) A3 or higher by Moody's, provided, however,
that in the event that (x) the Senior Debt Rating is not available from
either S&P or Moody's, such rating agency shall be deemed to have
assigned its lowest rating and (y) the Senior Debt Rating is not
available from both S&P and Moody's, Pricing Level IV shall be
applicable.

      "Pricing Level II": any time when (i) the Senior Debt Rating is
(a) BBB or higher by S&P or (b) Baa2 or higher by Moody's and (ii)
Pricing Level I does not apply, provided, however, that in the event
that (x) the Senior Debt Rating is not available from either S&P or
Moody's, such rating agency shall be deemed to have assigned its lowest
rating and (y) the Senior Debt Rating is not available from both S&P and
Moody's, Pricing Level IV shall be applicable.

      "Pricing Level III": any time when (i) the Senior Debt Rating is
(a) BBB- or higher by S&P or (b) Baa3 or higher by Moody's and (ii)
Pricing Levels I and II do not apply, provided, however, that in the
event that (x) the Senior Debt Rating is not available from either S&P
or Moody's, such rating agency shall be deemed to have assigned its
lowest rating and (y) the Senior Debt Rating is not available from both
S&P and Moody's, Pricing Level IV shall be applicable.

      "Pricing Level IV": any time when Pricing Levels I, II and III do
not apply.

      "Prohibited Transaction": a transaction that is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.

      "Property": all types of real, personal, tangible, intangible or
mixed property.

      "Real Property": all real property owned or leased (or previously
owned or leased) by the Borrower or any of its Subsidiaries (or any of
their respective predecessors).

      "Reimbursement Agreement": as defined in Section 2.18(b).

      "Replacement Lender": as defined in Section 2.22.

      "Reportable Event": with respect to any Pension Plan, (i) any
event set forth in Sections 4043(b) (other than a Reportable Event as to
which the 30 day notice requirement is waived by the PBGC under
applicable regulations), 4062(c) or 4063(a) of ERISA or the regulations
thereunder, (ii) an event requiring the Borrower, any of its
Subsidiaries or any ERISA Affiliate to provide security to a Pension
Plan under Section 401(a)(29) of the Code, or (iii) any failure to make
any payment required by Section 412(m) of the Code.

      "Required Lenders": (i) if the Commitments exist and no Revolving
Credit Loans or Letters of Credit are outstanding, Lenders having
Commitments equal to at least  66-2/3% of the sum of the Aggregate
Commitments; (ii) if the Commitments exist and Revolving Credit Loans or
Letters of Credit are outstanding, Lenders holding Revolving Credit
Notes and participation interests in Letters of Credit having an
aggregate unpaid principal balance and Letter of Credit Exposure equal
to at least 66-2/3% of the aggregate of Revolving Credit Loans
outstanding and Letter of Credit Exposure; and (iii) if the Commitments
have been terminated or otherwise no longer exist, Lenders holding Notes
and participation interests in Letters of Credit having an aggregate
unpaid principal balance and Letter of Credit Exposure equal to at least
66-2/3% of the aggregate of Loans outstanding and Letter of Credit Exposure.

      "Restricted Payment": as to any Person (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of Stock or other equity interest in such Person now or hereafter
outstanding (other than a dividend payable solely in shares of such
Stock to the holders of such shares) and (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other
acquisition, direct or indirect, of any shares of any class of Stock or
other equity interest in such Person now or hereafter outstanding.

      "Restricted Subsidiaries": collectively, the Operating
Subsidiaries and ACE. 

      "Revolving Credit Loans": as defined in Section 2.1.

      "Senior Debt Rating": the long-term senior secured debt rating of
ACE as from time to time determined by S&P and/or Moody's.

      "S&P": Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or any successor thereto.

      "SEC": the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions thereof.

      "Special Counsel": Emmet, Marvin & Martin, LLP, special counsel
to the Agent.

      "Stock": any and all shares, rights, interests, participations,
warrants or other equivalents (however designated) of corporate stock.

      "Submission Deadline": as defined in Section 2.4(b).

      "Subsidiary": as to any Person, any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which such Person or any Subsidiary of such Person, directly
or indirectly, either (i) in respect of a corporation, owns or controls
more than 50% of the outstanding Stock having ordinary voting power to
elect a majority of the board of directors or similar managing body,
irrespective of whether a class or classes shall or might have voting
power by reason of the happening of any contingency, or (ii) in respect
of an association, partnership, joint venture or other business entity,
is entitled to share in more than 50% of the profits and losses, however
determined.

           "Tax": any present or future tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature and whatever called, by a
Governmental Authority, on whomsoever and wherever imposed, levied,
collected, withheld or assessed.

      "Tax on the Overall Net Income": as to any Person, a Tax imposed
by the jurisdiction in which that Person's principal office (and/or, in
the case of a Lender, its Domestic Lending Office) is located or by any
political subdivision or taxing authority thereof or in which that
Person is deemed to be doing business on all or part of the net income,
profits or gains of that Person (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to
a particular jurisdiction, or otherwise).

      "Termination Event": with respect to any Pension Plan, (i) a
Reportable Event, (ii) the termination of a Pension Plan, or the filing
of a notice of intent to terminate a Pension Plan, or the treatment of a
Pension Plan amendment as a termination under Section 4041(c) of ERISA,
(iii) the institution of proceedings to terminate a Pension Plan under
Section 4042 of ERISA, or (iv) the appointment of a trustee to
administer any Pension Plan under Section 4042 of ERISA.

      "United States": the United States of America (including the
States thereof and the District of Columbia).

 2.   Principles of Construction

      (a)  All terms defined in a Loan Document shall have the meanings
given such terms therein when used in the other Loan Documents or any
certificate, opinion or other document made or delivered pursuant
thereto, unless otherwise defined therein.

      (b)  As used in the Loan Documents and in any certificate,
opinion or other document made or delivered pursuant thereto, accounting
terms not defined in Section 1.1, and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.

      (c)  The words "hereof", "herein", "hereto" and "hereunder" and
similar words when used in a Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof, and
Section, schedule and exhibit references contained therein shall refer
to Sections thereof or schedules or exhibits thereto unless otherwise
expressly provided therein.

      (d)  The phrase "may not" is prohibitive and not permissive.

      (e)  Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.

      (f)  Unless specifically provided in a Loan Document to the
contrary, references to a time shall refer to New York City time.

      (g)  Unless specifically provided in a Loan Document to the
contrary, in the computation of periods of time from a specified date to
a later specified date, the word  "from" means "from and including" and
the words "to" and "until" each means "to but excluding".

      (h)  References in any Loan Document to a fiscal period shall
refer to that fiscal period of the Borrower.


B.    AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT

 1.   Revolving Credit Loans

      Subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans (each a "Revolving Credit Loan"
and, as the context may require, collectively with all other Revolving
Credit Loans of such Lender and with the Revolving Credit Loans of all
other Lenders, the "Revolving Credit Loans") to the Borrower from time
to time during the Commitment Period, provided, however, that
immediately after giving effect thereto (i) such Lender's Credit
Exposure would not exceed such Lender's Commitment, and (ii) the
Aggregate Credit Exposure would not exceed the Aggregate Commitments. 
During the Commitment Period, the Borrower may borrow, prepay in whole
or in part and reborrow under the Aggregate Commitments, all in
accordance with the terms and conditions of this Agreement.

 2.   Revolving Credit Notes

      The Revolving Credit Loans made by a Lender shall be evidenced by
a promissory note of the Borrower, substantially in the form of Exhibit
B-1, with appropriate insertions therein as to date and principal amount
(each, as indorsed or modified from time to time, a "Revolving Credit
Note" and, collectively with the Revolving Credit Notes of all other
Lenders, the "Revolving Credit Notes"), payable to the order of such
Lender for the account of its Applicable Lending Office and representing
the obligation of the Borrower to pay the lesser of (i) the original
amount of the Commitment of such Lender and (ii) the aggregate unpaid
principal balance of all Revolving Credit Loans made by such Lender,
with interest thereon as prescribed in Section 2.8.  Each Revolving
Credit Note shall (iii) be dated the first Borrowing Date, (iv) be
stated to mature on the Maturity Date and (v) bear interest from the
date thereof on the unpaid principal balance thereof at the applicable
interest rate or rates per annum determined as provided in Section 2.8.
Interest shall be payable as specified in Section 2.8.

 3.   Procedure for Borrowing Revolving Credit Loans

      (a)  The Borrower may borrow Revolving Credit Loans under the
Aggregate Commitments on any Business Day during the Commitment Period,
provided, however, that the Borrower shall notify the Agent in writing
by facsimile transmission no later than (i) 12:00 p.m., three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar
Advances and (ii) 11:30 a.m. on the requested Borrowing Date, in the
case of ABR Advances, in each case specifying (1) the aggregate
principal amount to be borrowed under the Aggregate Commitments, (2) the
requested Borrowing Date, (3) whether such borrowing is to consist of
one or more Eurodollar Advances, ABR Advances, or a combination thereof
and (4) if the borrowing is to consist of one or more  Eurodollar
Advances, the length of the Eurodollar Interest Period for each such
Eurodollar Advance, provided, however, that no Eurodollar Interest
Period selected in respect of any Revolving Credit Loan shall end after
the Maturity Date.  If the Borrower fails to give timely notice in
connection with a request for a Eurodollar Advance, the Borrower shall
be deemed to have elected that such Advance shall be made as an ABR
Advance.  Each such notice shall be irrevocable and confirmed promptly
(and in any event within five Business Days) by delivery to the Agent of
a manually signed Borrowing Request.  Each ABR Advance shall be in an
aggregate principal amount equal to $1,000,000 or an integral multiple
of $1,000,000 in excess thereof (or, if the unused amount of the
Aggregate Commitments is less than such amount, then such lesser amount
of the Aggregate Commitments), and each Eurodollar Advance shall be in
an aggregate principal amount equal to $1,000,000 or an integral
multiple of $1,000,000 in excess thereof.

      (b)  Upon receipt of each notice of borrowing from the Borrower,
the Agent shall promptly notify each Lender thereof.  Subject to its
receipt of the notice referred to in the preceding sentence, each Lender
will make the amount of its Commitment Percentage of each borrowing
available to the Agent for the account of the Borrower at the office of
the Agent set forth in Section 11.2 not later than 2:00 p.m. on the
relevant Borrowing Date requested by the Borrower, in funds immediately
available to the Agent at such office.  The amounts so made available to
the Agent on such Borrowing Date will then, subject to the satisfaction
of the terms and conditions of this Agreement, as determined by the
Agent, be made available on such date to the Borrower by the Agent at
the office of the Agent specified in Section 11.2 by crediting the
account of the Borrower on the books of such office with the aggregate
of said amounts received by the Agent. In the event of any inconsistency
between the provisions of this Section and Sections 2.18 and 2.19 with
respect to Loans made pursuant to Section 2.18 to reimburse the Issuing
Bank for amounts paid by the Issuing Bank under Letters of Credit, the
provisions of Sections 2.18 and 2.19 shall control.

      (c)  Unless the Agent shall have received prior notice from a
Lender (by telephone or otherwise, such notice to be promptly confirmed
by fax or other writing) that such Lender will not make available to the
Agent such Lender's Commitment Percentage of the Revolving Credit Loans
requested by the Borrower, the Agent may assume that such Lender has
made such share available to the Agent on the Borrowing Date in
accordance with this Section, provided that such Lender received notice
of the proposed borrowing from the Agent, and the Agent may, in reliance
upon such assumption, make available to the Borrower on the Borrowing
Date a corresponding amount.  If and to the extent such Lender shall not
have so made its Commitment Percentage of such Loans available to the
Agent, such Lender and the Borrower severally agree to pay to the Agent
forthwith on demand such corresponding amount (to the extent not
previously paid by the other), together with interest thereon for each
day from the date such amount is made available to the Borrower to the
date such amount is paid to the Agent, at a rate per annum equal to, in
the case of the Borrower, the applicable interest rate set forth in
Section 2.8 for such Loans, and, in the case of such Lender, the Federal
Funds Rate in effect on each such day (as determined by the Agent). 
Such payment by the Borrower, however, shall be without prejudice to its
rights against such Lender.  If such Lender shall pay to the Agent such
corresponding amount, such amount so paid shall constitute such Lender's
Revolving Credit Loan as part of the Revolving Credit Loans for purposes
of this Agreement, which Revolving Credit Loan shall be deemed to have
been made by such Lender on the Borrowing Date applicable to such
Revolving Credit Loans.

           (d)  If a Lender makes a new Revolving Credit Loan on a Borrowing
Date on which the Borrower is to repay a Revolving Credit Loan or
Competitive Bid Loan from such Lender, such Lender shall apply the
proceeds of such new Revolving Credit Loan to make such repayment, and
only the excess of the proceeds of such new Revolving Credit Loan over
the Revolving Credit Loan or Competitive Bid Loan being repaid need be
made available to the Agent.

      (e)  Notwithstanding the provisions of Section 2.3(a), the Agent
may act without liability upon the basis of telephonic notice of
borrowing believed by the Agent in good faith to be from an authorized
officer of the Borrower prior to receipt of written notice and
confirmation by facsimile or otherwise.  In each such case, the Borrower
waives the right to dispute the Agent's record of the terms of such
telephone notice of such borrowing.

 4.   Competitive Bid Loans; Procedure

      (a)  The Borrower may make Competitive Bid Requests by 12:00 p.m.
at least one Business Day prior to the proposed Borrowing Date for one
or more Competitive Bid Loans.  Each Competitive Bid Request given to
the Agent (which shall promptly on the same day give notice thereof to
each Lender by facsimile transmission of an Invitation to Bid if the
Competitive Bid Request is not rejected pursuant to this Section), shall
be given in writing by facsimile transmission (confirmed promptly, and
in any event within five Business Days, by the delivery to the Agent of
a Competitive Bid Request manually signed by the Borrower), and shall
specify (i) the proposed Borrowing Date, which shall be a Business Day,
(ii) the aggregate amount of the requested Competitive Bid Loans (the
"Maximum Request") which amount (A) shall not exceed an amount which, on
the proposed Borrowing Date and after giving effect to the requested
Competitive Bid Loans, would cause the Aggregate Credit Exposure to
exceed the Aggregate Commitments and (B) shall be in a principal amount
equal to $1,000,000 or an integral multiple of $1,000,000 in excess
thereof, (iii) the Competitive Interest Period(s) therefor and the last
day of each such Competitive Interest Period, and (iv) if more than one
Competitive Interest Period is so specified, the principal amount
allocable to each such Competitive Interest Period (which amount shall
not be less than $1,000,000 or an integral multiple of $1,000,000 in
excess thereof).  A Competitive Bid Request that does not conform
substantially to the form of Exhibit D shall be rejected, and the Agent
shall promptly notify the Borrower of such rejection.  Notwithstanding
anything contained herein to the contrary, (1) not more than three
Competitive Interest Periods may be requested pursuant to any
Competitive Bid Request and (2) not more than three Competitive Bid
Loans may be outstanding at any one time.

      (b)  Each Lender in its sole discretion may (but is not obligated
to) submit one or more Competitive Bids to the Agent not later than
10:00 a.m. on the proposed Borrowing Date specified in such Competitive
Bid Request (such time being herein called the "Submission Deadline"),
by fax or other writing, and thereby irrevocably offer to make all or
any part (any such part referred to as a "Portion") of any Competitive
Bid Loan described in the relevant Competitive Bid Request at a rate of
interest per annum (each a "Bid Rate") specified therein in an aggregate
principal amount of not less than $1,000,000 or an integral multiple of
$1,000,000 in excess thereof, provided that Competitive Bids submitted
by BNY may only be submitted if BNY notifies the Borrower of the terms
of its Competitive Bid not later than thirty minutes prior to the
Submission  Deadline.  Multiple Competitive Bids may be delivered to the
Agent by a Lender.  The aggregate Portions of Competitive Bid Loans for
any or all Competitive Interest Periods offered by each Lender in its
Competitive Bid may exceed the Maximum Request contained in the relevant
Competitive Bid Request, provided that each Competitive Bid shall set
forth the maximum aggregate amount of the Competitive Bid Loans offered
thereby which the Borrower may accept (the "Maximum Offer"), which
Maximum Offer shall not exceed the Maximum Request.  If the Agent has
not received a Competitive Bid from any Lender by the Submission
Deadline, such Lender shall be deemed not to have made a Competitive Bid
and shall not be permitted or obligated to make a Competitive Bid Loan
on the proposed Borrowing Date.

      (c)  The Agent shall promptly give notice by telephone (promptly
confirmed by fax or other writing) to the Borrower of all Competitive
Bids received by the Agent prior to the Submission Deadline which comply
in all material respects with this Section.  The Borrower shall, in its
sole discretion but subject to Section 2.4(d), irrevocably accept or
reject any such Competitive Bid (or any Portion thereof) not later than
10:30 a.m. on the day of the Submission Deadline by notice to the Agent
by telephone (confirmed by fax or other writing in the form of a
Competitive Bid Accept/Reject Letter promptly the same day).  Promptly
upon receipt by the Agent of such a Competitive Bid Accept/Reject
Letter, the Agent will give notice to each Lender that submitted a
Competitive Bid as to the extent, if any, that such Lender's Competitive
Bid shall have been accepted.  If the Agent fails to receive notice from
the Borrower of its acceptance or rejection of any Competitive Bids at
or prior to 10:30 a.m. on the day of the Submission Deadline, all such
Competitive Bids shall be deemed to have been rejected by the Borrower,
and the Agent will give to each Lender that submitted a Competitive Bid
notice of such rejection by telephone on such day.  In due course
following the acceptance of any Competitive Bid, the Agent shall notify
each Lender which submitted a Competitive Bid, in the form of a
Competitive Bid Loan Confirmation, of the amount, maturity date and Bid
Rate for each Competitive Bid Loan.

      (d)  If the Borrower accepts a Portion of a proposed Competitive
Bid Loan for a single Competitive Interest Period at the Bid Rate
provided therefor in a Lender's Competitive Bid, such Portion shall be
in a principal amount of $1,000,000 or an integral multiple of
$1,000,000 in excess thereof (subject to such lesser allocation as may
be made pursuant to the provisions of this Section 2.4(d)).  The
aggregate principal amount of Competitive Bid Loans accepted by the
Borrower following Competitive Bids responding to a Competitive Bid
Request shall not exceed the Maximum Request.  The aggregate principal
amount of Competitive Bid Loans accepted by the Borrower pursuant to a
Lender's Competitive Bid shall not exceed the Maximum Offer therein
contained.  If the Borrower accepts any Competitive Bid Loans or Portion
offered in any Competitive Bid, the Borrower must accept Competitive
Bids (and Competitive Bid Loans and Portions thereby offered) based
exclusively upon the successively lowest Bid Rates within each
Competitive Interest Period and no other criteria.  If two or more
Lenders submit Competitive Bids with identical Bid Rates for the same
Competitive Interest Period and the Borrower accepts any thereof, the
Borrower shall, subject to the first three sentences of this Section
2.4(d), accept all such Competitive Bids as nearly as possible in
proportion to the amounts of such Lender's respective Competitive Bids
with identical Bid Rates for such Competitive Interest Period, provided,
that if the amount of Competitive Bid Loans to be so allocated is not
sufficient to enable each such Lender to make such Competitive Bid Loan
(or Portions thereof) in an aggregate principal amount of $1,000,000 or
an  integral multiple of $1,000,000 in excess thereof, the Borrower
shall round the Competitive Bid Loans (or Portions thereof) allocated to
such Lender or Lenders as the Borrower shall select as necessary to a
minimum of $1,000,000 or an integral multiple of $500,000 in excess
thereof.

      (e)  Not later than 2:00 p.m. on the relevant Borrowing Date,
each Lender whose Competitive Bid was accepted by the Borrower shall
make available to the Agent at its office set forth in Section 11.2, in
immediately available funds, the proceeds of such Lender's Competitive
Bid Loan(s). The amounts so made available to the Agent on such
Borrowing Date will then, subject to the satisfaction of the terms and
conditions of this Agreement, as determined by the Agent, be made
available on such date to the Borrower by the Agent at the office of the
Agent specified in Section 11.2 by crediting the account of the Borrower
on the books of such office with the aggregate of said amounts received
by the Agent.

      (f)  All notices required by this Section 2.4 shall be given in
accordance with Section 11.2.

      (g)  The Competitive Bid Loans made by each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit B-2 (each, as indorsed or modified from time to time, a
"Competitive Bid Note" and, collectively with the Competitive Bid Notes
of all other Lenders, the "Competitive Bid Notes"), payable to the order
of such Lender for the account of its Applicable Lending Office, and
dated the first Borrowing Date.  Each Competitive Bid Loan shall be due
and payable on the earlier of (i) the last day of the Competitive
Interest Period applicable thereto and (ii) the Maturity Date.

 5.   Voluntary Reduction or Termination of Aggregate Commitments;
Letter of Credit

      The Borrower shall have the right, upon at least three Business
Days' prior written notice to the Agent, at any time to terminate the
Aggregate Commitments or from time to time to permanently reduce the
Aggregate Commitments or the Letter of Credit Commitments, provided,
however, that each such reduction shall be in the amount of $5,000,000
or an integral multiple of $1,000,000 in excess thereof.  Each reduction
of the Aggregate Commitments shall be applied pro rata according to the
Commitment Percentage of each Lender.  Simultaneously with each
reduction of the Aggregate Commitments under this Section, the Borrower
shall (i) pay the Facility Fee accrued on the amount by which the
Aggregate Commitments have been reduced and (ii) prepay the Loans as
required by Section 2.6.  The Aggregate Commitments shall not be reduced
below an amount equal to the Aggregate Credit Exposure (after giving
effect to any prepayment of the Loans made simultaneously with such
reduction of the Aggregate Commitments). The Aggregate Commitments shall
not be reduced to the extent that, immediately after giving effect
thereto, the Commitment of any Lender would exceed the sum of (i) the
aggregate principal amount of all Revolving Credit Loans then
outstanding from such Lender plus (ii) the Letter of Credit Exposure of
such Lender.  The Letter of Credit Commitment shall not be reduced below
an amount equal to the Letter of Credit Exposure.

      6.   Prepayments of the Loans

      (a)  Voluntary Prepayments. The Borrower may, at its option,
prepay the Revolving Credit Loans without premium or penalty, in full at
any time or in part from time to time by notifying the Agent in writing
no later than 11:30 a.m. on the date of the proposed prepayment date, in
the case of Revolving Credit Loans consisting of ABR Advances and no
later than 12:00 p.m. on the third Business Day prior to the proposed
prepayment date, in the case of Revolving Credit Loans consisting of
Eurodollar Advances, specifying the Revolving Credit Loans to be
prepaid, the amount to be prepaid and the date of prepayment. 
Competitive Bid Loans may not be prepaid.  Such notice shall be
irrevocable and the amount specified in such notice shall be due and
payable on the date specified, together with accrued interest to the
date of such payment on the amount prepaid.  Upon receipt of such
notice, the Agent shall promptly notify each Lender thereof.  Each
partial prepayment of Revolving Credit Loans shall be in an aggregate
principal amount of (A) $1,000,000 or an integral multiple of $1,000,000
in excess thereof, or (B) if the outstanding principal balance of the
Revolving Credit Loans is less that the minimum amounts set forth in
clause (A), then such lesser outstanding principal balance.  After
giving effect to any partial prepayment with respect to Eurodollar
Advances which were made (whether as the result of a borrowing or a
conversion) on the same date and which had the same Interest Period, the
outstanding principal amount of such Eurodollar Advances shall exceed
(subject to Section 2.7) $1,000,000 or an integral multiple of
$1,000,000 in excess thereof.  If any prepayment is made in respect of
any Eurodollar Advance or Competitive Bid Loan, in whole or in part,
prior to the last day of the applicable Interest Period, the Borrower
agrees to indemnify the applicable Lenders in accordance with Section
2.13.

      (b)  Mandatory Prepayments Relating to Reductions of the
Aggregate Commitments. Simultaneously with each reduction of the
Aggregate Commitments under Section 2.5, the Borrower shall prepay the
Loans by the amount, if any, by which the aggregate unpaid principal
balance of the Loans exceeds the amount of the Aggregate Commitments as
so reduced.  Such prepayments shall be applied (i) first, to prepay the
Revolving Credit Loans pro rata according to the Commitment of each
Lender, and (ii) then, to the extent of any excess remaining, to prepay
the Competitive Bid Loans, pro rata according to the outstanding amount
of each Competitive Bid Loan.

 7.   Conversions and Continuations

      (a)  The Borrower may elect from time to time to convert
Eurodollar Advances to ABR Advances by giving the Agent at least one
Business Day's prior irrevocable notice in writing by facsimile
transmission of such election (confirmed promptly, and in any event
within five Business Days, by the delivery of a manually signed Notice
of Conversion/Continuation), specifying the amount to be so converted,
provided, that any such conversion of Eurodollar Advances shall only be
made on the last day of the Interest Period applicable thereto.  In
addition, the Borrower may elect from time to time to (i) convert ABR
Advances to Eurodollar Advances and (ii) to continue Eurodollar Advances
by selecting a new Interest Period therefor, in each case by giving the
Agent at least three Business Days' prior irrevocable notice in writing
by facsimile transmission of such election (confirmed promptly, and in
any event within five Business Days, by the delivery of a manually
signed Notice of Conversion/Continuation), in the case of a conversion
to, or continuation of, Eurodollar Advances, specifying the amount to 
be so converted and the initial Interest Period relating thereto,
provided that any such conversion of ABR Advances to Eurodollar Advances
shall only be made on a Business Day and any such continuation of
Eurodollar Advances shall only be made on the last day of the Interest
Period applicable to the Eurodollar Advances which are to be continued
as such new Eurodollar Advances.  The Agent shall promptly provide the
Lenders with a copy of each such Notice of Conversion/Continuation.  ABR
Advances and Eurodollar Advances may be converted or continued pursuant
to this Section in whole or in part, provided that conversions of ABR
Advances to Eurodollar Advances, or continuations of Eurodollar Advances
shall be in an aggregate principal amount of $1,000,000 or such amount
plus a whole multiple of $1,000,000 in excess thereof.

      (b)  Notwithstanding anything in this Section to the contrary, no
ABR Advance may be converted to a Eurodollar Advance and no Eurodollar
Advance may be continued, if the Borrower or the Agent has knowledge
that a Default or Event of Default has occurred and is continuing either
(i) at the time the Borrower shall notify the Agent of its election to
convert or continue or (ii) on the requested Conversion/Continuation
Date.  In such event, such ABR Advance shall be automatically continued
as an ABR Advance, or such Eurodollar Advance shall be automatically
converted to an ABR Advance on the last day of the Interest Period
applicable to such Eurodollar Advance.  If an Event of Default shall
have occurred and be continuing, the Agent shall, at the request of the
Required Lenders, notify the Borrower (by telephone or otherwise) that
all, or such lesser amount as the Required Lenders shall designate, of
the outstanding Eurodollar Advances shall be automatically converted to
ABR Advances, in which event such Eurodollar Advances shall be
automatically converted to ABR Advances on the date such notice is
given.

      (c)  No Interest Period selected in respect of conversion or
continuation of any Eurodollar Advance shall end after the Maturity
Date.

      (d)  Each conversion or continuation shall be effected by each
Lender by applying the proceeds of its new ABR Advance or Eurodollar
Advance, as the case may be, to its Advances (or portion thereof) being
converted (it being understood that such conversion shall not constitute
a borrowing for purposes of Sections 4, 5 or 6).

      (e)  Notwithstanding the provisions of Section 2.7(a), the Agent
may act without liability upon the basis of telephonic notice of such
conversion or continuation believed by the Agent in good faith to be
from an authorized officer of the Borrower prior to receipt of written
notice and confirmation, by facsimile or otherwise.  In each such case,
the Borrower waives the right to dispute the Agent's record of the terms
of such telephone notice of such conversion or continuation.

 8.   Interest Rate and Payment Dates

      (a)  Prior to Maturity. Except as otherwise provided in Section
2.8(b), prior to maturity, the Loans shall bear interest on the
outstanding principal balance thereof at the applicable interest rate or
rates per annum set forth below:

      ADVANCES                        RATE

     Each ABR Advance              Alternate Base Rate.

     Each Eurodollar Advance       Eurodollar Rate for the
                                   applicable Interest Period
                                   plus the Applicable Margin.

     Each Competitive              Bid Rate applicable thereto
                                   for Bid Loan the applicable
                                   Competitive Interest Period.


 (b)  Late Charges. If all or any portion of the principal balance of
or interest payable on any of the Loans or any other amount payable
under the Loan Documents shall not be paid when due (whether at the
stated maturity thereof, by acceleration or otherwise), such overdue
balance or amount shall bear interest at a rate per annum (whether
before or after the entry of a judgment thereon) equal to 2% plus the
rate which would otherwise be applicable pursuant to Section 2.8(a),
from the date of such nonpayment to, but not including, the date such
balance is paid in full.  All such interest shall be payable on demand.

      (c)  In General. Interest on (i) ABR Advances to the extent based
on the BNY Rate shall be calculated on the basis of a 365 or 366-day
year (as the case may be), and (ii) ABR Advances to the extent based on
the Federal Funds Rate, on Eurodollar Advances and on Competitive Bid
Loans shall be calculated on the basis of a 360-day year, in each case,
for the actual number of days elapsed, including the first day but
excluding the last.  Except as otherwise provided in Section 2.8(b),
interest shall be payable in arrears on each Interest Payment Date and
upon each payment (including prepayment) of the Loans.  Any change in
the interest rate on the Loans resulting from a change in the Alternate
Base Rate or reserve requirements shall become effective as of the
opening of business on the day on which such change shall become
effective.  The Agent shall, as soon as practicable, notify the Borrower
and the Lenders of the effective date and the amount of each such change
in the BNY Rate, but any failure to so notify shall not in any manner
affect the obligation of the Borrower to pay interest on the Loans in
the amounts and on the dates required.  Each determination of the
Alternate Base Rate or a Eurodollar Rate by the Agent pursuant to this
Agreement shall be conclusive and binding on all parties hereto absent
manifest error.  At no time shall the interest rate payable on the
Loans, together with the Facility Fee and all other amounts payable
under the Loan Documents, to the extent the same are construed to
constitute interest, exceed the Highest Lawful Rate.  If any amount paid
hereunder would exceed the maximum amount of interest permitted by the
Highest Lawful Rate, then such amount shall automatically be reduced to
such maximum permitted amount, and interest for any subsequent period,
to the extent less than the maximum amount permitted for such period by
the Highest Lawful Rate, shall be increased by the unpaid amount of such
reduction.  Any interest actually received for any period in excess of
such maximum allowable amount for such period shall be deemed to have
been applied as a prepayment of (x) the Loans or, if no Loans are then
outstanding, (y) any unpaid reimbursement obligations in respect of
Letters of Credit.  The Borrower acknowledges that to the extent
interest payable on ABR Advances is based on the BNY Rate, the BNY Rate
is only one of the bases for computing interest on loans made by the
Lenders, and by basing interest payable on ABR Advances on the BNY Rate,
the Lenders have not committed to charge, and the Borrower has not in
any way bargained for, interest based on a lower or the lowest rate at
which the Lenders may now or in the future make loans to other
borrowers.

      9.   Substituted Interest Rate

      In the event that (i) the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that by
reason of circumstances affecting the interbank eurodollar market either
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate or (ii) any Lender shall have notified the Agent that it
has determined (which determination shall be conclusive and binding on
the Borrower) that the applicable Eurodollar Rate will not adequately
and fairly reflect the cost to such Lender of maintaining or funding
loans bearing interest based on such Eurodollar Rate, with respect to
any portion of the Revolving Credit Loans that the Borrower has
requested be made as Eurodollar Advances or Eurodollar Advances that
will result from the requested conversion or continuation of any portion
of the Advances into or as Eurodollar Advances (each, an "Affected
Advance"), the Agent shall promptly notify the Borrower and the Lenders
(by telephone or otherwise, to be promptly confirmed in writing) of such
determination on or, to the extent practicable, prior to the requested
Borrowing Date or Conversion/Continuation Date for such Affected
Advances.  If the Agent shall give such notice, (a) any Affected
Advances shall be made as ABR Advances, (b) the Advances (or any portion
thereof) that were to have been converted to or continued as Affected
Advances shall be converted to or continued as ABR Advances and (c) any
outstanding Affected Advances shall be converted, on the last day of the
then current Interest Period with respect thereto, to ABR Advances. 
Until any notice under clauses (i) or (ii), as the case may be, of this
Section has been withdrawn by the Agent (by notice to the Borrower
promptly upon either (1) the Agent having determined that such
circumstances affecting the interbank eurodollar market no longer exist
and that adequate and reasonable means do exist for determining the
Eurodollar Rate pursuant to Section 2.8 or (2) the Agent having been
notified by such Lender that circumstances no longer render the Advances
(or any portion thereof) Affected Advances, no further Eurodollar
Advances shall be required to be made by the Lenders, nor shall the
Borrower have the right to convert or continue all or any portion of the
Loans to Eurodollar Advances.

 10.  Taxes

      (a)  Payments to Be Free and Clear. Provided that all
documentation, if any, then required to be delivered by any Lender or
the Agent pursuant to subsection (c) has been delivered, all sums
payable by the Borrower under the Loan Documents shall (except to the
extent required by law) be paid free and clear of and without any
deduction or withholding on account of any Tax (other than a Tax on the
Overall Net Income of any Lender (for which payment need not be free and
clear but no deduction or withholding shall be made unless then required
by applicable law)) imposed, levied, collected, withheld or assessed by
or within the United States or any political subdivision in or of the
United States or any other jurisdiction from or to which a payment is
made by or on behalf of the Borrower or by any federation or
organization of which the United States or any such jurisdiction is a
member at the time of payment.

      (b)  Grossing-up of Payments. If the Borrower or any other Person
is required by law to make any deduction or withholding on account of
any such Tax (other than a Tax on the Overall Net Income of a Lender)
from any sum paid or payable by the Borrower to the Agent or any Lender
under any of the Loan Documents:

                (i) the Borrower shall notify the Agent and such Lender of
      any such requirement or any change in any such requirement as soon as
      the Borrower becomes aware of it;
 
           (ii) the Borrower shall pay any such Tax before the date on
 which penalties attach thereto, such payment to be made (if the
 liability to pay is imposed on the Borrower) for its own account or
 (if that liability is imposed on the Agent or such Lender, as the case
 may be) on behalf of and in the name of the Agent or such Lender;
 
           (iii) the sum payable by the Borrower to the Agent or a
 Lender in respect of which the relevant deduction, withholding or
 payment is required shall be increased to the extent necessary to
 ensure that, after the making of that deduction, withholding or
 payment, the Agent or such Lender, as the case may be, receives on the
 due date therefor a net sum equal to what it would have received had
 no such deduction, withholding or payment been required or made; and
 
           (iv) within 30 days after paying any sum from which it is
 required by law to make any deduction or withholding, and within 30
 days after the due date of payment of any Tax which it is required by
 clause (b) above to pay, the Borrower shall deliver to the Agent and
 the applicable Lender evidence satisfactory to the other affected
 parties of such deduction, withholding or payment and of the
 remittance thereof to the relevant Governmental Authority;

provided that no such additional amount shall be required to be paid to
any Lender under clause (iii) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender (in
the case of each other Lender) in any such requirement for a deduction,
withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that
in effect at the date of this Agreement or at the date of such
Assignment and Acceptance, as the case may be, in respect of payments to
such Lender.

      (c)  Refunds and Credits. If the Borrower makes any additional
payment to any Lender pursuant to this Section 2.10 in respect of any
Tax, and such Lender determines that it has received (i) a refund of
such Tax or (ii) a credit against or relief or remission for, or a
reduction in the amount of, any tax or other governmental charge
attributable solely to any deduction or credit for any Tax with respect
to which it has received payments under this Section 2.10, such Lender
shall to the extent that it can do so without prejudice to the retention
of such refund, credit, relief, remission or reduction, pay to the
Borrower such amount as such Lender shall have determined to be
attributable to the deduction or withholding of such Tax.  If, within
one year after the payment of any such amount to the Borrower, such
Lender determines that it was not entitled to such refund, credit,
relief, remission or reduction to the full extent of any payment made
pursuant to the first sentence of this Section 2.10(c), the Borrower
shall upon notice and demand of such Lender promptly repay the amount of
such overpayment.  Any determination made by such Lender pursuant to
this Section 2.10(c) shall in the absence of bad faith or manifest error
be conclusive, and nothing in this Section 2.10(c) shall be construed as
requiring any Lender to conduct its business or to arrange or alter in
any respect its tax or financial affairs (except as required by Section
2.17(a)) so that it is  entitled to receive such a refund, credit or
reduction or as allowing any person to inspect any records, including
tax returns of any Lender.

      (d)  Limitation of Liability. No Lender shall be entitled to
demand any payment under this Section 2.10 more than six months
following the payment to or for the account of such Lender of all other
amounts payable hereunder and under any Note held by such Lender and the
termination of such Lender's Commitment; provided, however, that the
foregoing proviso shall in no way limit the right of any Lender to
demand or receive any payment under this Section 2.10 to the extent that
such payment relates to the retroactive application of any Tax if such
demand is made within six months after the implementation of such Tax.

      (e)  U.S. Tax Certificates. Each Lender that is organized under
the laws of any jurisdiction other than the United States shall deliver
to the Agent for transmission to the Borrower, on or prior to the
Effective Date (in the case of each Lender listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance
Agreement pursuant to which it becomes a Lender (in the case of each
other Lender), and at such other times as may be necessary in the
determination of the Borrower or the Agent (each in the reasonable
exercise of its discretion), such certificates, documents or other
evidence, properly completed and duly executed by such Lender
(including, without limitation, Internal Revenue Service Form W-8, Form
1001 or Form 4224 or any other certificate or statement of exemption
required by Treasury Regulations Section 1.1441-4(a) or Section
1.1441-6(c), or Temporary Treasury Regulations Section 35a9999-4T or
Section 35a9999-5, or any successor thereto) to establish that such
Lender is not subject to deduction or withholding of United States
federal income tax under Section 1441 or 1442 of the Code or otherwise
(or under any comparable provisions of any successor statute) with
respect to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Loan Documents.  The Borrower
shall not be required to pay any additional amount to any such Lender
under subsection (b)(iii) above if such Lender shall have failed to
satisfy the requirements of the immediately preceding sentence; provided
that if such Lender shall have satisfied such requirements on the
Effective Date (in the case of each Lender listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance
Agreement pursuant to which it became a Lender (in the case of each
other Lender), nothing in this subsection shall relieve the Borrower of
its obligation to pay any additional amounts pursuant to subsection
(b)(iii) in the event that, as a result of any change in applicable law,
such Lender is no longer properly entitled to deliver certificates,
documents or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described in the
immediately preceding sentence.

 11.  Illegality

      Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any
Lender to make or maintain its Eurodollar Advances as contemplated by
this Agreement, (i) the commitment of such Lender hereunder to make
Eurodollar Advances or convert ABR Advances to Eurodollar Advances shall
forthwith be suspended and (ii) such Lender's Loans then outstanding as
Eurodollar Advances affected hereby, if any, shall be converted
automatically to ABR Advances on the last day of the then current
Interest Period applicable thereto or within such earlier period as
required by  law.  If the commitment of any Lender with respect to
Eurodollar Advances is suspended pursuant to this Section and such
Lender shall notify the Agent and the Borrower that it is once again
legal for such Lender to make or maintain Eurodollar Advances, such
Lender's commitment to make or maintain Eurodollar Advances shall be
reinstated.

 12.  Increased Costs

      In the event that any law, regulation, treaty or directive
hereafter enacted, promulgated, approved or issued or any change in any
presently existing law, regulation, treaty or directive therein or in
the interpretation or application thereof by any Governmental Authority
charged with the administration thereof or compliance by any Lender (or
any corporation directly or indirectly owning or controlling such
Lender) with any request or directive from any Governmental Authority:

      (a)  does or shall subject any Lender to any Taxes of any kind
 whatsoever with respect to any Eurodollar Advances or its obligations
 under this Agreement to make Eurodollar Advances, or change the basis
 of taxation of payments to any Lender of principal, interest or any
 other amount payable hereunder in respect of its Eurodollar Advances,
 including any Taxes required to be withheld from any amounts payable
 under the Loan Documents (except for imposition of, or change in the
 rate of, Tax on the Overall Net Income of such Lender or its
 Applicable Lending Office for any of such Advances by the jurisdiction
 in which such Lender is incorporated or has its principal office or
 such Applicable Lending Office, including, in the case of Lenders
 incorporated in any State of the United States, such tax imposed by
 the United States); or
 
      (b)  does or shall impose, modify or make applicable any reserve,
 special deposit, compulsory loan, assessment, increased cost or
 similar requirement against assets held by, or deposits of, or
 advances or loans by, or other credit extended by, or any other
 acquisition of funds by, any office of such Lender in respect of its
 Eurodollar Advances which is not otherwise included in the
 determination of a Eurodollar Rate;

and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing, converting, continuing or maintaining its
Eurodollar Advances or its commitment to make such Eurodollar Advances,
or to reduce any amount receivable hereunder in respect of its
Eurodollar Advances, then, in any such case, the Borrower shall pay such
Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such additional cost or reduction in such amount
receivable which such Lender deems to be material as determined by such
Lender; provided, however, that (i) nothing in this Section shall
require the Borrower to indemnify the Lenders with respect to
withholding Taxes for which the Borrower has no obligation under Section
2.10, and (ii) no Lender shall be entitled to demand any payment under
this Section 2.12 more than six months following the payment to or for
the account of such Lender of all other amounts payable hereunder and
under any Note held by such Lender and the termination of such Lender's
Commitment; provided, however, that the foregoing proviso shall in no
way limit the right of any Lender to demand or receive any payment under
this Section 2.12 to the extent that such payment relates to the
retroactive application of any law, regulation, treaty or directive if
such demand is made within six months after the implementation of such
retroactive application.  A statement setting forth the calculations of
any additional  amounts payable pursuant to the foregoing sentence
submitted by a Lender to the Borrower shall be conclusive absent
manifest error.

 13.  Indemnification for Loss

      Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow, convert or continue an Advance after it
shall have given notice to do so in which it shall have requested a
Eurodollar Advance pursuant to Section 2.3 or 2.7, as the case may be,
or if the Borrower shall fail to borrow a Competitive Bid Loan after it
shall have accepted one or more offers therefor pursuant to Section 2.4,
or if a Eurodollar Advance or a Competitive Bid Loan shall be terminated
for any reason prior to the last day of the Interest Period applicable
thereto, or if any repayment or prepayment of the principal amount of a
Eurodollar Advance or a Competitive Bid Loan is made for any reason on a
date which is prior to the last day of the Interest Period applicable
thereto, the Borrower agrees to indemnify each Lender against, and to
pay on written demand directly to such Lender the amount (calculated by
such Lender using any method chosen by such Lender which is reasonable
and customarily used by such Lender for such purpose) equal to any loss
or out-of-pocket expense suffered by such Lender as a result of such
failure to borrow, convert or continue, or such termination, repayment
or prepayment, including any loss, cost or expense suffered by such
Lender in liquidating or employing deposits acquired to fund or maintain
the funding of such Eurodollar Advance or Competitive Bid Loan, as the
case may be, or redeploying funds prepaid or repaid, in amounts which
correspond to such Eurodollar Advance or Competitive Bid Loan, as the
case may be, and any internal processing charge customarily charged by
such Lender in connection therewith.  Calculations of all amounts
payable under this Section shall be made on the assumption that each
Lender has funded each of its relevant Eurodollar Advances and
Competitive Bid Loans through the purchase of deposits bearing interest
at the applicable rate of interest for, in an amount equal to the
principal amount of, and with a maturity equivalent to the Interest
Period applicable to, such Eurodollar Advance or Competitive Bid Loan,
as the case may be.

 14.  Survival of Certain Obligations

      The obligations of the Borrower under Sections 2.10, 2.12, 2.13,
2.16, 2.21, 11.5 and 11.10 shall survive the termination of the
Aggregate Commitments and the Letter of Credit Commitment, the payment
of the Loans, the reimbursement obligations in respect of the Letters of
Credit and all other amounts payable under the Loan Documents.

 15.  Use of Proceeds

      The proceeds of the Loans shall be used solely to (i) pay all of
the fees due hereunder, (ii) pay the reasonable out-of-pocket fees and
expenses incurred by the Borrower in connection with the Loan Documents,
(iii) for the general corporate purposes of the Borrower, including,
without limitation, the making of Intercompany Loans to Operating
Subsidiaries of the Borrower and Permitted Recipient Loans to Permitted
Recipients to the extent permitted by Section 8.5 and (iv) to make
repurchases of its stock to the extent permitted by Section 8.4.
Notwithstanding anything to the contrary contained in any Loan Document,
the Borrower agrees that no part of the proceeds of any Loan will be
used, directly or indirectly, for a purpose which violates any law,
including, without  limitation, the provisions of Regulations G, U or X
of the Board of Governors of the Federal Reserve System, as amended.

 16.  Capital Adequacy

      If the amount of capital required or expected to be maintained by
any Lender or any Person directly or indirectly owning or controlling
such Lender (each a "Control Person"), shall be affected by (i) the
introduction or phasing in of any law, rule or regulation after the
Effective Date, (ii) any change after the Effective Date in the
interpretation of any existing law, rule or regulation by any
Governmental Authority charged with the administration thereof, or (iii)
compliance by such Lender or such Control Person with any directive,
guideline or request from any Governmental Authority (whether or not
having the force of law) promulgated or made after the Effective Date,
and such Lender shall have determined that such introduction, phasing
in, change or compliance shall have had or will thereafter have the
effect of reducing (1) the rate of return on such Lender's or such
Control Person's capital, or (2) the asset value to such Lender or such
Control Person of the Loans made or maintained by such Lender, in either
case to a level below that which such Lender or such Control Person
could have achieved or would thereafter be able to achieve but for such
introduction, phasing in, change or compliance (after taking into
account such Lender's or such Control Person's policies regarding
capital adequacy) by an amount deemed by such Lender to be material to
such Lender or Control Person, then, within ten days after demand by
such Lender, the Borrower shall pay to such Lender or such Control
Person such additional amount or amounts as shall be sufficient to
compensate such Lender or such Control Person, as the case may be, for
such reduction.

 17.  Change of Lending Office; Right to Substitute Lender

      (a)  Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.12, 2.13 or 2.21 or to a
requirement under Section 2.10 to withhold and deduct taxes, it will, if
requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another Applicable
Lending Office for any Loans affected by such event, provided that such
designation is made on such terms that such Lender and its Applicable
Lending Office suffer no economic, legal or regulatory disadvantage,
with the object of avoiding the consequence of the event giving rise to
the operation of any such Section.  Except in the case of a change of
Applicable Lending Office made at the request of the Borrower, no change
in Applicable Lending Office will be made if greater costs and expenses
would result under Section 2.12, 2.13 or 2.21 or if the aforementioned
requirement under Section 2.10 would result from any such change in
designation.  Nothing in this Section shall affect or postpone any of
the obligations of the Borrower or the rights of any Lender provided in
Section 2.10, 2.12, 2.16 or 2.21.

      (b)  In addition to the Borrower's rights under subsection (a) of
this Section, upon the occurrence of any event giving rise to the
operation of Section 2.10, 2.12, 2.13 or 2.21, the Borrower may, within
a period of 60 days following the Borrower's obtaining knowledge of the
occurrence of the event giving rise to the operation of such provisions,
at its own expense, make arrangements for another bank or financial
institution reasonably acceptable to the Agent to purchase and accept
the rights and obligations under this Agreement of any Lender entitled
to payment under Section 2.10,  2.12, 2.13 or 2.21, whereupon such
Lender shall assign to the bank or financial institution designated by
the Borrower its rights and obligations hereunder pursuant to the
provisions of Section 11.7 of this Agreement.

 18.  Letter of Credit Sub-Facility

      (a)  Subject to the terms and conditions of this Agreement, the
Issuing Bank agrees, in reliance on the agreement of the other Lenders
set forth in Section 2.19, to issue standby letters of credit (the
"Letters of Credit"; each, individually, a "Letter of Credit") during
the Commitment Period for the account of the Borrower.  The aggregate
amount of Letter of Credit Exposure at any one time outstanding shall
not exceed the lesser of (i) the amount of the Letter of Credit
Commitment and (ii) the excess, if any, of the sum of the Aggregate
Commitments over the sum of the aggregate outstanding Loans.  Each
Letter of Credit issued pursuant to this Section shall have a
termination date which shall be not later than one Business Day before
the Maturity Date.  No Letter of Credit shall be issued if the Agent, or
any Lender by notice to the Agent no later than 1:00 p.m. one Business
Day prior to the requested date of issuance of such Letter of Credit,
shall have determined that the conditions set forth in Section 6 have
not been satisfied.

      (b)  Each Letter of Credit shall be issued for the account of the
Borrower in support of an obligation of the Borrower in favor of a
beneficiary who has requested the issuance of such Letter of Credit as a
condition to a transaction entered into in connection with the business
of an Operating Subsidiary of the Borrower, which transaction does not
include obligations for the borrowing of money or Contingent Obligations
with respect thereto.  The Borrower shall give the Agent a Letter of
Credit Request for the issuance of each Letter of Credit by 11:00 a.m.,
three Business Days prior to the requested date of issuance.  Such
Letter of Credit Request shall be accompanied by the Issuing Bank's
standard Application and Agreement for Standby Letter of Credit (each, a
"Reimbursement Agreement") executed by an Authorized Signatory of the
Borrower, and shall specify (i) the beneficiary of such Letter of Credit
and the obligations of the Borrower in respect of which such Letter of
Credit is to be issued, (ii) the conditions under which a drawing may be
made under such Letter of Credit and the documentation to be required in
respect thereof, (iii) the maximum amount to be available under such
Letter of Credit, and (iv) the requested date of issuance.  In the event
of any conflict between the provisions of a Reimbursement Agreement and
this Section 2.18, the provisions of this Section 2.18 shall control. 
Upon receipt of such Letter of Credit Request from the Borrower, the
Agent shall promptly notify the Issuing Bank and each other Lender
thereof.  The Issuing Bank shall, on the proposed date of issuance and
subject to the other terms and conditions of this Agreement, issue the
requested Letter of Credit.  Each Letter of Credit shall be in form and
substance reasonably satisfactory to the Issuing Bank, with such
provisions with respect to the conditions under which a drawing may be
made thereunder and the documentation required in respect of such
drawing as the Issuing Bank shall reasonably require.  Each Letter of
Credit shall be used solely for the purposes described therein.

      (c)  Each payment by the Issuing Bank of a draft drawn under a
Letter of Credit shall give rise to an obligation on the part of the
Borrower to reimburse the Issuing Bank immediately for the amount
thereof.  If the Borrower shall have failed to reimburse the Issuing
Bank in full on or before 12:00 p.m., on the date the Issuing Bank shall
make payment on a draft drawn under a Letter of Credit, the Borrower's
obligations  to make such reimbursement may be satisfied by the
automatic making of an ABR Advance by each Lender under its Revolving
Credit Note in the principal amount equal to its Commitment Percentage
of the amount of such draft paid by the Issuing Bank (it being
understood that such reimbursement by means of an ABR Advance shall not
constitute a borrowing for purposes of Sections 4, 5 or 6).

 19.  Letter of Credit Participation and Funding Commitments

      (a)  Each Lender hereby unconditionally and irrevocably,
severally for itself only and without any notice to or the taking of any
action by such Lender, takes an undivided participating interest in the
obligations of the Issuing Bank under and in connection with each Letter
of Credit in an amount equal to such Lender's Commitment Percentage of
the amount of such Letter of Credit.  Each Lender shall be liable to the
Issuing Bank for its Commitment Percentage of the unreimbursed amount of
any draft drawn and honored under each Letter of Credit.  Each Lender
shall also be liable for an amount equal to the product of its
Commitment Percentage and any amounts paid by the Borrower pursuant to
Section 2.20 that are subsequently rescinded or avoided, or must
otherwise be restored or returned.  Such liabilities shall be
unconditional and without regard to the occurrence of any Default or
Event of Default or the compliance by the Borrower with any of its
obligations under the Loan Documents.  Each payment by a Lender of such
Commitment Percentage of the amount of such Letter of Credit or of any
amounts so rescinded, avoided, restored or returned shall be treated as
the making by such Lender of an automatic ABR Advance.

      (b)  The Agent will promptly notify each Lender (which notice
shall be promptly confirmed in writing) of the date and the amount of
any draft presented under any Letter of Credit with respect to which
full reimbursement of payment is not made by the Borrower as provided in
Section 2.18(c), and forthwith upon receipt of such notice, such Lender
(other than the Issuing Bank) shall make available to the Agent for the
account of the Issuing Bank its Commitment Percentage of the amount of
such unreimbursed draft (which shall constitute such Lender's automatic
ABR Advance) at the office of the Agent specified in Section 11.2, in
lawful money of the United States and in immediately available funds,
before 4:00 p.m., on the day such notice was given by the Agent, if the
relevant notice was given by the Agent at or prior to 1:00 p.m., on such
day, and before 12:00 p.m., on the next Business Day, if the relevant
notice was given by the Agent after 1:00 p.m., on such day.  The Agent
shall distribute the payments made by each Lender pursuant to the
immediately preceding sentence to the Issuing Bank promptly upon receipt
thereof in like funds as received.  Each Lender shall indemnify and hold
harmless the Agent and the Issuing Bank from and against any and all
losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses and an
administration fee of not less than $100 payable to the Issuing Bank as
the issuer of the relevant Letter of Credit) resulting from any failure
on the part of such Lender to provide, or from any delay in providing,
the Agent with such Lender's Commitment Percentage of the amount of any
payment made by the Issuing Bank under a Letter of Credit in accordance
with this clause (b) above (except in respect of losses, liabilities or
other obligations suffered by the Issuing Bank resulting from the gross
negligence or willful misconduct of the Issuing Bank).  If a Lender does
not make available to the Agent when due such Lender's Commitment
Percentage of any unreimbursed payment made by the Issuing Bank under a
Letter of Credit (other than payments made by the Issuing Bank by 
reason of its gross negligence or willful misconduct), such Lender shall
be required to pay interest to the Agent for the account of the Issuing
Bank on such Lender's Commitment Percentage of such payment at a rate of
interest per annum equal to the Federal Funds Rate plus 1% from the date
such Lender's payment is due until the date such payment is received by
the Agent.  The Agent shall distribute such interest payments to the
Issuing Bank upon receipt thereof in like funds as received.  If the
Agent receives a Lender's Commitment Percentage of any unreimbursed
payment under a Letter of Credit after the date when due and the Agent
receives interest on any late payment from such Lender in accordance
with the provisions of the preceding sentence, such Lender's automatic
ABR Advance shall be deemed to have been made to the Borrower on the
date the Issuing Bank made payment under such Letter of Credit.

      (c)  Whenever the Agent is reimbursed by the Borrower, for the
account of the Issuing Bank, for any payment under a Letter of Credit
and such payment relates to an amount previously paid by a Lender in
respect of its Commitment Percentage of the amount of such payment under
such Letter of Credit, the Agent will pay over such payment to such
Lender (i) before 4:00 p.m. on the day such payment from the Borrower is
received, if such payment is received at or prior to 1:00 p.m. on such
day, or (ii) before 12:00 p.m. on the next succeeding Business Day, if
such payment from the Borrower is received after 1:00 p.m. on such day.

 20.  Absolute Obligation with respect to Letter of Credit Payments

      The Borrower's obligation to reimburse the Agent for the account
of the Issuing Bank in respect of a Letter of Credit for each payment
under or in respect of such Letter of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may have
or have had against the beneficiary of such Letter of Credit, the Agent,
the Issuing Bank, as issuer of such Letter of Credit, any Lender or any
other Person, including, without limitation, any defense based on the
failure of any drawing to conform to the terms of such Letter of Credit,
any drawing document proving to be forged, fraudulent or invalid, or the
legality, validity, regularity or enforceability of such Letter of
Credit; provided, however, that the Borrower shall not be obligated to
reimburse the Agent for the account of the Issuing Bank, as issuer of a
Letter of Credit, for any wrongful payment under such Letter of Credit
made as a result of the Issuing Bank's gross negligence or willful
misconduct.

 21.  Increased Costs Based on Letters of Credit

      Without limiting the provisions of Section 2.12 but without
duplication of any amounts payable thereunder, if any law or regulation
or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof or GAAP
shall either (i) impose, modify or make applicable any reserve, special
deposit, assessment or similar requirement against letters of credit
issued or participated in by any Lender, or (ii) impose on the Agent or
such Lender any other condition regarding the Letters of Credit (except
for imposition of, or changes in the rate of, Tax on the Overall Net
Income of the Agent or such Lender) and the result of any event referred
to in clause (i) or (ii) above shall be to increase the cost to the
Issuing Bank (or any successor thereto as issuer of Letters of Credit)
of issuing or maintaining the Letters of Credit or the cost to any
Lender of making or maintaining any Loan pursuant to  Section 2.18(c) or
its obligations pursuant to Section 2.19, or the cost to the Agent of
performing its functions hereunder with respect to the Letters of
Credit, in any case by an amount which the Agent, the Issuing Bank, or
any Lender, as the case may be, deems material, then, upon demand by the
Agent, the Issuing Bank or such Lender, as the case may be, the Borrower
shall immediately pay to the Agent, the Issuing Bank or such Lender, as
the case may be, from time to time as specified by the Agent, the
Issuing Bank or such Lender, additional amounts which shall be
sufficient to compensate the Agent, the Issuing Bank or such Lender, as
the case may be, for such increased cost, provided, however, that no
Lender shall be entitled to demand any payment under this Section 2.21
more than six months following the payment to or for the account of such
Lender of all other amounts payable hereunder and under any Note held by
such Lender and the termination of such Lender's Commitment; provided,
however, that the foregoing proviso shall in no way limit the right of
any Lender to demand or receive any payment under this Section 2.21 to
the extent that such payment relates to the retroactive application of
any law or regulation or any change in the interpretation or application
thereof if such demand is made within six months after the
implementation of such retroactive application.  A statement in
reasonable detail as to such increased cost incurred by the Agent, the
Issuing Bank or such Lender, as the case may be, as a result of any
event mentioned in clauses (i) or (ii) above, submitted by the Agent,
the Issuing Bank or such Lender, as the case may be, to the Borrower
shall be conclusive, absent manifest error, as to the amount thereof.

 22.  Extension of Maturity Date

      (a)  Provided that no Default or Event of Default exists during
the periods set forth below, the Borrower may request that the Maturity
Date be extended for additional periods of one year each by giving
written notice of such request (each, an "Extension Request") to the
Agent during the period not more than 90 days but not less than 60 days
prior to the then Maturity Date and, upon the receipt of such notice,
the Agent shall promptly notify each Lender of such Extension Request.

           (i)  If all Lenders consent to an Extension Request during
the Extension Consent Period by giving written notice thereof to the
Borrower and the Agent, then, effective on the then current Maturity
Date, such Maturity Date shall be extended to the corresponding day of
the next following calendar year, provided, however, that if such day
falls on a day that is not a Business Day, such Maturity Date shall be
the next following Business Day.

           (ii) If at least Extension Consent Required Lenders (but not
all Lenders) consent to an Extension Request during the Extension
Consent Period (by giving written notice thereof to the Borrower and the
Agent) the Maturity Date shall be extended to the corresponding day of
the next following calendar year (subject to the proviso in subsection
(a)(i) above) from and including the then current Maturity Date, with
respect to the Commitments of the Lenders consenting to such Extension
Request.

           (iii) If Lenders (each a "Nonconsenting Lender") having
Commitments equal to less than 33 1/3% of the Aggregate Commitments
(without giving effect to any Loans outstanding) do not consent to an
Extension Request during the Extension Consent Period, the Borrower may
elect to (1) withdraw such Extension Request, (2) terminate the
Commitment of each Nonconsenting Lender effective on the then current
Maturity Date (with the Commitments of each other Consenting Lender 
continuing in full force and effect) and, on such Maturity Date, pay to
the Agent for distribution to each such Nonconsenting Lender the
outstanding principal balance, if any, of the Notes of each such
Nonconsenting Lender, together with any accrued and unpaid interest
thereon to the date of such payment, any accrued and unpaid Facility
Fees due to such Lender, and any other amount due to such Lender
whereupon (A) effective on such then current Maturity Date, such
Maturity Date shall be extended to the corresponding day of the next
following calendar year (subject to the proviso in subsection (a)(i)
above), and (B) each Nonconsenting Lender shall cease to be a "Lender"
for all purposes of this Agreement (except with respect to its rights
hereunder to be reimbursed for costs and expenses in connection with,
and to indemnification with respect to, matters attributable to events,
acts or conditions occurring prior to such payment) and shall no longer
have any obligations hereunder, (3) request one or more of the
Consenting Lenders (each, a "Replacement Lender") to elect to increase
its Commitment by an amount up to the amount of the Commitment of such
Nonconsenting Lenders, or (4) designate another bank or banks (any such
bank, also a "Replacement Lender") acceptable to the Agent and the
Issuing Bank and willing to assume the Commitments of any such
Nonconsenting Lender or Lenders.  Upon the Commitment of a Nonconsenting
Lender being assumed by a Replacement Lender under clauses (C) or (D)
above, effective on the then current Maturity Date or such earlier date
as shall be determined by the Borrower and the Agent, each such
Replacement Lender shall assume the Commitment of each such
Nonconsenting Lender by executing and delivering an Assignment and
Acceptance Agreement and, if such Nonconsenting Lender is the holder of
Notes, by purchasing such Notes of such Nonconsenting Lender, which
shall sell the same without recourse or warranty (except as to the
amount due thereon, its title to such Notes and its right to sell the
same) to such Replacement Lender at a price in immediately available
funds equal to the amount payable under clause (B) above, whereupon (x)
effective on the then current Maturity Date, such Maturity Date shall be
extended to the corresponding day of the next following calendar year
(subject to the proviso in subsection (a)(i) above), (y) each
Replacement Lender, if applicable, shall be deemed to be a "Lender" for
all purposes of this Agreement, and (z) each Nonconsenting Lender shall
cease to be a "Lender" for all purposes of this Agreement (except with
respect to its rights hereunder to be reimbursed for costs and expenses
in connection with, and to indemnification with respect to, matters
attributable to events, acts or conditions occurring prior to such
assumption and purchase) and shall no longer have any obligations
hereunder.

           (iv) If Extension Consent Required Lenders do not consent to
an Extension Request during the Extension Consent Period, the Maturity
Date shall not be extended.

           (v)  Each Lender will use its best efforts to respond during
the Extension Consent Period to any Extension Request, provided that no
Lender's failure to so respond shall create any claim against it or have
the effect of extending the Maturity Date or such Lender's Commitment
beyond the Maturity Date.

      (b)  In the event the Borrower elects to terminate the Commitment
of a Nonconsenting Lender under Section 2.22(a)(iii)(B) above, the Agent
is authorized to amend Exhibit A, effective on the then current Maturity
Date, and promptly distribute a copy thereof to the Borrower and the
remaining Lenders (the "Consenting Lenders") reflecting the names of all
Consenting Lenders and Replacement Lenders and the new Commitment
Percentage of each such Consenting Lender and Replacement Lender (after 
giving effect to the termination of each Nonconsenting Lender's
Commitment and the assumption by any Replacement Lender of such
Commitment).

      (c)  Notwithstanding anything to the contrary set forth herein,
in the event that at the time of an Extension Request, the Facility A
Credit Agreement is then in effect and the Borrower has requested an
extension of the Facility A Maturity Date pursuant thereto, then (i)
each Consenting Lender must consent to an extension of both this
Agreement and the Facility A Credit Agreement, (ii) each Nonconsenting
Lender whose Commitment is terminated shall also have its Facility A
Commitment terminated and (iii) each Replacement Lender which assumes
all or a portion of the Commitment of a Nonconsenting Lender shall
assume all or a like portion of such Nonconsenting Lender's Facility A
Commitment, it being the intention of the parties that at all times
during which this Agreement and the Facility A Credit Agreement are both
in effect, each Lender shall also be a Facility A Lender and its
Commitment Percentage shall equal its Facility A Commitment Percentage.

 23.  Change in Control

      (a)  The Borrower will notify the Agent and the Lenders in
writing within one Business Day after the occurrence of a Change in
Control. Upon receipt of such notice, each Lender shall have the right
to terminate its Commitment and Facility A Commitment within five
Business Days of the receipt of such notice.  If a Lender so elects to
terminate its Commitment and Facility A Commitment, the Borrower shall,
not later than five Business Days after such Lender has given such
notice, repay such Lender's Loans and Facility A Loans together with any
accrued interest and fees and other amounts due such Lender under the
Loan Documents and the Facility A Loan Documents.

      (b)  Notwithstanding the foregoing, in lieu of terminating the
Commitments and Facility A Commitments of the Lenders and Facility A
Lenders as provided in subsection (a) hereof, the Borrower may request
one or more of the Lenders not terminating its Commitment and Facility A
Commitment (also, a "Replacement Lender") to elect to increase its
Commitment and Facility A Commitment by an amount up to the amount of
the Commitment and Facility A Commitment of such terminating Lender, or
may designate another bank or banks (any such bank, also a "Replacement
Lender") reasonably acceptable to the Agent and the Issuing Bank and
willing to assume the Commitments and Facility A Commitments of any such
terminating Lender or Lenders.  Upon the Commitment and Facility A
Commitment of a terminating Lender being assumed by a Replacement
Lender, each such Replacement Lender shall assume the Commitment and
Facility A Commitment of each such terminating Lender by executing and
delivering an Assignment and Acceptance Agreement and, if such
terminating Lender is the holder of Notes or Facility A Notes, by
purchasing such Notes or Facility A Notes, as the case may be, of such
terminating Lender, which shall sell the same without recourse or
warranty (except as to the amount due thereon, its title to such Notes
or Facility A Notes, as the case may be, and its right to sell the same)
to such Replacement Lender at a price in immediately available funds
equal to the outstanding principal balance, if any, of the Notes and
Facility A notes, as the case may be, of each such terminating Lender,
together with any accrued and unpaid interest thereon to the date of
such payment, any accrued and unpaid fees due to such Lender hereunder
and under the Facility A Loan Documents, whereupon each Replacement
Lender shall be deemed to be a "Lender" for all purposes of this
Agreement, and (z) each terminating Lender shall cease to be a "Lender" 
for all purposes of this Agreement (except with respect to its rights
hereunder and under the Facility A Loan Documents to be reimbursed for
costs and expenses in connection with, and to indemnification with
respect to, matters attributable to events, acts or conditions occurring
prior to such assumption and purchase) and shall no longer have any
obligations hereunder.

 24.  Agent's Records

      The Agent's records regarding the amount of each Loan and Letter
of Credit, each payment by the Borrower of principal and interest on the
Loans and reimbursement obligations in respect of Letters of Credit and
other information relating to the Loans and the Letters of Credit shall
be presumptively correct absent manifest error.


C.    FEES; PAYMENTS

 1.   Facility Fee

      The Borrower agrees to pay to the Agent, for the account of the
Lenders in accordance with each Lender's Commitment Percentage, during
the period from and including the Effective Date through but excluding
the Maturity Date, a fee (the "Facility Fee") equal to the Applicable
Fee Percentage per annum of the average daily sum of the Aggregate
Commitments, regardless of usage, during such period. The Facility Fee
shall be payable (i) quarterly in arrears on the last day of each March,
June, September and December during such period, (ii) on the date of any
reduction in the Aggregate Commitments (to the extent of such reduction)
and (iii) on the Maturity Date. The Facility Fee shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.

 2.   Letter of Credit Fees

      The Borrower agrees to pay to the Agent, for the account of the
Lenders in accordance with each Lender's Commitment Percentage, a fee
(the "Letter of Credit Fee") with respect to each Letter of Credit for
the period from and including the date of issuance thereof to and
including the expiration date thereof, at a rate per annum equal to the
Applicable Margin on the average daily amount available to be drawn
under such Letter of Credit.  The Letter of Credit Fee shall be (i)
calculated on the basis of a 360-day year for the actual number of days
elapsed, (ii) payable quarterly in arrears on the last day of each
March, June, September and December of each year and on the date that
the Aggregate Commitments shall expire and (iii) nonrefundable.  In
addition to the Letter of Credit Fee, the Borrower agrees to pay to the
Issuing Bank, for its own account, its standard fees and charges
customarily charged to customers similar to the Borrower with respect to
any Letter of Credit.

 3.   Agent's Fees

      The Borrower agrees to pay to the Agent, for its own account,
such other fees as have been agreed to in writing by the Borrower and
the Agent.

      4.   Pro Rata Treatment and Application of Principal Payments

      Each payment, including each prepayment, of principal and
interest on the Loans, of the Facility Fee and the Letter of Credit Fees
shall be made by the Borrower to the Agent at its office set forth in
Section 11.2 in funds immediately available to the Agent at such office
by 12:00 p.m. on the due date for such payment, and, promptly upon
receipt thereof by the Agent, shall be remitted by the Agent in like
funds as received, to the Lenders according to the Commitment Percentage
of each Lender, in the case of the Facility Fee and the Letter of Credit
Fees and pro rata according to the aggregate outstanding principal
balance of the Loans, in the case of principal and interest due thereon. 
The failure of the Borrower to make any such payment by such time shall
not constitute a default hereunder, provided that such payment is made
on such due date, but any such payment made after 12:00 p.m. on such due
date shall be deemed to have been made on the next Business Day for the
purpose of calculating interest on amounts outstanding on the Loans.  If
any payment hereunder or under the Notes shall be due and payable on a
day which is not a Business Day, the due date thereof (except as
otherwise provided in the definition of Interest Period) shall be
extended to the next Business Day and (except with respect to payments
in respect of the Facility Fee and the Letter of Credit Fees) interest
shall be payable at the applicable rate specified herein during such
extension.  If any payment is made with respect to any Eurodollar
Advance prior to the last day of the applicable Interest Period, the
Borrower shall indemnify each Lender in accordance with Section 2.13.


D.    REPRESENTATIONS AND WARRANTIES

 In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and the Issuing Bank to issue the
Letters of Credit and the Lenders to participate therein, the Borrower
makes the following representations and warranties to the Agent and each
Lender:

 1.   Subsidiaries

      On the Effective Date, the Borrower has only the Subsidiaries set
forth on Schedule 4.1.  The shares of each Subsidiary are duly
authorized, validly issued, fully paid and nonassessable and are owned
free and clear of any Liens.

 2.   Existence and Power

      Each of the Borrower and its Subsidiaries is duly organized or
formed and validly existing in good standing under the laws of the
jurisdiction of its incorporation or formation, has all requisite power
and authority to own its Property and to carry on its business as now
conducted, and is in good standing and authorized to do business as a
foreign corporation in each jurisdiction in which the nature of the
business conducted therein or the Property owned therein makes such
qualification necessary, except where such failure to qualify, singly or
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.

      3.   Authority; Enforceability

      The Borrower has full legal power and authority and has taken all
necessary actions, including, without limitation, any necessary
stockholder action, to enter into, execute, deliver and perform the
terms of the Loan Documents and to make the borrowings contemplated
hereby and by the Notes and to incur the obligations provided for herein
and therein, all of which have are in full compliance with its articles
of incorporation and by-laws or its other organization documents.  The
Loan Documents (other than the Notes) constitute, and the Notes, when
issued and delivered pursuant hereto for value received, will
constitute, the valid and legally binding obligations of the Borrower,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally.

 4.   Required Consents

      Except for information filings required to be made in the
ordinary course of business which are not a condition to the Borrower's
performance under the Loan Documents, no consent, authorization or
approval of, filing with, notice to, or exemption by, stockholders, any
Governmental Authority or any other Person is required to authorize, or
is required in connection with the execution, delivery and performance
by the Borrower of the Loan Documents or is required as a condition to
the validity or enforceability of the Loan Documents against the
Borrower.

 5.   No Conflicting Agreements, Compliance with Laws; Taxes

      On the initial Borrowing Date, (i) neither the Borrower nor any
of its Subsidiaries will be in default, (1) under any mortgage,
indenture, contract or agreement to which it is a party or by which it
or any of its Property is bound or (2) with respect to any judgment,
order, writ, injunction, decree or decision of any Governmental
Authority, the effect of which default could reasonably be expected to
have a Material Adverse Effect, and (ii) the execution, delivery or
carrying out of the terms of the Loan Documents will not constitute a
default under, or require the mandatory repayment of, or result in the
creation or imposition of, or obligation to create, any Lien upon any
Property of the Borrower or any of its Subsidiaries pursuant to the
terms of, any such mortgage, indenture, contract or agreement.

 6.   Franchises, Licenses, Etc.

      Each of the Borrower and ACE possesses or has the right to use
all franchises, licenses, privileges and other rights that are material
and necessary for the conduct of its business, and with respect to which
it is in compliance, with no known conflict with the valid rights of
others which could reasonably be expected to have a Material Adverse
Effect.

 7.   Investment Company Act

      The Borrower is not an "investment company" or a company
"controlled" by an "investment company" as defined in, or is otherwise
subject to regulation under, the Investment Company Act of 1940, as
amended.

      8.   Public Utility Status

      The Borrower and each of its Subsidiaries are exempt from the
provisions of the Public Utility Holding Company Act of 1935, as
amended, except Section 9(a)(2) thereof, pursuant to Rule 2 of the
General Rules and Regulations of the SEC under said Act.

 9.   Federal Reserve Regulations; Use of Loan Proceeds

      Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin
Stock.  No part of the proceeds of the Loans will be used, directly or
indirectly, for a purpose which violates any law, rule or regulation of
any Governmental Authority, including, without limitation, the
provisions of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System, as amended.  No part of the proceeds of the
Loans will be used, directly or indirectly, to purchase or carry Margin
Stock or to extend credit to others for the purpose of purchasing or
carrying Margin Stock.

 10.  Litigation

      Except as set forth in the Financial Statements or as disclosed
after the date of the Financial Statements in the most recent annual
report filed by the Borrower with the SEC pursuant to Section 13 or
15(d) of the Exchange Act, or in a quarterly or periodic report filed
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act with
respect to a period or date subsequent to the end of the fiscal year
covered by such annual report, there are no actions, suits or
proceedings at law or in equity or by or before any Governmental
Authority (whether purportedly on behalf of the Borrower or any of its
Subsidiaries) pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries or any of their
respective Properties or rights, which (i) reasonably may be expected to
have a Material Adverse Effect or (ii) call into question the validity
or enforceability of any of the Loan Documents.

 11.  Financial Statements

      The Borrower has heretofore delivered to the Agent and the
Lenders copies of its Form 10-K for the fiscal year ending December 31,
1994, containing the audited Consolidated Balance Sheets of the Borrower
and its Subsidiaries and the related Consolidated Statements of
Operations, Stockholder's Equity and Cash Flows for the period then
ended, and its Form 10-Q for the fiscal quarter ended March 31, 1995,
containing the unaudited Consolidated Balance Sheet of the Borrower and
its Subsidiaries for such fiscal quarter, together with the related
Consolidated Statements of Operations and Cash Flows for the fiscal
quarter then ended (with the applicable related notes and schedules, the
"Financial Statements").  The Financial Statements have been prepared in
accordance with GAAP and fairly present the Consolidated financial
condition and results of the operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated therein. 
Except as reflected in the Financial Statements or in the notes thereto,
neither the Borrower nor any of its Subsidiaries has any obligation or
liability of any kind (whether fixed, accrued, Contingent, unmatured or
otherwise) which, in accordance with  GAAP, should have been shown on
the Financial Statements and was not.  Since December 31, 1994, there
has been no Material Adverse Change.

 12.  Plans

      The only Pension Plans in effect as of the Effective Date (the
"Existing Pension Plans") are listed on Schedule 4.12.  Each Employee
Benefit Plan of the Borrower, its Subsidiaries and their respective
ERISA Affiliates is in compliance with ERISA and the Code, where
applicable, in all material respects and there is no event or condition
existing or anticipated under or with respect to any Existing Pension
Plan that could have a Material Adverse Effect.

 13.  Ownership of Property; Liens

      The Borrower has good and marketable title to, or a valid
leasehold interest in, all of its Property, subject to no Liens, except
Permitted Liens, and each Subsidiary has good and marketable title to,
or a valid leasehold interest in, all of its Property, except to the
extent that the failure to have such title or leasehold interest could
not reasonably be expected to have a Material Adverse Effect.

 14.  Security Interests

      The Pledge Agreement is effective to create in favor of the
Agent, for (i) the benefit of the Agent and the Facility A Agent and for
the ratable benefit of the Lenders and the Facility A Lenders, a legal,
valid and enforceable security interest in the Collateral, and, on and
after the taking of possession of the Intercompany Notes by the Agent as
collateral agent, and assuming the continued possession thereof by the
Agent as collateral agent, the security interest granted by the Pledge
Agreement shall at all times constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Borrower in
such Collateral, in each case prior and superior in right to any other
Person.

 15.  Environmental Matters

      Except as disclosed in the most recent report filed by the
Borrower with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, or in a quarterly or periodic report filed with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act with respect to a period or date
subsequent to the end of the fiscal year covered by such annual report,
(i) the Borrower and each of its Subsidiaries is in compliance with the
requirements of all applicable Environmental Laws, noncompliance with
which reasonably may be expected to have a Material Adverse Effect, (ii)
there have been no releases or disposals of hazardous wastes, hazardous
substances or other substances in quantities or locations which might
result in the Borrower or any of its Subsidiaries incurring any remedial
obligations under applicable law which could, either singly or in the
aggregate, reasonably be expected to have Material Adverse Effect, and
(iii) neither the Borrower nor any of its Subsidiaries has received
notice or order advising it that it has or may have any remedial
obligation with respect to any such releases or disposals or that it is
or may be responsible for the costs of any remedial action taken or to
be taken by any other Persons with respect to any such releases or
disposals, which obligation or cost, if fully payable  could, either
singly or in the aggregate, reasonably may be expected to have Material
Adverse Effect.

 16.  Certain Business Activities

      The Borrower does not engage in any business other than the
holding of Permitted Investments.


E.    CONDITIONS TO FIRST LOANS OR THE ISSUANCE OF FIRST LETTERS OF
      CREDIT

      In addition to the conditions precedent set forth in Section 6,
the obligation of each Lender to make its first Revolving Credit Loan,
any Lender to make the first Competitive Bid Loan or the Issuing Bank to
issue the first Letter of Credit, in each case on the first Borrowing
Date, and the Lenders to participate therein, shall be subject to the
fulfillment of the following conditions precedent:

 1.   Evidence of Action

      The Agent shall have received a certificate, dated the Effective
Date, of the Secretary or Assistant Secretary of the Borrower (i)
attaching a true and complete copy of the resolutions of its Board of
Directors and of all documents evidencing other necessary corporate
action (in form and substance satisfactory to the Agent) taken by it to
authorize the Loan Documents and the transactions contemplated thereby,
(ii) attaching a true and complete copy of its articles of incorporation
and by-laws, (iii) setting forth the incumbency of its officer or
officers who may sign the Loan Documents, including therein a signature
specimen of such officer or officers and (iv) attaching a certificate of
good standing of the Secretary of State of the jurisdiction of its
incorporation and of each other jurisdiction in which it is qualified to
do business.

 2.   This Agreement; Notes

      The Agent shall have received (i) counterparts of this Agreement
signed by each of the parties hereto (or receipt by the Agent from a
party hereto of a fax signature page signed by such party which shall
have agreed to promptly provide the Agent with originally executed
counterparts hereof) and (ii) for each Lender, a Revolving Credit Note
and a Competitive Bid Note, duly executed by an Authorized Signatory of
the Borrower.

 3.   Certificate as to Approvals and Liens

      The Agent shall have received a certificate of an Authorized
Signatory of the Borrower certifying that (i) all approvals and consents
of all Persons required to be obtained in connection with the
consummation of the transactions contemplated by the Loan Documents and
the Facility A Loan Documents have been duly obtained and are in full
force and effect, and that all required notices have been given and all
required waiting periods have expired and (ii) upon the making of the
first Loans under the Agreement and under the Facility A Loan Documents
there will exist no Liens on the Collateral other than Liens in favor of
the Facility A Agent, the Facility A Lenders, the Agent and the Lenders
under the Pledge Agreement.

      4.   Pledge Agreement

      The Agent shall have received the Pledge Agreement, duly executed
by an Authorized Signatory of the Borrower, together with Intercompany
Notes duly executed by each Operating Subsidiary, duly indorsed by the
Borrower to the order of the Agent, as collateral agent for itself, the
Lenders, the Facility A Agent and the Facility A Lenders.

 5.   Facility A Loan Documents

      Each of the Facility A Credit Agreement and the Facility A Notes
shall have been duly executed and delivered by the parties thereto.

 6.   Other Credit Facilities

      (a)  The Revolving Credit Commitment under the ATE Credit
Agreement shall have been permanently reduced to an amount not in excess
of $25,000,000, and the Agent shall have received satisfactory evidence
thereof; and

      (b)  The Borrower shall have paid, or made arrangements
satisfactory to the Agent to pay on the Borrowing Date, with the
proceeds of a Loan under this Agreement or a borrowing under the
Facility B Credit Agreement, or both, all principal and accrued interest
due to BNY under the Borrower's $20,000,000 unsecured line of credit
with BNY.

 7.   ACE Preferred Stock

      The Agent shall have received a copy of the relevant portions of
the charter of ACE, and of each certificate of designation filed
pursuant to such charter, setting forth the terms applicable to each
class and series of the ACE Preferred Stock outstanding on the Effective
Date, certified by an Authorized Signatory of the Borrower to be a true
and complete copy thereof, and such terms shall be satisfactory to the
Agent.

 8.   Opinions of Counsel

      The Agent shall have received (i) an opinion of Ballard Spahr
Andrews & Ingersoll, counsel to the Borrower, and (ii) an opinion of
James E. Franklin II, Esq., general counsel of the Borrower, in each
case addressed to the Facility A Agent, the Facility A Lenders, the
Agent, the Lenders and Special Counsel and dated the Effective Date,
covering the matters set forth in Exhibit N and satisfactory in form and
substance to the Agent.

 9.   Opinion of Special Counsel

      The Agent shall have received an opinion of Special Counsel,
addressed to the Facility A Agent, the Facility A Lenders, the Agent,
the Lenders and Special Counsel, substantially in the form of Exhibit O.

      10.  Fees

      All fees payable to the Agent on the first Borrowing Date, and
the fees and expenses of Special Counsel incurred and recorded to date
in connection with the preparation, negotiation and closing of the Loan
Documents, shall have been paid.


F.    CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT

 The obligation of each Lender to make any Loan or the Issuing Bank to
issue any Letter of Credit on a Borrowing Date and each Lender to
participate therein is subject to the satisfaction of the following
conditions precedent as of the date of such Loan or the issuance of such
Letter of Credit, as the case may be:

 1.   Compliance

      On each Borrowing Date and after giving effect to the Loans to be
made, or the Letters of Credit to be issued, thereon, (i) the Borrower
shall have complied with all of the terms, covenants and conditions of
this Agreement relating to such Loans or Letters of Credit, (ii) there
shall exist no Event of Default, (iii) the representations and
warranties contained in the Loan Documents shall be true and correct
with the same effect as though such representations and warranties had
been made on such Borrowing Date except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date, and
(iv) the Aggregate Credit Exposure will not exceed the Aggregate
Commitments.  Each borrowing by the Borrower and each request by the
Borrower for the issuance of a Letter of Credit shall constitute a
certification by the Borrower as of such Borrowing Date that each of the
foregoing matters is true and correct in all respects.

 2.   Borrowing Request; Competitive Bid Request

      In the case of the borrowing of Revolving Credit Loans, the Agent
shall have received a Borrowing Request, and in the case of a borrowing
of a Competitive Bid Loan, the Agent shall have received a Competitive
Bid Request and such other documents required to be delivered by the
Borrower pursuant to Section 2.4, in each case duly executed by an
Authorized Signatory of the Borrower.

 3.   Letter of Credit Request

      With respect to the issuance of each Letter of Credit, the Agent
shall have received a Letter of Credit Request duly executed by an
Authorized Signatory of the Borrower.


G.    AFFIRMATIVE COVENANTS

 The Borrower agrees that, so long as this Agreement is in effect, any
Loan or reimbursement obligations (contingent or otherwise) in respect
of any Letter of Credit  remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender or the Agent, the
Borrower shall:

 1.   Financial Statements

      Maintain a standard system of accounting in accordance with GAAP,
and furnish or cause to be furnished to the Agent and each Lender:

           (a)  As soon as available, but in any event not later than 5
 days after the due date thereof, or if an extension of time to file
 has been obtained by the Borrower pursuant to Rule 12b-25 under the
 Exchange Act, not later than 5 days after the expiration of such
 extension, (i) a complete copy of the Borrower's Annual Report on Form
 10-K in respect of each fiscal year as filed by the Borrower with the
 SEC, together with a copy all financial statements and financial
 statement schedules incorporated therein by reference, and (ii) a
 complete copy of the Borrower's Quarterly Report on Form 10-Q in
 respect of each fiscal quarter as filed by the Borrower with the SEC,
 together with a copy of any financial statements incorporated therein
 by reference.
 
           (b)  Within 45 days after the end of each of the first three
 fiscal quarters (90 days after the end of the last fiscal quarter), a
 Compliance Certificate, duly executed by the chief financial officer
 of the Borrower (or such other officer as may be reasonably acceptable
 to the Agent).
 
           (c)  Such other information as the Agent or any Lender may
 reasonably request from time to time.

 2.   Certificates; Other Information

      Furnish to the Agent and each Lender:

           (a)  Prompt written notice if any Default or Event of
 Default shall have occurred and be continuing;
 
           (b)  Promptly upon becoming available, copies of all (i)
 annual reports to shareholders, proxy statements and other materials
 (other than reports specified in Section 7.1) which the Borrower or
 any of its Subsidiaries may now or hereafter be required to file with
 or deliver to any securities exchange or the SEC, or any other
 Governmental Authority succeeding to the functions thereof and (ii)
 material news releases and annual reports relating to the Borrower or
 any of its Subsidiaries;
 
           (c)  Prompt written notice of any change by either Moody's
 or S&P in the Senior Debt Rating;
 
           (d)  Prompt written notice of any agreement, indenture or
 other document or instrument entered into by, or which becomes binding
 upon, ACE which restricts or has the effect of restricting the payment
 by ACE of dividends with respect to its Stock;
 
                (e)  Prompt written notice of the forgiveness of any
      Intercompany Note or the conversion thereof to Stock or other
      instruments, in each case to the extent permitted by Section 8.6,
      together with a total of all such forgiveness or conversions
      since the Effective Date; and
 
           (f)  Such other information as the Agent or any Lender shall
 reasonably request from time to time.

 3.   Legal Existence

      Maintain, and cause each of its Restricted Subsidiaries so to
maintain, its legal existence in good standing in the jurisdiction of
its incorporation or formation and in each other jurisdiction in which
the failure so to do could reasonably be expected to have a Material
Adverse Effect.

 4.   Taxes

      Pay and discharge when due, and cause each of its Restricted
Subsidiaries so to do, all Taxes, assessments and governmental charges,
license fees and levies upon, or with respect to the Borrower, such
Restricted Subsidiary and all Taxes upon the income, profits and
Property of the Borrower and its Restricted Subsidiaries which if
unpaid, could reasonably be expected to have a Material Adverse Effect
or become a Lien on the Property of the Borrower or such Restricted
Subsidiary (other than a Lien described in Section 8.2(i)), unless and
to the extent only that such Taxes, assessments, charges, license fees
and levies shall be contested in good faith and by appropriate
proceedings diligently conducted by the Borrower or such Restricted
Subsidiary and provided that any such contested Tax, assessment, charge,
license fee or levy shall not constitute, or create, a Lien on any
Property of the Borrower or such Restricted Subsidiary senior to the
Liens granted to the Agent and the Lenders under the Pledge Agreement on
such Property, and, provided further, that the Borrower shall give the
Agent prompt notice of such contest and that such reserve or other
appropriate provision as shall be required by the Accountants in
accordance with GAAP shall have been made therefor.

 5.   Insurance

      Maintain, and cause each of its Restricted Subsidiaries to
maintain insurance on all its Property in at least such amounts and
against at least such risks (but including in any event public
liability, product liability and business interruption coverage) as is
consistent with industry standards followed by companies engaged in the
same business; and furnish to the Agent, upon written request, full
information as to insurance policies and reserves for self insurance.

 6.   Condition of Property

      At all times, maintain, protect and keep in good repair, working
order and condition (ordinary wear and tear excepted), and cause each of
its Restricted Subsidiaries so to do, all Property necessary to the
operation of the Borrower's or such Restricted Subsidiary's business.

      7.   Observance of Legal Requirements

      Observe and comply, and cause each of its Restricted Subsidiaries
so to do, with all laws, ordinances, orders, judgments, rules,
regulations, certifications, franchises, permits, licenses, directions
and requirements of all Governmental Authorities, which now or at any
time hereafter may be applicable to it, including, without limitation,
ERISA and all Environmental Laws, noncompliance with which could
reasonably be expected to have a Material Adverse Effect.

 8.   Inspection of Property; Books and Records; Discussions

      Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law
shall be made of all dealings and transactions in relation to its
business and activities and permit representatives of the Agent and any
Lender to visit its offices, to inspect any of its Property and examine
and make copies or abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired, and to
discuss the business, operations, prospects, licenses, Property and
financial condition of the Borrower and its Restricted Subsidiaries with
the officers thereof and the Accountants.

 9.   Licenses, Franchises, Intellectual Property, Etc.

      Obtain or maintain, as applicable, and cause ACE to obtain or
maintain, as applicable, in full force and effect, all licenses,
franchises, Intellectual Property, permits, authorizations and other
rights as are necessary for the conduct of its business and the failure
of which to obtain or maintain could reasonably be expected to have a
Material Adverse Effect.

 10.  Indebtedness Capitalization Ratio

      Maintain as of the last day of each fiscal quarter of the
Borrower, an Indebtedness Capitalization Ratio of less than or equal to
0.65:1.00.

 11.  Ratio of Indebtedness to Annualized ACE Dividends

      Maintain at all times, a ratio of (i) Indebtedness of the
Borrower to (ii) Annualized ACE Dividends of less than or equal to
2.50:1.00.


H.    NEGATIVE COVENANTS

 The Borrower agrees that, so long as this Agreement is in effect, any
Loan or reimbursement obligations (contingent or otherwise) in respect
of any Letter of Credit remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender or the Agent, the
Borrower shall not:

 1.   Indebtedness

      Create, incur, assume or suffer to exist any liability for
Indebtedness except (i) Indebtedness due under the Loan Documents and
the Facility A Loan Documents, (ii)  Indebtedness of the Borrower
existing on the date hereof as set forth on Schedule 8.1, excluding
increases and refinancings thereof, (iii) provided that no Default or
Event of Default would exist before and after giving effect thereto,
Contingent Obligations of the Borrower not in excess of $70,000,000 in
respect of Indebtedness for borrowed money of Atlantic Thermal or any of
its Subsidiaries in connection with its District Heating and Cooling
Project, provided that any Contingent Obligation of the Borrower with
respect to such Indebtedness is unsecured and (iv) provided no Default
or Event of Default would exist before and after giving effect thereto
other Indebtedness and Contingent Obligations of the Borrower in an
aggregate amount not in excess of $10,000,000 provided that any such
Indebtedness constituting a Contingent Obligation shall be unsecured.

 2.   Liens

      Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired except (i) Liens for
Taxes, assessments or similar charges incurred in the ordinary course of
business which are not delinquent or which are being contested in
accordance with Section 7.4, provided that enforcement of such Liens is
stayed pending such contest, (ii) Liens in connection with workers'
compensation, unemployment insurance or other social security
obligations (but not ERISA), (iii) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of business,
(iv) zoning ordinances, easements, rights of way, minor defects,
irregularities, and other similar restrictions affecting real Property
which do not adversely affect the value of such real Property or the
financial condition of the Borrower or impair its use for the operation
of the business of the Borrower, (v) Liens arising by operation of law
such as mechanics', materialmen's, carriers', warehousemen's liens
incurred in the ordinary course of business which are not delinquent or
which are being contested in good faith and by appropriate proceedings
diligently conducted by it, provided that enforcement of such Liens is
stayed pending such contest, (vi) Liens arising out of judgments or
decrees which are being contested in good faith and by appropriate
proceedings diligently conducted by it, provided that enforcement of
such Liens is stayed pending such contest, (vii) Liens in favor of the
Agent and the Lenders under the Loan Documents and the Facility A Agent
and the Facility A Lenders under the Facility A Loan Documents, (viii)
Liens on Property of the Borrower existing on the Effective Date as set
forth on Schedule 8.2 as renewed from time to time, but not any
increases in the amounts secured thereby, (ix) Liens on Property of the
Borrower acquired after the Effective Date provided that such Liens are
limited to the Property so acquired and were not created in
contemplation of such acquisition and (x) Liens securing Indebtedness
for borrowed money (or Contingent Obligations in connection therewith)
of the Borrower provided that the Agent, the Lenders, the Facility A
Agent and the Facility A Lenders are ratably secured pursuant to
documentation in form and substance satisfactory to the Agent and the
Facility A Agent.

 3.   Merger; Consolidation

      (a)  Consolidate with, be acquired by, or merge into or with any
Person, or permit any of its Restricted Subsidiaries so to do, except
that if no Default or Event of Default would exist before and after
giving effect thereto, (i) the Borrower or any Restricted Subsidiary may
merge with another entity provided that the resulting corporation shall
have a net worth not less than the net worth of the Borrower or 
Restricted Subsidiary involved in such merger, (ii) the entity to be
merged with is in the same business as a Restricted Subsidiary of the
Borrower or in a related business (including other types of utilities),
(iii) in the case of a merger involving the Borrower, the Borrower is
the survivor and (iv) in the case of a merger involving an Operating
Subsidiary, the survivor (if not such Operating Subsidiary) shall assume
the obligations of such Operating Subsidiary under the Intercompany Note
theretofore delivered by such Operating Subsidiary to the Borrower by an
instrument in form and substance satisfactory to the Agent.

      (b)  Sell, lease or otherwise dispose of all or any part of its
Property, or enter into any sale-leaseback transaction except:

           (i)  Sales or other dispositions of inventory in the
 ordinary course of business;
 
           (ii) Sales or other dispositions of equipment and materials
 in the ordinary course of business which, in the reasonable opinion of
 the Borrower, is obsolete or no longer useful in the conduct of its
 business; and
 
           (iii)     Sales or other dispositions of other Property for
 consideration not in excess of $25,000,000 per sale or other
 disposition provided that no Default or Event of Default shall exist
 immediately before or after giving effect thereto.

 4.   Restricted Payments

      Declare or pay any Restricted Payments payable in cash or
otherwise or apply any of its Property thereto or set apart any sum
therefor, or permit any of its Restricted Subsidiaries so to do, except
that (i) a Restricted Subsidiary may declare and pay Restricted Payments
to its parent or to the Borrower, (ii) provided that no Default or Event
of Default has occurred and is then continuing or would occur giving
effect thereto, (1) the Borrower may (1) declare and pay cash dividends
on its common Stock in any fiscal year and (2) repurchase its Stock, and
(2) ACE may declare and pay cash dividends on, and make mandatory and
optional sinking fund payments with respect to, the ACE Preferred Stock.

 5.   Investments, Acquisitions, Loans, Etc.

      At any time, purchase or otherwise acquire, hold or invest in the
Stock of, or any other interest in, any Person, or make any loan or
advance to, or enter into any arrangement for the purpose of providing
funds or credit to, or make any other investment, whether by way of
capital contribution, time deposit or otherwise, in or with any Person,
or make any Acquisition (all of which are sometimes referred to herein
as "Investments") except:

           (a)  Investments in (i) obligations issued or guaranteed by
the United States Government, (ii) obligations of Federal agencies;
(iii) State general obligation or revenue bonds having a rating category
not less than Aa or AA by Moody's or S&P, respectively; (iv) State bond
anticipation, tax anticipation or revenue anticipation notes having a
rating category not less than MIG-2 or AA by Moody's or S&P, 
respectively; (v) any of the following which, by their terms, mature
within twelve months from the date of issuance: (1) commercial paper
rated not less than Prime-1 or A-1 by Moody's or S&P, respectively; (2)
bankers' acceptance drawn on and accepted by Approved Financial
Institutions; (3) certificates of deposit issued by Approved Financial
Institutions and (4) money market mutual funds investing in securities
rated as "First Tier Eligible Securities" by Moody's or S&P.

           (b)  Investments existing on the Effective Date as set forth
on Schedule 8.5.

           (c)  Investments consisting of Intercompany Loans to
Operating Subsidiaries, provided that (i) no Default or Event of Default
shall exist before and after giving effect thereto and (ii) such
Operating Subsidiary shall have executed and delivered to the Borrower
an Intercompany Note, which Intercompany Note shall be in form and
substance satisfactory to the Agent, shall have been duly indorsed by
the Borrower to the order of the Agent, as collateral agent for itself,
the Lenders, the Facility A Agent and the Facility A Lenders and shall
have been delivered to the Agent, as such collateral agent.

           (d)  Investments consisting of loans to Permitted
Recipients, provided that (i) no Default or Event of Default shall exist
before and after giving effect thereto, and (ii) the aggregate amount of
all such Investments shall not exceed $10,000,000.

           (e)  Acquisitions provided that (i) no Default or Event of
Default shall exist before and after giving effect thereto, (ii) the
Person or business to be acquired is in the same or a related business
to a Subsidiary of the Borrower (including other types of utilities) or
the assets or to be acquired are devoted to or usable in such a business
and (iii) no more than $25,000,000 of proceeds of Loans are used
therefor.

           (f)  Equity Investments in Operating Subsidiaries, provided
(i) that no Default or Event of Default would exist before or after
giving effect thereto and (ii) not more than $20,000,000 of such
Investments in the aggregate shall be made with the proceeds of Loans or
the forgiveness of Indebtedness or the conversion to equity of any such
Indebtedness, in each case to the extent permitted by Section 8.6.

 6.   Amendments, Etc. of Intercompany Notes

      Enter into or agree to any amendment, modification or waiver of
any term or condition of any Intercompany Note or forgive all or any
portion of any amount due thereunder or convert all or any portion
thereof into Stock or other interests or instruments, provided, however,
that if no Default or Event of Default exists before and after giving
effect thereto, the Borrower may so convert or forgive such Intercompany
Note or Intercompany Notes not in excess of $20,000,000 in the
aggregate, provided further that any such conversion or forgiveness in
excess thereof may only be made if the Agent shall have received 30 days
prior written notice thereof and the Operating Subsidiary whose
Intercompany Note is to be forgiven or converted shall have executed and
delivered to the Agent a guaranty substantially in the form of Exhibit Q
hereto, together with such legal opinions, certificates and other
documents as the Agent reasonably may request, each in form and
substance satisfactory to the Agent.

      7.   Designation of Operating Subsidiaries

      Designate any Subsidiary as an additional Operating Subsidiary to
whom proceeds of Loans may be loaned by the Borrower unless (i) no
Default or Event of Default shall exist before or after giving effect
thereto, (ii) the prospective Operating Subsidiary is a Subsidiary of
the Borrower, (iii) the prospective Operating Subsidiary is engaged in
the conduct of an active trade or business, (iv) the prospective
Operating Subsidiary executes an Intercompany Note, in favor of the
Borrower and in form and substance satisfactory to the Agent, evidencing
its obligation to repay Intercompany Loans made to it by the Borrower
from time to time, which Intercompany Note has been duly indorsed by the
Borrower to the order of the Agent, as collateral agent for itself, the
Lenders, the Facility A Agent and the Facility A Lenders, and (v) the
Agent shall have received a written certificate signed by an Authorized
Signatory of the Borrower designating such Operating Subsidiary and
certifying as to its status as described in clauses (ii) and (iii)
above.

 8.   Certain Business Activities

      Engage in any business other than the holding of Permitted
Investments.


I.    DEFAULT

 1.   Events of Default

      The following shall each constitute an "Event of Default"
hereunder:

           (a)  The failure of the Borrower to pay any installment of
principal on any Note or reimbursement obligations in respect of any
Letter of Credit on the date when due and payable; or

           (b)  The failure of the Borrower to pay any installment of
interest or any other fees or expenses payable under any Loan Document
or otherwise to the Agent with respect to the loan facilities
established hereunder within three Business Days of the date when due
and payable; or

           (c)  The use of the proceeds of any Loan in a manner
inconsistent with or in violation of Section 2.15; or

           (d)  The failure of the Borrower to observe or perform any
covenant or agreement contained in Sections 7.3, 7.10, 7.11 or Section
8; or

           (e)  The failure of the Borrower to observe or perform any
other term, covenant, or agreement contained in any Loan Document and
such failure shall have continued unremedied for a period of 30 days
after the Borrower shall have obtained knowledge thereof; or

           (f)  Any representation or warranty made in any Loan
Document or in any certificate delivered or to be delivered pursuant
thereto shall prove to have been  incorrect or misleading (whether
because of misstatement or omission) in any material respect when made;
or

           (g)  Obligations of the Borrower (other than its obligations
under the Notes), ACE or any of any Operating Subsidiary, whether as
principal, guarantor, surety or other obligor, for the payment of any
Indebtedness or operating leases in excess of $10,000,000 in the
aggregate (i) shall become or shall be declared to be due and payable
prior to the expressed maturity thereof, or (ii) shall not be paid when
due or within any grace period for the payment thereof, or (iii) the
holders of any such obligations shall have the right to declare such
obligation due and payable prior to the expressed maturity thereof;

           (h)  The Borrower, ACE or any Operating Subsidiary shall (i)
suspend or discontinue its business, (ii) make an assignment for the
benefit of creditors, (iii) generally not be paying its debts as such
debts become due, (iv) admit in writing its inability to pay its debts
as they become due, (v) file a voluntary petition in bankruptcy, (vi)
become insolvent (however such insolvency shall be evidenced), (vii)
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute, law
or regulation of any jurisdiction, (viii) petition or apply to any
tribunal for any receiver, custodian or any trustee for any substantial
part of its Property, (ix) be the subject of any such proceeding filed
against it which remains undismissed for a period of 60 days, (x) file
any answer admitting or not contesting the material allegations of any
such petition filed against it or any order, judgment or decree
approving such petition in any such proceeding, (xi) seek, approve,
consent to, or acquiesce in any such proceeding, or in the appointment
of any trustee, receiver, sequestrator, custodian, liquidator, or fiscal
agent for it, or any substantial part of its Property, or an order is
entered appointing any such trustee, receiver, custodian, liquidator or
fiscal agent and such order remains in effect for 60 days, or (xii) take
any formal action for the purpose of effecting any of the foregoing or
looking to the liquidation or dissolution of the Borrower or such
Subsidiary; or

           (i)  An order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court
having jurisdiction (i) adjudging the Borrower, ACE or any Operating
Subsidiary bankrupt or insolvent, (ii) approving as properly filed a
petition seeking reorganization, liquidation, arrangement, adjustment or
composition of or in respect of the Borrower or any of its Subsidiaries
under the United States bankruptcy laws or any other applicable Federal
or state law, (iii) appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the
Borrower or any of its Subsidiaries or of any substantial part of the
Property thereof, or (iv) ordering the winding up or liquidation of the
affairs of the Borrower or any of its Subsidiaries, and any such decree
or order continues unstayed and in effect for a period of 60 days; or

           (j)  Judgments or decrees against the Borrower or any of its
Subsidiaries aggregating in excess of $10,000,000 shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period
of 30 consecutive days from the entry thereof; or

                (k)  Any Loan Document shall cease, for any reason, to be in
full force and effect or the Borrower shall so assert in writing or
shall disavow any of its obligations thereunder; or

           (l)  The occurrence of an Event of Default under and as
defined in the Pledge Agreement; or

           (m)  The occurrence of an Event of Default under and as
defined in any Facility A Loan Document; or

           (n)  The Borrower shall own less than 100% of the issued and
outstanding common Stock of ACE; or

           (o)  (i) any Termination Event shall occur; (ii) any
Accumulated Funding Deficiency, whether waived, shall exist with respect
to any Pension Plan; (iii) any Person shall engage in any Prohibited
Transaction involving any Employee Benefit Plan; (iv) the Borrower, any
of its Subsidiaries or any ERISA Affiliate shall fail to pay when due an
amount which is payable by it to the PBGC or to a Pension Plan under
Title IV of ERISA; or (v) any other event or condition shall occur or
exist with respect to an Employee Benefit Plan; and the occurrence of
any of such events would have a Material Adverse Effect.

      Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, (a) if such event is an Event
of Default specified in clause (h) or (i) above, the Aggregate
Commitments and the Letter of Credit Commitment shall immediately and
automatically terminate and the Loans, all accrued and unpaid interest
thereon, any reimbursement obligations owing or contingently owing in
respect of all outstanding Letters of Credit and all other amounts owing
under the Loan Documents shall immediately become due and payable, and
the Borrower shall forthwith deposit an amount equal to the Letter of
Credit Exposure in a cash collateral account with and under the
exclusive control of the Agent, and the Agent may, and, upon the
direction of the Required Lenders shall, exercise any and all remedies
and other rights provided in the Loan Documents, and (b) if such event
is any other Event of Default, any or all of the following actions may
be taken: (i) with the consent of the Required Lenders, the Agent may,
and upon the direction of the Required Lenders shall, by notice to the
Borrower, declare the Aggregate Commitments and the Letter of Credit
Commitment to be terminated forthwith, whereupon the Aggregate
Commitments and the Letter of Credit Commitment shall immediately
terminate, and (ii) with the consent of the Required Lenders, the Agent
may, and upon the direction of the Required Lenders shall, by notice of
default to the Borrower, declare the Loans, all accrued and unpaid
interest thereon, any reimbursement obligations owing or contingently
owing in respect of all outstanding Letters of Credit and all other
amounts owing under the Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable, and the
Borrower shall forthwith deposit an amount equal to the Letter of Credit
Exposure in a cash collateral account with and under the exclusive
control of the Agent, and the Agent may, and upon the direction of the
Required Lenders shall, exercise any and all remedies and other rights
provided pursuant to the Loan Documents.  Except as otherwise provided
in this Section, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.  The Borrower hereby further
expressly waives and covenants not to assert any appraisement,
valuation, stay, extension, redemption or similar laws, now or at  any
time hereafter in force which might delay, prevent or otherwise impede
the performance or enforcement of any Loan Document.

      In the event that the Aggregate Commitments and the Letter of
Credit Commitment shall have been terminated or the Notes shall have
been declared due and payable pursuant to the provisions of this
Section, any funds received by the Agent and the Lenders from or on
behalf of the Borrower shall be applied by the Agent and the Lenders in
liquidation of the Loans and the obligations of the Borrower under the
Loan Documents in the following manner and order, in each case pro rata
in proportion to the amounts due to each Person entitled to payment: (i)
first, to the payment of interest on, and then the principal portion of,
any Loans which the Agent may have advanced on behalf of any Lender for
which the Agent has not then been reimbursed by such Lender or the
Borrower; (ii) second, to the payment of any fees or expenses due the
Agent from the Borrower, (iii) third, to reimburse the Agent and the
Lenders for any expenses (to the extent not paid pursuant to clause (ii)
above due from the Borrower pursuant to the provisions of Section 11.5;
(iv) fourth, to the payment of accrued Facility Fees, Letter of Credit
Fees and all other fees, expenses and amounts due under the Loan
Documents (other than principal and interest on the Notes); (v) fifth,
to the payment of interest due on the Notes; (vi) sixth, to the payment
of principal outstanding on the Revolving Credit Notes and under the
Reimbursement Agreements; (vii) seventh, to the payment of principal
outstanding on the Competitive Bid Notes; and (viii) eighth, to the
payment of any other amounts owing to the Agent and the Lenders under
any Loan Document.


J.    THE AGENT

 1.   Appointment

      Each Lender hereby irrevocably designates and appoints BNY as the
Agent of such Lender under the Loan Documents and each such Lender
hereby irrevocably authorizes BNY, as the Agent for such Lender, to take
such action on its behalf under the provisions of the Loan Documents and
to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of the Loan Documents, together with
such other powers as are reasonably incidental thereto.  Notwithstanding
any provision to the contrary elsewhere in any Loan Document, the Agent
shall not have any duties or responsibilities other than those expressly
set forth therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist
against the Agent.

 2.   Delegation of Duties

      The Agent may execute any of its duties under the Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to rely
upon the advice of counsel concerning all matters pertaining to such
duties.

 3.   Exculpatory Provisions

      Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under
or in connection with the Loan Documents (except the  Agent for its own
gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer
thereof contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received
by the Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, perfection, enforceability
or sufficiency of any of the Loan Documents or for any failure of the
Borrower or any other Person to perform its obligations thereunder.  The
Agent shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, the Loan Documents, or to inspect the
properties, books or records of the Borrower.  The Agent shall not be
under any liability or responsibility whatsoever, as Agent, to the
Borrower or any other Person as a consequence of any failure or delay in
performance, or any breach, by any Lender of any of its obligations
under any of the Loan Documents.

 4.   Reliance by Agent

      The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, opinion, letter, cablegram, telegram, fax, telex or teletype
message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Agent.  The
Agent may treat each Lender, or the Person designated in the last notice
filed with it under this Section, as the holder of all of the interests
of such Lender in its Loans and in its Notes until written notice of
transfer, signed by such Lender (or the Person designated in the last
notice filed with the Agent) and by the Person designated in such
written notice of transfer, in form and substance satisfactory to the
Agent, shall have been filed with the Agent.  The Agent shall not be
under any duty to examine or pass upon the validity, effectiveness,
enforceability, perfection or genuineness of the Loan Documents or any
instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Agent shall be entitled to assume that the
same are valid, effective and genuine, have been signed or sent by the
proper parties and are what they purport to be.  The Agent shall be
fully justified in failing or refusing to take any action under the Loan
Documents unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate.  The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under
the Loan Documents in accordance with a request or direction of the
Required Lenders, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.

 5.   Notice of Default

      The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Agent has
received written notice thereof from a Lender or the Borrower.  In the
event that the Agent receives such a notice, the Agent shall promptly
give notice thereof to the Lenders and the Borrower.  The Agent shall
take such action with respect to such Default or Event of Default as
shall be directed by the Required Lenders, provided, however, that
unless and until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such  action, or refrain
from taking such action, with respect to such Default or Event of
Default as it shall deem to be in the best interests of the Lenders.

 6.   Non-Reliance on Agent and Other Lenders

      Each Lender expressly acknowledges that neither the Agent nor any
of its respective officers, directors, employees, agents, attorneys-
in-fact or affiliates has made any representations or warranties to it
and that no act by the Agent hereinafter, including any review of the
affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender.  Each Lender
represents to the Agent that 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 evaluation of and
investigation into the business, operations, Property, financial and
other condition and creditworthiness of the Borrower and made its own
decision to enter into this Agreement.  Each Lender also represents that
it will, independently and without reliance upon the Agent 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 analyses,
evaluations and decisions in taking or not taking action under any Loan
Document, and to make such investigation as it deems necessary to inform
itself as to the business, operations, Property, financial and other
condition and creditworthiness of the Borrower.  Except for notices,
reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, Property, financial and
other condition or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.

 7.   Indemnification

      Each Lender agrees to indemnify and reimburse the Agent in its
capacity as such (to the extent not promptly reimbursed by the Borrower
and without limiting the obligation of the Borrower to do so), pro rata
according to the outstanding principal balance of the Loans (or at any
time when no Loans are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind whatsoever including, without limitation,
any amounts paid to the Lenders (through the Agent) by the Borrower
pursuant to the terms of the Loan Documents, that are subsequently
rescinded or avoided, or must otherwise be restored or returned) which
may at any time (including, without limitation, at any time following
the payment of the Notes) be imposed on, incurred by or asserted against
the Agent in any way relating to or arising out of the Loan Documents or
any other documents contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted to be
taken by the Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the
extent resulting solely from the finally adjudicated gross negligence or
willful misconduct of the Agent.  Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its
pro rata share of any unpaid fees owing to the Agent, and any costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) payable by the Borrower under Section 11.5, to the extent  that
the Agent has not been paid such fees or has not be reimbursed for such
costs and expenses by the Borrower.  The failure of any Lender to
reimburse the Agent promptly upon demand for its pro rata share of any
amount required to be by the Lenders to the Agent as provided in this
Section shall not relieve any other Lender of its obligation hereunder
to reimburse the Agent for its pro rata share of such amount, but no
Lender shall be responsible for the failure of other Lender to reimburse
the Agent for such other Lender's pro rata share of such amount.  The
agreements in this Section shall survive the payment of all amounts
payable under the Loan Documents.

 8.   Agent in Its Individual Capacity

      BNY and its respective affiliates may make loans to, accept
deposits from, issue letters of credit for the account of, and generally
engage in any kind of business with, the Borrower as though BNY were not
Agent hereunder.  With respect to the Commitment made or renewed by BNY
and the Notes issued to BNY, BNY shall have the same rights and powers
under the Loan Documents as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall
in each case include BNY.

 9.   Successor Agent

      If at any time the Agent deems it advisable, in its sole
discretion, it may submit to each of the Lenders a written notice of its
resignation as Agent under the Loan Documents, such resignation to be
effective upon the earlier of (i) the written acceptance of the duties
of the Agent under the Loan Documents by a successor Agent and (ii) on
the 30th day after the date of such notice.  Upon any such resignation,
the Required Lenders shall have the right, with the prior written
consent of the Borrower (which consent shall not be unreasonably
withheld or delayed and which consent of the Borrower shall not be
required upon the occurrence and during the continuance of a Default or
an Event of Default), to appoint from among the Lenders a successor
Agent.  If no successor Agent shall have been so appointed by the
Required Lenders and accepted such appointment in writing within 30 days
after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which successor Agent shall be a commercial bank organized under the
laws of the United States of America or any State thereof and having a
combined capital, surplus, and undivided profits 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 retiring Agent, and the retiring Agent's rights, powers, privileges
and duties as Agent under the Loan Documents shall be terminated.  The
Borrower and the Lenders shall execute such documents as shall be
necessary to effect such appointment.  After any retiring Agent's
resignation as Agent, the provisions of the Loan Documents shall inure
to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Loan Documents.  If at any time there shall
not be a duly appointed and acting Agent, the Borrower agrees to make
each payment due under the Loan Documents directly to the Lenders
entitled thereto during such time.


 K.   OTHER PROVISIONS

 1.   Amendments and Waivers

      With the written consent of the Required Lenders, the Agent and
the Borrower may, from time to time, enter into written amendments,
supplements or modifications of the Loan Documents and, with the consent
of the Required Lenders, the Agent on behalf of the Lenders may execute
and deliver to any such parties a written instrument waiving or a
consent to a departure from, on such terms and conditions as the Agent
may specify in such instrument, any of the requirements of the Loan
Documents or any Default or Event of Default and its consequences;
provided, however, that:

      (a)  no such amendment, supplement, modification, waiver or
consent shall, without the written consent of all of the Lenders, (i)
increase the Commitment of any Lender or the Aggregate Commitments, (ii)
extend the Maturity Date (except as provided in Section 2.22); (iii)
decrease the rate, or extend the time of payment, of interest of, or
change or forgive the principal amount of, or change the pro rata
allocation of payments under, any Note; (iv) release all or any part of
the Collateral; (v) change the provisions of Sections 3.4, 11.1 or
11.7(a) or (vi) change the definition of Required Lenders;

      (b)  without the written consent of the Issuing Bank, no such
amendment, supplement, modification or waiver shall change the Letter of
Credit Commitment, change the amount or the time of payment of the
Letter of Credit Fees or change any other term or provision which
relates to the Letter of Credit Commitment or the Letters of Credit; and

      (c)  without the written consent of BNY, no such amendment,
supplement, modification or waiver shall amend, modify or waive any
provision of Section 10 or otherwise change any of the rights or
obligations of the Agent hereunder or under the Loan Documents.

      Any such amendment, supplement, modification or waiver shall
apply equally to each of the Lenders and shall be binding upon the
parties to the applicable Loan Document, the Lenders, the Agent and all
future holders of the Notes.  In the case of any waiver, the parties to
the applicable Loan Document, the Lenders and the Agent shall be
restored to their former position and rights hereunder and under the
outstanding Notes and other Loan Documents to the extent provided for in
such waiver, and any Default or Event of Default waived shall not extend
to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.  The Loan Documents may not be amended orally
or by any course of conduct.

 2.   Notices

      All notices, requests and demands to or upon the respective
parties to the Loan Documents to be effective shall be in writing and,
unless otherwise expressly provided therein, shall be deemed to have
been duly given or made when delivered by hand, or when deposited in the
mail, first-class postage prepaid, or, in the case of notice by fax,
when sent, addressed as follows in the case of the Borrower or the
Agent, at the Domestic Lending Office, in the case of each Lender, or to
such other addresses as to  which the Agent may be hereafter notified by
the respective parties thereto or any future holders of the Notes:

      The Borrower:

      Atlantic Energy, Inc.
      6801 Black Horse Pike
      Pleasantville, New Jersey 08232-4130
      Attention:  Louis M. Walters,
                    Treasurer
      Telephone:  (609) 645-4441
      Fax:        (609) 645-4550

      The Agent:

      The Bank of New York
      One Wall Street
      Agency Function Administration
      18th Floor
      New York, New York 10286
      Attention:  Patricia Clancy
      Telephone: (212) 635-4696
      Fax:       (212) 635-6365 or 6366 or 6367

      with a copy to:

      The Bank of New York
      Energy Industries Division
      One Wall Street
      19th Floor
      New York, New York 10286
      Attention:  Mary Lou Bradley,
                    Vice President
      Telephone:  (212) 635-7533
      Fax:        (212) 635-7923

except that any notice, request or demand by the Borrower to or upon the
Agent or the Lenders pursuant to Sections 2.3, 2.4 or 2.7 shall not be
effective until received.  Any party to a Loan Document may rely on
signatures of the parties thereto which are transmitted by fax or other
electronic means as fully as if originally signed.

 3.   No Waiver; Cumulative Remedies

      No failure to exercise and no delay in exercising, on the part of
the Agent or any Lender, any right, remedy, power or privilege under any
Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege.  The rights, remedies,
powers and privileges under the Loan Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by
law.

      4.   Survival of Representations and Warranties

      All representations and warranties made under the Loan Documents
and in any document, certificate or statement delivered pursuant thereto
or in connection therewith shall survive the execution and delivery of
the Loan Documents.

 5.   Payment of Expenses and Taxes

      The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Loan is made (i) to pay or reimburse
the Agent for all its out-of-pocket costs and expenses reasonably
incurred in connection with the development, preparation, execution and
syndication of, the Loan Documents and any amendment, supplement or
modification thereto (whether or not executed), any documents prepared
in connection therewith and the consummation of the transactions
contemplated thereby, including, without limitation, the reasonable fees
and disbursements of Special Counsel, (ii) to pay or reimburse the Agent
and the Lenders for all of their respective costs and expenses,
including, without limitation, reasonable fees and disbursements of
counsel, incurred in connection with (1) any Default or Event of Default
and any enforcement or collection proceedings resulting therefrom or in
connection with the negotiation of any restructuring or "work-out"
(whether consummated or not) of the obligations of the Borrower under
any of the Loan Documents and (2) the enforcement of this Section, (iii)
to pay, indemnify, and hold each Lender and the Agent harmless from and
against, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery
of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under
or in respect of, the Loan Documents and any such other documents, and
(iv) to pay, indemnify and hold each Lender and the Agent and each of
their respective officers, directors and employees harmless from and
against any and all other liabilities, obligations, claims, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without
limitation, reasonable counsel fees and disbursements) with respect to
the enforcement and performance of the Loan Documents and the
enforcement and performance of the provisions of any subordination
agreement in favor of the Agent and the Lenders (all the foregoing,
collectively, the "indemnified liabilities") and, if and to the extent
that the foregoing indemnity may be unenforceable for any reason, the
Borrower agrees to make the maximum payment permitted or not prohibited
under applicable law; provided, however, that the Borrower shall have no
obligation hereunder to pay indemnified liabilities to the Agent or any
Lender arising from the finally adjudicated gross negligence or willful
misconduct of the Agent or such Lender or claims between one indemnified
party and another indemnified party.  The agreements in this Section
shall survive the termination of the Aggregate Commitments and the
payment of all amounts payable under the Loan Documents.

 6.   Lending Offices

      Each Lender shall have the right at any time and from time to
time to transfer its Loans to a different office, provided that such
Lender shall promptly notify the Agent and the Borrower of any such
change of office.  Such office shall thereupon become such Lender's
Domestic Lending Office or Eurodollar Lending Office, as the case  may
be, provided, however, that no such Lender shall be entitled to receive
any greater amount under Sections 2.10, 2.12, 2.13 and 2.21 as a result
of a transfer of any such Loans to a different office of such Lender
than it would be entitled to immediately prior thereto unless such claim
would have arisen even if such transfer had not occurred.

 7.   Assignments and Participations

      (a)  The Loan Documents shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agent, all future holders of
the Notes and their respective successors and assigns, except that the
Borrower may not assign, delegate or transfer any of its rights or
obligations under the Loan Documents without the prior written consent
of the Agent, the Issuing Bank and each Lender.

      (b)  Each Lender shall have the right at any time, upon written
notice to the Agent of its intent to do so, to sell, assign, transfer or
negotiate all or any part of such Lender's rights under the Loan
Documents and the Facility A Loan Documents to one or more of its
affiliates, to one or more of the other Lenders (or to affiliates of
such other Lenders) or, with the prior written consent of the Borrower,
the Agent and the Issuing Bank (which consent shall not be unreasonably
withheld or delayed and which consent of the Borrower shall not be
required upon the occurrence and during the continuance of an Event of
Default), to sell, assign, transfer or negotiate all or any part of such
Lender's rights and obligations under the Loan Documents and the
Facility A Loan Documents to any other bank, insurance company, pension
fund, mutual fund or other financial institution, provided that (i) each
such sale, assignment, transfer or negotiation (other than sales,
assignments, transfers or negotiations (x) to affiliates of such Lender
or (y) of a Lender's entire interest) shall be in a minimum amount of
$5,000,000, (ii) each such sale, assignment, transfer or negotiation
shall be of an equal percentage of such Lenders interest under the Loan
Documents and the Facility A Loan Documents (it being the intention of
the parties that at all times during which the Loan Documents and the
Facility A Loan Documents are both in effect, each Lender shall also be
a Facility A Lender and its Commitment Percentage shall equal its
Facility A Commitment Percentage) and (iii) there shall be paid to the
Agent by the assigning Lender a fee (the "Assignment Fee") of $3,000 for
the assignment of both the Loan Documents and the Facility A Loan
Documents.  For each assignment, the parties to such assignment shall
execute and deliver to the Agent for its acceptance and recording an
Assignment and Acceptance Agreement.  Upon such execution, delivery,
acceptance and recording by the Agent, from and after the effective date
specified in such Assignment and Acceptance Agreement, the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance Agreement, the assignor Lender thereunder
shall be released from its obligations under the Loan Documents.  The
Borrower agrees upon written request of the Agent and at the Borrower's
expense to execute and deliver (1) to such assignee, a Revolving Credit
Note, dated the effective date of such Assignment and Acceptance
Agreement, in an aggregate principal amount equal to the Loans assigned
to, and Commitments assumed by, such assignee, (2) to such assignee, a
Competitive Bid Note, dated the effective date of such Assignment and
Acceptance Agreement and (3) to such assignee, a Revolving Credit Note,
dated the effective date of such Assignment and Acceptance Agreement, in
an aggregate principal amount equal to the balance of such assignor
Lender's Revolving Credit Loans and Commitments, if any, and each
assignor Lender shall cancel and return to the Borrower its existing
Revolving Credit Note.  Upon any such sale, assignment or  other
transfer, the Commitments and the Commitment Percentages set forth in
Exhibit A shall be adjusted accordingly by the Agent.

      (c)  Each Lender may grant participations in all or any part of
its Loans, its Notes and its Commitment to one or more banks, insurance
companies, financial institutions, pension funds or mutual funds,
provided that (i) such Lender's obligations under the Loan Documents
shall remain unchanged, (ii) such Lender shall remain solely responsible
to the other parties to the Loan Documents for the performance of such
obligations, (iii) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents, (iv) no
sub-participations shall be permitted and (v) the voting rights of any
holder of any participation shall be limited to decisions that only do
any of the following: (1) subject the participant to any additional
obligation, (2) reduce the principal of, or interest on the Notes or any
fees or other amounts payable hereunder, (3) postpone any date fixed for
the payment of principal of, or interest on the Notes or any fees or
other amounts payable hereunder, (4) release any security interest or
Collateral except to the extent that such release is specifically
provided for in any Loan Document or (5) release any guarantor under any
guarantee.  The Borrower acknowledges and agrees that any such
participant shall for purposes of Sections 2.10, 2.12, 2.13, 2.16 and
2.21 be deemed to be a "Lender"; provided, however, the Borrower shall
not, at any time, be obligated to pay any participant in any interest of
any Lender hereunder any sum in excess of the sum which the Borrower
would have been obligated to pay to such Lender in respect of such
interest had such Lender not sold such participation.

      (d)  If any (i) assignment is made pursuant to subsection (b)
above or (ii) any participation is granted pursuant to subsection (c)
above, shall be made to any Person that is not a U.S. Person, such
Person shall furnish such certificates, documents or other evidence to
the Borrower and the Agent, in the case of clause (i) and to the
Borrower and the Lender which sold such participation in the case of
clause (ii), as shall be required by Section 2.10(e).

      (e)  No Lender shall, as between and among the Borrower, the
Agent and such Lender, be relieved of any of its obligations under the
Loan Documents as a result of any sale, assignment, transfer or
negotiation of, or granting of participations in, all or any part of its
Loans, its Commitment or its Note, except that a Lender shall be
relieved of its obligations to the extent of any such sale, assignment,
transfer, or negotiation of all or any part of its Loans, its Commitment
or its Notes pursuant to subsection (b) above.

      (f)  Notwithstanding anything to the contrary contained in this
Section, any Lender may at any time or from time to time assign all or
any portion of its rights under the Loan Documents to a Federal Reserve
Bank, provided that any such assignment shall not release such assignor
from its obligations thereunder.

 8.   Counterparts

      Each Loan Document (other than the Notes) may be executed by one
or more of the parties thereto on any number of separate counterparts
and all of said counterparts taken together shall be deemed to
constitute one and the same document.  It shall not be necessary in
making proof of any Loan Document to produce or account for  more than
one counterpart signed by the party to be charged.  A counterpart of any
Loan Document or to any document evidencing, and of any an amendment,
modification, consent or waiver to or of any Loan Document transmitted
by fax shall be deemed to be an originally executed counterpart.  A set
of the copies of the Loan Documents signed by all the parties thereto
shall be deposited with each of the Borrower and the Agent.  Any party
to a Loan Document may rely upon the signatures of any other party
thereto which are transmitted by fax or other electronic means to the
same extent as if originally signed.

 9.   Adjustments; Set-off

      (a)  If any Lender (a "Benefited Lender") shall at any time
receive any payment of all or any part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 9.1 (h) or (i), or
otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender in respect of such other
Lender's Loans, or interest thereon, such Benefited Lender shall
purchase for cash from each of the other Lenders such portion of each
such other Lender's Loans, and shall provide each of such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of
the Lenders, provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. 
The Borrower agrees that each Lender so purchasing a portion of another
Lender's Loans may exercise all rights of payment (including, without
limitation, rights of set-off, to the extent not prohibited by law) with
respect to such portion as fully as if such Lender were the direct
holder of such portion.

      (b)  In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence of an Event of Default and the
acceleration of the obligations owing in connection with the Loan
Documents, or at any time upon the occurrence and during the continuance
of an Event of Default, under Section 9.1(a) or (b), each Lender shall
have the right, without prior notice to the Borrower, any such notice
being expressly waived by the Borrower to the extent not prohibited by
applicable law, to set-off and apply against any indebtedness, whether
matured or unmatured, of the Borrower to such Lender, any amount owing
from such Lender to the Borrower, at, or at any time after, the
happening of any of the above-mentioned events.  To the extent not
prohibited by applicable law, the aforesaid right of set-off may be
exercised by such Lender against the Borrower or against any trustee in
bankruptcy, custodian, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of
the Borrower, or against anyone else claiming through or against the
Borrower or such trustee in bankruptcy, custodian, debtor in possession,
assignee for the benefit of creditors, receiver, or execution, judgment
or attachment creditor, notwithstanding the fact that such right of set-
off shall not have been exercised by such Lender prior to the making,
filing or issuance, or service upon such Lender of, or of notice of, any
such petition, assignment for the benefit of creditors, appointment or
application for the appointment of a receiver, or issuance of execution,
subpoena, order or warrant.  Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application made by
such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.

      10.  Indemnity

      The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and their respective affiliates, directors, officers,
employees, attorneys and agents (each an "Indemnified Person") from and
against any loss, cost, liability, damage or expense (including the
reasonable fees and disbursements of counsel of such Indemnified Person,
including all local counsel hired by any such counsel) incurred by such
Indemnified Person in investigating, preparing for, defending against,
or providing evidence, producing documents or taking any other action in
respect of, any commenced or threatened litigation, administrative
proceeding or investigation under any federal securities law or any
other statute of any jurisdiction, or any regulation, or at common law
or otherwise, which is alleged to arise out of or is based upon (i) any
untrue statement or alleged untrue statement of any material fact by the
Borrower in any document or schedule executed or filed with any
Governmental Authority by or on behalf of the Borrower; (ii) any
omission or alleged omission to state any material fact required to be
stated in such document or schedule, or necessary to make the statements
made therein, in light of the circumstances under which made, not
misleading; (iii) any acts, practices or omissions or alleged acts,
practices or omissions of the Borrower or its agents relating to the use
of the proceeds of any or all borrowings made by the Borrower which are
alleged to be in violation of Section 2.15, or in violation of any
federal securities law or of any other statute, regulation or other law
of any jurisdiction applicable thereto; or (iv) any acquisition or
proposed acquisition by the Borrower of all or a portion of the Stock,
or all or a portion of the assets, of any Person whether such
Indemnified Person is a party thereto.  The indemnity set forth herein
shall be in addition to any other obligations or liabilities of the
Borrower to each Indemnified Person under the Loan Documents or at
common law or otherwise, and shall survive any termination of the Loan
Documents, the expiration of the Aggregate Commitments and the payment
of all indebtedness of the Borrower under the Loan Documents, provided
that the Borrower shall have no obligation under this Section to an
Indemnified Person with respect to any of the foregoing to the extent
found in a final judgment of a court having jurisdiction to have
resulted primarily out of the gross negligence or wilful misconduct of
such Indemnified Person or arising solely from claims between one such
Indemnified Person and another such Indemnified Person.

 11.  Governing Law

      The Loan Documents and the rights and obligations of the parties
thereunder shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York, without
regard to principles of conflict of laws.

 12.  Headings Descriptive

      Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.

 13.  Severability

      Every provision of the Loan Documents is intended to be
severable, and if any term or provision thereof shall be invalid,
illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions thereof shall not be 
affected or impaired thereby, and any invalidity, illegality or
unenforceability in any jurisdiction shall not affect the validity,
legality or enforceability of any such term or provision in any other
jurisdiction.

 14.  Integration

      All exhibits to a Loan Document shall be deemed to be a part
thereof.  Except for agreements between the Agent and the Borrower with
respect to certain fees, the Loan Documents embody the entire agreement
and understanding among the Borrower, the Agent and the Lenders with
respect to the subject matter thereof and supersede all prior agreements
and understandings among the Borrower, the Agent and the Lenders with
respect to the subject matter thereof.

 15.  Consent to Jurisdiction

      The Borrower hereby irrevocably submits to the jurisdiction of
any New York State or Federal court sitting in the City of New York over
any suit, action or proceeding arising out of or relating to the Loan
Documents.  The Borrower hereby irrevocably waives, to the fullest
extent permitted or not prohibited by law, any objection which it may
now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such
suit, action or proceeding brought in such a court has been brought in
an inconvenient forum.  The Borrower hereby agrees that a final judgment
in any such suit, action or proceeding brought in such a court, after
all appropriate appeals, shall be conclusive and binding upon it.

 16.  Service of Process

      The Borrower hereby irrevocably consents to the service of
process in any suit, action or proceeding by sending the same by first
class mail, return receipt requested or by overnight courier service, to
the address of the Borrower set forth in Section 11.2.  The Borrower
hereby agrees that any such service (i) shall be deemed in every respect
effective service of process upon it in any such suit, action, or
proceeding, and (ii) shall to the fullest extent enforceable by law, be
taken and held to be valid personal service upon and personal delivery
to it.

 17.  No Limitation on Service or Suit

      Nothing in the Loan Documents or any modification, waiver,
consent or amendment thereto shall affect the right of the Agent or any
Lender to serve process in any manner permitted by law or limit the
right of the Agent or any Lender to bring proceedings against the
Borrower in the courts of any jurisdiction or jurisdictions in which the
Borrower may be served.

 18.  WAIVER OF TRIAL BY JURY

      THE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION
WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. 
FURTHER, THE BORROWER 
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE
AGENT, OR THE
  LENDERS, OR COUNSEL TO THE AGENT OR THE LENDERS, HAS REPRESENTED,
  EXPRESSLY OR OTHERWISE, THAT THE AGENT OR THE LENDERS WOULD NOT, IN THE
  EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY
  TRIAL PROVISION.  THE BORROWER ACKNOWLEDGES THAT THE AGENT AND THE
  LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA,
  THE PROVISIONS OF THIS SECTION.
  
  
             [Remainder of page intentionally left blank]
      IN WITNESS WHEREOF, the parties hereto have caused this Revolving
  Credit Agreement (Facility B) to be duly executed and delivered by their
  proper and duly authorized officers as of the day and year first above
  written.
  
  
                                      ATLANTIC ENERGY, INC.
  
  
  
                                     By:    /s/ Jerrold L. Jacobs
                                     Name:  Jerrold L. Jacobs
                                     Title: President & Chief
                                            Executive Officer
  
  
                                     THE BANK OF NEW YORK,  
                                     Individually and as Agent
  
  
  
                                     By:    /s/ Mary Lou Bradley
                                     Name:  Mary Lou Bradley
                                     Title: Vice President
  
  
  
                                     THE FIRST NATIONAL BANK
                                       OF CHICAGO
  
  
  
                                     By     /s/ Kenneth J. Bauer
                                     Name:  Kenneth J. Bauer
                                     Title: Authorized Agent
  
  
  
                                     MELLON BANK, N.A.
  
  
  
                                    By:    /s/ A. Gary Chace
                                    Name:  A. Gary Chace
                                    Title: Senior Vice President
    
                       ATLANTIC ENERGY EXHIBIT A
  
                          LIST OF COMMITMENTS
  
                             (Facility B)
                         Commitment
Lender                   Commitment             Percentage

The Bank of New York    $21,334,000                 53.3350%

The First National Bank $13,333,000                 33.3325%
  of Chicago

Mellon Bank, N.A.       $ 5,333,000                 13.3325%

Total                   $40,000,000                100.0000%

                       ATLANTIC ENERGY EXHIBIT B-1

                      FORM OF REVOLVING CREDIT NOTE

                               (Facility B)

$______________                                          , 1995
                                             New York, New York


FOR VALUE RECEIVED, on the Maturity Date, ATLANTIC ENERGY, INC.,
a New Jersey corporation (the "Borrower"), hereby promises to pay
to the order of ________________ (the "Lender"), at the office of
THE BANK OF NEW YORK, as Agent (the "Agent"), located at One Wall
Street, New York, New York or at such other place as the Agent may
specify from time to time, in lawful money of the United States of
America, the principal sum of $_____, or such lesser unpaid
principal balance as shall be outstanding hereunder, together with
interest from the date hereof, on the unpaid principal balance
hereof, payable at the rate or rates and at the time or times
provided for in the Revolving Credit Agreement (Facility B), dated
as of September 28, 1995, among the Borrower, the Lenders party
thereto and the Agent (as the same may be amended, modified or
supplemented from time to time, the "Agreement").  Capitalized
terms used herein that are defined in the Agreement shall have the
meanings therein defined.  In no event shall interest payable
hereon exceed the Highest Lawful Rate.

This Note is one of the Revolving Credit Notes referred to in the
Agreement and is entitled to the benefits of, and is subject to
the terms set forth in, the Agreement.  The principal of this Note
is payable in the amounts and under the circumstances, and its ma-
turity is subject to acceleration upon the terms, set forth in the
Agreement.  Except as otherwise provided in the Agreement, if any
payment on this Note becomes due and payable on a day which is not
a Business Day, the maturity thereof shall be extended to the next
Business Day and interest shall be payable at the applicable rate
or rates specified in the Agreement during such extension period.

The (i) date and amount of each Revolving Credit Loan made by the
Lender, (ii) its character as an ABR Advance or a Eurodollar
Advance, (iii) the Eurodollar Rate and Eurodollar Interest Period
applicable to any Eurodollar Advances, and (iv) each payment and
prepayment of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, may
be indorsed by the Lender on the schedule attached hereto or any
continuation thereof, provided that the failure of the Lender to
make any such recordation or indorsement shall not affect the
obligations of the Borrower to make payment when due of any amount
owing hereunder.

Presentment for payment, demand, protest, notice of protest and
notice of dishonor and all other demands and notices in connection
with the delivery, performance and enforcement of this Note are
hereby waived, except as specifically otherwise provided in the
Agreement.

This Note is being delivered in, is intended to be performed in,
and shall be construed and interpreted in accordance with and be
governed by the internal laws of, the State of New York, without
regard to principles of conflicts of law.

This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 11.1 of the Agreement.


                                         ATLANTIC ENERGY, INC.


                                       By:                   
                                       Name:                 
                                       Title:                
     


                               SCHEDULE TO
                            REVOLVING CREDIT NOTE



                                                    Interest
                                                    Rate on
                                                    Eurodollar
                                                    Advances
         Type of                       Amount of    (without
         Advance(ABR                   principal     regard to
         or Eurodollar    Amount of    paid or       Applicable
Date     Rate)            Advance      prepaid       Margin    

                               SCHEDULE TO
                      REVOLVING CREDIT NOTE - continued








Interest
Period (if
Eurodollar                      Notation 
Advance)                        Made By  



                       ATLANTIC ENERGY EXHIBIT B-2

                       FORM OF COMPETITIVE BID NOTE

                               (Facility B)

                                              ______ __, 1995
                                              New York, New York


FOR VALUE RECEIVED, ATLANTIC ENERGY, INC., a New Jersey corpora-
tion (the "Borrower"), hereby promises to pay to the order of
____________________ (the "Lender"), at the office of THE BANK
OF NEW YORK, as Agent (the "Agent"), located at One Wall Street,
New York, New York or at such other place as the Agent may
specify from time to time, in lawful money of the United States
of America, the outstanding principal balance of the Lender's
Competitive Bid Loans, together with interest thereon payable at
the rate or rates and at the time or times provided for in the
Revolving Credit Agreement (Facility B), dated as of
September 28, 1995, among the Borrower, the Lenders party
thereto and the Agent (as the same may be amended, modified or
supplemented from time to time, the "Agreement").  Capitalized
terms used herein that are defined in the Agreement shall have
the meanings therein defined.  In no event shall interest
payable hereon exceed the Highest Lawful Rate.

This Note is one of the Competitive Bid Notes referred to in the
Agreement and is entitled to the benefits of, and is subject to
the terms set forth in, the Agreement.  The principal of this
Note is payable in the amounts and under the circumstances, and
its maturity is subject to acceleration upon the terms, set
forth in the Agreement.  Except as otherwise provided in the
Agreement, if any payment on this Note becomes due and payable
on a day which is not a Business Day, the maturity thereof shall
be extended to the next Business Day and interest shall be pay-
able at the applicable rate or rates specified in the Agreement
during such extension period.

The (i) date and amount of each Competitive Bid Loan made by the
Lender, (ii) the interest rate and Interest Period applicable
thereto and (iii) each payment and prepayment of the principal
thereof, shall be recorded by the Lender on its books and, prior
to any transfer of this Note, may be indorsed by the Lender on
the schedule attached hereto or any continuation thereof,
provided that the failure of the Lender to make any such
recordation or indorsement shall not affect the obligations of
the Borrower to make payment when due of any amount owing
hereunder.

Presentment for payment, demand, protest, notice of protest and
notice of dishonor and all other demands and notices in
connection with the delivery, performance and enforcement of
this Note are hereby waived, except as specifically otherwise
provided in the Agreement.

This Note is being delivered in, is intended to be performed in,
and shall be construed and interpreted in accordance with and be
governed by the internal laws of, the State of New York, without
regard to principles of conflicts of law.

This Note may only be amended by an instrument in writing
executed pursuant to the provisions of Section 11.1 of the
Agreement.


                                    ATLANTIC ENERGY, INC.


                                   By:                     
                                   Name:               
                                   Title:              


                               SCHEDULE TO
                           COMPETITIVE BID NOTE


                                  Amount of
 Amount of                                     Principal
 Competitive          Interest     Bid         Payment or        Notation
Date   Loan           Period       Rate        Prepayment        Made by 

                           ATLANTIC ENERGY EXHIBIT C

                           FORM OF BORROWING REQUEST

                                  (Facility B)

                                                     _______ __, 99_


The Bank of New York, as Agent
Agency Function Administration
One Wall Street
18th Floor
New York, New York 10286
Attention:  Patricia Clancy

The Bank of New York, as Agent
Energy Industries Division
One Wall Street
19th Floor
New York, New York 10286
Attention:  Mary Lou Bradley,
            Vice President

       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and among
                  ATLANTIC ENERGY, INC. (the "Borrower"), the
                  Lenders party thereto, and THE BANK OF NEW
                  YORK, as Agent (the "Agreement")    
           
           
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      (a)  Pursuant to Section 2.3 of the Agreement, the Bor-
  rower hereby gives notice of its intention to borrow Revolving
  Credit Loans in an aggregate principal amount of $_______ on
  ______ __, 19__, which borrowing(s) shall consist of the
  following Advances:
                                          Initial Interest
  Type of Advance                         Period for Eurodollar
  (Eurodollar or ABR)       Amount        Advances              
  
  (a)
  (b)
  
      (b)  The Borrower hereby certifies that on the date hereof
  and, after giving effect to the Loans requested hereby on the
  Borrowing Date set forth above:
  
           (a)  The Borrower is and shall be in compliance with
  all of the terms, covenants and conditions of the Agreement
  relating to such Loan.
  
           (b)  There exists and there shall exist no Event of
  Default under the Agreement.
  
           (c)  Each of the representations and warranties con-
  tained in the Agreement shall be true and correct with the same
  effect as though such representations and warranties had been
  made on such Borrowing Date, except to the extent such
  representations and warranties specifically relate to an
  earlier date, in which case such representations and warranties
  are true and correct in all material respects on and as of such
  earlier date.
  
           (d)  After giving effect to the Revolving Credit
  Loans requested to be made hereby, the Aggregate Credit
  Exposure will not exceed the Aggregate Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
                                   ATLANTIC ENERGY, INC.
  
  
  
                                  By: 
                                  Name: 
                                  Title:
  
    
                       ATLANTIC ENERGY EXHIBIT D
  
                    FORM OF COMPETITIVE BID REQUEST
  
                             (Facility B)
  
                                         [Date]
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:  Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:  Mary Lou Bradley
              Vice President
  
  Re: Revolving Credit Agreement (Facility B),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
                Capitalized terms used herein which defined in the
  Agreement shall have the meanings therein defined.
  
           Pursuant to Section 2.4 of the Agreement, the Bor-
  rower hereby gives notice of its request to borrow
  Competitive Bid Loans in the aggregate sum of $____________
  on ____________, which borrowing shall consist of the
  following Competitive Interest Periods and amounts
  corresponding thereto:
  
  Competitive
  Interest Period                      Amount 
  (1)
  (2)
  (3)
  
      The Borrower hereby certifies that on the date hereof
  and, after giving effect to the Competitive Bid Loans
  requested hereby, on the Borrowing Date set forth above:
  
      The Borrower is and shall be in compliance with all of the
  terms, covenants and conditions of the Agreement relating to
  such Loans.
  
      There exists and there shall exist no Event of Default
  under the Agreement.
  
      (c)  Each of the representations and warranties contained
  in the Agreement shall be true and correct with the same effect
  as though such representations and warranties had been made on
  such Borrowing Date, except to the extent such representations
  and warranties specifically relate to an earlier date, in which
  case such representations and warranties are true and correct
  in all material respects on and as of such earlier date.
  
           (d)  After giving effect to the Competitive Bid Loans
  requested to be made hereby, the Aggregate Credit Exposure will
  not exceed the Aggregate  Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                                By: 
                                Name: 
                                Title:
    
                       ATLANTIC ENERGY EXHIBIT E
  
                       FORM OF INVITATION TO BID
  
                             (Facility B)
  
  
                                          _____ __, 199_
  
  To the Lenders under the Credit
  Agreement referred to below
  
  Re: Revolving Credit Agreement (Facility B),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
       
       
                Capitalized terms used herein which
       are defined in the Agreement shall have the
       meanings therein defined.
       
                Pursuant to a Competitive Bid Request,
       a copy of which is appended hereto or enclosed
       herewith, the Borrower has given notice of its
       request to borrow Competitive Bid Loans in the
       aggregate sum of $____________ on ____________
       
                The Lenders are hereby invited to bid
       to make such Competitive Bid Loans by 10:00 a.m.
       on the proposed Borrowing Date, pursuant to the
       terms and conditions of the Agreement.
       
                                Very truly yours,
       
                                 THE BANK OF NEW YORK,
                                 as Agent
       
       
                                 By: 
                                 Name: 
                                 Title: 
              
                ATLANTIC ENERGY EXHIBIT F
       
                 FORM OF COMPETITIVE BID
       
                       (Facility B)
       
                                         _____ __, 199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:  Mary Lou Bradley,
                   Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
       
       
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           In response to a Competitive Bid Request,
       the undersigned Lender hereby offers to lend
       Competitive Bid Loans in the aggregate sum of
       $____________ on ____________, which borrowing
       shall consist of the following Competitive
       Interest Periods and the amounts and Bid Rates
       corresponding thereto:
       
       
       Competitive
       Interest Period      Amount            Bid Rate 
       (1)
       (2)
       (3)
        
                                   Very truly yours,
       
                                   [LENDER]
                                   By: 
                                   Name: 
                                   Title: 
              
                             
                ATLANTIC ENERGY EXHIBIT G
       
       FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
       
                       (Facility B)
       
                                        _______ __, 199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:  Mary Lou Bradley,
                   Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
           
           
           
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           Pursuant to Section 2.4(c) of the
       Agreement, the Borrower hereby gives notice of
       its [rejection/acceptance] of [Lender's]
       Competitive Bid, dated _____ __, 199_, in the
       aggregate sum of $_________ on ________, which
       borrowing shall consist of the following
       Competitive Interest Periods and the amounts and
       Bid Rates corresponding thereto:
       
       Competitive
       Interest Period      Amount             Bid Rate 
       (1)
       (2)
       (3)             
                             Very truly yours,
       
                             ATLANTIC ENERGY, INC.
       
       
                             By: 
                             Name: 
                             Title: 
              
                ATLANTIC ENERGY EXHIBIT H
       
        FORM OF COMPETITIVE BID LOAN CONFIRMATION
       
                       (Facility B)
       
                                      _____ __, 199_
       To [Lender]
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")
       
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           In accordance with Section 2.4(c) of the
       Agreement we hereby notify you that pursuant to
       a Competitive Bid Accept Letter, the Borrower
       gave notice of its acceptance of [Lender's]
       Competitive Bid, dated _____________, in the
       aggregate sum of $____________ on ____________,
       which borrowing shall consist of the following
       Competitive Interest Periods and the following
       amounts and Bid Rates corresponding thereto:
       
       Competitive
       Interest Period      Amount         Bid Rate
       (1)
       (2)
       (3)
       
           Pursuant to Section 2.4(e) of the
       Agreement, [Lender] is required to make avail-
       able to the Agent at its office the proceeds of
       Lender's Competitive Bid Loan(s) set forth in
       Section 11.2 of the Agreement, in immediately
       available funds, not later than 2:00 p.m. on the
       Borrowing Date specified above.
       
                        Very truly yours,
       
                         THE BANK OF NEW YORK, as Agent
                         By: 
                         Name: 
                         Title: 
                ATLANTIC ENERGY EXHIBIT I
       
        FORM OF NOTICE OF CONVERSION/CONTINUATION
       
                       (Facility B)
       
                                      _______ __, 199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:Mary Lou Bradley,
                 Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
           
           
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           Pursuant to Section 2.7 of the Agreement,
       the Borrower requests to convert or continue
       Advances as set forth below:
       
            on ____ __, 199_, to convert $_______ in
       principal amount of presently outstanding
       Eurodollar Advances having an Interest Period
       that expires on ____ __, 199_ to ABR Advances.
       
            on ____ __, 199_, to continue as
       Eurodollar Advances, $_______ in principal
       amount of presently outstanding Eurodollar
       Advances having an Interest Period that expires
       on ____ __, 199_ for an additional Interest
       Period of __ months;
       
            on ____ __, 199_, to convert $_______ in
       principal amount of presently outstanding ABR
       Advances to Eurodollar Advances that have an
       initial Interest Period of __ months.
       
           (c)  The Borrower hereby certifies that on
       the date hereof and on the requested
       Conversion/Continuation Date set forth above,
       there exists and there shall exist no Default or
       Event of Default under the Agreement.
       
           IN WITNESS WHEREOF, the Borrower has caused
       this request and certificate to be executed by
       its Authorized Signatory as of the date and year
       first written above.
       
       
                              ATLANTIC ENERGY, INC.
       
       
       
                              By: 
                              Name: 
                              Title: 
              
                ATLANTIC ENERGY EXHIBIT J
       
             FORM OF LETTER OF CREDIT REQUEST
       
                       (Facility B)
       
                                        _______ __,
       199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:Mary Lou Bradley,
                 Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
       
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           (d)  Pursuant to Sections 2.18 of the
       Agreement, the Borrower hereby requests that the
       Issuing Bank issue the Letter(s) of Credit in
       accordance with the information annexed hereto
       (attach additional sheets if necessary). 
       
           (e)  The Borrower hereby certifies that on
       the date hereof and on the Borrowing Date set
       forth above, and after giving effect to the
       Letter(s) of Credit requested hereby:
           (a)The Borrower is and shall be in
       compliance with all of the terms, covenants and
       conditions of the Agreement relating to such
       Letter of Credit.
       
           (b)There exists and there shall exist no
       Event of Default under the Agreement.
       
           (c)  Each of the representations and
       warranties contained in the Agreement shall be
       true and correct with the same effect as though
       such representations and warranties had been
       made on such Borrowing Date, except to the
       extent such representations and warranties
       specifically relate to an earlier date, in which
       case such representations and warranties are
       true and correct in all material respects on and
       as of such earlier date.
       
           (d)  After giving effect to the Letters of
       Credit requested to be made hereby, the
       Aggregate Credit Exposure does not exceed the
       Aggregate Commitments.
       
           IN WITNESS WHEREOF, the Borrower has caused
       this request and certificate to be executed by
       its Authorized Signatory as of the date and year
       first written above.
       
                            ATLANTIC ENERGY, INC.
       
       
       
                            By: 
                            Name: 
                            Title:
              
       LETTER OF CREDIT INFORMATION
       
       
       1.  Name of
       Beneficiary:__________________________________.
       
       2.  Address of Beneficiary to which Letter of
       Credit will be sent:
       _________________________________________
       ________________________________________________
       ______________.
       
       3.  Conditions under which a drawing may be made 
          (specify any required documentation):
       _____________________________________
       ________________________________________________
       ______________
       ________________________________________________
       ______________.
       
       4.  Maximum amount to be available under such
       Letter of Credit: $___________.
       
       5.  Requested date of issuance: _____ __, 199_.
       
       6.Requested date of expiration: _____ __, 199_.
              
                ATLANTIC ENERGY EXHIBIT K
       
              FORM OF COMPLIANCE CERTIFICATE
       
                       (Facility B)
       
           I, ______________, do hereby certify that I
       am the ___________ of ATLANTIC ENERGY, INC., a
       New Jersey corporation (the "Borrower"), and
       that, as such, I am duly authorized to execute
       and deliver this Compliance Certificate on the
       Borrower's behalf pursuant to Section 7.1(c) of
       each of (i) the Revolving Credit Agreement
       (Facility A), dated as of September 28, 1995,
       among the Borrower, the Lenders party thereto
       and The Bank of New York, as Agent (as the same
       may be amended, supplemented or otherwise modi-
       fied from time to time, the "Facility A
       Agreement") and (ii) the Revolving Credit
       Agreement (Facility B), dated as of
       September 28, 1995, among the Borrower, the
       Lenders party thereto and The Bank of New York,
       as Agent (as the same may be amended,
       supplemented or otherwise modified from time to
       time, the "Facility B Agreement" and, together
       with the Facility A Agreement, the
       "Agreements").  Capitalized terms used herein
       that are defined in the Agreements shall have
       the meanings therein defined.
       
           I hereby certify that:
       
       1.  The Indebtedness Capitalization Ratio as of
       ______ __, 199_ , is _.__:1.00, calculated as
       set forth on Schedule 1.
       
       2.  The Ratio of Indebtedness of the Borrower
       to Annualized ACE Dividends as of ______ __,
       199_, is _.__:1.00, calculated as set forth on
       Schedule 2.
       
       3.  There exists no Event of Default under the
       Agreement.
       
           IN WITNESS WHEREOF, I have executed this
       Compliance Certificate on this ___ day of
       ______________, 19__.
       
       
       Schedule 1 to Compliance Certificate
       dated __/__/__
       
       COMPUTATION OF INDEBTEDNESS CAPITALIZATION RATIO
       
       1.  Total Indebtedness of the Borrower
       and its Subsidiaries determined
       on a Consolidated basis
       in accordance with GAAP               $_________
       
       2.  Preferred Stock and any premium
       thereon of the Borrower and its
       Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       3.  Common Stock and any premium
       thereon of the Borrower and its
       Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       4.  Retained earnings of the Borrower
       and its Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       5.  All Indebtedness (net of unamortized
       premium and discount) of the Borrower
       and its Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       6.  Sum of Items 2 through 5          $_________
       
       7.  Unamortized capital Stock expense
       of the Borrower and its Subsidiaries
       determined on a Consolidated basis
       in accordance with GAAP               $_________
       
       8.  Items 6 minus Item 7              $_________
       
       9.  Indebtedness Capitalization Ratio
       Item 1:Item 8                          _.__:1.00
              
       
       10.  Maximum permitted ratio
       pursuant to Section 7.10 of
       each of the Agreements                 0.65:1.00
       
              
Schedule 2 to Compliance Certificate
       dated __/__/__
       
       
       
       
       
       CALCULATION OF RATIO OF TOTAL INDEBTEDNESS OF THE BORROWER
       
               TO ANNUALIZED ACE DIVIDENDS
       
       
       1.  Indebtedness of the Borrower     $_________
       
       2.  The amount of dividends paid
       to the Borrower by ACE during
       the fiscal quarter ending on
       the date of determination or,
       if such date of determination
       is not a fiscal quarter ending
       date, the immediately preceding
       fiscal quarter                        $_________
       
       3.  Annualized ACE Dividends
       (Item 2 multiplied by 4)              $_________
       
       4.  Ratio of Indebtedness to
         Annualized ACE Dividends
        (Item 1:Item 3)                       _.__:1.00
       
       Maximum permitted ratio
       pursuant to Section 7.11 of
       each of the Agreements                2.50:1.00.
              
                ATLANTIC ENERGY EXHIBIT L
       
                 FORM OF PLEDGE AGREEMENT
       
                       (Facility B)
       
       
       PLEDGE AGREEMENT (as amended, modified or
       supplemented from time to time, this
       "Agreement"), dated as of ______ __, 1995, made
       by ATLANTIC ENERGY, INC., a New Jersey
       corporation (the "Borrower"), to THE BANK OF NEW
       YORK, in its capacity as collateral agent (in
       such capacity, the "Secured Party") for itself
       in its capacity as Agent and for the Lenders
       under and as defined in each of the Facility A
       Credit Agreement as defined below (in such
       capacity, the "Facility A Agent") and the
       Facility B Credit Agreement as defined below (in
       such capacity, the "Facility B Agent" and,
       together with the Facility A Agent, the
       "Agents").
       
                         RECITALS
       
           1.   The Borrower has entered into (i) the
       Revolving Credit Agreement (Facility A), dated
       as of the date hereof, among the Borrower, the
       Lenders party thereto (each, a "Facility A
       Lender", and collectively, the "Facility A
       Lenders") and the Facility A Agent (as the same
       may be amended, supplemented or otherwise
       modified from time to time, the "Facility A
       Credit Agreement") and (ii) the Revolving Credit
       Agreement (Facility B), dated as of the date
       hereof among the Borrower, the Lenders party
       thereto (each, a "Facility B Lender",
       collectively, the "Facility B Lenders" and
       together with the Facility A Lenders, the
       "Lenders") and the Facility B Agent (as the same
       may be amended, supplemented or otherwise
       modified from time to time, the "Facility B
       Credit Agreement" and, together with the
       Facility B Credit Agreement, the "Credit
       Agreements").  Capitalized terms used herein
       that are not defined herein and are defined in
       the Credit Agreements shall have the meanings
       defined therein.
       
           2.   The Lenders have agreed (i) to make
       loans to the Borrower pursuant to, and upon the
       terms and subject to the conditions specified
       in, the Facility A Credit Agreement and (ii) to
       make loans to the Borrower and to participate in
       Letters of Credit issued by Issuing Bank (as
       defined in the Facility B Credit Agreement)
       pursuant to, and upon the terms and subject to
       the conditions specified in, the Facility B
       Credit Agreement.  The Borrower desires to
       secure the prompt and complete payment,
       observance and performance of all of its
       obligations of every kind and nature now or
       hereafter incurred, existing or created under or
       in respect of the Loan Documents (as defined in
       the Facility A Credit Agreement which Loan
       Documents are herein referred to as the
       "Facility A Loan Documents") and the Loan
       Documents (as defined in the Facility B Credit
       Agreement which Loan Documents are herein
       referred to as the "Facility B Loan Documents"
       and, together with the "Facility A Loan
       Documents", the "Loan Documents"), as such
       obligations may be amended, increased, modified,
       renewed, refinanced, refunded or extended from
       time to time, (collectively, the "Obligations").
       
           3.   The obligations of the Lenders to make
       loans under the Credit Agreements and the
       Issuing Bank to issue Letters of Credit under
       the Facility B Credit Agreement and the Facility
       B Lenders to participate therein are conditioned
       upon, among other things, the execution and
       delivery by the Borrower of this Agreement.
       
           In consideration of the premises and in
       order to induce the Secured Party and the
       Lenders to enter into the Credit Agreements and
       make the loans under the Credit Agreements and
       the Issuing Bank to issue the Letters of Credit
       under the Facility B Credit Agreement and the
       Facility B Lenders to participate therein, the
       Borrower hereby agrees with the Secured Party
       for its benefit and for the ratable benefit of
       the Lenders as follows:
              
      3.1. Grant of Security
       
                To secure the prompt and complete
       payment, observance and performance of all of
       the Obligations, the Borrower hereby assigns and
       pledges to the Secured Party, for its benefit,
       for the benefit of the Agents, for the benefit
       of the Issuing Bank and for the ratable benefit
       of the Lenders, and hereby grants to the Secured
       Party, for its benefit, for the benefit of the
       Agents, for the benefit of the Issuing Bank and
       for the ratable benefit of the Lenders, a
       continuing first priority security interest in
       all of the Borrower's right, title and interest
       in and to all promissory notes and other debt
       instruments evidencing Indebtedness owed by any
       of the Borrower's Operating Subsidiaries to the
       Borrower (each, an "Intercompany Note"), in each
       case whether now owned or hereafter acquired,
       including, without limitation, the Intercompany
       Notes owned on the date hereof as set forth on
       Schedule 1, and all interest and other payments
       thereunder and instruments and other Property
       from time to time delivered in respect thereof
       or in exchange therefor, and all additions
       thereto, substitutions and replacements
       therefor, and the products and Proceeds thereof
       (the "Collateral").
       
                As used herein, the term "Proceeds"
       shall have the meaning as set forth in Article 9
       of the New York Uniform Commercial Code (as the
       same is amended from time to time, the "UCC")
       and, to the extent not otherwise included, shall
       include, but not be limited to, (i)
       distributions payable in Property; (ii) any and
       all proceeds of causes and rights of action or
       settlements thereof, escrowed amounts or
       Property, judicial and arbitration judgments and
       awards, payable to the Borrower from or in
       respect of any Person from time to time; (iii)
       all claims of the Borrower for losses or damages
       arising out of or relating to or for any breach
       of any agreements, covenants, representations or
       warranties or any default whether or not with
       respect to or under any of the foregoing
       Collateral (without limiting any direct or
       independent rights of the Secured Party or any
       Lender with respect to the Collateral); and (iv)
       any and all other amounts from time to time paid
       or payable under or in connection with the
       Collateral.
       
           3.2. Delivery of Collateral
       
                All notes and other instruments
       representing or evidencing the Collateral at any
       time owned or acquired by the Borrower shall be
       delivered to and held by or on behalf of the
       Secured Party pursuant hereto and shall be in
       suitable form for transfer by delivery, and
       shall bear appropriate indorsements or shall be
       accompanied by duly executed instruments of
       transfer or assignments in blank, all in form
       and substance satisfactory to the Secured Party. 
       Upon the occurrence and during the continuance
       of an Event of Default, the Secured Party shall
       have the right, at any time in its discretion
       and without notice to the Borrower, to transfer
       to or to register in the name of the Secured
       Party or any of its nominees any or all of the
       Collateral.  In addition, upon the occurrence
       and during the continuance of an Event of
       Default, the Secured Party shall have the right
       at any time to exchange certificates or
       instruments representing or evidencing
       Collateral for certificates or instruments of
       smaller or larger denominations.
       
        3.3.    Representations and Warranties
       
       The Borrower represents and warrants as follows:
       
       (a)  The Borrower is the legal and beneficial
       owner of the Collateral, free and clear of all
       Liens other than the Lien created by this
       Agreement.
       
       (b) This Agreement creates a valid security
       interest in the Collateral, securing the payment
       of the Obligations. The delivery and pledge of
       the Collateral pursuant to this Agreement create
       a valid and perfected first priority security
       interest in the Collateral securing the payment
       of the Obligations.
       
       (c)  The Intercompany Notes listed on Schedule
       1 constitute all of the Intercompany Notes held
       by the Borrower on the date of this Agreement. 
       To the best of the Borrower's knowledge, each of
       such Intercompany Notes has been duly
       authorized, issued and delivered, and
       constitutes the legal, valid, binding and
       enforceable obligations of the respective makers
       thereof.
       
       3.4.     Further Assurances
       
       (a) The Borrower agrees that from time to time,
       at its expense, the Borrower shall promptly
       execute and deliver all further instruments and
       documents, and take all further action, that the
       Secured Party may reasonably request, in order
       to perfect and protect any security interests
       granted hereby or to enable the Secured Party to
       exercise and enforce its rights and remedies
       hereunder with respect to any Collateral. 
       Without limiting the generality of the
       foregoing, the Borrower shall promptly execute
       and file such financing or continuation
       statements, or amendments thereto, and such
       other instruments or notices, and promptly take
       such other action as the Secured Party may
       reasonably request, in order to perfect and
       preserve the security interests granted hereby.
       
       (b) The Borrower hereby authorizes the Secured
       Party to file one or more financing or
       continuation statements, and amendments thereto,
       relative to all or any part of the Collateral
       without the signature of the Borrower where
       permitted by law.  The Secured Party shall
       provide the Borrower with a copy of any such
       statement or amendment, provided that no failure
       to do so shall affect the rights of the Secured
       Party hereunder, result in any liability of the
       Secured Party or the Lenders to the Borrower or
       in any way affect the validity of such filing. 
       A photographic or other reproduction of this
       Agreement or any financing statement covering
       the Collateral or any part thereof shall be
       sufficient as a financing statement where
       permitted by law.
       
       (c) The Borrower shall furnish to the Secured
       Party from time to time statements and schedules
       further identifying and describing the
       Collateral and such other reports in connection
       with the Collateral as the Secured Party may
       reasonably request, all in reasonable detail.
       
       3.5.     Certain Rights as to the Collateral
       
       (a) So long as no Event of Default shall have
       occurred and be continuing:
       
        The Borrower shall be entitled to exercise any
       and all consensual rights pertaining to the
       Collateral or any part thereof for any purpose
       not inconsistent with the terms of this
       Agreement and the Credit Agreements, provided,
       however, that the Borrower shall not exercise or
       refrain from exercising any such right without
       the consent of the Secured Party if such action
       or inaction would have a material adverse effect
       on the fair market value of any part of the
       Collateral or the validity, priority or
       perfection of the security interests granted
       hereby or the remedies of the Secured Party
       hereunder.
       
       (i) The Borrower shall be entitled to receive
       and retain any and all principal, interest and
       other distributions paid in respect of the
       Collateral to the extent not prohibited by this
       Agreement, provided, however, that any and all
       principal, interest and other distributions paid
       or payable other than in cash in respect of, and
       instruments and other Property received,
       receivable or otherwise distributed in respect
       of, or in exchange for, Collateral, shall
       forthwith be delivered to the Secured Party to
       be held as Collateral and shall, if received by
       the Borrower, be received in trust for the
       benefit of the Secured Party, be segregated from
       the other Property of the Borrower, and be
       forthwith delivered to the Secured Party, as
       Collateral in the same form as so received (with
       any necessary indorsement).
       
       (ii)     The Secured Party shall execute and deliver
       (or cause to be executed and delivered) to the
       Borrower all instruments as the Borrower may
       reasonably request for the purpose of enabling
       the Borrower to exercise the rights which it is
       entitled to exercise pursuant to clause (i)
       above and to receive the principal or interest
       payments, or other distributions which it is
       authorized to receive and retain pursuant to
       clause (ii) above.
       
           (b)  Upon the occurrence and during the
       continuance of an Event of Default and at the
       Secured Party's option and following written
       notice by the Secured Party to the relevant
       Borrower:
       
       (i) All rights of the Borrower to exercise the
       consensual rights which it would otherwise be
       entitled to exercise pursuant to Section 5(a)(i)
       and to receive the principal, and interest
       payments and other distributions which it would
       otherwise be authorized to receive and retain
       pursuant to Section 5(a)(ii) shall cease, and
       all such rights shall thereupon become vested in
       the Secured Party, who shall thereupon have the
       sole right to exercise such consensual rights
       and to receive and hold as Collateral such
       principal or interest payments and
       distributions.
       
       (ii)     All principal and interest payments and
       other distributions which are received by the
       Borrower contrary to the provisions of Section
       5(b)(i) shall be received in trust for the
       benefit of the Secured Party, shall be
       segregated from other funds of the Borrower and
       shall be forthwith paid over to the Secured
       Party as Collateral in the same form as so
       received (with any necessary indorsement).
       
       (c) In the event that all or any part of the
       instruments constituting the Collateral are
       lost, destroyed or wrongfully taken while such
       instruments are in the possession of the Secured
       Party, the Borrower agrees that it will cause
       the delivery of new instruments in place of the
       lost, destroyed or wrongfully taken securities
       or instruments upon request therefor by the
       Secured Party without the necessity of any
       indemnity bond or  other security other than the
       Secured Party's agreement or indemnity therefor
       customary for security agreements similar to
       this Agreement.
       
       3.6.     Other Covenants and Agreements of the
       Borrower
       
           The Borrower covenants and agrees that on
       and after the date hereof until the indefeasible
       cash payment in full of the Obligations, unless
       the Secured Party shall otherwise consent in
       writing:
       
       (a) Defense of Collateral. It will defend the
       Collateral against all claims and demands of all
       Persons at any time claiming the same or any
       interest therein adverse to the interests of the
       Secured Party.
       
       (b) Security Interest. The security interest
       granted hereby constitutes and will at all times
       constitute a continuing (and so long as the
       Secured Party has possession of the Collateral)
       perfected first priority security interests in
       the Collateral.
       
       (c) Encumbrances; Filings. It will not (i)
       further hypothecate, pledge, encumber, transfer,
       sell or otherwise suffer to exist a security
       interest in, or a Lien on, the Collateral or any
       portion thereof in favor of any Person other
       than the Secured Party as provided herein,
       except for transfers or sales to the extent
       permitted under the Credit Agreements or (ii)
       sign or file or authorize the signing or filing
       of any document or instrument perfecting any
       Lien on the Collateral. The inclusion of
       "Proceeds" of the Collateral under the security
       interest granted herein shall not be deemed a
       consent by the Secured Party to any sale or
       other disposition of any Collateral.
       
       3.7.     Secured Party Appointed Attorney-in-Fact
       
           Effective upon the occurrence and during
       the continuance of an Event of Default, the
       Borrower hereby irrevocably appoints the Secured
       Party the Borrower's attorney-in-fact, with full
       authority in the place and stead of the Borrower
       and in the name of the Borrower or otherwise,
       from time to time in the Secured Party's
       discretion, to take any action and to execute
       any instrument which the Secured Party may deem
       necessary or advisable to accomplish the
       purposes of this Agreement, including, without
       limitation:
       
       (a) to ask, demand, collect, sue for, recover,
       compromise, receive and give acquittance and
       receipts for moneys due and to become due under
       or in respect of any of the Collateral,
       
       (b) to file any claims or take any action or
       institute any proceedings which the Secured
       Party may deem necessary or desirable for the
       collection of any of the Collateral or otherwise
       to enforce the rights of the Secured Party with
       respect to any of the Collateral, and
       
       (c) to receive, indorse and collect all
       instruments made payable to the Borrower
       representing any principal payment, interest
       payment or other distribution in respect of the
       Collateral or any part thereof and to give full
       discharge for the same. The powers granted to
       the Secured Party under this Section constitute
       a power coupled with an interest which shall
       survive until all of the Obligations have been
       indefeasibly paid in full in cash.
       
       3.8.     The Secured Party May Perform
       
           If the Borrower fails to perform any
       agreement contained herein, the Secured Party
       may itself perform, or cause performance of,
       such agreement, and the reasonable expenses of
       the Secured Party incurred in connection
       therewith shall be payable by the Borrower under
       Section 12.
       
           3.9. The Secured Party's Duties
       
           The powers conferred on the Secured Party
       hereunder are solely to protect its interest in
       the Collateral and shall not impose any duty
       upon it to exercise any such powers.  Except for
       the safe custody of any Collateral in its
       possession and the accounting for moneys
       actually received by it hereunder, the Secured
       Party shall have no duty as to any Collateral. 
       The Secured Party shall be deemed to have
       exercised reasonable care in the custody and
       preservation of the Collateral in its possession
       if the Collateral is accorded treatment
       substantially equal to that which the Secured
       Party accords its own property, it being
       understood that the Secured Party shall not be
       under any obligation to (i) ascertain or take
       action with respect to exchanges, maturities,
       tenders or other matters relative to any
       Collateral, whether the Secured Party or any
       Lender has or is deemed to have knowledge of
       such matters, or (ii) take any necessary steps
       to preserve rights against prior parties or any
       other rights pertaining to any Collateral, but
       may do so at its option, and all reasonable
       expenses incurred in connection therewith shall
       be for the sole account of the Borrower and
       shall be added to the Obligations.
       
       3.10.Events of Default
       
       The following shall each constitute an "Event of
       Default" hereunder:
       
       (a) If any representation or warranty made
       herein or in any certificate furnished by the
       Borrower in connection with this Agreement shall
       prove to have been incorrect or misleading
       (whether because of misstatement or omission) in
       any material respect when made; or
       
       (b) If the Borrower shall fail to observe or
       perform any term, covenant or agreement
       contained in Section 6(c) of this Agreement; or
       
       (c) If the Borrower shall fail to perform or
       observe any other covenant or agreement on its
       part to be performed or observed pursuant to
       this Agreement and such failure shall have
       continued unremedied for a period of thirty days
       after the Borrower shall become aware of such
       failure; or
       
       (d) The occurrence of an Event of Default under
       and as defined in either of the Credit
       Agreements; or
       (e) If the Borrower shall contest or disavow
       its obligations under this Agreement or this
       Agreement shall not remain in full force and
       effect.
       
       3.11.Remedies
       
           Upon the occurrence of an Event of Default
       or at any time thereafter during the continuance
       thereof, the Secured Party may, and upon
       direction of the Required Lenders shall,
       exercise any and all remedies and other rights
       provided under this Agreement, including,
       without limitation, the following:
       
       (a) The Secured Party may exercise in respect
       of the Collateral, in addition to other rights
       and remedies provided for herein or otherwise
       available to it, all the rights and remedies of
       a secured party upon default under the UCC
       (whether or not the UCC applies to the
       Collateral) and also may without notice, except
       as specified below, sell, assign, grant an
       option or options to purchase or otherwise
       dispose of the Collateral or any part thereof at
       public or private sale, at any exchange,
       broker's board or at any of the Secured Party's
       offices or elsewhere, for cash, on credit or for
       future delivery, and upon such other terms as
       may be commercially reasonable.  The Borrower
       agrees that, to the extent notice of sale shall
       be required by law, at least five Business Days'
       notice to the Borrower of the time and place of
       any public sale or the time after which any
       private sale is to be made shall constitute
       reasonable notification.  The Secured Party
       shall not be obligated to make any sale of
       Collateral regardless of notice of sale having
       been given.  The Secured Party may adjourn any
       public or private sale from time to time by
       announcement at the time and place fixed
       therefor, and such sale may, without further
       notice, be made at the time and place to which
       it was so adjourned.
       
           Any cash held by the Secured Party as
       Collateral and all cash proceeds received by the
       Secured Party in respect of any sale of,
       collection from, or other realization upon all
       or any part of the Collateral may, in the
       discretion of the Secured Party, be held by the
       Secured Party as Collateral for, and/or then or
       at any time thereafter applied (after payment of
       any amounts payable to the Secured Party
       pursuant to Section 12) in whole or in part by
       the Secured Party, for the ratable benefit of
       the Lenders, against all or any part of the
       Obligations in accordance with Section 9.1 of
       each Credit Agreement.  Any surplus of such cash
       or cash proceeds held by the Secured Party and
       remaining after payment in full of all the
       Obligations shall be promptly paid over to the
       Borrower or to whomsoever may be lawfully
       entitled to receive such surplus.
       
       (b) The Borrower hereby expressly waives and
       covenants not to assert any appraisement,
       valuation, stay, extension, redemption or
       similar laws, now or at any time hereafter in
       force, which might delay, prevent or otherwise
       impede the performance or enforcement of this
       Agreement.
       
       3.12.  No Segregation of Moneys; No Interest
       
           No moneys or any other Property received by
       the Secured Party hereunder need be segregated
       in any manner except to the extent required by
       law, and any such moneys or other Property may
       be deposited under such general conditions as
       may be prescribed by law applicable to the
       Secured Party, and neither the Secured Party nor
       any Lender shall be liable for any interest
       thereon.
       
       3.13.Notices
       
           All notices and other communications
       provided for hereunder shall be given in the
       manner and to the addresses set forth in Section
       11.2 of the Facility A Credit Agreement.  Any
       notice given to the Secured Party as Secured
       Party thereunder shall be deemed to have been
       given to The Bank of New York as Agent under the
       Facility B Credit Agreement.
       
              
3.14. Continuing Security Interest;
             Transfer of Notes
       
           This Agreement shall create a continuing
       security interest in the Collateral and shall
       (i) remain in full force and effect until the
       indefeasible cash payment in full of the
       Obligations and the termination of the Credit
       Agreement, (ii) be binding upon the Borrower,
       its successors and assigns and (iii) inure,
       together with the rights and remedies of the
       Secured Party hereunder, to the benefit of the
       Secured Party, any successor to Secured Party as
       agent and the ratable benefit of the Lenders. 
       Except to the extent not permitted by Section
       11.7 of the Credit Agreements, any Lender may
       assign or otherwise transfer the notes held by
       it under the Credit Agreements to any other
       Person, and such other Person shall thereupon
       become vested with all the benefits in respect
       thereof granted to such Lender herein or
       otherwise.  Nothing set forth herein or in any
       other Loan Document is intended or shall be
       construed to give any other Person any right,
       remedy or claim under, to or in respect of this
       Agreement, any other Loan Document, or any
       Collateral.  The Borrower's successors and
       assigns shall include, without limitation, a
       receiver, trustee or debtor-in-possession
       thereof or therefor.
       
       3.15.  Other Provisions
       
       (a) This Agreement is the "Pledge Agreement"
       referred to in each of the Credit Agreements. 
       Each of the Secured Party and the Borrower
       acknowledges that certain provisions of each of
       the Credit Agreements, including, without
       limitation, Sections 1.2 (Other Definitional
       Provisions), 11.1 (Amendments and Waivers), 11.3
       (No Waiver; Cumulative Remedies), 11.4 (Survival
       of Representations and Warranties), 11.7
       (Assignments and Participations), 11.8
       (Counterparts), 11.12 (Headings Descriptive),
       11.13 (Severability), 11.14 (Integration), 11.15
       (Consent to Jurisdiction), 11.16 (Service of
       Process), 11.17 (No Limitation on Service or
       Suit) and 11.18 (WAIVER OF TRIAL BY JURY)
       thereof, are made applicable to this Agreement
       and all such provisions are incorporated by
       reference herein as if fully set forth herein.
       
           (b)  All Schedules hereto shall be deemed
       to be a part hereof. 
       
           (c)  Each and every right, remedy and power
       granted to the Secured Party hereunder or
       allowed at law or by any other agreement shall
       be cumulative and not exclusive, and may be
       exercised by the Secured Party from time to
       time.
       
           (d)  This Agreement shall be governed by
       and construed in accordance with the laws of the
       State of New York without regard to conflict of
       laws rules, except to the extent that the
       validity or perfection of the security interest
       hereunder, or remedies hereunder, in respect of
       any particular Collateral are governed by the
       laws of a jurisdiction other than the State of
       New York.  Unless otherwise defined herein,
       terms used in Articles 8 and 9 of the UCC are
       used herein as therein defined.
       
           The parties hereto have caused this Pledge
       Agreement to be duly executed and delivered by
       its officer thereunto duly authorized as of the
       date first above written.
          
                           ATLANTIC ENERGY, INC.
       
       
                           By: 
                           Name: 
                           Title: 
       
       
                           THE BANK OF NEW YORK,
                           as Collateral Agent for the
                           Facility A Lenders under the
                           Facility A Credit Agreement
                           and the Facility B Lenders
                           under the Facility B Credit
                           Agreement
       
                           By: 
                           Name: 
                           Title: 
                             
                        Schedule 1
                 to the Pledge Agreement,
                Dated as of _____ __, 1995
       
       
       
                        LIST OF INTERCOMPANY NOTES


Maker                                           Date 

Atlantic Generation, Inc.                           ,1995

ATE Investment, Inc.                       ____ __, 1995

Atlantic Thermal Systems, Inc.             ____ __, 1995

Atlantic Jersey Thermal Systems, Inc.     _____ __, 1995

Atlantic Energy Technologies, Inc.        _____ __, 1995

                         ATLANTIC ENERGY EXHIBIT M

                         FORM OF INTERCOMPANY NOTE

                               (Facility B)

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR
QUALIFIED UNDER ANY SECURITIES OR BLUE SKY LAWS.  IT MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN A
TRANSACTION COMPLYING WITH OR EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE.


                                          ____________ __, 199_


      FOR VALUE RECEIVED, the undersigned, _________________, a
__________ corporation (the "Borrower"), hereby promises to pay
to the order of ATLANTIC ENERGY, INC. (the "Company"), at the
office of the Company, upon demand by the Company, the aggregate
unpaid principal amount of all loans made by the Company to the
Borrower from time to time as reflected on the attached Schedule
hereto, pursuant to an intercompany account or otherwise, in
lawful money of the United States of America in same day funds,
and to pay interest from the date set forth on the attached
Schedule on which principal is advanced hereunder on the unpaid
principal amount from time to time outstanding, in like funds, at
said office, with each repayment of principal hereunder, at a
rate per annum equal to 1/4% above the borrowing rate of the
Company for amounts advanced hereunder and provided to the
Borrower by the Company on the date of any such advance.  All
interest hereunder shall be calculated on the basis of the actual
number of days that principal is outstanding over a year of 365
or 366 days, as appropriate.

      The unpaid principal amount hereof may be declared due and
payable by the Company, whereupon the same shall immediately
become due and payable, upon the occurrence or at any time during
the continuance of an Event of Default under, and as defined in,
either of the Revolving Credit Agreements (Facility A or Facility
B) among the Company, the Lenders parties thereto, and The Bank
of New York, as Agent.

      The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever.  The nonexercise by
the holder of any of its rights hereunder in any particular
instance shall not constitute a waiver thereof in that or any
subsequent instance.

      All borrowings evidenced by this Intercompany Note and all
payments and prepayments of the principal hereof and interest
hereon and the respective dates thereof shall be endorsed by the
holder hereof on the schedule attached hereto and made a part
hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such
holder in its internal records; provided, however, that any
failure of the holder hereof to make such a notation or any error
in such notation shall not in any manner affect the obligation of
the Borrower to make payments of principal and interest in
accordance with the terms of this Intercompany Note.

      NEITHER THE BORROWER NOR ANY OTHER PERSONS LIABLE FOR THE
INDEBTEDNESS TO THE COMPANY, NOR ANY ASSIGNEE, SURVIVOR, HEIR OR
PERSONAL REPRESENTATIVE OF THE BORROWER OR ANY SUCH OTHER PERSON
OR ENTITY SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR
ARISING OUT OF THIS INTERCOMPANY NOTE, ANY RELATED INSTRUMENT OR
AGREEMENT, ANY COLLATERAL FOR THE PAYMENT HEREOF OR THE DEALINGS
OR THE RELATIONSHIP BETWEEN THE COMPANY AND SUCH PERSONS OR
ENTITIES, OR ANY OF THEM.  NEITHER THE BORROWER NOR ANY SUCH
PERSON OR ENTITY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN
WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
BORROWER AND THE COMPANY AND THE PROVISIONS HEREOF SHALL BE
SUBJECT TO NO EXCEPTIONS.  THE BORROWER HAS NOT IN ANY WAY AGREED
WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

      THIS INTERCOMPANY NOTE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.


                                            [BORROWER]



                                            By: 
                                            Name: 
                                            Title: 

                       SCHEDULE TO INTERCOMPANY NOTE

                                [BORROWER]

                         LOANS BALANCE OUTSTANDING
                           INTERCOMPANY ACCOUNT

                                               Loan Balance
Date           Advance      Repayment          Outstanding


                                ENDORSEMENT


      The undersigned, ATLANTIC ENERGY, INC. a New Jersey
corporation (the "Company"), hereby assigns, transfers and
endorses to and makes payable to the order of The Bank of New
York, as collateral agent for itself in its capacity as Agent and
the Lenders under and as defined in each of the (i) Revolving
Credit Agreement (Facility A), dated as of September 28, 1995,
among the Borrower, the Lenders party thereto and the Agent (as
the same may be amended, supplemented or otherwise modified from
time to time) and (ii) Revolving Credit Agreement (Facility B),
dated as of September 28, 1995, among the Borrower, the Lenders
party thereto and the Agent (as the same may be amended,
supplemented or otherwise modified from time to time), that
certain Intercompany Note, dated ___________ __, ____, made by
___________________ to the order of the Company.  This endorse-
ment is made with recourse to the undersigned for payment or
collection.

DATED:  __________ __, 199_


                               ATLANTIC ENERGY, INC.



                               By: 
                               Name: 
                               Title:

                         ATLANTIC ENERGY EXHIBIT N

                    MEMORANDUM OF OPINIONS TO BE GIVEN
                        BY COUNSEL TO THE BORROWER



      In connection with the (i) Revolving Credit Agreement
(Facility A) (the "Facility A Agreement"), dated as of
September 28, 1995, by and among Atlantic Energy, Inc.  (the
"Borrower"), the Lenders party thereto (the "Facility A Lenders")
and The Bank of New York, as Agent (the "Facility A Agent") and
(ii) Revolving Credit Agreement (Facility B) (the "Facility B
Agreement" and, together with the Facility A Agreement, the
"Agreements"), dated as of September 28, 1995, by and among the
Borrower, the Lenders party thereto (the "Facility B Lenders"),
The Bank of New York, as Issuing Bank and The Bank of New York,
as Agent (the "Facility B Agent"), set forth below is the
substance of the opinions to be included in the opinion letters
referred to in Section 5.8 of the Facility B Agreement and the
corresponding provision of the Facility A Agreement
(collectively, the "Opinions"). 

           The opinion letters should be addressed to "The Bank
of New York, as Agent and as Issuing Bank and the Lenders under
the Credit Agreements referred to below".  It should specifically
authorize Special Counsel's reliance thereon.

           Capitalized terms used in the Opinions and which are
not otherwise defined therein shall have the respective meanings
ascribed thereto in the Agreements.  For purposes of the
opinions set forth below,  the term "Transaction Documents"
means, collectively, the "Loan Documents" under and as defined in
each of the Agreements and the term "Notes" means, collectively,
the "Notes" under and as defined in each of the Agreements.

Opinions:

      (e)  The Borrower has only the Subsidiaries set forth
on Schedule 4.1 to each Agreement.  The shares of each Subsidiary
are duly authorized, validly issued, fully paid and nonassessable
and are owned free and clear of any Liens.

      (f)  Each of the Borrower and its Subsidiaries is
duly organized or formed and validly existing in good standing
under the laws of the jurisdiction of its incorporation or for-
mation, has all requisite power and authority to own its Property
and to carry on its business as now conducted, and is in good
standing and authorized to do business as a foreign corporation
in each jurisdiction in which the nature of the business con-
ducted therein or the Property owned therein makes such
qualification necessary, except where such failure to qualify,
singly or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

           (g)  The Borrower has full legal power and authority
and has taken all necessary actions, including, without
limitation, any necessary stockholder action, to enter into,
execute, deliver and perform the terms of the Transaction
Documents and to make the borrowings contemplated thereby and by
the Notes, to execute, deliver and carry out the terms of the
Notes and to incur the obligations provided for therein, all of
which have been duly authorized by all proper and necessary
corporate or other applicable action and are in full compliance
with its charter and by-laws or its other organization documents.


      (h)  Each of the Transaction Documents (other than
the Notes) constitutes, and the Notes, when issued and delivered
pursuant to the applicable Agreement for value received, will
constitute, the valid and legally binding obligations of the
Borrower, enforceable in accordance with its respective terms.

      (i)  To the best of counsel's knowledge after due
inquiry, except as set forth in the Financial Statements, there
are no actions, suits or proceedings at law or in equity or by or
before any Governmental Authority (whether or not purportedly on
behalf of the Borrower or any of its Subsidiaries) pending or
threatened against the Borrower or any of its Subsidiaries or any
of their respective Properties or rights, which (i) reasonably
may be expected to have a Material Adverse Effect, or (ii) call
into question the validity or enforceability of any of the
Transaction Documents.

      (j)  Except for information filings required to be
made in the ordinary course of business which are not a condition
to the Borrower's performance under the Transaction Documents, no
consent, authorization or approval of, filing with, notice to, or
exemption by, stockholders, any Governmental Authority or any
other Person is required to authorize, or is required in con-
nection with the execution, delivery and performance of the
Transaction Documents or is required as a condition to the
validity or enforceability of the Transaction Documents.

      (k)  To the best of counsel's knowledge after due
inquiry, neither the Borrower nor any of its Subsidiaries is in
default (x) under any mortgage, indenture, contract or agreement
to which it is a party or by which it or any of its Property is
bound or (y) with respect to any judgment, order, writ, injunc-
tion, decree or decision of any Governmental Authority, the
effect of which default could reasonably be expected to have a
Material Adverse Effect.

      (l)  The execution, delivery or carrying out of the
terms of the Transaction Documents will not constitute a default
under, or require the mandatory repayment of, or result in the
creation or imposition of, or obligation to create, any Lien upon
any Property of the Borrower or any of its Subsidiaries pursuant
to the terms of, any such mortgage, indenture, contract or
agreement. 

      (m)  To the best of counsel's knowledge after due
inquiry, each of the Borrower and ACE possesses or has the right
to use all franchises, licenses, privileges and other rights as
are material and necessary for the conduct of its business, and
with respect to which it is in compliance, with no known conflict
with the valid rights of others which could reasonably be ex-
pected to have a Material Adverse Effect.

      (n)  The Borrower is not an "investment company" or a
company "controlled" by an "investment company" as defined in, or
is otherwise subject to regulation under, the Investment Company
Act of 1940, as amended.

           (o)  The Borrower and each of its Subsidiaries are
exempt from the provisions of the Public Utility Holding Company
Act of 1935, as amended, except Section 9(a)(2) thereof, pursuant
to Rule 2 of the General Rules and Regulations of the SEC under
said Act.

      (p)  To the best of counsel's knowledge after due
inquiry, neither the Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.  If used in accordance with Section
2.15 of each Agreement, no part of the proceeds of the Loans will
be used, directly or indirectly, for a purpose which violates any
law, rule or regulation of any Governmental Authority, including
without limitation the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System, as amended. 
If used in accordance with Section 2.15 of each Agreement, no
part of the proceeds of the Loans will be used, directly or indi-
rectly, to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock.

      (q)  The Pledge Agreement is effective to create in
favor of The Bank of New York, as collateral agent for each of
The Bank of New York, as Agent under the Facility A Agreement,
The Bank of New York, as Agent under the Facility B Agreement,
The Bank of New York, Issuing Bank under the Facility B Agreement
and each of the Lenders under the Agreements in all of the
Borrower's right, title and interest in and to all Intercompany
Notes (as defined in the Pledge Agreement) when issued and
delivered, provided that such Intercompany Notes remain in the
continued possession of such collateral agent.

 (r)  To the best of counsel's knowledge after due inquiry,
no indenture, certificate of designation for preferred Stock,
agreement or instrument to which the Borrower or ACE is a party,
prohibits or restrains, directly or indirectly, the payment of
dividends or other payments by ACE to the Borrower except for the
terms of the ACE Preferred Stock as in existence on the Effective
Date.

 


                         ATLANTIC ENERGY EXHIBIT O

                    FORM OF OPINION OF SPECIAL COUNSEL


                                      _____ __, 1995


The Bank of New York,
as Agent and the other
Lenders under the Credit
Agreements referred to below


Ladies and Gentlemen:


 We have acted as Special Counsel to (A) The Bank of New
York, as Agent (in such capacity, the "Facility A Agent") in
connection with the Revolving Credit Agreement (Facility A),
dated as of September 28, 1995, by and among Atlantic Energy,
Inc. (the "Borrower"), the Lenders party thereto and the Facility
A Agent (the "Facility A Agreement") and (B) The Bank of New
York, as Agent (in such capacity, the "Facility B Agent") in
connection with the Revolving Credit Agreement (Facility B),
dated as of September 28, 1995, by and among the Borrower, the
Lenders party thereto and the Facility B Agent (the "Facility B
Agreement" and, together with the Facility A Agreement, the
"Agreements").  Capitalized terms used herein which are defined
in the Facility A Agreement shall have the meanings therein
defined, unless the context hereof otherwise requires.
 
 We have examined originals or copies certified to our
satisfaction of the documents required to be delivered pursuant
to the provisions of Sections 5 and 6 of each of the Agreements. 
In conducting such examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to
us as originals, and the conformity to originals of all documents
submitted to us as copies.

 Based upon the foregoing examination, and relying with
your permission upon the opinions of Ballard Spahr Andrews &
Ingersoll, special counsel to the Borrower, and James E. Franklin
II, Esq., General Counsel of the Borrower, we are of the opinion
that all legal preconditions to the making of the first Loans
under and as defined in each of the Agreements and the issuance
of the first Letter of Credit under and as defined in the
Facility B Agreement have been satisfactorily met.

 This opinion is rendered solely for your benefit in
connection with the transactions referred to herein and may not
be relied upon by any other Person.

 In rendering the foregoing opinion, we express no opinion
as to laws other than the laws of the State of New York and the
federal laws of the United States of America.


                                  Very truly yours,


                                  EMMET, MARVIN & MARTIN, LLP

                         ATLANTIC ENERGY EXHIBIT P

                FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
                                     

 This Assignment and Acceptance Agreement is made and en-
tered into as of _____ __, 19__, by and between ____________ (the
"Assignor") and ____________ (the "Assignee").

R E C I T A L S

 4.   All capitalized terms not otherwise defined herein
which are used herein shall have the meanings set forth in the
Facility A Credit Agreement (as defined below).

 5.   The Assignor, certain other lenders (together with
any prior assignees, the "Facility A Lenders") and The Bank of
New York, as agent (in such capacity the "Facility A Agent"), are
parties to that certain Revolving Credit Agreement (Facility A),
dated as of September 28, 1995 (the "Facility A Credit
Agreement") with ATLANTIC ENERGY, INC., a New Jersey corporation
(the "Borrower").  Pursuant to the Facility A Credit Agreement,
the Facility A Lenders (i) agreed to make Revolving Credit Loans
(the "Facility A Revolving Credit Loans") under the Aggregate
Commitments (as defined in the Facility A Credit Agreement, which
Aggregate Commitments are hereinafter referred to as the
"Aggregate Facility A Commitments") in the aggregate amount of
$35,000,000 and (ii) may, in their sole discretion and upon the
Borrower's request, make Competitive Bid Loans to the Borrower
from time to time (the "Facility A Competitive Bid Loans" and,
together with the Facility A Revolving Credit Loans, the
"Facility A Loans").

 6.   The amount of the Assignor's Facility A Commitment
(without giving effect to the assignment effected hereby or to
other assignments thereof which have not yet become effective) is
specified in Item 1 of Schedule 1 hereto.  The outstanding
principal amount of the Assignor's Facility A Loans (without giv-
ing effect to the assignment effected hereby or to other as-
signments thereof which have not yet become effective) is
specified in Item 2 of Schedule 1 hereto. 

 7.   The Assignor, certain other lenders (together with
any prior assignees, the "Facility B Lenders") and The Bank of
New York, as agent (in such capacity the "Facility B Agent" and,
together with it in its capacity as Facility A Agent, the
"Agent"), are parties to that certain Revolving Credit Agreement
(Facility B), dated as of September 28, 1995 (the "Facility B
Credit Agreement") with the Borrower.  Pursuant to the Facility B
Credit Agreement, the Facility B Lenders (i) agreed to make
Revolving Credit Loans (the "Facility B Revolving Credit Loans")
under the Aggregate Commitments (as defined in the Facility B
Credit Agreement, which Commitments are hereinafter referred to
as the "Aggregate Facility B Commitments" and, together with the
Aggregate Facility A Commitments, the "Aggregate Commitments") in
the aggregate amount of $40,000,000 and to participate in Letters
of Credit issued by the Issuing Bank (under and as defined in the
Facility B Credit Agreement) and (ii) may, in their sole
discretion and upon the Borrowers' request make Competitive Bid
Loans to the Borrower from time to time (the "Facility B Competi-
tive Bid Loans" and, together with the Facility B Revolving
Credit Loans, the "Facility B Loans").

      8.   The amount of the Assignor's Facility B Commitment,
including its Letter of Credit Commitment (as defined in the
Facility B Credit Agreement and without giving effect to the
assignment effected hereby or to other assignments thereof which
have not yet become effective), is specified in Item 1 of
Schedule 1 hereto.  The outstanding principal amount of the
Assignor's Facility B Loans, including its Letter of Credit
Exposure (as defined in the Facility B Credit Agreement and with-
out giving effect to the assignment effected hereby or to other
assignments thereof which have not yet become effective), is
specified in Item 2 of Schedule 1 hereto. 

 9.   The Assignor wishes to sell and assign to the As-
signee, and the Assignee wishes to purchase and assume from the
Assignor, (i) the portion of the Assignor's Facility A Commitment
and Facility B Commitment specified in Item 3 of Schedule 1
hereto (the "Assigned Commitment") and (ii) the portion of the
Assignor's Facility A Revolving Credit Loans, Facility B
Revolving Credit Loans and/or the portion of the Assignor's
Facility A Competitive Bid Loans or Facility B Competitive Bid
Loans specified in Item 5 of Schedule 1 hereto (the "Assigned
Loans").

 The parties agree as follows:

 9.1. Assignment

      Subject to the terms and conditions set forth herein
and in the Credit Agreements, the Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, without recourse, on the date set
forth above (the "Assignment Date") (i) all right, title and
interest of the Assignor to the Assigned Loans and (ii) all
obligations of the Assignor under the Credit Agreements with
respect to the Assigned Commitment.  As full consideration for
the sale of the Assigned Loans and the Assigned Commitment, the
Assignee shall pay to the Assignor on the Assignment Date the
principal amount of the Assigned Loans (the "Purchase Price")
[and the Assignor shall pay to the Assignee on the Assignment
Date the fee specified in Item 6 of Schedule 1 hereto].  It is
understood by the parties hereto that each sale, assignment,
transfer or negotiation of rights under the Credit Agreements
shall be of an equal percentage of such Lenders interest under in
each of the Credit Agreements, it being the intention that at all
times during which the Facility A Credit Agreement and Facility B
Credit Agreement are both in effect, each Facility A Lender shall
be a Facility B Lender and its Commitment Percentage in each
thereof shall be identical.

 9.2. Representation and Warranties

      Each of the Assignor and the Assignee represents and
warrants to the other that (i) it has full power and legal right
to execute and deliver this Agreement and to perform the
provisions of this Agreement; (ii) the execution, delivery and
performance of this Agreement have been authorized by all action,
corporate or otherwise, and do not violate any provisions of its
charter or by-laws or any contractual obligations or requirement
of law binding on it; and (iii) this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms.  The Assignor further represents that
it is the legal and beneficial owner of the interest being
assigned by it  hereunder and that such interest is free and
clear of any adverse claim created by the Assignor.

 9.3. Condition Precedent

      The obligations of the Assignor and the Assignee
hereunder shall be subject to the fulfillment of the conditions
that the Assignor shall have (i) received payment in full of the
Purchase Price and (ii) complied with the other applicable
provisions of Section 11.7 of each Credit Agreement.

 9.4. Notice of Assignment

      The Assignor agrees to give notice of the assignment
and assumption of the Assigned Loans and the Assigned Commitment
to the Agent and the Borrower and hereby instructs the Agent and
the Borrower to make all payments with respect to the Assigned
Loans and the Assigned Commitment directly to the Assignee at the
applicable Lending Offices specified on Schedule 2 hereto;
provided, however, that the Borrower and the Agent shall be
entitled to continue to deal solely and directly with the
Assignor in connection with the interests so assigned until the
Agent, the Issuing Bank and the Borrower, to the extent required
by Section 11.7 of each Credit Agreements, shall have received
notice of the assignment and  shall have consented in writing
thereto by signing this Agreement and the Agent shall have
recorded and accepted this Agreement and received the Assignment
Fee required to be paid pursuant to Section 11.7 of each Credit
Agreement.  From and after the date (the "Assignment Effective
Date") on which the Agent shall notify the Borrower and the
Assignor that the requirements set forth in the foregoing
sentence shall have occurred and all consents (if any) required
shall have been given, (i) the Assignee shall be deemed to be a
party to the Credit Agreements and, to the extent that rights and
obligations thereunder shall have been assigned to the Assignee
as provided in such notice of assignment to the Agent, shall have
the rights and obligations of a Lender under the Credit
Agreements, and (ii) the Assignee shall be deemed to have
appointed 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.  After the
Assignment Effective Date, the Agent shall make all payments in
respect of the interest assigned hereby (including payments of
principal, interest, fees and other amounts) to the Assignee. 
The Assignor and Assignee shall make all appropriate adjustment
in payments under the Assigned Loans and the Assigned Commitment
for periods prior to the Assignment Effective Date hereof
directly between themselves.  If the Assignee is not a United
States Person as defined in Section 7701(a)(30) of the Code, the
Assignee shall deliver herewith the forms required by Section
2.10(c) of the Credit Agreements to evidence the Assignee's
complete exemption from United States withholding taxes with
respect to payments under the Loan Documents.

 9.5. Independent Investigation

      The Assignee acknowledges that it is purchasing the
Assigned Loans and the Assigned Commitments from the Assignor
totally without recourse and, except as provided in Section 2
hereof, without representation or warranty.  The Assignee further
acknowledges that it has made its own independent investigation
and credit evaluation of the Borrower in connection with its
purchase of the Assigned Loans and the Assigned  Commitments. 
Except for the representations or warranties set forth in Section
2, the Assignee acknowledges that it is not relying on any
representation or warranty of the Assignor, expressed or implied,
including, without limitation, any representation or warranty
relating to the legality, validity, genuineness, enforceability,
collectibility, interest rate, repayment schedule or accrual
status of the Assigned Loans or the Assigned Commitment, the
legality, validity, genuineness or enforceability of any  Loan
Document, or financial condition or creditworthiness of the
Borrower or any other Person.  The Assignor has not and will not
be acting as either the representative, agent or trustee of the
Assignee with respect to matters arising out of or relating to
the Credit Agreements or this Agreement.  From and after the
Assignment Effective Date, except as set forth in Section 4
above, the Assignor shall have no rights or obligations with
respect to the Assigned Loans or the Assigned Commitments.

 9.6. Consent of the Borrower; Issuance of Notes.

      (a)  Pursuant to the provisions of Section 11.7 of
each  Credit Agreement, and to the extent required thereby, the
Borrower, by signing below, consents to this Agreement and to the
assignment contemplated herein.  The Borrower further agrees to
execute and deliver:

           (i)  to the Assignee, (1) a
Facility A Revolving Credit Note, in an aggregate principal
amount of $____, (2) a Facility B Revolving Credit Note, in an
aggregate principal amount of $____, (3) a Facility A Competitive
Bid Note and (4) a Facility B Competitive Bid Note; and

           (ii) to the Assignor, (1) a
Facility A Revolving Credit Note, in an aggregate principal
amount of $____, and (2) a Facility B Revolving Credit Note, in
an aggregate principal amount of $____.

      (b)  Upon receipt of its new Notes as set forth in
subsection (a)(ii) above, the Assignor shall deliver its replaced
Facility A Revolving Credit Note and Facility B Revolving Credit
Note to the Borrower.

 9.7. Method of Payment

      All payments to be made by either party hereunder
shall be in funds available at the place of payment on the same
day and shall be made by wire transfer to the account designated
by the party to receive payment.

 9.8. Integration

      This Agreement shall supersede any prior agreement or
understanding between the parties (other than the Credit
Agreements) as to the subject matter hereof.

 9.9. Counterparts

      This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
shall be binding upon both parties, their successors and assigns.

      9.10.     Headings

      Section headings have been inserted herein for
convenience only and shall not be construed to be a part hereof.

 9.11.     Amendments; Waivers

      This Agreement may not be amended, changed, waived or
modified except by a writing executed by the parties hereto, and
may not be amended, changed, waived or modified in any manner
inconsistent with Section 11.7 of each  Credit Agreement without
the prior written consent of the Agent.

 9.12.     Governing Law.

      This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of the
State of New York, without regard to principles of conflict of
laws.


 IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the
day and year first above written.
  
                                             , as Assignor

                                  By: 
                                  Name: 
                                  Title: 

                                            , as Assignee


                                   By:
                                   Name:
                                   Title:


Consented to:

ATLANTIC ENERGY, INC.


By: 
Name: 
Title: 


Accepted:

THE BANK OF NEW YORK, as Agent


By: 
Name:
Title: 


THE BANK OF NEW YORK, as Issuing Bank


By: 
Name: 
Title: 

                                SCHEDULE 1

                                    TO

                    ASSIGNMENT AND ACCEPTANCE AGREEMENT

                                  between
                    _____________________, as Assignor
                                    and
                    _____________________, as Assignee

                                relating to

                Revolving Credit Agreement (Facility A) and
                 Revolving Credit Agreement (Facility B),
                    each dated as of September 28, 1995
                                   among
                          ATLANTIC ENERGY, INC.,
                   the respective Lenders party thereto,
                                    and
                      The Bank of New York, as Agent,


Item 9.13. Assignor's Commitments

 (a)  Facility A Commitment            $
 (b)  Facility B Commitment            $


Item 9.14. Assignor's Loans:                  

 (a)  Facility A Revolving
Credit Loans* consisting
of:
ABR Advances                                   $
Eurodollar Advances                            $
Letter of Credit Exposure                      $

(b)   Facility A Competitive
 Bid Loans* consisting of Loans
 at the interest rates and
 for the Interest Periods
 set forth below:

 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________

(c)   Facility B Revolving
 Credit Loans* consisting
 of:
      ABR Advances                    $___________
      Eurodollar Advances             $___________

(d)   Facility B Competitive
 Bid Loans* consisting of Loans
 at the interest rates and
 for the Interest Periods
 set forth below:

 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________


Item 9.15. Amount of Assigned Commitments:

 (a)  Assigned Facility A Revolving
      Credit Commitment                $___________

 (b)  Assigned Facility B Revolving
      Credit Commitment                $___________

Item 9.16. Percentage of Assigned Commitments
      in Facility A as a percentage of
      the Aggregate Commitments
      of Facility A of all Facility
      A Lenders                             ___%

      Percentage of Assigned Commitments
      in Facility B as a percentage of
      the Aggregate Commitments
      of Facility B of all Facility
      A Lenders                             ___%

 Item 9.17.     Amount of Assigned Loans:

 (a)  Assignor's Facility A Revolving
      Credit Loans consisting
      of:
      ABR Advances                         $___________
      Eurodollar Advances                  $___________
      Letter of Credit Exposure            $___________

 (b)  Assignor's Facility A Competitive
      Bid Loans consisting of Loans
      at the interest rates and
      for the Interest Periods
      set forth below:

      Rate: __%  Interest Period: ___       $___________
      Rate: __%  Interest Period: ___       $___________
      Rate: __%  Interest Period: ___       $___________

 (c)  Assignor's Facility B Revolving
      Credit Loans consisting
      of:
      ABR Advances                         $___________
      Eurodollar Advances                  $___________

 (d)  Assignor's Facility B Competitive
      Bid Loans consisting of Loans
      at the interest rates and
      for the Interest Periods
      set forth below:

      Rate: __%  Interest Period: ___      $___________
      Rate: __%  Interest Period: ___      $___________
      Rate: __%  Interest Period: ___      $___________


Item 6.    Amount of Fee
      payable to Assignee                 $___________



                                SCHEDULE 2

                                    TO

                    ASSIGNMENT AND ACCEPTANCE AGREEMENT

                                  between
                    _____________________, as Assignor
                                    and
                    _____________________, as Assignee

                                relating to

                Revolving Credit Agreement (Facility A) and
                 Revolving Credit Agreement (Facility B),
                    each dated as of September 28, 1995
                                   among
                          ATLANTIC ENERGY, INC.,
                   the respective Lenders party thereto,
                                    and
                      The Bank of New York, as Agent,


DOMESTIC LENDING OFFICE             EURODOLLAR LENDING OFFICE

____________________                ____________________
____________________                ____________________
____________________                ____________________
Attention: ______________           Attention: ______________
Telephone: (___) ___-____           Telephone: (___) ___-____
Telecopy:  (___) ___-____           Telecopy:  (___) ___-____


ADDRESS FOR NOTICES

____________________
____________________
____________________
Attention: ______________
Telephone: (___) ___-____
Telecopy:  (___) ___-____


                             ATLANTIC ENERGY EXHIBIT Q

                   FORM OF GUARANTY AND SUBORDINATION AGREEMENT

         Guaranty and Subordination Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, this "Guaranty"),
dated as of _____ __, 199_, made by _________, a ______ corporation ("   
     ") and each Person which becomes a party hereto pursuant to Section
10 hereof (together with _________, the "Guarantors", each, a
"Guarantor") and ATLANTIC ENERGY, INC., a New Jersey corporation (the
"Borrower") to THE BANK OF NEW YORK, as Agent (in such capacity, the
"Agent") [(i)] for itself and for the ratable benefit of the Lenders.

         9.18.     The Borrower has entered into two Revolving Credit
Agreements (Facility A and Facility B), dated as of September 28, 1995,
among the Borrower, the signatory Lenders thereto and the Agent (as the
same may be amended, extended, increased, modified, refunded or
refinanced from time to time, the "Credit Agreements").  Section 8.7 of
the Credit Agreements provides that the Guarantors and the Borrower
shall execute and deliver this Guaranty in the event that the Borrower
shall convert or forgive Intercompany Notes of the Guarantors.

         9.19.     The Guarantors have derived and expect to continue to
derive substantial benefit from the Credit Agreements and the making of
the Loans and the issuance of the Letters of Credit thereunder,
including, without limitation, the lending, directly or indirectly, by
the Borrower of a portion of the proceeds of the Loans to the
Guarantors.  The Guarantors acknowledge that the Agent and the Lenders
are relying on this Guaranty in agreeing to continue to make the Loans
subsequent to the conversion or forgiveness of an Intercompany Note, and
that the Agent and the Lenders would not do so without the execution and
delivery of this Guaranty.

         9.20.     Each of the Guarantors wishes to (i) guarantee the
obligations of the Borrower under the Loan Documents and (ii)
subordinate, subject to the terms and conditions contained herein, any
obligations due it from the Borrower to the prior indefeasible cash
payment in full of the Borrower Obligations (as hereinafter defined).

         In consideration of the premises and agreements herein contained
and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to induce the Agent and
the Lenders to make the Loans and to induce BNY to issue the Letters of
Credit and the Lenders to participate therein, the Borrower and each of
the Guarantors covenant and agree as follows:

         (a)  Definitions

              Except as otherwise provided herein, capitalized terms that
are defined in the Credit Agreements and are not defined herein shall
have the meanings assigned to such terms therein.  For purposes hereof,
the following terms shall have the following meanings:

              "Additional Guarantor": each Guarantor which becomes a party
hereto pursuant to Section 10 hereof.

              "Borrower Obligations": all obligations and liabilities,
whether now existing or hereafter arising, of the Borrower under the
Loan Documents, whether direct,  indirect or contingent, incurred as
primary obligor or otherwise, secured or unsecured, and whether or not
on open account, including all principal and interest thereon (whether
arising or accruing before or after the occurrence of any Event of
Default set forth in Section 9.1(i) or (j) of the Credit Agreements and
whether allowed as a claim), and all reasonable costs and expenses of
the Agent and the Lenders in enforcing, preserving and protecting any
thereof, whether or not suit is instituted (as the same may be amended,
increased, modified, renewed, refinanced, refunded or extended from time
to time).

              "Consideration": as of any date of determination and with
respect to each Guarantor, an amount equal to the lesser of (a) the
total "value" (within the meaning of Section 548 of the Bankruptcy Code
as in effect on the date hereof) given, directly or indirectly, to such
Guarantor during the period commencing on the date such Guarantor became
a party to this Guaranty and ending on such date of determination, in
exchange for its execution and delivery of this Guaranty, and (b) the
amount of "fair consideration" (within the meaning of Article 10 of the
New York Debtor Creditor Law as in effect on the date hereof) given,
directly or indirectly, to such Guarantor during the period commencing
on the date such Guarantor became a party to this Guaranty and ending on
such date of determination in exchange for its execution and delivery of
this Guaranty.

              "Guarantor Obligations": with respect to each Guarantor, all
of the obligations and liabilities of such Guarantor hereunder, whether
fixed, contingent, now existing or hereafter arising, created, assumed,
incurred or acquired.

              "Net Worth": as of any date and with respect to each
Guarantor, the lesser of the following:

                   (a)(i) all of such Guarantor's "property, at a fair
valuation" (within the meaning of Section 101(32) of the Bankruptcy Code
as in effect on the date hereof) on such date, minus (ii) the sum of
such Guarantor's "debts" (within the meaning of Section 101(12) of the
Bankruptcy Code as in effect on the date hereof) on such date, or

                   (b)(i) the "fair salable value of the assets" (within the
meaning of Article 10 of the New York Debtor Creditor Law as in effect
on the date hereof) of such Guarantor on such date, minus (ii) "the
amount that will be required to pay such Guarantor's probable liability
on its existing debts as they become absolute and matured" (as such
phrase would be construed under Article 10 of the New York Debtor
Creditor Law as in effect on the date hereof) on such date.

              "Subordinated Debt": all indebtedness for borrowed money and
any other obligations, contingent or otherwise, of the Borrower to any
Guarantor, including, without limitation, all amounts, fees and expenses
payable by the Borrower to any Guarantor in respect thereof, in each
case whether outstanding on the date of execution of this Guaranty or
hereafter arising or created.

              "Supplement": a Supplement to this Guaranty, duly completed,
in the form of Annex 1 hereto.

         (b)  Guaranty

              (1)  Subject to Section 2(b) hereof, each Guarantor hereby
absolutely, irrevocably and unconditionally guarantees the full and
prompt payment when due (whether at stated maturity, by acceleration or
otherwise) of the Borrower Obligations.   This Guaranty constitutes a
guaranty of payment, and neither the Agent nor any Lender shall have any
obligation to enforce any Loan Document or exercise any right or remedy
with respect to any collateral security thereunder by any action,
including, without limitation, making or perfecting any claim against
any Person or any collateral security for any of the Borrower
Obligations prior to being entitled to the benefits of this Guaranty. 
The Agent may, at its option, proceed against the Guarantors, or any one
or more of them, in the first instance to enforce the Guarantor
Obligations without first proceeding against the Borrower or any other
Person, and without first resorting to any other rights or remedies, as
the Agent may deem advisable.  In furtherance hereof, if the Agent or
any Lender is prevented by law from collecting or otherwise hindered
from collecting or otherwise enforcing any Borrower Obligation in
accordance with its terms, the Agent or such Lender, as the case may be,
shall be entitled to receive hereunder from the Guarantors after demand
therefor, the sums which would have been otherwise due had such
collection or enforcement not been prevented or hindered.

              (2)  Notwithstanding anything to the contrary contained in
this Guaranty, the maximum liability of each Guarantor hereunder shall
not, as of any date of determination, exceed the lesser of (i) the
highest amount that is valid and enforceable against such Guarantor
under principles of New York State contract law, and (ii) the sum of (1)
all Consideration received by such Guarantor as of such date of
determination, plus (2) the lesser of (A) 95% of the Net Worth of such
Guarantor on the date such Guarantor became a party to this Guaranty
after giving effect to (1) this Guaranty and (2) the receipt by such
Guarantor of any Consideration on the date such Guarantor became a party
to this Guaranty, and (B) 95% of the Net Worth of such Guarantor on such
date of determination.

              (3)  Each Guarantor agrees that its Guarantor Obligations may
at any time and from time to time exceed the maximum liability of such
Guarantor hereunder without impairing this Guaranty or affecting the
rights and remedies of the Agent or any Lenders hereunder.

              (4)  Subject to the limitations contained in Section 2(b), the
obligations hereunder of each Guarantor shall be joint and several with
the obligations hereunder of the other Guarantors from time to time
party hereto.

         (c)  Absolute Obligation

              Subject to Section 9, no Guarantor shall be released from
liability hereunder unless and until the Maturity Date shall have
occurred and either (a) the Borrower Obligations shall have been
indefeasibly paid in full, in cash, or (b) the Guarantor Obligations of
such Guarantor shall have been paid in full, in cash.  Each Guarantor
acknowledges and agrees that (1) neither the Agent nor any Lender has
made any representation or warranty to such Guarantor with respect to
the Borrower, its Subsidiaries, any Loan Document or any agreement,
instrument or document executed or delivered in connection therewith or
any other matter whatsoever, and (2) such Guarantor shall be liable
hereunder, and such liability shall not be affected or impaired,
irrespective of (A) the validity or enforceability of any Loan Document
or any agreement, instrument or document executed or delivered in
connection therewith, or the collectability of any of the Borrower
Obligations, (B) the preference or priority ranking with respect to any
of the Borrower Obligations, (C) the existence, validity, enforceability
or perfection of any security interest or collateral security under any
Loan Document or the release, exchange, substitution or loss or
impairment of any such security interest or collateral security, (D) 
any failure, delay, neglect or omission by the Agent or any Lender to
realize upon any direct or indirect collateral security, indebtedness,
liability or obligation, any Loan Document or any agreement, instrument
or document executed or delivered in connection therewith, or any of the
Borrower Obligations, (E) the existence or exercise of any right of
set-off by the Agent or any Lender, (F) the existence, validity or
enforceability of any other guaranty with respect to any of the Borrower
Obligations, the liability of any other Person in respect of any of the
Borrower Obligations, or the release of any such Person or any other
guarantor of any of the Borrower Obligations, (G) any act or omission of
the Agent or any Lender in connection with the administration of any
Loan Document or any of the Borrower Obligations, (H) the bankruptcy,
insolvency, reorganization or receivership of, or any other proceeding
for the relief of debtors commenced by or against, any Person, (I) the
disaffirmance or rejection, or the purported disaffirmance or purported
rejection, of any of the Borrower Obligations, any Loan Document or any
agreement, instrument or document executed or delivered in connection
therewith, in any bankruptcy, insolvency, reorganization or
receivership, or any other proceeding for the relief of debtors,
relating to any Person, (J) any law, regulation or decree now or
hereafter in effect which might in any manner affect any of the terms or
provisions of any Loan Document or any agreement, instrument or document
executed or delivered in connection therewith or any of the Borrower
Obligations, or which might cause or permit to be invoked any alteration
in the time, amount, manner or payment or performance of any of the
Borrower's obligations and liabilities (including, without limitation,
the Borrower Obligations), (K) the merger or consolidation of the
Borrower into or with any Person, (L) the sale by the Borrower of all or
any part of its assets, (M) the fact that at any time and from time to
time none of the Borrower Obligations may be outstanding or owing to the
Agent or any Lender, (N) any amendment or modification of, or supplement
to, any Loan Document or (O) any other reason or circumstance which
might otherwise constitute a defense available to or a discharge of the
Borrower in respect of its obligations or liabilities (including,
without limitation, the Borrower Obligations) or of such Guarantor in
respect of any of the Guarantor Obligations (other than by the
performance in full thereof).

         (d)  Representations and Warranties

              Each of the Guarantors hereby makes the following
representations and warranties to the Agent:

                   (1)  Existence and Power. It is duly organized or formed
and validly existing in good standing under the laws of the jurisdiction
of its incorporation or formation, has all requisite power and authority
to own its Property and to carry on its business as now conducted, and
is in good standing and authorized to do business as a foreign
corporation in each jurisdiction in which the nature of the business
conducted therein or the Property owned therein makes such qualification
necessary, except where such failure to qualify could not reasonably be
expected to have a Material Adverse Effect.

                   (2)  Authority. It has full legal power and authority to
enter into, execute, deliver and perform the terms of the Loan Documents
to which it is a party and the transactions contemplated thereby, all of
which have been duly authorized by all proper and necessary corporate or
other applicable action and are in full compliance with its Certificate
of Incorporation or By-Laws or its other organization documents. 

                   (3)  Binding Agreement. The Loan Documents to which its
is a party constitute its valid and legally binding obligations,
enforceable in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally.

                   (4)  Litigation. Except as disclosed in a schedule to the
Credit Agreements, there are no actions, suits or proceedings at law or
in equity or by or before any Governmental Authority (whether
purportedly on its behalf) pending or, to its knowledge, threatened
against it or any of its Property or rights, which (i) if adversely
determined, could reasonably be expected to have a Material Adverse
Effect, (ii) call into question the validity or enforceability of any of
the Loan Documents, (iii) could reasonably be expected to result in the
rescission, termination or cancellation of any material franchise,
right, license, permit or similar authorization held by it or (iv) might
materially and adversely affect any of the Transactions.

                   (5)  Required Consents. No consent, authorization or
approval of, filing with, notice to, or exemption by, stockholders, any
Governmental Authority or any other Person is required to authorize, or
is required in connection with the execution, delivery and performance
of the Loan Documents to which it is a party and the transactions
contemplated thereby, or is required as a condition to the validity or
enforceability of such Loan Documents.

                   (6)  No Conflicting Agreements. It is not in default
under any mortgage, indenture, contract or agreement to which it is a
party or by which it or any of its Property is bound, the effect of
which default could reasonably be expected to have a Material Adverse
Effect.  The execution, delivery or carrying out of the terms of the
Loan Documents to which it is a party and the transactions contemplated
thereby, will not constitute a default under, or result in the creation
or imposition of, or obligation to create, any Lien upon any of its
Property or result in a breach of or require the mandatory repayment of
or other acceleration of payment under or pursuant to the terms of any
such mortgage, indenture, contract or agreement.

                   (7) Compliance with Applicable Laws. It is not in default
with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Authority which default could reasonably be
expected to have a Material Adverse Effect.  It is complying in all
material respects with all statutes, regulations, rules and orders
applicable to it of all Governmental Authorities a violation of which
could reasonably be expected to have a Material Adverse Effect.

                   (8) Property. It has good and marketable title to all of
its Property, title to which is material to such Guarantor, subject to
no Liens, except for Liens described in Section 8.2(i), (ii), (iii),
(iv), (v), (vi) or (vii) of the Credit Agreements.

                   (9) Franchises, Intellectual Property, Etc. It possesses
or has the right to use all franchises, Intellectual Property, licenses
and other rights as are material and necessary for the conduct of its
business, and with respect to which it is in compliance, with no known
conflict with the valid rights of others which could reasonably be
expected to have a Material Adverse Effect.  No event has occurred which
permits or, to the best of its knowledge, after notice or the lapse of
time or both, or any other condition, could reasonably be expected to
permit, the revocation or termination of any  such franchise,
Intellectual Property, license or other right which revocation or
termination could reasonably be expected to have a Material Adverse
Effect.

                   (10) No Misrepresentation. No representation or warranty
contained in any Loan Document to which it is a party and no certificate
or report furnished or to be furnished by it in connection with the
transactions contemplated thereby, contains or will contain a
misstatement of material fact, or, to the best of its knowledge, omits
or will omit to state a material fact required to be stated in order to
make the statements therein contained not misleading in the light of the
circumstances under which made.

         (e)  Events of Default

              Each of the following shall constitute an "Event of Default"
hereunder:

                   (1)  Any of the Guarantors shall fail to observe or
perform any term, covenant or agreement contained in Section 2 of this
Guaranty; or

                   (2)  Any of the Guarantors shall fail to perform or
observe any other term, covenant or agreement on its part to be
performed or observed pursuant to this Guaranty and such failure shall
have continued unremedied for a period of 30 days after such Guarantor
shall become aware of such failure; or

                   (3)  Any representation of any Guarantor contained herein
or in any certificate, report or notice delivered or to be delivered by
such Guarantor pursuant hereto shall prove to have been incorrect or
misleading in any material respect when made; or

                   (4)  This Guaranty shall cease to be in full force and
effect or any of the Guarantors shall so assert or shall disavow any of
its obligations hereunder; or

                   (5)  The occurrence of an "Event of Default" under and as
defined in the Credit Agreements.

         (f)  Subordination

              (1)  No payment of any nature whatsoever due in respect of the
Subordinated Debt payable to any of the Guarantors shall be made unless
and until the Borrower Obligations have been first indefeasibly paid in
full in cash.

              (2)  Upon any bankruptcy, insolvency, liquidation or
reorganization of the Borrower, or upon the filing of a petition in
bankruptcy or commencement of any proceeding in bankruptcy against the
Borrower or upon any distribution of the assets of the Borrower or upon
any dissolution, winding up, liquidation or reorganization of the
Borrower, whether in bankruptcy, insolvency, reorganization, arrangement
or receivership proceedings, or upon any assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of the
Borrower, or in the event any of the Subordinated Debt shall for any
reason become or be declared due and payable or otherwise:

                   (i)  the Agent shall first be entitled to receive
indefeasible payment in full in cash of the Borrower Obligations
(whenever arising) before any Guarantor shall be entitled to receive any
payment on account of the Subordinated Debt;

                   (ii)  any payment by, or distribution of the assets of,
the Borrower of any kind or character, whether in cash, property or
securities, to which any Guarantor would be entitled except for the
provisions of this Guaranty, in connection with the Subordinated Debt,
shall be paid or delivered by the Person making such payment or
distribution (whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the Agent to the extent
necessary to make payment in full in cash of the Borrower Obligations
remaining unpaid, after giving effect to any concurrent payment or
distribution (or provision therefor) in cash to the Agent; and

                   (iii) None of the Guarantors shall ask, demand by legal
proceedings or otherwise, or take or receive from the Borrower, by set-
off, counterclaim or in any other manner, any payment or distribution on
account of the Subordinated Debt other than as expressly permitted
hereunder;

                   (iv) Each of the Guarantors agrees to declare the
Subordinated Debt to be due and payable and, at least 30 days before the
time required by applicable law or rule, to file proof of claim
therefor, in default of which the Agent is hereby irrevocably authorized
so to declare and file in order to effectuate the provisions hereof; and

                   (v)  The Agent shall have the right, and is hereby
authorized, to vote the interest of each Guarantor with respect to the
Subordinated Debt, including, without limitation, the right to make all
acceptances, rejections, consents or approvals on its behalf (including
the right to accept, approve or disapprove of any plan of
reorganization) in connection with any insolvency or other proceeding,
and to execute and deliver for and on behalf of the Guarantor any
instrument, agreement or other document in connection therewith, and if
for any reason this clause shall not be enforceable, each Guarantor
agrees to vote and give or make such acceptances, rejections, consents
or approvals in the manner directed by the Agent.  Each of the
Guarantors hereby irrevocably appoints the Agent its attorney-in-fact
for purposes of exercising the rights and authority granted to it under
this clause.

              Notwithstanding the foregoing, in the event that any payment
by, or distribution of the assets of, the Borrower of any kind or
character prohibited hereby, whether in cash, property or securities,
shall for any reason be received by any of the Guarantors in respect of
the Subordinated Debt, such payment or distribution shall be held in
trust for the benefit of the Agent, and shall be immediately paid over
to the Agent, to the extent necessary to make payment in full in cash of
the Borrower Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution (or provision therefor) in cash to
the Agent.

              (3)  Without the prior written consent of the Agent, the
Borrower will not give, and none of the Guarantors will receive or
accept, any collateral of any nature whatsoever for the Subordinated
Debt on any Property or assets, whether now existing or hereafter
acquired, of the Borrower.

              (4)  Nothing contained in this Guaranty is intended to or
shall impair, as between and among the Borrower, its creditors (other
than the holders of the Borrower Obligations) and the Guarantors, the
obligation of the Borrower to pay to the Guarantors any amount due in
respect of the Subordinated Debt as and when the same shall become due
and payable in accordance with the terms thereof, or affect the relative
rights of the Guarantors and the creditors of the Borrower (other than
the holders of the Borrower  Obligations), in each case subject to the
rights of the holders of the Borrower Obligations under this Guaranty.

              (5)  Unless and until the Borrower Obligations have been
indefeasibly paid in full in cash and the Credit Agreements have been
terminated, each of the Guarantors agrees not to declare any part of the
Subordinated Debt to be due and payable or exercise any of the rights or
remedies which it may have, or bring (in its capacity as holder of the
Subordinated Debt) or join with any other creditor in instituting, any
proceedings against the Borrower under any bankruptcy, insolvency,
reorganization, arrangement, receivership or other similar law, unless
the Borrower Obligations shall have been declared immediately due and
payable or, in the case of the institution of any such proceedings, the
Agent shall have joined in the institution thereof or expressly
consented thereto in writing.  In the event that the Agent shall have so
declared the Borrower Obligations immediately due and payable, each of
the Guarantors agrees to declare the Subordinated Debt then due to be
due and payable, provided, however, if the Agent shall rescind any such
declaration, each of the Guarantors shall automatically be deemed to
have rescinded its declaration.

              (6)  No right of the Agent to enforce this Guaranty shall at
any time or in any way be prejudiced or impaired by any act or failure
to act on the part of any of the Guarantors, or by any noncompliance by
the Guarantors with the terms, provisions and covenants herein, and the
Agent are hereby expressly authorized to extend, waive, renew, increase,
decrease, modify or amend the terms of the Borrower Obligations or any
collateral security therefor, and to waive any default, modify, amend,
rescind or waive any provision of any document executed and delivered in
connection with the Borrower Obligations and to release, sell or
exchange any such collateral security and otherwise deal freely with the
Borrower, all without notice to or consent of the Guarantors and without
affecting the liabilities and obligations of the parties hereto.

              (7)  The Borrower and the Guarantors each waives notice of
acceptance of this Guaranty by the Agent and the Lenders, and each of
the Guarantors waives notice of and consents to the making, amount and
terms of the Borrower Obligations which may exist from time to time and
any renewal, extension, increase, amendment or modification thereof and
any other action which the Agent or the Lenders in its sole and absolute
discretion, may take or omit to take with respect thereto.  This Section
(g) shall constitute a continuing offer to the Agent and the Lenders,
its provisions are made for the benefit of the Agent and the Lenders,
and the Agent and the Lenders are made obligees hereunder and may
enforce such provisions.

              (8)  Each of the Guarantors agrees that no payment or
distribution to the Agent pursuant to the provisions of this Guaranty
shall entitle any of the Guarantors to exercise any rights of
subrogation in respect thereof until the Borrower Obligations shall have
been indefeasibly paid in full in cash.  Each of the Guarantors agrees
that the subordination provisions contained herein shall not be affected
by any action or failure to act by the holders of the Borrower
Obligations which results, or may result, in affecting, impairing or
extinguishing any right of reimbursement or subrogation or other right
or remedy of such Guarantor.

              (9)  None of the Guarantors shall sell, assign, transfer or
otherwise dispose of all or any part of the Subordinated Debt without
having first obtained the prior written consent of the Agent which
consent may be withheld for any reason or for no reason.

              (10) The Borrower agrees that it will not make any payment of
any of the Subordinated Debt, or take any other action, in contravention
of the provisions of this Guaranty.

              (11) Each of the Guarantors agrees that the provisions of this
Guaranty shall be applicable to the Borrower Obligations whenever the
same may arise and notwithstanding the fact that no Borrower Obligations
may be outstanding from time to time and may have paid down to zero at
any time or from time to time, it being understood that the Credit
Agreements permit the Borrower to borrow, repay and reborrow from time
to time subject to the terms and conditions thereof, all or any of which
terms and conditions may be waived.

              (12) All rights and interests of the Agent hereunder, and all
agreements and obligations of the Borrower and the Guarantors under this
Guaranty, shall remain in full force and effect irrespective of:

                   (i)  any lack of validity or enforceability of any of the
Loan Documents;

                   (ii) any change in the time, manner or place of payment
of, or any other term of, all or any of the Borrower Obligations, or any
other amendment or waiver of or any consent to departure from any of the
Borrower Obligations;

                   (iii) any exchange, release or non-perfection of the
Collateral, or any release or amendment or waiver of or consent to or
departure from any guaranty, for all or any of the Borrower Obligations;
or

                   (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower in
respect of the Borrower Obligations or this Guaranty.  This Guaranty
shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Borrower Obligations is rescinded
or must otherwise be returned by the Agent upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, all as though
such payment had not been made.

              (13) Each of the Guarantors authorizes the Agent, without
notice or demand and without affecting or impairing the obligations of
any of the Guarantors, from time to time to (i) renew, compromise,
extend, increase, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Borrower Obligations, or any
part thereof, including, without limitation, to increase or decrease the
rate of interest thereon or the principal amount thereof; (ii) take or
hold security for the payment of the Borrower Obligations and exchange,
enforce, foreclose upon, waive and release any such security; (iii)
apply such security and direct the order or manner of sale thereof as
the Agent, in its sole discretion, may determine; (iv) release and
substitute one or more indorsers, warrantors, borrowers or other
obligors; and (v) exercise or refrain from exercising any rights against
the Borrower or any other Person.

         (g)  Notices

              Except as otherwise specifically provided herein, all notices,
requests, consents, demands, waivers and other communications hereunder
shall be given in the manner provided in Section 11.2 of the Credit
Agreements and, if to the Agent or the Borrower, at their respective
addresses set forth therein or, if to the Guarantor, the address set
forth below (or if to an Additional Guarantor, to the address set forth
in the Supplement executed and delivered by such Additional Guarantor)
or to such other addresses as to which the Agent may be hereafter
notified by the respective parties hereto:




         Attention:     ,

         Telephone: (___) ___-____
         Fax:       (___) ___-____.

(h)      Expenses

              The Guarantors will upon demand pay to the Agent any and all
reasonable sums, costs and expenses which the Agent may pay or incur
pursuant to the provisions of this Guaranty or in negotiating, executing
or enforcing this Guaranty or in enforcing payment of its Guarantor
Obligations, including, but not limited to court costs, reasonable
collection charges, reasonable travel expenses, and reasonable
attorneys' fees and disbursements.  All sums, costs and expenses which
are due and payable pursuant to this Section shall bear interest,
payable on demand, at the highest rate then payable on the Borrower
Obligations.

         (i)  Repayment in Bankruptcy, etc.

              If, at any time or times subsequent to the payment of all or
any part of the Borrower Obligations or the Guarantor Obligations, the
Agent or any Lender shall be required to repay any amounts previously
paid by or on behalf of the Borrower or any Guarantor in reduction
thereof by virtue of an order of any court having jurisdiction in the
premises, including, without limitation, as a result of an adjudication
that such amounts constituted preferential payments or fraudulent
conveyances, the Guarantors unconditionally agree to pay to the Agent
within 10 days after demand a sum in cash equal to the amount of such
repayment, together with interest on such amount from the date of such
repayment by the Agent or such Lender, as the case may be, to the date
of payment to the Agent at the applicable after-maturity rates set forth
in the Credit Agreements.

         (j)  Additional Guarantors

              Upon the execution and delivery to the Agent of a Supplement
by any Person, such Person shall be a Guarantor.

         (k)  Other Provisions

              (1)  This Guaranty is the "Guaranty" referred to in the Credit
Agreements.  Each of the Agent and the Guarantors acknowledges that
certain provisions of the Credit Agreements, including, without
limitation, Sections 11.1 (Amendments and  Waivers), 11.3 (No Waiver;
Cumulative Remedies), 11.7 (Assignments and Participations), 11.8
(Counterparts), 11.12 (Governing Law), 11.14 (Severability), 11.15.
(Integration), 11.16 (Consent to Jurisdiction), 11.17 (Service of
Process), 11.18 (No Limitation on Service or Suit) and 11.19 (WAIVER OF
TRIAL BY JURY) thereof, are made applicable to this Guaranty and all
such provisions are incorporated by reference herein as if fully set
forth herein.

              (2)  All Schedules and Annexes hereto shall be deemed to be a
part hereof. With respect to an Additional Guarantor, all references in
this Agreement to (i) a Schedule hereof shall refer to the corresponding
Schedule to the Supplement executed and delivered by such Additional
Guarantor and (ii) the date hereof, shall refer to the date on which the
Additional Guarantor became a Grantor hereunder by executing and
delivering a Supplement.

              (3)  No failure by the Agent to exercise, and no delay by the
Agent in exercising, any right or remedy hereunder shall operate as a
waiver thereof.

              (4)  Each and every right, remedy and power granted to the
Agent hereunder or allowed at law, in equity or by other agreement shall
be cumulative and not exclusive, and may be exercised by the Agent from
time to time.

              (5)  Each Guarantor hereby waives presentment, demand for
payment, notice of default, nonperformance and dishonor, protest and
notice of protest of or in respect of this Guaranty, the Loan Documents
and the Borrower Obligations, notice of acceptance of this Guaranty and
reliance hereupon by the Agent and each Lender, and the incurrence of
any of the Borrower Obligations, notice of any sale of collateral
security or any default of any sort and notice of any amendment,
modification, increase or waiver of any Loan Document.

              (6)  No Guarantor is relying upon the Agent or any Lender to
provide to such Guarantor any information concerning the Borrower or any
Subsidiary of the Borrower, and each Guarantor has made arrangements
satisfactory to such Guarantor to obtain from the Borrower on a
continuing basis such information concerning the Borrower and its
Subsidiaries as such Guarantor may desire.

              (7)  Each Guarantor agrees that any statement of account with
respect to the Borrower Obligations from the Agent or any Lender to the
Borrower which binds the Borrower shall also be binding upon such
Guarantor, and that copies of said statements of account maintained in
the regular course of the Agent's or such Lender's business, as the case
may be, may be used in evidence against such Guarantor in order to
establish its Guarantor Obligations.

              (8)  Each Guarantor acknowledges that it has received a copy
of the Loan Documents.  In addition, such Guarantor acknowledges having
read each Loan Document and having had the advice of counsel in
connection with all matters concerning its execution and delivery of
this Guaranty, and, accordingly, waives any right it may have to have
the provisions of this Guaranty strictly construed against the Agent and
the Lenders.


         The Guarantors and the Borrower have each caused this Guaranty to
be duly executed and delivered by its duly authorized officer as of the
date first above written.

                                                      



                                    By:                 
                                    Name:                
                                    Title:              






                                    By:                   
                                    Name:                
                                    Title:               


Accepted and Agreed to:


THE BANK OF NEW YORK, as Agent



By:                         
Name:                        
Title:                       




Annex 1 to the Guaranty and
Subordination Agreement


FORM OF SUPPLEMENT TO GUARANTY AND SUBORDINATION AGREEMENT


SUPPLEMENT, dated as of _____ __, 199_, made by ___________, a ______
corporation (the "New Guarantor") to the Guaranty (the "Guaranty"),
dated as of ____ __, 1994, made by each Guarantor party thereto and
ATLANTIC ENERGY, INC., a New Jersey corporation (the "Borrower") to THE
BANK OF NEW YORK, as Agent (in such capacity, the "Agent").

Reference is made to the Credit Agreements (Facility A and Facility B),
dated as of September 28, 1995, by and among the Borrower, the Lenders
party thereto (the "Lenders") and the Agent (as the same may be amended,
extended, increased, modified, refunded or refinanced from time to time,
the "Credit Agreements").

Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Guaranty or the Credit
Agreements, as the case may be.

Accordingly, the Agent and the New Guarantor agree as follows:

In accordance with Section 10 of the Guaranty, by signing this
Supplement, the New Guarantor (a) shall be, and shall be deemed to be, 
a "Guarantor" under, and as such term is defined in, the Guaranty with
the same force and effect as if originally named therein as a Guarantor,
(b) shall have made, and shall be deemed to have made, the
representations and warranties contained in Section 4 of the Guaranty on
and as of the date hereof, and (c) shall have made, and shall be deemed
to have made, all of the covenants and agreements of a Guarantor set
forth in the Guaranty.

Except as expressly supplemented hereby, the Guaranty shall remain in
full force and effect.

This Supplement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws
rules.

Every provision of this Supplement is intended to be severable, and if
any term or provision hereof shall be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the
remaining provisions hereof or thereof shall not be affected or impaired
thereby, and any invalidity, illegality or unenforceability in any
jurisdiction shall not affect the validity, legality or enforceability
of any such term or provision in any other jurisdiction.

         For purposes of Section 7 of the Guaranty, the address of the New
Grantor is as follows:
                                   
                                   
                                   

             Attention: 


             Telephone:  (___) ___-____
             Fax:        (___) ___-____.

         This Supplement may be executed in two or more counterparts, each
of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.  This Supplement shall
become effective when the Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New
Grantor and the Agent.

              The New Grantor and the Agent have duly executed this
Supplement to the Guaranty as of the day and year first above written.

                               [NAME OF NEW GUARANTOR]



                               By:                     
                               Name:                   
                               Title:                  


                              THE BANK OF NEW YORK, AS AGENT



                              By:                         
                              Name:                    
                              Title:                   




-----END PRIVACY-ENHANCED MESSAGE-----

EX-24

                                        Exhibit 24




INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in Registration No.
33-49683 of Atlantic Energy, Inc. on Form S-3 and Registration
No. 33-53511 of Atlantic Energy, Inc. on Form S-8 and
Registration No. 33-53841 of Atlantic City Electric Company on
Form S-3 of our reports dated February 2, 1995 appearing in the
Annual Report of Form 10-K of Atlantic Energy, Inc. and Atlantic
City Electric Company for the year ended December 31, 1995.



DELOITTE & TOUCHE LLP   
Parsippany, New Jersey

March 19, 1996

EX-25

                                                    EXHIBIT 25(A)

                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ M. Holden, Jr.
                                  M. Holden, Jr.


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                                 /s/ G/ A. Hale      
                                     G. A. Hale 


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for her and in her name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in her name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as her own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                                   /s/ K. MacDonnell
                                       K. MacDonnell

                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ B. J. Morgan          
                                  B. J. Morgan



                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ H. J. Raveche                  
                                  H. J. Raveche


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  


                                          /s/ R. B. McGlynn
                                              R. B. McGlynn




                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ C. H. Holley
                                  C. H. Holley 



                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ E. D. Huggard
                                  E. D. Huggard


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ J. M. Galvin, Jr.
                                  J. M. Galvin, Jr.


                           ATLANTIC ENERGY, INC.

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 14th day of March, 1996.  



                              /s/ J. L. Jacobs
                                  J. L. Jacobs

EX-25

                                                   Exhibit 25(b)
                      ATLANTIC CITY ELECTRIC COMPANY


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                                /s/ J. L. Jacobs         
                                    J. L. Jacobs  



                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                              /s/ M. J. Chesser
                                  M. J. Chesser


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                               /s/ J. E. Franklin II
                                   J. E. Franklin II             


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                              /s/ M. I. Harlacher, Jr.
                                  M. I. Harlacher, Jr.           


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                                   /s/ H. K. Levari, Jr.
                                       H. K. Levari, Jr.


                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for him and in his name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in his name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as his own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                                /s/ M. J. Barron
                                    M. J. Barron

                      ATLANTIC CITY ELECTRIC COMPANY

                             POWER OF ATTORNEY



     The undersigned, a director or officer of Atlantic Energy,
Inc., a New Jersey corporation, does hereby appoint J. L. JACOBS,
M. J. CHESSER, M. J. BARRON AND J. E. FRANKLIN II and each of
them (with power to act without the other), including full power
of substitution and revocation, as the undersigned's true and
lawful attorneys-in-fact and agents, with full power and
authority to act in all capacities for her and in her name, place
and stead in connection with the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of
1934, as amended, of an Annual Report on Form 10-K for the year
ended December 31, 1995 and any and all amendments thereto, and
execute and deliver for the undersigned and in her name, place
and stead all such other documents or instruments and to take
such further action as they, or any of them, deem appropriate. 
The undersigned hereby ratifies and adopts as her own act and
deed the acts lawfully taken by said attorneys-in-fact and
agents, or any of them, or by their respective substitutes
pursuant to the powers and authorities granted herein. 

     IN WITNESS WHEREOF, the undersigned has executed this
document as of this 11th day of March, 1996.  



                              /s/ M. T. Powell
                                  M. T. Powell

EX-27

 

<ARTICLE> UT
<CIK> 0000806393 
<NAME>  ATLANTIC ENERGY, INC.
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1995
<PERIOD-END>                               DEC-31-1995
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                    1,801,786
<OTHER-PROPERTY-AND-INVEST>                     63,879
<TOTAL-CURRENT-ASSETS>                         243,429
<TOTAL-DEFERRED-CHARGES>                       352,813
<OTHER-ASSETS>                                       0
<TOTAL-ASSETS>                               2,461,907
<COMMON>                                        54,963
<CAPITAL-SURPLUS-PAID-IN>                      491,712
<RETAINED-EARNINGS>                            252,484
<TOTAL-COMMON-STOCKHOLDERS-EQ>                 799,159
<PREFERRED-MANDATORY>                          114,750
<PREFERRED>                                     40,000
<LONG-TERM-DEBT-NET>                           802,356
<SHORT-TERM-NOTES>                              30,545
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                       0
<LONG-TERM-DEBT-CURRENT-PORT>                   12,247
<PREFERRED-STOCK-CURRENT>                       22,250
<CAPITAL-LEASE-OBLIGATIONS>                     40,227
<LEASES-CURRENT>                                   650
<OTHER-ITEMS-CAPITAL-AND-LIAB>                 599,723
<TOT-CAPITALIZATION-AND-LIAB>                2,461,907
<GROSS-OPERATING-REVENUE>                      953,779
<INCOME-TAX-EXPENSE>                            45,876
<OTHER-OPERATING-EXPENSES>                     758,976
<TOTAL-OPERATING-EXPENSES>                     804,852
<OPERATING-INCOME-LOSS>                        148,927
<OTHER-INCOME-NET>                              11,025
<INCOME-BEFORE-INTEREST-EXPEN>                 159,952
<TOTAL-INTEREST-EXPENSE>                        61,200
<NET-INCOME>                                    98,752
<PREFERRED-STOCK-DIVIDENDS>                     14,627
<EARNINGS-AVAILABLE-FOR-COMM>                   84,125
<COMMON-STOCK-DIVIDENDS>                        81,239
<TOTAL-INTEREST-ON-BONDS>                            0
<CASH-FLOW-OPERATIONS>                         157,427
<EPS-PRIMARY>                                        0
<EPS-DILUTED>                                        0
        

 

EX-27

 

<ARTICLE> UT
<CIK>    0000008192
<NAME>   ATLANTIC CITY ELECTRIC COMPANY
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1995
<PERIOD-END>                               DEC-31-1995
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                    1,801,786
<OTHER-PROPERTY-AND-INVEST>                    216,284
<TOTAL-CURRENT-ASSETS>                         248,322
<TOTAL-DEFERRED-CHARGES>                       354,504
<OTHER-ASSETS>                                       0
<TOTAL-ASSETS>                               2,620,896
<COMMON>                                       563,436
<CAPITAL-SURPLUS-PAID-IN>                            0
<RETAINED-EARNINGS>                            249,741
<TOTAL-COMMON-STOCKHOLDERS-EQ>                 813,177
<PREFERRED-MANDATORY>                          114,750
<PREFERRED>                                     40,000
<LONG-TERM-DEBT-NET>                           829,856
<SHORT-TERM-NOTES>                              30,545
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                       0
<LONG-TERM-DEBT-CURRENT-PORT>                   65,247
<PREFERRED-STOCK-CURRENT>                       22,250
<CAPITAL-LEASE-OBLIGATIONS>                     40,227
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                 664,844
<TOT-CAPITALIZATION-AND-LIAB>                2,620,896
<GROSS-OPERATING-REVENUE>                      953,137
<INCOME-TAX-EXPENSE>                            45,876
<OTHER-OPERATING-EXPENSES>                     758,724
<TOTAL-OPERATING-EXPENSES>                     804,600
<OPERATING-INCOME-LOSS>                        148,537
<OTHER-INCOME-NET>                               9,058
<INCOME-BEFORE-INTEREST-EXPEN>                 157,595
<TOTAL-INTEREST-EXPENSE>                        61,200
<NET-INCOME>                                    81,768
<PREFERRED-STOCK-DIVIDENDS>                          0
<EARNINGS-AVAILABLE-FOR-COMM>                   81,768
<COMMON-STOCK-DIVIDENDS>                        81,088
<TOTAL-INTEREST-ON-BONDS>                            0
<CASH-FLOW-OPERATIONS>                         148,361
<EPS-PRIMARY>                                     1.55
<EPS-DILUTED>                                     1.55
        

 

EX-28

                                                   Exhibit 28(a)
INDEPENDENT AUDITORS' REPORT
                                                    
To Atlantic City Electic Company:

We have audited the accompanying consolidated balance sheets of
Atlantic City Electric Company and subsidiary as of December 31,
1995 and 1994 and the related consolidated statements of income,
changes in common shareholder's equity, and cash flows for each
of the three years in the period ended December 31, 1995.  These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Atlantic City Electric Company and subsidiary at December 31,
1995 and 1994 and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting
principles.



DELOITTE & TOUCHE LLP
Parsippany, New Jersey

February 2, 1996 



REPORT OF MANAGEMENT

The management of Atlantic City Electric Co. and its subsidiary
is responsible for the preparation of the financial statements
presented in this Annual Report.  The financial statements have
been prepared in conformity with generally accepted accounting
principles.  In preparing the financial statements, management
made informed judgments and estimates, as necessary, relating to
events and transactions reported.  

Management has established a system of internal accounting and
financial controls and procedures designed to provide reasonable
assurance as to the integrity and reliability of financial
reporting.  In any system of financial reporting controls,
inherent limitations exist.  Management continually examines the
effectiveness and efficiency of this system, and actions are
taken when opportunities for improvement are identified. 
Management believes that, as of December 31, 1995, the system of
internal accounting and financial controls over financial
reporting is effective.  Management also recognizes its
responsibility for fostering a strong ethical climate in which
the Company's affairs are conducted according to the highest
standards of corporate conduct.  This responsibility is
characterized and reflected in the Company's code of ethics and
business conduct policy.

The financial statements have been audited by Deloitte & Touche
LLP, Certified Public Accountants.  Deloitte & Touche provides
objective, independent audits as to management's discharge of its
responsibilities insofar as they relate to the fairness of the
financial statements.  Their audits are based on procedures
believed by them to provide reasonable assurance that the
financial statements are free of material misstatement.

The Company's internal auditing function conducts audits and
appraisals of the Company's operations.  It evaluates the system
of internal accounting, financial and operational controls and
compliance with established procedures.  Both the external
auditors and the internal auditors periodically make
recommendations concerning the Company's internal control
structure to management and the Audit Committee of the Board of
Directors.  Management responds to such recommendations as
appropriate in the circumstances.  None of the recommendations
made for the year ended December 31, 1995 represented significant
deficiencies in the design or operation of the Company's internal
control structure.


M. J. Chesser                                            
President and Chief Operating Officer


M. J. Barron
Senior Vice President and Chief Financial Officer

February 2, 1996

CONSOLIDATED STATEMENT OF INCOME    
(Thousands of Dollars)                           
                                     For the Years Ended December
31,
                                      1995        1994       
1993 

Operating Revenues-Electric         $953,779    $913,226   
$865,799
Operating Expenses:
Energy                               191,766     210,891    
159,438
Purchased Capacity                   190,570     130,929    
110,781
Operations                           152,277     157,047    
162,840  Maintenance                           34,414      37,662 
    45,452
Depreciation and Amortization         78,461      73,344     
67,950
State Excise Taxes                   102,811      97,072    
104,280
Federal Income Taxes                  45,876      42,529     
45,277
Other Taxes                            8,677      10,757     
10,854
Total Operating Expenses             804,852     760,231    
706,872

Operating Income                     148,927     152,995    
158,927

Other Income and Expense:
Allowance for Equity Funds Used                                   
 
 During Construction                     817       3,364      
2,368
Employee Separation Costs,                                        
      net of tax benefit of $9,265           -        (17,335)    
  -   
Litigation Settlement, net of tax            
 benefit of $1,321                      -           -        
(2,564)  Other-Net                             10,208       9,568 
     9,865
Total Other Income and Expense        11,025      (4,133)     
9,669

Income Before Interest Charges       159,952     148,862    
168,596
Interest Charges:
Interest on Long Term Debt            60,329      57,346     
59,385
Other Interest Expense                 2,550       1,114      
1,633
Total Interest Charges                62,879      58,460     
61,018
Allowance for Borrowed Funds Used        
 During Construction                  (1,679)     (2,772)    
(1,448)
Net Interest Charges                  61,200      55,688     
59,570

Net Income                          $ 98,752    $ 93,174   
$109,026
                                                           
       
Earnings for Common Stock:
Net Income                          $ 98,752    $ 93,174   
$109,026
Less Preferred Stock Dividend
Requirements                          14,627      16,716     
17,405
Income Available for Common Stock   $ 84,125    $ 76,458    $
91,621


The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.

CONSOLIDATED STATEMENT OF CASH FLOWS                                   
(Thousands of Dollars)              
                                      For the Years Ended December 31,
                                        1995       1994       1993    
Cash Flows Of Operating Activities:
Net Income                             $ 98,752   $ 93,174   $109,026
Deferred Purchased Power Costs           15,721     14,920     (6,050)
Deferred Energy Costs                   (20,435)    (3,819)   (15,269)
Depreciation and Amortization            78,461     73,344     67,950
Deferred Income Taxes-Net                15,694      6,116     16,213 
Prepaid State Excise Taxes                9,560    (40,128)   (33,706)
Net (Increase) Decrease in Other 
 Working Capital                        (31,262)   (22,913)    28,486 
Employee Separation Costs               (19,112)    26,600       -
Other-Net                                10,048      1,403      7,559
Net Cash Provided by Operating          157,427    148,697    174,209
 Activities
Cash Flows Of Investing Activities:
Construction Expenditures              (100,904)  (119,961)  (138,111)
Leased Property                         (10,446)   (10,713)    (9,946)
Decommissioning Trust Fund Deposits      (6,424)    (6,424)    (6,424)
Plant Removal Costs                      (4,525)    (8,000)    (1,943)
Other-Net                                 7,316      7,223     (3,824)
Net Cash Used by Investing Activities  (114,983)  (137,875)  (160,248)

Cash Flows Of Financing Activities:
Proceeds from Long Term Debt            104,404     53,572    464,633
Retirement and Maturity of           
 Long Term Debt                         (57,489)   (42,664)  (360,414)
Increase (Decrease) in Short Term Debt   21,945      8,600    (14,600)
Proceeds from Capital Lease 
 Obligations                             10,446     10,713      9,946
Redemption of Preferred Stock           (24,500)   (24,500)    (5,469)
Dividends                               (95,866)  (100,198)   (98,752)
Capital Contributions                        13     25,270     20,991
Other-Net                                  (869)     1,601     (1,362)
Net Cash Used by Financing Activities   (41,916)   (67,606)   (14,973)
Net Increase (Decrease) in Cash   
 and Temporary Investments                  528    (56,784)    28,934
Cash and Temporary Investments, 
 beginning of year                        3,459     60,243     31,309
Cash and Temporary Investments, 
 end of year                           $  3,987   $  3,459   $ 60,243
Supplemental Schedule of Payments:
 Interest                              $ 58,274   $ 61,035  $  51,331
 Federal income taxes                  $ 31,999   $ 32,254  $  25,809

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
CONSOLIDATED BALANCE SHEET           
(Thousands of Dollars)
                                                December 31,
                                             1995          1994  
Assets
Electric Utility Plant:
In Service:
  Production                              $1,187,169    $1,151,661     
  Transmission                               366,242       357,389
  Distribution                               691,830       659,619
  General                                    183,935       180,204
Total In Service                           2,429,176     2,348,873
Less Accumulated Depreciation                794,479       725,999
Net                                        1,634,697     1,622,874
Construction Work in Progress                119,270       110,078
Land Held for Future Use                       6,941         6,941
Leased Property-Net                           40,878        42,030
Electric Utility Plant-Net                 1,801,786     1,781,923
Investments and Nonutility Property:
Nuclear Decommissioning Trust Fund            61,802        52,004
Other                                          2,077         3,139
Total Investments and Nonutility Property     63,879        55,143
Current Assets:
Cash and Temporary Investments                 3,987         3,459
Accounts Receivable:
  Utility Service                             66,099        54,554
  Miscellaneous                               17,379        15,804
  Allowance for Doubtful Accounts             (3,300)       (3,300)
Unbilled Revenues                             41,515        32,070
Fuel (at average cost)                        25,459        28,030
Materials and Supplies (at average cost)      25,434        27,823
Working Funds                                 14,420        14,475
Deferred Energy Costs                         31,434        10,999
Deferred Income Taxes                           -           12,141
Other Prepayments                             21,002        11,760
Total Current Assets                         243,429       207,815

Deferred Debits:
Unrecovered Purchased Power Costs             99,817       115,538
Recoverable Future Federal Income Taxes       85,858        85,854
Unrecovered State Excise Taxes                64,274        73,834
Unamortized Debt Costs                        38,924        38,083
Other Regulatory Assets                       54,568        47,055
Other                                          9,372        16,071
Total Deferred Debits                        352,813       376,435
Total Assets                              $2,461,907    $2,421,316

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.


CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
                                                   December 31,
                                                1995           1994

Liabilities and Capitalization
Capitalization:
Common Shareholder's Equity:
Common Stock                                $   54,963     $   54,963
Premium on Capital Stock                       231,081        231,081
Contributed Capital                            262,762        262,749
Capital Stock Expense                           (2,131)        (2,300)
Retained Earnings                              252,484        249,767
Total Common Shareholder's Equity              799,159        796,260
Preferred Stock:                                                      
  Not Subject to Mandatory Redemption           40,000         40,000
  Subject to Mandatory Redemption              114,750        149,250
Long Term Debt                                 802,356        763,288 
Total Capitalization (excluding current                               
  portion)                                   1,756,265      1,748,798

Current Liabilities:                                                  
Preferred Stock Redemption Requirement          22,250         12,250 
Capital Lease Obligations                          650            928 
Long Term Debt - Current Portion                12,247            -
Short Term Debt                                 30,545          8,600 
Accounts Payable                                60,831         65,632 
Federal Income Taxes Payable - Affiliate        11,574          9,537
Other Taxes Accrued                              3,382          3,490
Interest Accrued                                19,961         19,048
Dividends Declared                              23,490         24,681
Accrued Employee Separation Costs                7,488         26,600
Deferred Income Taxes                            2,569            - 
Other                                           17,156         18,206 
Total Current Liabilities                      212,143        188,972 

Deferred Credits and Other Liabilities:                               
Deferred Income Taxes                          354,218        350,697
Deferred Investment Tax Credits                 49,112         51,646
Capital Lease Obligations                       40,227         41,102
Other                                           49,942         40,101  
Total Deferred Credits and Other
  Liabilities                                  493,499        483,546

Commitments and Contigencies (Note 8)

Total Liabilities and Capitalization        $2,461,907     $2,421,316




CONSOLIDATED STATEMENT OF CHANGES IN    
COMMON SHAREHOLDER'S EQUITY             
(Thousands of Dollars)
                            Premium On               Capital      
                   Common    Capital   Contributed    Stock  Retained
                   Stock      Stock      Capital     Expense Earnings
Balance,
December 31, 1992  $54,963   $231,081   $216,488   $(2,496)  $246,883
Net Income                                                    109,026
Capital stock
 expense                                                 26      (196)
Capital contritution
 from parent                              20,991                      
Less dividends 
 declared:
 Preferred                                                    (17,405)
 Common                                                       (81,347)
Balance,
December 31, 1993   54,963    231,081    237,479    (2,470)   256,961
Net Income                                                     93,174
Capital stock
 expense                                               170       (170)
Capital contribution
 from parent                              25,270                      
Less dividends
 declared:
 Preferred                                                    (16,716)
 Common                                                       (83,482)
Balance,
December 31, 1994   54,963    231,081    262,749    (2,300)   249,767
Net income                                                     98,752 
Capital stock
 expense                                               169       (169)
Capital contribution
 from parent                                  13                      
Less dividends
 declared:                                                       
Preferred                                                     (14,627)
Common                                                        (81,239)
Balance,         
December 31, 1995  $54,963   $231,081   $262,762   $(2,131)  $252,484
                                                                      


As of December 31, 1995, the Company had $25 million authorized shares
of Common Stock at $3 par value.  Shares outstanding at December 31,
1995, 1994 and 1992 were 18,320,937.   

The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements. 

Notes to Consolidated Financial Statements
Note 1. SIGNIFICANT ACCOUNTING POLICIES

Organization - Atlantic City Electric Company (the Company) is a 
wholly-owned subsidiary of Atlantic Energy, Inc.(AEI).  The Company is
a public utility primarily engaged in the generation, transmission,
distribution and sale of electric energy.  The Company's service
territory encompasses approximately 2,700 square miles within the
southern one-third of New Jersey with the majority of customers being
residential and commercial.  Deepwater Operating Company is a wholly-
owned subsidiary of the Company which operates certain generating
facilities.
   
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its subsidiary.  All
significant intercompany accounts and transactions have been
eliminated in consolidation.  

Regulation - The accounting policies and rates of service for the
Company are subject to the regulations of the New Jersey Board of
Public Utilities (BPU) and in certain respects to the Federal Energy
Regulatory Commission (FERC).  The Company follows generally accepted
accounting principles (GAAP) and financial reporting requirements
employed by all industries as specified by the Financial Accounting
Standards Board (FASB) and the Securities and Exchange Commission
(SEC).  However, accounting for rate regulated industries may depart
from GAAP applied by other industries as permitted by Statement of
Financial Accounting Standards No. 71 (SFAS No. 71).  SFAS No. 71
provides guidance on circumstances where the economic effect of a
regulator's decision warrants different applications of GAAP as a
result of the ratemaking process.  In setting rates, a regulator may
provide recovery of an incurred cost in a year or years other than the
year the cost is incurred.  As permitted by SFAS No. 71, costs ordered
by a regulator to be deferred or capitalized for future recovery are
recorded as a regulatory asset because the regulator's rate action
provides reasonable assurance of future economic benefits attributable
to these costs.  In a non-rate regulated industry, such costs may be
charged to expense in the year incurred.  SFAS No. 71 further
specifies that a regulatory liability is recorded when a regulator
orders a refund to customers of revenues previously collected, or when
existing rates provide for recovery of future costs not yet incurred. 
Such treatment is not afforded to non-rate regulated companies.  When
collection of regulatory assets or relief of regulatory liabilities is
no longer probable, the assets and liabilities are applied to income
in the year that the assessment is made.  Specific regulatory assets
and liabilities that have been recorded are discussed elsewhere in the
notes to the consolidated financial statements.

Electric Operating Revenues - Revenues are recognized when electric
energy services are rendered, and include estimates for amounts
unbilled at the end of the year for energy used by customers
subsequent to the last bill rendered for the calendar year.

Nuclear Fuel - Fuel costs associated with the Company's participation
in jointly-owned nuclear generating stations, including spent nuclear
fuel disposal costs, are charged to Energy expense based on the units
of thermal energy produced.

Electric Utility Plant - Property is stated at original cost. 
Generally, the plant is subject to a first mortgage lien.  The cost of
property additions, including replacement of units of property and
betterments, is capitalized.  Included in certain property additions
is an Allowance for Funds Used During Construction (AFDC), which is
defined in the applicable regulatory system of accounts as the cost,
during the period of construction, of borrowed funds used for
construction purposes and a reasonable rate on other funds when so
used.  AFDC has been calculated using a semi-annually compounded rate
of 8.25% since August 1, 1993.  The AFDC rate was 8.95% prior to this
date.   

Depreciation - The Company provides for straight-line depreciation
based on:  transmission and distribution property - estimated
remaining life;  nuclear property - remaining life of the related
plant operating license in existence at the time of the last base rate
case;  other depreciable property - estimated average service life. 
The overall composite rate of depreciation was 3.3% for the last three
years.  Accumulated depreciation is charged with the cost of
depreciable property retired together with removal costs less salvage
and other recoveries.  

Nuclear Plant Decommissioning Reserve -  A reserve for decommissioning
costs is presented as a component of accumulated depreciation and
amounted to $60.9 million and $51.1 million at December 31, 1995 and
1994, respectively.  

The SEC has questioned certain accounting practices employed by the
electric utility industry concerning decommissioning costs for nuclear
generating facilities.  The FASB is currently reviewing this issue
within the broad context of removal costs relative to all industries. 
At this time, the Company cannot predict what future accounting
practices may be required by the FASB and SEC concerning this issue,
or the impact on future financial statements, that any new accounting
practices may have.
  
Deferred Energy Costs - As approved by the BPU, the Company has a
Levelized Energy Clause (LEC) through which energy and energy-related
costs (energy) are charged to customers.  LEC rates are based on
projected energy costs and prior period underrecoveries or
overrecoveries.  Generally, energy costs are recovered through
levelized rates over the period of projection, which is usually a 12-
month period.  In any period, the actual amount of LEC revenues
recovered from customers may be greater or less than the recoverable
amount of energy costs incurred in that period.  Energy expense is
adjusted to match the associated LEC revenues.  Any underrecovery (an
asset representing energy costs incurred that are to be collected from
customers) or overrecovery (a liability representing previously
collected energy costs to be returned to customers) of costs is
deferred on the Consolidated Balance Sheet as Deferred Energy Costs. 
These deferrals are recognized in the Consolidated Statement of Income
as Energy expense during the period in which they are subsequently
included in the LEC.  The Company may elect to forgo recovery of
certain amounts of otherwise recoverable energy costs.  Such amounts
are expensed.

Income Taxes - Deferred Federal income taxes are provided on all
significant temporary differences between book bases and tax bases of
assets and liabilities, transactions that reflect taxable income in a
year different than book income, and tax carryforwards.  Investment
tax credits previously used for income tax purposes have been deferred
on the Consolidated Balance Sheet and are recognized in book income
over the life of the related property.  The Company files a
consolidated Federal income tax return with AEI.  An agreement with
AEI provides for allocation to the Company of tax liabilities or
benefits generated by the Company based on the separate return method.

Related Party Transactions - The Company has a contract for a total of
106 MWS of capacity and related energy from a cogeneration facility
that is 50% owned by a wholly-owned subsidiary of Atlantic Energy
Enterprises, Inc. (AEE), which is a wholly-owned subsidiary of AEI. 
Capacity costs totaled $23.8 million in 1995 and $23.0 million in 1994
and 1993. The Company sells electricity to subsidiaries of AEE.  The
Company also rents office space from a wholly-owned subsidiary of AEE. 
The electric sales recorded and the rents paid are not significant to
the Consolidated Income Statement.  The amounts receivable from and
payable to affiliates for such transactions were not significant at
December 31, 1995 and 1994.

Financial Instruments - A number of items within Current Assets and
Current Liabilities on the Consolidated Balance Sheet are considered
to be financial instruments because they are cash or are to be settled
in cash.  Due to their short term nature, the carrying values of these
items approximate their fair market values.  Accounts Receivable -
Utility Service and Unbilled Revenues are subject to concentration of
credit risk because they pertain to utility service conducted within a
fixed geographic region.  

Other - Debt premium, discount and expense are amortized over the life
of the related debt.  Temporary investments considered as cash
equivalents for Consolidated Statement of Cash Flows purposes
represent purchases of highly liquid debt instruments maturing in
three months or less.  The Company's weighted daily average interest
rate on short term debt was 6.3% for 1995 and 4.4% for 1994.  

The preparation of financial statements in conformity with GAAP
requires management at times to make certain judgments, estimates and
assumptions that affect amounts and matters reported at the year end
dates and for the annual periods presented.  Actual results could
differ from those estimates.  Any change in the judgments, estimates
and assumptions used, which in management's opinion would have a
significant effect on the financial statements, will be reported when
management becomes aware of such changes.

New Accounting Standards - The FASB issued two new statements in 1995 -
 Statement No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" and Statement No. 123
"Accounting for Stock-Based Compensation".  Both statements are
effective for the Company in 1996.  Statement No. 121 primarily
concerns accounting for the impairment and disposal of property, plant
and equipment.  Statement No. 123 permits a fair value-based method to
account for stock-based compensation as an alternative to the
intrinsic value-based method that is currently permitted.  The Company
currently employs stock-based compensation which has not had a
material impact on the financial statements.  Should the Company elect
to continue to use the intrinsic value-based method to account for
stock-based compensation, the statement requires, if material, certain
disclosures as if the fair value-based method was used.  The Company
has not yet fully assessed the impacts on its financial statements of
the requirements of these new accounting standards. 

Certain prior year amounts have been reclassified to conform to the
current year reporting of these items.

NOTE 2.  INCOME TAXES
The components of Federal income tax expense for the years ended
December 31 are as follows:
                                      
(000)                                  1995        1994        1993   
Current                             $ 32,457    $ 30,013    $ 29,679
Deferred                              15,694       6,116      16,214
Total Federal Income Tax Expense      48,151      36,129      45,893
Less Amounts in Other Income           2,275      (6,400)        616
Federal Income Taxes in 
 Operating Expenses                 $ 45,876    $ 42,529    $ 45,277

A reconciliation of the expected Federal income taxes compared to the
reported Federal income tax expense computed by applying the statutory
rate for the years ended December 31 follows:
                                       1995        1994        1993
Statutory Federal Income Tax Rate       35%         35%         35%
(000)
Income Tax Computed at the           
 Statutory Rate                     $ 51,417    $ 45,256    $ 54,221
Plant Basis Differences                1,307         (27)     (5,171)
Amortization of Investment Tax
 Credits                              (2,534)     (2,534)     (2,534)
Tax Adjustments                           -       (4,874)       (750)
Other-Net                             (2,039)     (1,692)        127
Total Federal Income Tax Expense    $ 48,151    $ 36,129    $ 45,893
Effective Federal Income Tax Rate       33%         28%         30%

Items comprising deferred tax balances as of December 31 are as
follow: 
(000)                                 1995         1994    
Deferred Tax Liabilities:
Plant Basis Differences             $316,834     $304,476
Unrecovered Purchased Power Costs     28,209       33,557
State Excise Taxes                    22,527       25,842 
Other                                 29,519       22,573
 Total Deferred Tax Liabilities      397,089      386,448
Deferred Tax Assets:
Deferred Investment Tax Credits       26,511       27,879
Employee Separation Costs              2,621        6,932
Other                                 11,169       13,081
 Total Deferred Tax Assets            40,301       47,892
Total Deferred Taxes-Net            $356,788     $338,556

Deferred tax costs associated with additional deferred tax
liabilities resulting from a prior year accounting change are
recorded on the Consolidated Balance Sheet as Recoverable Future
Federal Income Taxes.  This recognition is given for the probable
amount of revenue to be collected from ratepayers for these
additional taxes to be paid in future years.

NOTE 3.  RATE MATTERS    

Energy Clause Proceedings

              Changes in Levelized Energy Clause Rates
                            1993 - 1995
                              
                    Amount            Amount             
     Date         Requested          Granted            Date
     Filed        (millions)        (millions)        Effective

     3/93            $14.2             $10.9            10/93
     2/94             63.0              55.0             7/94
     4/95             37.0              37.0             7/95

The Company's Levelized Energy Clause (LEC) is subject to annual
review by the BPU.

In March 1993, the Company filed a petition with the BPU
requesting a $14.2 million increase in LEC revenues for the June
1, 1993 through May 31, 1994 LEC period.  Effective for service
rendered on and after October 1, 1993, the BPU approved an
increase of $10.9 million.  The request was reduced primarily to
return to customers an additional 25%, or $3.8 million, of a
$15.5 million litigation settlement with the operator of the
Peach Bottom Atomic Power Station.     

On February 8, 1994, the Company filed a petition with the BPU
requesting an increase in LEC revenues of $63 million for the
period June 1, 1994 through May 31, 1995.  The increase was
primarily due to the additional costs incurred from two new
independent power producers (IPPs) scheduled to begin commercial
operation during the 1994/1995 LEC period.  The requested amount
was reduced by $84 million as a result of the utilization of $56
million of current base rate revenues associated with a utility
power purchase contract expiring in May 1994 and the Southern New
Jersey Economic Initiative (SNJEI), a Company initiative that
forgoes the recovery of $28 million of energy costs that the
Company will incur during the LEC period.  On November 30, 1994,
the BPU rendered its final decision approving the continuation of
a provisional LEC rate increase of $55 million that had been in
effect since July 26, 1994.       

On April 17, 1995, the Company filed a petition with the BPU
requesting a $37 million increase in LEC revenues for the period
June 1, 1995 through May 31, 1996.  This filing represents the
first that includes a full year of costs for capacity and energy
with all four of the IPPs with which the Company is under
contract.  The requested amount had been reduced by the Company
from $67.6 million by forgoing $10 million in LEC revenues under
the SNJEI and deferring $20.6 million of LEC costs that the
Company will incur during the 1995/1996 LEC period for recovery
in a future LEC period.  Effective July 7, 1995, the BPU approved
a provisional increase of $37 million effective for service
rendered on and after July 7, 1995.  On November 15, 1995, the
Administrative Law Judge (ALJ) recommended that the provisional
rates be made final.  On December 1, 1995, the Ratepayer
Advocate, the BPU Staff and the Company agreed to a stipulation
recommending that the ALJ's findings be accepted by the BPU.  A
final decision is expected from the BPU by the end of March 1996.

Other Rate Proceedings

In November 1993, the Company filed a petition with the BPU
requesting that hotel-casino customers be permitted to take
service under rate schedules offered to all other commercial and
industrial customers.  On June 23, 1994, the BPU approved the
request.  Prior to BPU approval, hotel-casino customers were
served under the Hotel Casino Service rate schedule, the highest
rate for service of all the Company's service classes.  Effective
July 1, 1994, all hotel-casino customers began taking service
under a general service rate schedule.  The effect of this change
was not material to the results of operations. 
   
On September 14, 1994, the BPU issued an order supporting the
investigation of the double recovery of capacity costs from
nonutility generation projects.  This issue relates to the
Ratepayer Advocate's allegation that the Company, along with
other New Jersey electric utility companies, is recovering
cogeneration capacity costs concurrently in base rates and LEC
rates.  The order confirmed the establishment of a generic
proceeding to review the nonutility capacity cost recovery
methodology and ordered that the matter be reviewed in a two
phase proceeding.  The scope of the issues to be resolved during
the first phase of the proceeding include:  1) the determination
of the existence, or lack of existence, of the double recovery as
a result of the traditional LEC pass-through of nonutility
generation capacity costs;  2) the quantification of any double
recovery found to exist for each utility for the relevant
periods;  3) a determination of an appropriate remedy or
adjustment if double recovery is found to occur and the periods
of time over which an adjustment would be applicable.  Following
the conclusion of the first phase of the proceeding, the BPU, in
the second phase, will render a final decision regarding the
specific findings of the Office of Administrative Law and address
the broader issues relating to the appropriate prospective
purchase power capacity cost recovery methods.  In September
1995, the Ratepayer Advocate filed testimony that claims the
Company's overrecovery of capacity costs for the four-year period
June 1991 through May 1995 is $46 million.  The Ratepayer
Advocate also filed testimony supporting similar claims for other
New Jersey electric utilities.  In December 1995, the Company and
the other electric utilities filed testimony rebutting the
Ratepayer Advocate's claims.  Litigation is expected to continue
in 1996; the BPU's final decision is not expected until the
latter part of 1996.  At this time, the Company cannot predict
the outcome of this proceeding and cannot estimate the impact
that the double recovery issue may have on future rates.

NOTE 4.  RETIREMENT BENEFITS

Pension

The Company has a noncontributory defined benefit pension plan
covering substantially all of its employees and those of its
wholly-owned subsidiary.  Benefits are based on an employee's
years of service and average final pay.  The Company's policy is
to fund pension costs within the guidelines of the minimum
required by the Employee Retirement Income Security Act and the
maximum allowable as a tax deduction.  Each company is allocated
its participative share of plan costs and contributions.

Net periodic pension costs include:
(000)                                  1995      1994      1993
Service cost-benefits earned  
 during the period                  $  6,363  $  6,871  $  7,196
Interest cost on projected benefit                                
 obligation                           14,794    15,390    16,016
Actual return on plan assets         (44,067)     (860)  (23,200)    
Other-net                             28,379   (16,885)    5,496  
Net periodic pension costs          $  5,469  $  4,516  $  5,508  




Of these costs, $3.0 million were charged to operating expense in both
1995 and 1994 and $5.2 million in 1993.  The remaining costs, which
are associated with construction labor, were charged to the cost of
new utility plant.  Actual return on plan assets and other-net for
1995 primarily reflect the favorable market conditions from the
investment of plan assets and expected returns versus the unfavorable
market conditions in 1994.    

A reconciliation of the funded status of the plan as of December 31 is
as follows:
(000)                                  1995          1994      
Fair value of plan assets            $212,000      $190,200     
Projected benefit obligation          213,470       206,742     
Plan assets less than           
 projected benefit obligation          (1,470)      (16,542)    
Unrecognized net transition asset      (1,550)       (1,722)   
Unrecognized prior service cost           282           306
Unrecognized net loss                  10,006        24,106    
Prepaid pension cost                 $  7,268      $  6,148     
Accumulated benefit obligation:
Vested benefits                      $169,044      $166,602     
Nonvested benefits                      3,413           485     
Total                                $172,457      $167,087         

At December 31, 1995, approximately 65% of plan assets were invested
in equity securities, 21% in fixed income securities and 14% in other
investments.  The assumed rates used in determining the actuarial
present value of the projected benefit obligation at December 31 were
as follows:
                                         1995       1994
Weighted average discount                7.0%       7.5%
Anticipated increase in compensation     3.5%       3.5%

The assumed long term rate of return on plan assets was 8.5% for both
1995 and 1994.

Other Postretirement Benefits 

The Company and its subsidiary provide certain health care and life
insurance benefits for retired employees and their eligible
dependents.  Substantially all employees may become eligible for these
benefits if they reach retirement age while working for the companies. 
Benefits are provided through insurance companies and other plan
providers whose premiums and related plan costs are based on the
benefits paid during the year.  The Company has a tax qualified trust
to fund these benefits.  Each company is allocated its participative
share of plan costs and contributions.  

Net periodic other postretirement benefit costs include:
(000)                                  1995        1994        1993  
Service cost-benefits attributed to 
 service during the period           $ 2,891     $ 3,817     $ 3,045
Interest cost on accumulated 
 postretirement benefits obligation    8,107       8,450       7,133
Actual return on plan assets          (1,437)        100        (255) 
Amortization of unrecognized 
 transition obligation                 3,893       3,893       3,893
Other-net                                404        (700)       (711)
Net periodic other postretirement 
  cost                               $13,858     $15,560     $13,105  
These costs were allocated as follows:
(millions)                                 1995     1994     1993
Operating expense                          $5.0     $5.6     $3.3
New utility plant-associated with   
 construction labor                          .6       .2      1.7
Regulatory asset                            8.3      9.8      8.1

The regulatory asset represents the amount of cost recognized in
excess of the amount of cost currently recovered in rates.  These
excess costs are deferred as authorized by an accounting order of the
BPU pending future recovery through rates.   

A reconciliation of the funded status of the plan as of December 31 is
as follows:
(000)                                        1995         1994   
Accumulated benefits obligation:
Retirees                                  $ 64,516     $ 43,265 
Fully eligible active plan participants      6,954       18,010 
Other active plan participants              33,649       60,588 
Total accumulated benefits obligation      105,119      121,863 
Less fair value of plan assets              16,500       14,700 
Accumulated benefits obligation in      
 excess of plan assets                      88,619      107,163 
Unrecognized net loss                      (15,335)     (19,223)
Unamortized unrecognized transition 
 obligation                                (47,057)     (70,075)
Accrued other postretirement benefits      
 cost obligation                          $ 26,227     $ 17,865

The accumulated benefit obligation for retirees and other active plan
participants for 1995 reflect the impact of the Company's workforce
reduction program and a lower discount rate effective in 1995.  The
unamortized unrecognized transition obligation for 1995 was reduced by
certain changes to the plan.

At December 31, 1995, approximately 80% of plan assets were invested
in fixed income securities and 20% in other investments.

The assumed health care costs trend rate for 1996 is 9% and is assumed
to evenly decline to an ultimate constant rate of 5% in the year 2001
and thereafter.  If the assumed health care costs trend rate was
increased by 1% in each future year, the aggregate service and
interest costs of the 1995 net periodic benefits cost would increase
by $1.8 million, and the accumulated postretirement benefits
obligation at December 31, 1995 would increase by $12.1 million.  The
weighted average discount rate assumed in determining the accumulated
benefits obligation was 7% for 1995 and 7.5% for 1994.  The assumed
long term return rate on plan assets was 7% for both 1995 and 1994. 

NOTE 5.  JOINTLY-OWNED GENERATING STATIONS

The Company owns jointly with other utilities several electric
production facilities.  The Company is responsible for its pro-rata
share of the costs of construction, operation and maintenance of each
facility.

The amounts shown represent the Company's share of each facility at,
or for the year ending, December 31, including AFDC as appropriate.    
                                       Peach                  Hope
              Keystone   Conemaugh     Bottom      Salem      Creek   
Energy Source   Coal        Coal      Nuclear     Nuclear    Nuclear
Company's Share
 (%/MWs)      2.47/42.3  3.83/65.4   7.51/157.0  7.41/164.0  5.00/52.0

Electric Plant in Service (000):
1995           $12,719    $35,371     $128,398    $214,306   $239,499
1994            11,293     26,607      125,003     206,804    238,980

Accumulated Depreciation (000):
1995           $ 3,277    $ 6,445     $ 58,870    $ 84,611   $ 60,998
1994             3,180      6,237       55,190      79,898     53,746

Construction Work in Progress (000):
1995           $   442    $   873     $ 11,056    $ 11,198   $    655
1994             1,216      2,649       11,002       8,727        387

Operations and Maintenance Expenses (including fuel)(000):
1995           $ 5,143    $ 7,252     $ 29,647    $ 28,306   $ 10,360
1994             5,085      7,211       29,530      27,731     10,471 
1993             5,323      6,855       31,479      27,021      9,764

Working Funds (000):
1995           $    44    $    69     $  4,505    $  5,782   $  1,919
1994                44         69        5,051       5,199      2,013

Generation (MWHr):
1995           285,899    451,211    1,232,921     334,572    352,316 
1994           257,561    419,313    1,214,776     836,725    355,390
1993           293,876    416,263    1,043,485     840,043    440,118

The Company provides financing during the construction period for its
share of the jointly-owned facilities and includes its share of direct
operations and maintenance expenses in the Consolidated Statement of
Income.  Additionally, the Company provides an amount of working funds
to the operators of the facilities to fund operational needs.  

The decrease in Salem's generation is due to both units being taken
out of service in May and June 1995, respectively, by its operator
Public Service Electric and Gas Company, pending review and resolution
of certain equipment and management issues. (See Note 8 for further
information).

NOTE 6.  CUMULATIVE PREFERRED STOCK 

The Company has authorized 799,979 shares of Cumulative Preferred
Stock, $100 Par Value, two million shares of No Par Preferred Stock
and three million shares of Preference Stock, No Par Value. 
Information relating to outstanding shares at December 31 is shown in
the table below.
                                                                       
                                                             Current
                                                             Optional
         Par            1995                    1994        Redemption 
Series  Value     Shares     (000)        Shares     (000)    Price    
Not Subject to Mandatory Redemption:
4%       $100      77,000   $ 7,700        77,000   $ 7,700   $105.50
4.10%     100      72,000     7,200        72,000     7,200    101.00
4.35%     100      15,000     1,500        15,000     1,500    101.00
4.35%     100      36,000     3,600        36,000     3,600    101.00
4.75%     100      50,000     5,000        50,000     5,000    101.00
5%        100      50,000     5,000        50,000     5,000    100.00
7.52%     100     100,000    10,000       100,000    10,000    101.88
Total                       $40,000                 $40,000
Subject to Mandatory Redemption:
$8.25     None     50,000  $  5,000        55,000  $  5,500    104.45
$8.53     None    120,000    12,000       360,000    36,000    101.00
$8.20     None    500,000    50,000       500,000    50,000       -
$7.80     None    700,000    70,000       700,000    70,000       -
Total                       137,000                 161,500
Less portion due within
 one year                    22,250                  12,250
Total                      $114,750                $149,250            
                                                                    

Cumulative Preferred Stock Not Subject to Mandatory Redemption is
redeemable solely at the option of the Company.

On November 1 of each year, 2,500 shares of the $8.25 No Par Preferred
Stock must be redeemed through the operation of a sinking fund at a
redemption price of $100 per share.  The Company may redeem not more
than an additional 2,500 shares on any sinking fund date without
premium.  The Company redeemed 5,000 shares in each of the years 1995
and 1994.

On November 1 of each year, 120,000 shares of the $8.53 No Par
Preferred Stock must be redeemed through the operation of a sinking
fund at a redemption price of $100 per share.  At the option of the
Company, not more than an additional 120,000 shares may be redeemed on
any sinking fund date without premium.  The Company redeemed 240,000
shares in each of the years 1995 and 1994.  The Company redeemed the
remainder of this series at a price of $101.00 in February 1996.  

Beginning August 1, 1996 and annually thereafter, 100,000 shares of
the $8.20 No Par Preferred Stock must be redeemed through the
operation of a sinking fund at a redemption price of $100 per share. 
At the option of the Company, not more than an additional 100,000
shares may be redeemed on any sinking fund date without premium.  This
series is not refundable prior to August 1, 2000.    

Beginning May 1, 2001 and annually through 2005, 115,000 shares of
$7.80 No Par Preferred Stock must be redeemed through the operation of
a sinking fund at a redemption price of $100 per share.  On May 1,
2006, the remaining shares outstanding must be redeemed at $100 per
share.  The Company has the option to redeem up to an additional
115,000 shares without premium on each May 1 through 2005.  This
series is not refundable prior to May 1, 2006.  

At December 31, 1995, the minimum annual sinking fund requirements of
the Cumulative Preferred Stock Subject to Mandatory Redemption for the
next five years are $22.25 million in 1996 and $10.25 million in each
of the years 1997 through 2000.

Cumulative Preferred Stock of the Company is not widely held and
trades infrequently.  The estimated aggregate fair market value of the
Company's outstanding Cumulative Preferred Stock at December 31, 1995
and 1994 was approximately $172 million and $185 million,
respectively.  The fair market value has been determined using market
information available from actual trades of similar instruments of
companies with similar credit quality and rate.

NOTE 7.  LONG TERM DEBT                                                
                      Maturity        December 31,    Series          
                          Date         1995       1994    (000)
5-1/8% First Mortgage Bonds          2/1/1996    $  9,980   $  9,980
Medium Term Notes Series B (6.28%)   1998          56,000     56,000
Medium Term Notes Series A (7.52%)   1999          30,000     30,000
Medium Term Notes Series B (6.83%)   2000          46,000     46,000
Medium Term Notes Series C (6.86%)   2001          40,000        -
7-1/2% First Mortgage Bonds          4/1/2002      20,000     20,000
Medium Term Notes Series C (7.02%)   2002          30,000        -
Medium Term Notes Series B (7.18%)   2003          20,000     20,000
7-3/4% First Mortgage Bonds          6/1/2003      29,976     29,976
Medium Term Notes Series A (7.98%)   2004          30,000     30,000
Medium Term Notes Series B (7.125%)  2004          28,000     28,000
Medium Term Notes Series C (7.15%)   2004           9,000        -
Medium Term Notes Series B (6.45%)   2005          40,000     40,000
6-3/8% Pollution Control            12/1/2006       2,500      2,500
Medium Term Notes Series C (7.15%)   2007           1,000        -
Medium Term Notes Series B (6.76%)   2008          50,000     50,000
Medium Term Notes Series C (7.25%)   2010           1,000        -
10-1/2% Pollution Control Series B   7/15/2012        -          850
6-5/8% First Mortgage Bonds          8/1/2013      75,000     75,000
7-3/8% Pollution Control Series A    4/15/2014     18,200     18,200
Medium Term Notes Series C (7.63%)   2014           7,000        -
Medium Term Notes Series C (7.68%)   2015          15,000        -
Medium Term Notes Series C (7.68%)   2016           2,000        -
8-1/4% Pollution Control Series A    7/15/2017      4,400      4,400
9-1/4% First Mortgage Bonds         10/1/2019         -       53,857
6.80% Pollution Control Series A     3/1/2021      38,865     38,865
7%    First Mortgage Bonds           9/1/2023      75,000     75,000
5.60% Pollution Control Series A    11/1/2025       4,000      4,000
7%    First Mortgage Bonds           8/1/2028      75,000     75,000
6.15% Pollution Control Series A     6/1/2029      23,150     23,150
7.20% Pollution Control Series A    11/1/2029      25,000     25,000
7%    Pollution Control Series B    11/1/2029       6,500      6,500
 Total                                            812,571    762,278  
Debentures:
5-1/4%                               2/1/1996       2,267      2,267
7-1/4%                               5/1/1998       2,619      2,619
Total                                               4,886      4,886  
Unamortized Premium and Discount-Net               (2,854)    (3,876)
Total Long Term Debt of ACE                       814,603    763,288
Less Portion Due within One Year                   12,247       -     
                                                 $802,356   $763,288 

Medium Term Notes have varying maturity dates and are shown with the
weighted average interest rate of the related issues within the year
of maturity.


In 1995, the Company redeemed its 10-1/2% Pollution Control Bonds
Series B due 7/15/2012 and the remaining outstanding principal amount
of its 9-1/4% First Mortgage Bonds due 10/1/2019.  The aggregate cost
of these redemptions was $2.6 million, net of related Federal income
taxes.

Sinking fund deposits are required for retirement of First Mortgage
Bonds, 6-3/8% Pollution Control Series due 2006 annually beginning
December 1, 1997 in amounts sufficient to redeem $75 thousand
principal amount.  Sinking fund deposits are also required for
retirement of 7-1/4% Debentures annually on May 1 through 1997 in
amounts sufficient to redeem $100 thousand principal amount.  The
Company may, at its option, redeem an additional $100 thousand
annually.  Through December 31, 1995, the Company acquired and
cancelled $81 thousand principal amount of the 7-1/4% Debentures,
which will be used to satisfy its requirements for 1996.  Certain
series of First Mortgage Bonds contain provisions for deposits of cash
or certification of bondable property currently amounting to $100
thousand, which the Company may elect to satisfy through property
additions.  For the next five years, the annual amount of scheduled
maturities and sinking fund requirements of the Company's long term
debt are $12.266 million in 1996, $175 thousand in 1997, $58.575
million in 1998, $30.075 million in 1999 and $46.075 million in 2000. 

The Company's long term debt securities are not widely held and
generally trade infrequently.  The estimated aggregate fair market
value of the Company's outstanding long term debt at December 31, 1995
and 1994 was $851 million and $693 million, respectively.  The fair
market value has been determined based on quoted market prices for the
same or similar debt issues or on debt instruments of companies with
similar credit quality, coupon rates and maturities.


NOTE 8.  COMMITMENTS AND CONTINGENCIES

Construction Program

Cash construction expenditures for 1996 are estimated to be
approximately $92 million.  

Insurance Programs

Nuclear
The Company is a member of certain insurance programs that provide
coverage for decontamination and property damage to members' nuclear
generating plants.  Facilities at the Peach Bottom, Salem and Hope
Creek stations are insured against property damage losses up to $2.75
billion per site under these programs.

In addition, the Company is a member of an insurance program which
provides coverage for the cost of replacement power during prolonged
outages of nuclear units caused by certain specific conditions.  The
insurer for nuclear extra expense insurance provides stated value
coverage for replacement power costs incurred in the event of an
outage at a nuclear unit resulting from physical damage to the nuclear
unit.  The stated value coverage is subject to a deductible period of
the first 21 weeks of any outage.  Limitations of coverage include,
but are not limited to, outages 1) not resulting from physical damage
to the unit, 2) resulting from any government mandated shutdown of the
unit, 3) resulting from any gradual deterioration, corrosion, wear and
tear, etc. of the unit, 4) resulting from any intentional acts
committed by an insured and 5) resulting from certain war risk
conditions.  Under the property and replacement power insurance
programs, the Company could be assessed retrospective premiums in the
event the insurers' losses exceed their reserves.  As of December 31,
1995, the maximum amount of retrospective premiums the Company could
be assessed for losses during the current policy year was $6.4 million
under these programs.

The Price-Anderson provisions of the Atomic Energy Act of 1954, as
amended by the Price-Anderson Amendments Act of 1988, govern liability
and indemnification for nuclear incidents.  All nuclear facilities
could be assessed, after exhaustion of private insurance, up to
$79.275 million each reactor per incident, payable at $10 million per
year.  Based on its ownership share of nuclear facilities, the Company
could be assessed up to an aggregate of $27.6 million per incident. 
This amount would be payable at an aggregate of $3.48 million per
year, per incident.

Other

The Company's comprehensive general liability insurance provides
pollution liability coverage, subject to certain terms and limitations
for environmental costs incurred in the event of bodily injury or
property damage resulting from the discharge or release of pollutants
into or upon the land, atmosphere or water.  Limitations of coverage
include any pollution liability 1) resulting subsequent to the
disposal of such pollutants, 2) resulting from the operation of a
storage facility of such pollutants, 3) resulting in the formation of
acid rain, 4) caused to property owned by an insured and 5) resulting
from any intentional acts committed by an insured.

Nuclear Plant Decommissioning 

The Company has a trust to fund the future costs of decommissioning
each of the five nuclear units in which it has an ownership interest. 
The current annual funding amount, as authorized by the BPU, totals
$6.4 million and is provided for in rates charged to customers.  The
funding amount is based on estimates of the future cost of
decommissioning each of the units, the dates that decommissioning
activities are expected to begin and return to be earned by the assets
of the fund.  The present value of the Company's nuclear
decommissioning obligation, based on costs adopted by the BPU in 1991
and restated in 1995 dollars, is $157 million.  Decommissioning
activities as approved by the BPU were expected to begin in 2006 and
continue through 2032.  The Company will seek to adjust these
estimates and the level of rates collected from customers in future
BPU proceedings to reflect changes in decommissioning cost estimates
and the expected levels of inflation and interest to be earned by the
assets in the trust.  The total estimated value of the trust at
December 31, 1995, inclusive of the present value of future funding,
based on current annual funding amounts and expected decommissioning
dates approved by the BPU, is approximately $131 million, without
earnings on or appreciation of the fund assets.  As of December 31,
1995, the market value of the trust approximated the book value.  In
accordance with BPU requirements, updated site specific studies are
underway.  Amounts to be recognized and recovered in rates based on
the updated studies are not presently determinable.

Purchased Capacity and Energy Arrangements

The Company arranges with various providers of bulk energy to obtain
sufficient supplies of energy to satisfy current and future energy
requirements of the company.  Arrangements may be for generating
capacity and associated energy or for energy only.  Terms of the
arrangements vary in length to enable the Company to optimally manage
its supply portfolio in response to changing near and long term market
conditions.  At December 31, 1995, the Company has contracted for 707
megawatts (MW's) of purchased capacity with terms remaining of 3 to 29
years.  Additionally, the Company has contracted for capacity of 125
MW's commencing in 1998 for 2 years and for 175 MW's commencing in
1999 for 10 years.

Information regarding these arrangements relative to the Company was
as follows:
                               1995        1994        1993     
As a % of Capacity (year end)     30%         29%         23%  
As a % of Generation              52%         48%         46%  
Capacity charges (millions)   $190.6      $130.9      $110.8  
Energy charges (millions)     $135.4      $128.6       $98.3
    
Amounts for purchased capacity are shown on the Consolidated Statement
of Income as Purchased Capacity.  Of these amounts, charges of certain
nonutility providers are recoverable through the LEC, which amounted
to $162.7 million, $77.0 million and $30.2 million in 1995, 1994 and
1993, respectively.  Future purchases of energy and payments for
purchased capacity and energy under contracts with remaining terms in
excess of one year from December 31, 1995 generally are contingent
upon provider performance and availability, and as such are not
presently determinable.

Environmental Matters

The provisions of Title IV of the Clean Air Act Amendments of 1990
(CAAA) will require, among other things, phased reductions of sulfur
dioxide (SO2) emissions by 10 million tons per year, a limit on SO2
emissions nationwide by the year 2000 and reductions in emissions of
nitrogen oxides (NOx) by approximately 2 million tons per year.  The
Company's wholly-owned B.L. England Units 1 and 2 and its jointly-
owned Conemaugh Station Units 1 and 2 are in compliance with Phase I
requirements as the result of recent installation of scrubbers at each
station.  All of the Company's other fossil-fuel steam generating
units are affected by Phase II (2000) of the CAAA.  A compliance plan
for these units initially estimates capital expenditures of
approximately $10 million in 1996 through 2000.  The jointly-owned
Keystone Station is impacted by the SO2 and NOx provisions of Title IV
of the CAAA during Phase II.  The Keystone owners plan to primarily
rely on emission allowances to comply with the CAAA through the year
2000.  

Other

The Company is a 7.41% owner of the Salem Nuclear Generating Station
(Salem) operated by Public Service Electric & Gas Company (PS). Salem
Units 1 and 2 were taken out of service on May 16, 1995 and June 7,
1995, respectively.  Unit 2 is expected to return to service in the
third quarter of 1996.  A thorough assessment of the equipment and
management issues that have affected the operation of the unit and
station are being resolved and necessary corrections are being made to
assure safe and reliable operation over the long term.  Unit 1 is
undergoing extended testing of its steam generation equipment and its
return has been delayed to an indefinite period.  The Company's
expenses associated with restart activities totalled $2.6 million for
1995 and are estimated to be $5.6 million for 1996.  The additional
incremental cost of replacement power during the outages is
approximately $1.4 million per month.

The Company is a 5% owner in the Hope Creek Nuclear Generating Station
(Hope Creek) also operated by PS.  Hope Creek went into a scheduled
refueling and maintenance outage on November 11, 1995 which has been
extended to correct maintenance and performance problems.  The unit is
expected to return to service in March 1996.  The incremental
replacement power costs associated with the Hope Creek outage is
approximately $400 thousand per month.  

The Company is subject to a performance standard for its five
jointly-owned nuclear units.  This standard is used by the BPU in
determining recovery of replacement energy costs.  The standard
establishes a target aggregate capacity factor within a zone of
reasonable performance to be achieved by the units.  Underperformance
results in penalties.  Penalties incurred are not permitted to be
recovered from customers and are charged against income.  For 1995,
the Company recorded $845 thousand after tax for a performance penalty
because the aggregate capacity factor of the Company's nuclear units
was below the reasonable performance zone as a result of the Salem
outage noted above. 
   
In December 1994, the Company recorded the costs of an employee
separation program in the amount of $17.3 million, net of tax of $9.3
million, or $.32 in earnings per share.  This program was initiated so
that the Company could be better positioned for the more competitive
environment within the electric industry.  The balance of the accrued
separation costs on the Consolidated Balance Sheet at December 31,
1995 is $7.5 million compared to $26.6 million at December 31, 1994. 
The Company expects payments in settlement of this obligation to be
substantially completed by the end of 1996.

The Energy Policy Act of 1992 permits the Federal government to assess
investor-owned electric utilities that have ownership interests in
nuclear generating facilities.  The assessment funds the
decontamination and decommissioning of three Federally operated
nuclear enrichment facilities.  Based on its ownership in five nuclear
generating units, the Company has a liability of $6.0 million and $6.6
million at December 31, 1995 and 1994, respectively, for its
obligation to be paid over the next 12 years.  The Company has an
associated regulatory asset of $6.4 million and $7.2 million at
December 31, 1995 and 1994, respectively.  Amounts are currently being
recovered in rates for this liability and the regulatory asset is
concurrently being amortized to expense based on the annual assessment
billed by the Federal government.

In March 1995, FERC issued a Notice of Proposed Rulemaking regarding
several key electric utility industry issues such as transmission
access, transmission pricing and recovery guidelines for stranded
costs stemming from wholesale transactions.  The focus of the proposal
is to establish policies that will provide a structure to facilitate
more competitive wholesale electric power markets.  What is being
proposed is a departure from the existing regulatory framework.  FERC
is considering comments on the proposal submitted by the Company and
other members of the industry, as well as other interested parties. 
Associated with the FERC proposal are structural initiatives by the
BPU concerning New Jersey electric regulation and by the regional
power pool in which the Company participates regarding bulk power
transmission and generation dispatch within the region.  At this time,
the Company cannot predict the outcomes of these sweeping initiatives
and the impacts on the Company that may ensue.  The Company is taking
an active role in the development of these issues.

Note 9.  REGULATORY ASSETS AND LIABILITIES

Costs incurred by the Company that have been permitted by the BPU to
be deferred for recovery in rates in more than one year, or for which
future recovery is probable, are recorded as regulatory assets.
Regulatory assets are amortized to expense over the period of
recovery.  Total regulatory assets at December 31 are as follows:
  
                                                            Remaining  
                                                                     Recovery
(000)                                1995         1994       Period*
Recoverable Future Federal   
 Income Taxes(see Note 2)          $ 85,858     $ 85,854       (A)
Unrecovered Purchased Power Costs:
 Capacity Costs                      80,598       95,878       5 years 
 Contract Renegotiation Costs        19,219       19,660      19 years
Unrecovered State Excise Taxes       64,274       73,834       7 years
Unamortized Debt Costs-Refundings    33,110       32,227    1-29 years
Deferred Energy Costs(see Note 1)    31,434       10,999       (B)
Other Regulatory Assets:
 Postretirement Benefits Other
  Than Pensions (see Note 4)         26,227       17,865       (A)
 Asbestos Removal Costs               9,356        9,625      34 years 
 Decommissioning/Decontaminating       
  Federally-owned Nuclear Units      
  (See Note 10)                       6,404        7,231      13 years 
 Other                               12,581       14,379               
                                   $369,061     $367,552          
*From December 31, 1995
(A)  Pending future recovery
(B)  Recovered over annual LEC period

Unrecovered Purchased Power Capacity Costs represent deferrals of
prior capacity costs then in excess of levelized revenues associated
with a certain long term capacity arrangement.  Levelized revenues
have since been greater than costs, permitting the deferred costs to
be amortized to expense.  Contract Renegotiation Costs were incurred
through renegotiation of a long term capacity and energy contract with
a certain independent power producer.  Unrecovered State Excise Taxes
represent additional amounts paid as a result of prior legislative
changes in the computation of state excise taxes.  Unamortized Debt
Costs associated with debt reacquired by refundings are amortized over
the life of the related new debt.  Asbestos Removal Costs were
incurred to remove asbestos insulation from a wholly-owned generating
station.  Within Other are certain amounts being recovered over a
period of two to six years.
 
No regulatory liabilities existed at December 31, 1995 and 1994.

NOTE 10.  LEASES

The Company leases from others various types of property and equipment
for use in its operations.  Certain of these lease agreements are
capital leases consisting of the following at December 31:

(000)                                1995       1994
Production plant                   $ 9,097    $13,521
Less accumulated amortization        6,810      9,707
Net                                  2,287      3,814
Nuclear fuel                        38,591     38,216
Leased property-net                $40,878    $42,030

The Company has a contractual obligation to obtain nuclear fuel for
the Salem, Hope Creek and Peach Bottom stations.  The asset and
related obligation for the leased fuel are reduced as the fuel is
burned and are increased as additional fuel purchases are made.  No
commitments for future payments beyond satisfaction of the outstanding
obligation exist.  Operating expenses for 1995, 1994 and 1993 include
leased nuclear fuel costs of $11.2 million, $14.1 million and $13.9
million, respectively, and rentals and lease payments for all other
capital and operating leases of $4.1 million, $5.9 million and $5.5
million, respectively.  Future minimum rental payments for all
noncancellable lease agreements are not significant to the Company's
operations.

NOTE 11.  QUARTERLY FINANCIAL RESULTS (UNAUDITED)

Quarterly financial data, reflecting all adjustments necessary in the
opinion of management for a fair presentation of such amounts, are as
follows:                                                               
                                                                     
              Operating    Operating      Net      Earnings for        
Quarter       Revenues       Income      Income    Common Stock        
1995           (000)        (000)       (000) 
1st           $218,666     $ 27,565     $15,779     $11,992           
2nd            206,246       27,755      15,111      11,324           
3rd            303,031       67,026      52,666      48,879            
4th            225,836       26,581      15,195      11,930           

Annual        $953,779     $148,927     $98,752     $84,125            

1994                       
1st           $232,134     $ 39,580     $27,130     $22,821           
2nd            205,861       30,299      20,635      16,326           
3rd            272,769       58,321      49,679      45,370           
4th            202,461       24,794      (4,272)     (8,059)          

Annual        $913,226     $153,995     $93,174     $76,458       


Individual quarters may not add to the total due to rounding, and the
effect on earnings per share of changing average number of common
shares outstanding.  

Third quarter results generally exceed those of other quarters due to
increased sales and higher residential rates for the Company.

Net income in 1994 includes special charges aggregating $18.7 million,
after tax of $10.0, million recorded in Other Income during the fourth
quarter of 1994.  These special charges consisted of costs of a
workforce reduction and write-off of certain deferred costs.


            Management's Discussion and Analysis of Financial 
                    Condition and Results of Operations

      
Financial Summary
 
Consolidated operating revenues for 1995, 1994 and 1993 were
$953.8 million, $913.2 million and $865.8 million, respectively. 
The increase in 1995 revenue over 1994 largely reflects a
provisional increase in annual Levelized Energy Clause (LEC)
revenues of $37.0 million granted in July 1995 and an increase in
unbilled revenues.  The increase in 1994 revenue from 1993 was
primarily due to an increase of $55.0 million in LEC revenues
effective July 1994, accompanied by an increase in sales of
energy.  

Liquidity and Capital Resources

Atlantic City Electric Company (the Company) is a wholly-owned 
subsidiary of Atlantic Energy, Inc. (AEI).  The Company is a
public utility primarily engaged in the generation, transmission,
distribution and sale of electric energy.  The Company's service
territory encompasses approximately 2,700 square miles within the
southern one-third of New Jersey with the majority of customers
being residential and commercial.  The Company has a wholly-owned
subsidiary that operates certain generating facilities. 

Cash construction expenditures for 1993-1995 amounted to $359.0
million and included expenditures for upgrades to existing
transmission and distribution facilities and compliance with
provisions of the Clean Air Act Amendments (CAAA) of 1990.  The
Company's current estimate of cash construction expenditures for
1996-1998 is $255 million.  These estimated expenditures reflect
necessary improvements to generation, transmission and distribu-
tion facilities.

The Company also utilizes cash for mandatory redemptions of
Preferred Stock and maturities and redemption of long term debt. 
Optional redemptions of securities are reviewed on an ongoing
basis with a view toward reducing the overall cost of capital. 
Redemptions of Preferred Stock (at par or stated value) for the
period were as follows:
 
                                    1995      1994      1993 
Preferred Stock
  (Series)      
   9.96% (Shares)                     -         -       48,000 
  $8.53  (Shares)                  240,000   240,000      -    
  $8.25  (Shares)                    5,000     5,000     5,000
 
  Aggregate Amount (000)           $24,500   $24,500    $5,300








First Mortgage Bonds redeemed, acquired and retired or matured
in the period 1993-1995 were as follows:

    Date                 Series            Principal     Price(%) 
                                             Amount               
                                              (000)
October 1995         9-1/4% due 2019       $ 53,857      105.15
October 1995        10-1/2% due 2014            850      101.00        
November 1994        7-5/8% due 2005          6,500      100.00
June 1994           10-1/2% due 2014         23,150      102.00
Various 1994 Dates   9-1/4% due 2019         11,910      105.38*
September 1993       9-1/4% due 2019         69,233      110.95*
September 1993       8-7/8% due 2016        125,000      104.80
March 1993           8-7/8% due 2000         19,000      102.41
March 1993           8%     due 2001         27,000      102.53
March 1993           8%     due 1996         95,000      100.91
March 1993           4-3/8% due 1993          9,540      100.00

* Average price

Scheduled debt maturities and sinking fund requirements aggregate
$113.8 million for 1996-1998.

On or before April 1 of each year, the Company and other New
Jersey utilities are required to pay excise taxes to the State of
New Jersey.  In March 1995, the Company paid $98.7 million funded 
through the issuance of short term debt.  In 1994 and 1993, the
Company paid an additional $50 million and $45 million,
respectively, for the accelerated payment of one year's tax due
as required by amended state law.  These accelerated payments are
being recovered through rates.

During 1995, the Company made $19.1 million in payments related
to its workforce reduction program.  The Company expects payments
and settlement of the remaining obligation for this program of
$7.5 million to be substantially completed by the end of 1996. 

On an interim basis, the Company finances construction costs and
other capital requirements in excess of internally generated
funds through the issuance of unsecured short term debt
consisting of commercial paper and borrowings from banks.  As of
December 31, 1995, the Company has arranged for lines of credit
of $150 million of which $119.5 million was available.  Permanent
financing by the Company is undertaken by the issuance of long
term debt and Preferred Stock, and at times from capital
contributions by AEI.  The Company's nuclear fuel requirements
associated with its jointly-owned units have been financed
through arrangements with a third party.

A summary of the issue and sale of the Company's long term debt
for 1993-1995 is as follows:

(millions)                  1995       1994       1993   
First Mortgage Bonds          -          -        $225
Medium Term Notes           $105         -         240
Pollution Control Bonds       -         $55          4


The proceeds from these financings were used to refund higher
cost debt and for construction purposes.  During 1996-1998, the
Company may issue up to $150 million in new long term debt to be
used for construction and repayment of short term debt.  The
provisions of the Company's charter, mortgage and debenture
agreements can limit, in certain cases, the amount and type of
additional financing which may be used.  At December 31, 1995,
the Company estimates additional funding capacities of $288
million of First Mortgage Bonds, or $490 million of Preferred
Stock, or $413 million of unsecured debt.  These amounts are not
necessarily additive.

Revenues

Operating Revenues - Electric increased 4.4% and 5.5% in 1995 and
1994, respectively. Components of the overall changes are shown
as follows:

                                         1995         1994        
 (millions)       
Levelized Energy Clause                $ 49.2        $30.3
Kilowatt-hour Sales                     (10.0)         9.6        
Unbilled Revenues                        16.6         (7.3)       
Sales for Resale                        (11.9)        17.8       
Other                                    (3.3)        (3.0)       
Total                                  $ 40.6        $47.4

LEC revenues increased in 1995 due to a provisional rate increase
of $37.0 million in July 1995 and a $55 million increase in July
1994.  Changes in kilowatt-hour sales are discussed under "Billed
Sales to Ultimate Customers."  Overall, the combined effects of
changes in rates charged to customers and kilowatt-hour sales
resulted in increases of 5.9% and 3.1% in revenues per
kilowatt-hour in 1995 and 1994, respectively.  The changes in
Unbilled Revenues are a result of the amount of kilowatt-hours
consumed by, but not yet billed to, ultimate customers at the end
of the respective periods, which are affected by weather and
economic conditions, and the corresponding price per kilowatt-
hour.  The changes in Sales for Resale are a function of the
Company's energy mix strategy, which in turn is dependent upon
the Company's needs for energy, the energy needs of other
utilities participating in the regional power pool of which the
Company is a member, and the sources and prices of energy
available.  The decline in the 1995 Sales for Resale reflects a
decrease in the demand of the power pool, the decline in market
prices and a reduction in excess energy sources when compared to
the previous year.  The decrease in supplemental excess energy
sources reflect the expiration of a 200 megawatt purchase
capacity arrangement in May 1994, and expiration of other short
term purchase contracts.  The increase in Sales for Resale for
1994 was the result of being able to meet the demands of the
regional power pool due to the extreme weather conditions during
the first six months of 1994.  


Billed Sales to Ultimate Customers

Changes in kilowatt-hour sales are generally due to changes in
the average number of customers and average customer use, which
is affected by economic and weather conditions.  Energy sales
statistics, stated as percentage changes from the previous year,
are shown as follows:

                        1995                      1994  
                         Avg    Avg #              Avg    Avg #
Customer Class   Sales   Use   of Cust     Sales   Use   of Cust
Residential      (2.0)% (3.1)%  1.2%        1.5 %  .4 %  1.1%
Commercial        1.4    (.1)   1.5         2.6    .5    2.1  
Industrial       (7.4)  (9.0)   1.7        (2.9) (3.8)    .9  
Total            (1.4)  (2.6)   1.2         1.3    -     1.2     

The 1995 decrease in total sales was attributed to weather
conditions that led to below normal electricity consumption for a
majority of the year and a decreased number of billing days in
1995 compared to 1994.  The 1994 increase in total sales was due
to an increase in the number of billing days in 1994 compared to
1993 and, to a lesser extent, weather.  The Commercial sector
experienced continued growth during 1995 due to sales increases
across all the major commercial subsectors.  Commercial growth in
both years benefitted from night lighting programs.  The sales
declines in the Industrial sector are primarily related to the
impact of two former customers taking energy service from
independent power producers commencing in June 1994 and January
1995.    

Costs and Expenses 

Total Operating Expenses increased 5.9% and 7.5% in 1995 and
1994, respectively.  Included in these expenses are the costs of
energy, purchased capacity, operations, maintenance, depreciation
and taxes.  

Energy expense reflects costs incurred for energy needed to meet
load requirements, various energy supply sources used and
operation of the LECs.  Changes in costs reflect the varying
availability of low-cost generation from Company-owned and
purchased energy sources, and the corresponding unit prices of
the energy sources used, as well as changes in the needs of other
utilities participating in the Pennsylvania-New Jersey-Maryland
Interconnection power pool.  The cost of energy is recovered from
customers primarily through the operation of the LEC.  Excluding
the effects of the SNJEI (discussed below), earnings generally
are not affected by energy costs because these costs are adjusted
to match the associated LEC revenues.  In any period, the actual
amount of LEC revenue recovered from customers may be greater or
less than the actual amount of energy cost incurred in that
period.  Such respective overrecovery or underrecovery of energy
costs is recorded on the Consolidated Balance Sheet as a
liability or an asset as appropriate.  Amounts in the balance
sheet are recognized in the Consolidated Statement of Income
within Energy expense during the period in which they are
subsequently recovered through the LEC.  The Company was
underrecovered by $31.4 million and by $11 million at December
31, 1995 and 1994, respectively.  The increase in 1995 is due to
the combination of the election to defer recovery of $20.6
million of recoverable fuel costs, lower than projected kilowatt-
hour sales and greater than projected purchased fuel as
replacement for Salem Station generation.  

As a result of implementing the Southern New Jersey Economic
Initiative (SNJEI), the Company is forgoing the recovery of
energy costs in LEC rates in the amount of $10.0 million and
$28.0 million for the 1995 and 1994 LEC periods, respectively. 
After tax net income has been reduced by $12.2 million and $10.1
million due to the effects of the initiative for 1995 and 1994,
respectively.

Energy expense decreased 9.0% in 1995 primarily due to the
increase in underrecovered fuel costs, offset in part by the
effects of the SNJEI referred to above.  In 1994, Energy expense
increased 32.7% due to the SNJEI and the increase in the
levelized energy clause that reduced underrecovered fuel costs.
Production-related energy costs for 1995 decreased 1.9% due to
reduced generation.  The average unit cost of energy decreased to
2.02 cents per kilowatt-hour in 1995 compared to 2.04 cents per
kilowatt-hour in 1994.  Production-related energy costs for 1994
increased by 19.9% due to increased overall generation and the
high cost of energy from additional nonutility sources.  The 1993
cost per kilowatt-hour was 1.82 cents.  

Purchased Capacity expense reflects entitlement to generating
capacity owned by others.  Purchased Capacity expense increased
45.5% and 18.2% in 1995 and 1994, respectively.  The increases 
reflect additional contract capacity supplied by nonutility power
producers in each year.

Operations expense decreased 3.0% and 3.6% in 1995 and 1994,
respectively.  These decreases reflect the benefits of the
Company's restructuring programs, initiated in 1993 and 1994. 
The 1995 decrease was offset in part by the additional costs
associated with Salem Station restart activities.  Net after tax
savings approximated $8 million in 1995 related to the workforce
reduction recorded in 1994.  Employee separations throughout the
Company of approximately 300 employees largely occurred on March
1, 1995.  The original estimate of net after tax savings of $10
million was based on a full-year assessment.  Maintenance expense
decreased 8.6% and 17.1% in 1995 and 1994, respectively, due to
cost saving measures. 

Depreciation and Amortization expense increased 7.0% and 7.9% in
1995 and 1994, respectively, as a result of continued increases
in the Company's depreciable electric plant in service.  
  
State Excise Taxes expense increased 5.9% in 1995 due to an
increase in the tax base used to calculate the tax in comparison
to the 1994 tax base.  In 1994, State Excise Taxes expense
decreased 6.9% relative to the higher tax assessment in 1993.
   
Federal Income Taxes increased 7.9% in 1995 and decreased 6.1% in
1994 as a result of the level of taxable income during those
periods.  

Employee Separation costs is the provision by the Company in 1994
for the reduction of its workforce.  Other-Net within Other
Income (Expense) decreased in 1994 due to the net after-tax
impacts of the write-off of deferred nuclear study costs of $1.4
million.  The Litigation Settlement for 1993 represents an
additional allocation to customers of the proceeds from the 1992
settlement associated with the Peach Bottom Station shut down in
prior years.  

Interest on Long Term Debt increased 5.2% in 1995 due to
increased amounts of debt outstanding during the year.  In 1994,
interest on long term debt decreased 3.4% due to refunding of
higher cost debt.  At December 31, 1995, 1994 and 1993, the
Company's embedded cost of long term debt was 7.5%, 7.6% and
7.8%, respectively.  

Preferred Stock Dividend Requirements decreased 12.5% and 4% in
1995 and 1994, respectively, as a result of continuing mandatory
and optional redemptions.  Embedded cost of Preferred Stock as of
December 31, 1995, 1994 and 1993 was 7.4%, 7.6% and 7.7%,
respectively.

Outlook

Factors such as regional economic trends, abnormal weather
conditions and inflation will continue to be important
determinants of the Company's financial performance.  However,
continued competition from independent power producers and the
anticipated deregulation of the electric utility industry are
becoming the most critical strategic factors for the Company.
  
Fundamental changes in the industry have led to the emergence of
significant competitive issues for the Company, including
heightened competition in the wholesale bulk power market, the
growth of the independent power industry and the pressure to
offer more competitive rates to customers.   

The Company is closely monitoring deregulation of the industry on
both a state and Federal level.  The Federal Energy Regulatory
Commissions' (FERC) on-going rulemaking proceeding is proposing
changes to rules governing transmission access and pricing.  FERC
is also establishing guidelines for recovery of stranded costs
and investments stemming from wholesale transactions.  In
response to FERC's initiative, the power pool in which the
Company participates has proposed significant changes to its
structure and operation.

State jurisdictions across the country, including New Jersey, are
closely examining the issues surrounding deregulation or are
creating new regulations designed to foster a more competitive
industry.  The Company is playing an active role in The New
Jersey Board of Public Utilities' (BPU) on-going Energy Master
Plan proceeding.  Among other things, the proceeding is
investigating the extent to which utilities, in a competitive
environment, may be threatened with the inability to recover
investments or long term commitments prudently made, and placed
into rates under traditional ratemaking regulations.  To date,
the BPU has made no formal policy pronouncement regarding
deregulation or the recovery of stranded commitments.

In anticipation of heightened competition in energy markets, the
Company is pursuing a number of initiatives designed to
strengthen its position in the marketplace.  The cost of the
Company's power supply, including the cost of power purchased
from independent power producers, along with its retail prices
are expected to be critical success factors in a competitive
marketplace.  The Company is focusing on cost and rate control
measures as well as the development of new energy-related
products and services.  To allow for more flexibility and closer
cost control, the Company transferred its production operations
to its subsidiary, Deepwater Operating Company, on January 1,
1996.  Alternate pricing mechanisms and long term discount power
contracts are being explored as a means of retaining key
customers that are at risk of leaving the Company's system. 
While any such discounts are intended to have a long term
beneficial impact, they could have a detrimental effect on the
Company's operating revenues and net income in the short term.  

The Company's net income and its levelized energy adjustment
rates may be affected by the operational performance of nuclear
generating facilities and a BPU-mandated nuclear unit performance
standard.  Net income may also be affected by significant changes
in the decommissioning costs associated with the nuclear units. 
At this time, it is not known what impact there may be on future
operations and financial condition associated with the uncertain
status of Salem Station Unit 1.

The electric utility industry continues to be capital intensive. 
The Company has lowered its planned construction budget to $398
million for 1996-2000, with an expected reduction in its external
cash requirements.  The Company's ability to generate cash flows
or access the capital markets to fund capital requirements will
be affected by competitive pressures on revenues and net income,
as well as regulatory initiatives and rate developments.

The FASB issued two new statements in 1995 - Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of" and Statement No. 123 "Accounting
for Stock-Based Compensation".  Both statements are effective for
the Company in 1996.  Statement No. 121 primarily concerns 
accounting for the impairment and disposal of property, plant and
equipment.  Statement No. 123 permits a fair value-based method
to account for stock-based compensation as an alternative to the
intrinsic value-based method currently permitted.  The Company
currently employs stock-based compensation which has not had a
material impact on the financial statements.  The Company has not
yet fully assessed the impacts on its financial statements of the
requirements of these new accounting standards. 

Inflation

Inflation affects the level of operating expenses and also the
cost of new utility plant placed in service.  Traditionally, the
rate making practices that have applied to the Company have
involved the use of historical test years and the actual cost of
utility plant.  However, the ability to recover increased costs
through rates, whether resulting from inflation or otherwise,
depends upon both market circumstances and the frequency, timing
and results of rate case decisions.  

EX-99.1

                                             Final Copy 9/8/95


ATLANTIC CITY ELECTRIC COMPANY
      
                SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - II


Article 1.  Definitions

The following are defined terms wherever they appear in this
Supplemental Executive Retirement Plan - II ( SERP-II ).

  1.1    Board of Directors  means the Board  of Directors of
     Atlantic Energy, Inc.

  1.2    Change of Control  means that one of the following has
     occurred:

     (i)    when any  person  as defined in Section 3(a)(9) of
        the Securities Exchange Act of 1934, as amended (the
         Exchange Act ) and as used in Section 13(d) and 14(d)
        thereof, including a  group  as defined in Section
        13(d) of the Exchange Act but excluding the Company and
        any subsidiary and any employee benefit plan sponsored
        or maintained by the Company of any subsidiary
        (including any trustee of such plan acting as trustee),
        directly or indirectly, becomes the  beneficial owner 
        (as defined in Rule 13d-3 under the Exchange Act), of
        securities of the Company representing 20 percent or
        more of the combined voting power of the Company s then
        outstanding securities; or

     (ii)   when, during any period of 24 consecutive months
        during the existence of the Plan, the individuals who,
        at the beginning of such period, constitute the Board
        (the  Incumbent Directors ) cease for any reason other
        than death to constitute at least a majority thereof;
        provided, however, that a director  who is not a
        director at the beginning of such 24-month period shall
        be deemed to have satisfied such 24-month requirement
        (and be an Incumbent Director) if such director was
        elected by, or on the recommendation of or with the
        approval of, at least two-thirds of the directors who
        then qualified as Incumbent Directors either actually
        (because they were directors at the beginning of such
        24-month period) or by prior operation of this Section;
        or

     (iii)  upon the occurrence of a transaction requiring
        stockholder approval for the acquisition of the Company
        by an entity other than the Company or a subsidiary
        through purchase of assets, or by merger, or otherwise.
  
  1.3    Company  means Atlantic City Electric Company, any of
     its subsidiaries authorized by the Board of Directors to
     participate in this Plan with respect to its employees,
     its successors (whether direct or indirect by purchase,
     merger, consolidation or otherwise) to all or
     substantially all of the business or assets of Atlantic
     City Electric Company, and its assigns, except that for
     purposes of the definition of Change of Control it shall
     mean Atlantic Energy, Inc., and to the extent a
     participant is employed by Atlantic City Electric Company
     upon the occurrence of an event which constitutes a Change
     of Control, Atlantic City Electric Company.

  1.4    Compensation  means the Qualified Executive s base
     salary plus annual incentive payments.  Compensation 
     shall not include any amounts distributed or distributable
     to a Qualified Executive in stock or cash pursuant to the
     Long-Term Executive Incentive Plan.

  1.5    Designated Beneficiary  means a person or persons
     designated, in writing, by a Qualified Executive or, if no
     designation is made or if the person or persons so
     designated should predecease the Qualified Executive, the
     legal representative of the estate of a deceased Qualified
     Executive or the person or persons who shall acquire the
     benefits payable to the Qualified Executive by bequest or
     inheritance, or in the case of a Beneficiary s death after
     the Qualified Executive s death, the Beneficiary s estate.

  1.6    Early Retirement Date  means the first day of any
     month after the Qualified Executive has attained age
     fifty-five (55) and has completed five (5) years of
     Service with the Company, but before age sixty (60).

  1.7    Excess Benefit Plan  means the Atlantic City Electric
     Company Excess Benefit Retirement Income Program as may be
     supplemented or amended or any successor plan in effect at
     the time a Qualified Executive s employment with the
     Company terminates.

  1.8    Final Annual Compensation  means (i) the base salary
     of a Qualified Executive in the calendar year in which the
     Qualified Executive terminates Service, plus (ii) the
     average of the bonuses, if any, paid to a Qualified
     Executive during the year in which he terminates Service,
     and the bonuses, if any, paid to a Qualified Executive
     during the year immediately before he terminates Service. 
     Final Annual Compensation shall not include any amounts
     distributed or distributable to a Qualified Executive in
     stock or cash pursuant to the Long-Term Executive
     Incentive Plan.

  1.9    Final Average Compensation  means the average of the
     Qualified Executive s annual Compensation over the 36 full
     calendar months immediately preceding or coinciding with
     the Qualified Executive s last day of employment with the
     Company.

  1.10   Normal Retirement Date  means the first day of the
     month coincident with or next following the date on which
     the Qualified Executive attains (or would have attained)
     age sixty (60).

  1.11   Plan  means the Atlantic City Electric Company
     Supplemental Executive Retirement Plan - II approved by
     the Board of Directors of Atlantic City Electric Company,
     as embodied in this document and as may be supplemented or
     amended. 

  1.12   Qualified Executive  means an employee of the Company
     elected to the position of officer of the Company and who
     is designated by the Board of Directors to participate in
     this Plan.

  1.13   Retirement Plan  means the Atlantic City Electric
     Company Retirement Plan as may be supplemented or amended
     or any successor plan in effect at the time a Qualified
     Executive s employment with the Company terminates.

  1.14   SERP-II  Disability Benefits  means the benefits
     listed in paragraph 3.4.

  1.15   SERP-II Pre-Retirement Survivor Benefits  means the
     benefits listed in paragraph 3.2.

  1.16   SERP-II Post-Retirement Survivor Benefits  means the
     benefits listed in paragraph 3.3.
  
  1.17   SERP-II Retirement Benefits  means the benefits listed
in paragraph 3.1.
  
  1.18   Service  means all periods in which a Qualified
     Executive is an officer of the Company prior to attainment
     of age 66.  In addition to periods of employment, the
     following periods of absence count as Service:

     (1)    absence due to any illness or injury during which
        a Qualified Executive is receiving regular disability
        benefits under the Company s officer disability benefit
        program; and

     (2)    any period of absence granted by the Company s
        Board of Directors.

Article 2.  SERP-II Benefits - Vested Portion

  2.1   Upon termination of employment and the attainment of
     age 55 or greater as of such termination, a Qualified
     Executive shall be entitled to receive the Vested portion
     of his SERP- II Retirement Benefits, which shall be
     determined as follows:

     Service (as defined
     in paragraph 1.18)                   Vested Portion
      0-4 Years                                0%
        5 Years                              50%
        6 Years                              60%
        7 Years                              70%
        8 Years                              80%
        9 Years                              90%
     10 Years                                 100%

     Notwithstanding any other provision of the Plan, in the
     event of a Change of Control, any Qualified Executive not
     having 5 years of service shall be deemed to have 5 years
     of service and shall vest at that level.

  2.2   In the event of (i) the death of a Qualified Executive
     while he is in Service or (ii) the death of a Qualified
     Executive entitled to receive SERP-II Retirement Benefits
     or SERP-II Disability Benefits who has not received any of
     such benefits, the Designated Beneficiary of the Qualified
     Executive shall be entitled to receive the benefits listed
     in paragraph 3.2.

  2.3   In the event of the death of a Qualified Executive who
     has received SERP-II Retirement Benefits or SERP-II
     Disability Benefits for a period of less than 15 years,
     the Designated Beneficiary of such Qualified Executive
     shall be entitled to receive the benefits listed in
     paragraph 3.3.

  2.4   In the event that a Qualified Executive becomes
     disabled, such Qualified Executive shall be entitled to
     receive the benefits listed in paragraph 3.4.

Article 3.  Amount of Benefits

The amount of benefits payable, pursuant to this SERP-II are as
follows:

  3.1   SERP-II Retirement Benefits:  Subject to the limitation
     provided in paragraph 3.5 below and the vesting schedule
     provided in paragraph 2.1 above, SERP-II Retirement
     Benefits shall equal an annual benefit payable to the 
     Qualified Executive for life with guaranteed minimum
     payments of fifteen (15) years in an amount equal to A
     minus B:

     (A)    60% of the Qualified Executive s Final Average
        Compensation.
     (B)    The sum of (i) the annual primary social security
        retirement benefit payable (before reduction for the
        commencement of post-retirement earnings) to the
        Qualified Executive or which would be payable if
        applied for by the Qualified Executive, (ii) the annual
        amounts of benefits payable (whether or not actually
        paid) from the Retirement Plan (determined without
        regard to any optional method of benefit payment
        selected), and (iii) the annual amounts of benefits
        payable (whether or not actually paid) from the Excess
        Benefit Plan.

     Upon the Qualified Executive s retirement on or after his
     Early Retirement Date but prior to his Normal Retirement
     Date, the amount equal to the SERP-II Retirement Benefit
     shall be reduced by 4% for each year (to be calculated on
     a full calendar month basis) that the payment commencement
     date precedes the Qualified Executive s Normal Retirement
     Date.  

  3.2   SERP-II Pre-Retirement Survivor Benefits:

     (1)    A Qualified Executive shall be covered by a split
        dollar insurance policy providing benefits equal to
        three (3) times Final Annual Compensation.

     (2)    Notwithstanding subparagraph (1) above, if a
        Qualified Executive who would otherwise be entitled to
        the benefit described in subparagraph (1) is
        uninsurable, or if the Company determines that he is
        such a rated risk for insurance purposes that the cost
        of the split dollar insurance described in subparagraph
        (1) is excessive, the Company shall notify the
        Qualified Executive that he is not entitled to the
        benefit described in subparagraph (1) and that the
        benefit described below in subparagraph (3) shall be
        substituted therefore.

     (3)    Any Qualified Executive not eligible for the
        benefit described in subparagraph (1), as defined in
        subparagraph (2), shall be entitled to a benefit upon
        death equal to the sum of:

        (i) An amount equivalent to Final Average Compensation
            to be paid in a lump-sum within a reasonable time
            following the date of death; and
        (ii)   Subject to the limitation provided in paragraph
            3.5 and commencing with the first anniversary of the
            death of the Qualified Executive, an annual payment
            of fifty percent (50%) of the annual  Vested SERP-II
            Retirement Benefit to which the Qualified Executive
            would have been entitled to receive if he had
            terminated employment on his date of death, until
            the Qualified Executive would have attained the age
            of 60 years, or until fifteen (15) such annual
            payments have been made, whichever is the later to
            occur.



  3.3   SERP-II Post-Retirement Survivor Benefits:
     Commencing with the first anniversary of the death of the
     Qualified Executive, an annual payment of 100% of the
     annual SERP-II Retirement Benefit that the Qualified
     Executive was entitled to receive as of his date of death
     until benefits have been paid to both the Qualified
     Executive and the Designated Beneficiary for an aggregate
     of fifteen (15) years.
  3.4   SERP-II Disability Benefits
     Subject to the limitation provided in paragraph 3.5, in
     the event the Board of Directors shall determine, on the
     basis of such medical evidence as it may require, that the
     Qualified Executive has become disabled, mentally or
     physically, such that he is prevented from performing all
     the material aspects of his duties, the Qualified
     Executive shall be entitled to an annual payment equal to
     fifty percent (50%) of his Vested SERP-II Retirement
     Benefit.  SERP-II Disability Benefits shall commence on
     the date the Qualified Executive is determined to be
     disabled and shall be made for life with guaranteed
     minimum payments of fifteen (15) years.  In the event of
     death during such payment period, subsequent annual
     payments will be made to the Designated Beneficiary until
     such benefits have been paid to both the Qualified
     Executive and the Designated Beneficiary for an aggregate
     of fifteen (15) years.
  3.5   Limitation on SERP-II Benefits
     Notwithstanding the above, annual payments made pursuant
     to paragraph 3.1, 3.2(3)(ii) or 3.4 shall not exceed 25%
     of the Qualified Executive s Final Annual Compensation.
Article 4.  Commencement of SERP-II Retirement Benefits
  4.1   Unless this Plan specifically provides otherwise, SERP-
     II Retirement Benefits payable to a Qualified Executive
     shall commence when retirement benefits commence under the
     Retirement Plan.
     Notwithstanding  any other provision of the Plan, if any
     payment due under this Plan, when taken into account with
     all other payments of  applicable employee remuneration 
     (as defined in Section 162(m)(4) of the Internal Revenue
     Code)  made to the Qualified Executive in the taxable year
     his employment terminates, exceeds the limitation under
     Section 162(m)(l) of the Internal Revenue Code, then such
     payment will be deferred to the taxable year of the
     Qualified Executive next following the year of
     termination.


Article 5. Forfeiture of Benefits
  5.1   Forfeitures.  In the event of a Change of Control this
     paragraph 5.1 of the Plan shall be void and of no force
     and effect.  In the absence of a Change of Control,
     notwithstanding anything contained in this Plan to the
     contrary, a Qualified Executive shall forfeit all benefits
     not yet paid from this Plan in the event the Company
     terminates his employment for Cause or for his breach of
     the Non-Competition or Non-Disclosure provisions specified
     in paragraphs 5.2 and 5.3.  For purposes of this
     paragraph,  Cause  means:
     (i)  willful and continuous failure by a participant to
     perform his duties (other than resulting from incapacity
     due to physical or mental illness), (ii) a participant s
     conviction or plea of nolo contendere to a felony; (iii) a
     participant s willful engagement in misconduct in
     connection with employment which results in material
     damage to the Company s business or reputation; or (iv)
     material breach of Executive s duties under any applicable
     employment agreement which results in material damage to
     the Company s business or reputation, in each of (ii)
     through (iv) above, upon 30 days written notice to the
     Executive, the opportunity for the Executive to be heard
     by the Board and the good faith determination by at least
     two-thirds of the Company s non-emplyoee directors that
     Cause exists; provided, however, that after the occurrence
     of a Change of Control (as hereinafter defined),  Cause 
     shall be limited to (ii) through (iv) above.
  5.2   Non-Competition. 
     A Qualified Executive shall not, during his Service and
     for the period after termination of employment, compete
     directly or indirectly with the Company or be directly or
     indirectly interested in any business competing with the
     business being conducted by the Company; provided,
     however, that the Qualified Executive shall not be
     prohibited from owning up to one percent (1%) of the
     shares of common stock of any corporation whose shares are
     publicly traded on a national securities exchange or in
     the over-the-counter market, or from engaging in
     activities with the written permission of the Board of
     Directors.
  5.3   Non-Disclosure.
     A Qualified Executive shall regard and preserve as
     confidential and not use, communicate or disclose to any
     person, orally, in writing or by a publication, any secret
     or confidential information of the Company, regardless of
     where or when or how acquired by the Company, which the
     Company is obligated to maintain in confidence until such
     information becomes a matter of public knowledge through
     no act of the Qualified Executive.

Article 6.  General
  6.1   Form of Payment.   Benefits under this Plan shall be
     paid in cash.  In lieu of the fifteen (15) year certain
     form of payment provided in Article 3, a Qualified
     Executive may, with the approval of the Company, elect to
     receive an actuarially equivalent lump sum Benefit,
     provided that such election is made and becomes
     irrevocable before the Benefit is actually payable.  For
     purposes of this paragraph,  actuarial equivalent  shall
     have the same meaning as given such term in the Retirement
     Plan.
  6.2   Withholding.  The Company may withhold from any
     benefits payable all federal, state, city, or other taxes
     as shall be required pursuant to any law or governmental
     legislation or ruling.
  6.3   Amendment and Termination.  In the event of a Change of
     Control, the Plan may not be amended, curtailed, or
     terminated.  In the absence of a Change of Control, the
     Plan may be amended, curtailed, or terminated at any time
     by the Board of Directors; provided, however, that at the
     time such action is taken, to the extent that a Qualified
     Executive or his Designated Beneficiary is then entitled
     to receive benefits pursuant to paragraph 2.1, 2.2, or
     2.3, such benefits shall nonetheless be paid as if the
     Plan were still in existence and without reference to such
     change if the effect of such change would be to reduce the
     amount, frequency or duration of benefit payments; and
     further provided that no amendment or curtailment of the
     Plan pursuant hereto shall have the effect of reducing the
     accrued benefit under the Plan of any Qualified Executive.
  6.4   Assignability. Except for naming a Designated
     Beneficiary to receive benefits upon a Qualified
     Executive s death, no right to receive payments shall be
     transferable or assignable by a Qualified Executive.  Any
     other attempted assignment or alienation of payments shall
     be void and of no force or effect.
  6.5   Qualified Executive s Rights Unsecured.  The right of
     any Qualified Executive to receive future benefits under
     the provisions of the Plan shall be an unsecured claim
     against the general assets of the Company.  The benefits
     to be paid, pursuant to this Plan, are unfunded by the
     Company.  Nothing herein shall be construed to prevent
     establishment by the Company of a trust arrangement,
     commonly called a  rabbi trust,  to identify certain
     Company assets to be applied (subject to prior claims of
     creditors) to the discharge of the Company s obligations
     under the Plan.
  6.6   Agreement.  Each Qualified Executive shall execute a
     SERP-II agreement with the Company pursuant to which the
     Qualified Executive agrees, as a condition precedent to
     receipt of benefits, that the Company will purchase, own
     and be beneficiary of a policy or policies of insurance,
     insuring the life of each Qualified Executive.
  6.7   Not an Employment Contract.  The Plan does not confer
     any right of employment upon a Qualified Executive,
     provided the Qualified Executive shall not be discharge
     for the sole purpose of avoiding any obligation under the
     Plan.
  6.8   Applicable Law.  The Plan shall be construed and
     applied in accordance with the laws of the State of New
     Jersey, to the extent such laws have not been superseded
     by federal law (which shall otherwise prevail).
  6.9   Headings and Captions.  Headings and captions are for
     convenience of reference only; shall not be deemed
     provisions of the Plan; and shall not be applied to the
     construction of the Plan.
  6.10  Gender and Number. All terms used in the Plan shall be
     deemed both gender and quantity-neutral unless otherwise
     required by context.  Accordingly, the masculine shall
     include the feminine, the feminine shall include the
     masculine, the singular shall include the plural and the
     plural shall include the singular.
  6.11  Binding Effect.  The terms of the Plan shall be binding
     on each Qualified Executive and on the heirs,
     beneficiaries and personal representatives of each
     Qualified Executive.
  6.12  Construction of Provisions. In the event of any dispute
     as to the construction of any provision of the Plan, the
     need to supply an omission or reconcile an inconsistency
     in the provisions of the Plan, or the need to resolve any
     dispute as to benefits under the Plan, the Board of
     Directors shall appoint one or more individuals to serve
     as a committee with full authority to construe the Plan,
     to supply such omission, to reconcile any inconsistency in
     the provisions of the Plan, and to resolve any such
     disputes.  The determinations made by such appointee in
     good faith shall be binding upon the parties.

EX-99.2

                                                 EXHIBIT 10A(10)1

                             ATLANTIC ELECTRIC
               EXCESS BENEFIT PLAN RETIREMENT INCOME PROGRAM

                           Amendment No. 1995-1

          Atlantic City Electric Company hereby adopts this
Amendment No. 1995-1 to the instrument setting forth the Atlantic
Electric Excess Benefit Retirement Income Program (the "Program
Instrument").  This amendment is adopted pursuant to Section 7 of
the Program Instrument.

          1.   The following definition is added to Section 1 of
the Program Instrument:

               "Change of Control" means that one of
          the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii)  when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.


          2.   The following definition in Section 1 of the
Program Instrument is restated to read as follows:

               "Company" means Atlantic City Electric
          Company, except that for purposes of the
          definition of Change of Control it shall mean
          Atlantic Energy, Inc., and to the extent a
          participant is employed by Atlantic City
          Electric Company upon the occurrence of an
          event which constitutes a Change of Control,
          Atlantic City Electric Company.

          3.   Section 2(b) of the Program Instrument is hereby
restated to read as follows:

               (b)  Payment of Income.  In the event of
          a Change of Control, the entire Excess
          Benefit Retirement Income payable under this
          Section 2 shall become immediately vested to
          the extent not already vested.  The Excess
          Benefit Retirement Income payable under this
          Section 2 shall be paid in either (a) one
          lump sum or (b) monthly coincident with the
          date of benefits under the Retirement Plan;
          provided, however, that a Participant who is
          to receive monthly benefits under the
          Retirement Plan may elect to receive a single
          sum distribution and a Participant who is to
          receive a single sum distribution under the
          Retirement Plan may receive a monthly
          distribution, if the Participant applies to
          do so at least one year prior to the date on
          which his benefits hereunder first become
          payable, and further provided that the
          Program Administrator determines, in its sole
          discretion and applying such values and
          standards as it deems relevant, that it is in
          the best interest of the Participant. 
          Subject to Section 7 of this Program, payment
          of the Excess Benefit Retirement Income shall
          be made by the Company.  Any entity
          (including the Company) making a payment
          under this Program may withhold therefrom
          such amounts as may be required by federal,
          state or local law, and the amount payable
          under the Program to the Participant or his
          beneficiary may be reduced by the amount so
          withheld.  The amount of any single sum
          distribution of Excess Benefit Retirement
          Income shall be equal to the actuarial
          equivalent of the monthly benefit herein
          described, computed using the actuarial the
          Retirement Plan.

          4.  Section 7 of the Program Instrument is hereby
restated to read as follows:

          SECTION 7.  Change or Termination of the Program.

               In the event of a Change of Control,
          this Program may not be amended.  In the
          absence of a Change of Control, the Company
          may amend the Program in any respect and at
          any time; provided, however, that no such
          amendment shall have the effect of (a)
          reducing the basis on which the Excess
          Benefit Retirement Income then being paid to
          any Participant pursuant to the Program, or
          which might thereafter become payable to the
          Participant's beneficiary, is computed, or
          (b) reducing the accrued Excess Benefit
          Retirement Income under Section 2 of any
          active or terminated vested participant of
          the Plan, unless the Participant or his
          beneficiary becomes entitled to an amount
          equal to such benefit under another plan or
          practice adopted by the Company.
               In the event of a Change of Control,
          this Program may not be terminated.  In the
          absence of a Change of Control, the Company
          may terminate the Program at any time.  The
          Excess Benefit Retirement Income then being
          paid to any Participant under Section 3 shall
          continue to be paid subject to the terms of
          the Program and each Participant shall be
          fully vested in such Participant's accrued
          Excess Benefit Retirement Income under
          Section 2, unless the Participant or his
          beneficiary becomes entitled to an amount
          equal to such benefit under another plan or
          practice adopted by the Company, subject to
          diminution resulting from any increase in his
          funded Plan benefit.
               The accrued Excess Benefit Retirement
          Income at any time is the amount contingently
          payable under Section 2 if all factors used
          in determining the funded benefit of such
          active or terminated vested participant of
          the Plan remained constant under the first
          date on which such benefit was in pay status.

          5.   The amendment made hereby shall be effective as of
August 10, 1995.

                              By:______________________


                              Title:___________________

EX-99.3

                                             EXHIBIT 10A(16)1
                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey
corporation (the "Company"), and Jerrold L. Jacobs (the
"Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  (a)  Employment Period.  The
term of this Agreement shall commence on the date hereof (the
"Effective Date") and shall continue until the second anniversary
of the Effective Date (the "Employment Period"); provided,
however, that the Employment Period shall be automatically
renewed for two years unless either party shall send the other
written notice of its intention to terminate the agreement at the
end of such Employment Period one year prior to the end of such
Employment Period; and, provided, further, that upon the
occurrence of a Change of Control, the Employment Period shall
become three years and shall commence on the date of the Change
of Control, and shall thereafter be automatically renewed for two
years unless either party shall send the other written notice of
its intention to terminate the agreement one year prior to the
end of the then current Employment Period.

          (b)  Consulting Period.  Notwithstanding the foregoing,
in the event that the Executive elects to retire at any time on
or after December 1, 1996 (the "Retirement Date") he may, at his
election, enter into a consulting arrangement with the Company
commencing on the day after the Retirement Date and ending on 
the second anniversary thereof (the "Consulting Period").  The
rights and obligations of the parties during the Consulting
Period are set forth on Exhibit A hereto.

   
          2.  Place of Employment.  The Executive's services
during the Employment Period shall be performed primarily at the
principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably
require in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees
to employ the Executive as its President and Chief Executive
Officer and as the Chairman and Chief Executive Officer of
Atlantic City Electric Company ("Electric") for the Employment
Period.  The Executive shall exercise his reasonable best efforts
in furtherance of, and shall devote substantially all of his
working time and attention to the affairs of the Company and its
affiliates, and shall perform such duties and services as may
reasonably be assigned to him by, and shall report directly to
the Board of Directors of the Company (the "Board").


          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees on
which he served prior to the Effective Date, in each case only if
and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of
vacation and sick leave to which he is entitled.  It is expressly
understood and agreed that the Executive's continuing to serve on
any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the Effective Date
which is not in violation of any Company policy shall not be
deemed to interfere with the performance of the Executive's
services to the Company.  In addition, the Executive may commence
service as a director of other corporations or organizations
after the Effective Date upon approval by the Board which, in the
judgment of the Board, will not present any conflict of interest
with the Company or any subsidiary or affiliate thereof, and
which would not affect the performance of Executive's duties
pursuant to this Agreement, which approval shall not be
unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility
under the Federal Power Act, or any successor act, (ii) any bank,
trust company, banking association or firm that is authorized by
law to underwrite or participate in the marketing of securities
of a public utility, or (iii) any company supplying electrical
equipment to the Company, nor (b) accept any such position and
commence the performance of any duties or services in such
capacity (an "Interlock"), unless the Executive shall have first
(x) furnished the Board with at least thirty (30) days prior
written notice of his intention to create such Interlock and (y)
secured, if the Board shall request that such action be taken,
any necessary authorization for such Interlock, in form and
substance satisfactory to the Board, from the Federal Energy
Regulatory Commission, or successor regulatory agency, pursuant
to Section 305(b) of the Federal Power Act, or any supplement or
amendment thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall
be reviewed at least once each year after the Effective Date, and
may be increased (but not decreased) at any time and from time to
time by action of the Board or any committee thereof or any
individual having authority to take such action in accordance
with the Company's regular practices.  Once increased, any
reference to Base Salary herein shall be a reference to such
increased amount.  Neither the Base Salary nor any increase in
Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid
to the Executive for the most recently ended fiscal year of the
Company or the target bonus for the then current fiscal year (the
"Minimum Bonus Amount").  Any amount payable in respect of the
Annual Bonus Opportunity or the Minimum Bonus Amount shall be
paid no later than sixty (60) days after the close of the fiscal
year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to
any deferral programs or arrangements that the Company may make
available to the Executive.

          (c)  Long-term Incentive Compensation Programs and
Equity Programs.  During the Employment Period, the Executive
shall participate in all long-term incentive compensation
programs and equity programs for key executives at a level that
is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter, it being
understood that as of the Effective Date all of the Executive's
options now or hereafter granted under such plans shall be
exercisable, by the Executive or his beneficiary, until the later
of (i) December 31, 1999, or (ii) the date set forth in the plan
or the operative option agreements. 

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
retirement, supplemental retirement or excess benefit
(collectively, the "Supplemental Retirement Benefits"), deferred
compensation, savings, medical, dental, health, disability, group
life, accidental death and travel accident insurance plans and
programs of the Company and its affiliated companies at a level
that is commensurate with and provides the same level and quality
of coverage as the Executive's participation in such plans
immediately prior to the Effective Date (except for the Medical
Executive Reimbursement Plan (the "MERP"), it being understood
that the MERP shall be terminated as of September 30, 1995), or,
if more favorable to the Executive, at the level made available
to the Executive or other similarly situated executive officers
of the Company and its affiliated companies at any time
thereafter, it being understood that (I) post-employment medical
benefits either under the Company's medical insurance plan, or
otherwise, shall be provided by the Company to the Executive and
his spouse, Carol Jacobs (the "Spouse"), at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive and Spouse's participation in such plan
immediately prior to the Date of Termination until the later of
(i) the Executive's death or (ii) the Spouse's death; provided,
however, that such benefits shall be offset by any medical
benefits payable to the Executive or the Spouse under any then
applicable state or federal medical plans or programs, and (II)
to the extent Board or Company approval is required or to the
extent notice by the Executive is required under any plan
providing Supplemental Retirement Benefits for any election for
form of benefit or timing of payment thereof, such approval is
hereby deemed granted and such notice is deemed to have been
satisfied.  In addition, in the event that the Company adjusts
interest rate assumptions or mortality tables used in the
calculation of lump sum benefits under the Company's qualified
pension plan in order to comply with federal law, Executive's
aggregate benefits under the Company's qualified and nonqualified
pension plans shall not be less than such benefits would have
been if calculated in accordance with the interest rate
assumptions and mortality table in effect as of the Effective
Date.  

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time; provided, however, that in no event shall such
policies and procedures after the occurrence of a Change of
Control be less favorable to the Executive than immediately prior
to a Change of Control.  Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the
Change of Control date to the Executive, if such policies and
procedures are more favorable to the Executive than those in
effect immediately prior to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to

the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"); provided, however, that in no event shall
the protection afforded to the Executive hereunder be less than
that afforded under the Governing Documents as in effect im-
mediately prior to the Effective Date, or if later, the Change of
Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time, it being understood that the Executive is eligible
for voluntary retirement as of the Effective Date.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, the Executive may, upon not
less than 60 days' written notice to the Company, voluntarily
terminate employment for any reason; provided, however, that any
termination by the Executive pursuant to Section 5(d) on account
of Good Reason (as defined therein) or voluntary retirement shall
not be treated as a voluntary termination under this Section
5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness), (ii) the
Executive's conviction or plea of nolo contendere to a felony;
(iii) the Executive's willful engagement in misconduct in
connection with employment which results in material damage to
the Company's business or reputation; or (iv) material breach of
Executive's duties hereunder which result in material damage to
the Company's business or reputation, in each of (ii) through
(iv) above, upon 30 days written notice to the Executive, the
opportunity for the Executive to be heard by the Board and the
good faith determination by at least two-thirds of the Company's
non-employee directors that Cause exists; provided, however, that
after the occurrence of a Change of Control (as hereinafter
defined), "Cause" shall be limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any
     duties inconsistent with the Executive's position, authority
     or responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

           (iv   any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the
     occurrence of a Change of Control; provided, however, that
     the successor has had actual written notice of the existence
     of this Agreement and its terms and an opportunity to assume
     the Company's responsibilities under this Agreement during a
     period of 10 business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the Executive's having actual
knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon as
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.


          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement, this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representatives under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i)  the Executive's full Base Salary through the Date
               of Termination (the "Earned Salary");

              (ii)  in the event of a termination by reason of
              death
                    or Permanent Disability only, a cash amount
                    (the
                    "Severance Amount") equal to the sum of

                    (A)  the Executive's annual Base Salary; plus

                    (B)  the Minimum Bonus Amount; multiplied by

                    (C)  a fraction, the numerator of which is
                         the number of full months remaining in
                         the Employment Period, and the
                         denominator of which is twelve.

                    Notwithstanding the foregoing, in the event
                    of termination by reason of Permanent
                    Disability, the Severance Amount shall be
                    reduced by any salary replacement payments
                    received by the Executive under any long-term
                    disability plan sponsored by the Company.
     
             (iii)  the Supplemental Retirement Benefits and the
                    amount otherwise payable to or in respect of the
                    Executive under the Company's otherwise applicable
                    long-term incentive compensation and equity plans
                    and programs (the "Incentive and Equity  Amounts")
                    it being understood that, in the event of death or
                    disability, any applicable performance targets
                    thereunder (to the extent not already determined
                    as of the last day of Employment) shall be deemed
                    to have been met for the applicable performance
                    period and that payments thereunder shall be pro-
                    rated as of the last day of the Employment Period;
                    and in the event of a termination by reason of
                    voluntary retirement, then the Supplemental
                    Retirement Benefits and the Incentive and Equity
                    Amounts, the Incentive and Equity Amounts being
                    calculated and payable in accordance with the
                    terms of the underlying plans and payable to the
                    Executive when awards are payable to all other
                    participants in such plans in accordance with the
                    terms thereof, but prorated through the date of
                    such retirement; and

              (iv)  an amount (the "Pro-Rated Bonus") equal to the
                    product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable
                    bonus plan (the "Actual Bonus Payment")
     
          (v)  all vested amounts or benefits owing to the
               Executive under the Company's otherwise applicable
               employee benefit plans and programs, including any
               compensation previously deferred by the Executive
               (together with any accrued earnings thereon) and
               not yet paid by the Company and any accrued
               vacation pay not yet paid by the Company (the
               "Accrued Obligations").

Any Earned Salary, Severance Amount, Accrued Obligations and
Pro-Rated Bonus shall be paid in cash in a single lump sum as
soon as practicable (but in no event more than 20 days) following
the Date of Termination.  Any Incentive and Equity Amounts and
Supplemental Retirement Benefits accrued by the Executive shall
be payable in accordance with the terms of the underlying plans,
it being understood that for purposes of such plans, in the event
of a termination by reason of death or Permanent Disability,
Executive shall be treated as if he retired on the last day of
the Employment Period.

          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason), the Company shall pay the Executive
the Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the
Date of Termination, or in accordance with the terms of the
underlying plan.

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A),
               Executive's vested interest in such benefits shall
               accelerate; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a
     Change of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, it being
               understood that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination (the "Benefit Plans").  To
               the extent any such benefits cannot be provided
               under the terms of the applicable plan, policy or
               program, the Company shall provide a comparable
               benefit under another plan or from the Company's
               general assets.  The Executive's participation in
               the Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time described in
               Section 4(c) after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.


     (B) After the Occurrence of a Change of Control.

          (i)  Payments.  If, following a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;


          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the
               calculation of Supplemental Retirement Benefits,
               Final Annual Compensation (as defined in the
               underlying plans) shall be equal to Final Annual
               Compensation as of the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein) and the elections of the Executive thereunder.

           (ii   Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause, or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, excluding the
               Supplemental Retirement Benefits (the "Benefit
               Plans").  To the extent any such benefits cannot
               be provided under the terms of the applicable
               plan, policy or program, the Company shall provide
               a comparable benefit under another plan or from
               the Company's general assets.  The Executive's
               participation in the Benefit Plans will be on the
               same terms and conditions that would have applied
               had the Executive continued to be employed by the
               Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the Equity
               Documents for the period of time described in
               Section 4(c) after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.  Except as
expressly provided in the last sentence of this Section 6(d), the
amounts payable to the Executive pursuant to this Section 6
following termination of his employment shall be in full and
complete satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 6(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid
     or distributed to the Executive by the Company or any
     affiliated company (collectively, the "Covered Payments"),
     are or become subject to the tax (the "Excise Tax") imposed
     under Section 4999 of the Code or any similar tax that may
     hereafter be imposed, the Company shall pay to the Executive
     at the time specified in Section 6(e)(v) below an additional
     amount (the "Tax Reimbursement Payment") such that the net
     amount retained by the Executive with respect to such
     Covered Payments, after deduction of any Excise Tax on the
     Covered Payments and any Federal, state and local income,
     employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section 6(e), but
     before deduction for any Federal, state or local income or
     employment tax withholding on such Covered Payments, shall
     be equal to the amount of the Covered Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as
               "parachute payments" within the meaning of Section
               28OG of the Code, and all "parachute payments" in
               excess of the "base amount" (as defined under
               Section 28OG(b)(3) of the Code) shall be treated
               as subject to the Excise Tax, unless, and except
               to the extent that, in the good faith judgment of
               the Company's independent certified public
               accountants appointed prior to the Effective Date
               or tax counsel selected by such Accountants (the
               "Accountants"), the Company has a reasonable basis
               to conclude that such Covered Payments (in whole
               or in part) either do not constitute "parachute
               payments" or represent reasonable compensation for
               personal services actually rendered (within the
               meaning of Section 28OG(b)(4)(B) of the Code) in
               excess of the "base amount," or such "parachute
               payments" are otherwise not subject to such Excise
               Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the
     Tax Reimbursement Payment, the Executive shall be deemed to
     pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum
               reduction in Federal incomes taxes which could be
               obtained from the deduction of such state or local
               taxes if paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding
     or negotiations with the Internal Revenue Service to be less
     than the amount taken into account hereunder in calculating
     the Tax Reimbursement Payment made, the Executive shall
     repay to the Company, at the time that the amount of such
     reduction in the Excise Tax is finally determined, the
     portion of such prior Tax Reimbursement Payment that would
     not have been paid if such Excise Tax had been applied in
     initially calculating such Tax Reimbursement Payment, plus
     interest on the amount of such repayment at the rate
     provided in Section 1274(b)(2)(B) of the Code. 
     Notwithstanding the foregoing, in the event any portion of
     the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund
     or credit of such portion has been made to the Executive,
     and interest payable to the Company shall not exceed
     interest received or credited to the Executive by such tax
     authority for the period it held such portion.  The
     Executive and the Company shall mutually agree upon the
     course of action to be pursued (and the method of allocating
     the expenses thereof) if the Executive's good faith claim
     for refund or credit is denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service (the
     "Service") to exceed the amount taken into account hereunder
     at the time the Tax Reimbursement Payment is made
     (including, but not limited to, by reason of any payment the
     existence or amount of which cannot be determined at the
     time of the Tax Reimbursement Payment), the Company shall
     make an additional Tax Reimbursement Payment in respect of
     such excess (plus any interest or penalty payable with
     respect to such excess) at the time that the amount of such
     excess is finally determined, such that the net amount
     retained by the Executive with respect to the Covered
     Payments, after deduction of any Excise Tax on the Covered
     Payments and any Federal, state and local income, employment
     or other tax and Excise Tax on the Tax Reimbursement Payment
     provided for by this Section, but before deduction for any
     Federal, state or local income or employment tax withholding
     on such Covered Payments, shall be equal to the amount of
     the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises
     out of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for
     the cost of preparing the Executive's income tax returns for
     the year in which any payment by the Company may be
     characterized as a parachute payment.  The Executive shall
     notify the Company in writing of any such Claim as soon as
     practicable but in no event later than ten (10) business
     days after the Executive is informed of such Claim and shall
     cooperate with the Company in good faith to effectively
     contest the Claim.  The Company shall control all
     proceedings taken in connection with such contest and, at
     its sole option, may pursue or forego any and all
     administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect of such
     Claim and the Executive agrees to prosecute such contest as
     the Company shall determine.  Notwithstanding the foregoing,
     if the Company forgoes further prosecution of such contest,
     the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

            (v   The Tax Reimbursement Payment (or portion
     thereof) provided for in Section 6(e)(i) above shall be paid
     to the Executive not later than 10 business days following
     the payment of the Covered Payments; provided, however, that
     if the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date
     on which payment is due, the Company shall pay to the
     Executive by such date an amount estimated in good faith by
     the Accountants to be the minimum amount of such Tax Re-
     imbursement Payment and shall pay the remainder of such Tax
     Reimbursement Payment (together with interest at the rate
     provided in Section 1274(b)(2)(B) of the Code) as soon as
     the amount thereof can be determined, but in no event later
     than 45 calendar days after payment of the related Covered
     Payment.  In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

7.  Definitions.  (a)  Change of Control.  For purposes of this
Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed  to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise
In the event that the Executive shall in good faith give a Notice
of Termination for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual
consent of the Company and the Executive and, except as provided
in the last preceding sentence, the Executive shall be entitled
to receive only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 11
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date, including,
but not limited to, that certain Employment Agreement between the
parties dated as of February 11, 1993.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the city
of Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of
law or equity.  The arbitrator shall be acceptable to both the
Company and the Executive.  If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators, one appointed by each of the parties and the
third appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company


If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey  08232
                              Attention: Secretary



with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.


or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.


          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.


          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.


          (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.


          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.


          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.


          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.



                                 By:/S/ J. Michael Galvin, Jr.    
        
     Secretary                           J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee


                                 EXECUTIVE:


                                                                  
        
                                   J. L. Jacobs


                                 EXHIBIT A
                             CONSULTING TERMS

          (i)  Executive shall serve as a consultant to the
          Company on an exclusive basis and shall furnish
          advisory and consultative services to the Company, its
          divisions and subsidiaries including advice and
          assistance in connection not only with matters then
          current, but also matters in which Executive
          participated during and subsequent to the Employment
          Period in accordance with the instructions of the
          Board;

          (ii)  Executive shall be entitled to prompt
          reimbursement as vouchers are presented in accordance
          with the Company's practices for all reasonable
          business expenses incurred by him in the performance of
          services during the Consulting Period;

          (iii)   The Company shall pay Executive $130,000 annual
          consulting fee payable annually at the end of each
          fiscal year;

          (iv)  In the event of the occurrence of a Change of
          Control, the Executive shall be paid in a lump sum as
          soon as practicable thereafter (but in no event more
          than 20 days thereafter) an amount equal to his
          consulting fee for the balance of the Consulting
          Period;

          (v)  In the event that the Executive dies prior to the
          end of the Consulting Period, the Company shall pay the
          Executive's legal representatives under this Agreement
          in a lump sum as soon as practicable thereafter (but in
          no event more than 20 days thereafter) an amount equal
          to the Executive's consulting fee for the balance of
          the Consulting Period;

          (vi)    During the Consulting Period, Executive shall
          be treated by the Company as an independent contractor
          for all purposes, and is therefore not entitled to
          participate in the Company's employee benefit plans,
          programs or arrangements, (except to the extent such
          participation is attributable to service rendered prior
          to or during the Employment Period).

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
                ATLANTIC ENERGY, INC. and JERROLD L. JACOBS
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and JERROLD L. JACOBS (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________________       
BY:______________________________
                                   J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
Committee

                              BY:  /s/ J. L. Jacobs
                                       J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ J. L. Jacobs
                                  J. L. Jacobs

EX-99.4

                                              EXHIBIT 10A(20)1

                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey
corporation (the "Company"), and Michael J. Chesser (the
"Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  The term of this Agreement
shall commence on the date hereof (the "Effective Date") and
shall continue until the second anniversary of the Effective Date
(the "Employment Period"); provided, however, that the Employment
Period shall be automatically renewed for two years unless either
party shall send the other written notice of its intention to
terminate the agreement at the end of such Employment Period one
year prior to the end of such Employment Period; and, provided,
further, that upon the occurrence of a Change of Control, the
Employment Period shall become three years and shall commence on
the date of the Change of Control, and shall thereafter be
automatically renewed for two years unless either party shall
send the other written notice of its intention to terminate the
agreement one year prior to the end of the then current
Employment Period.
          
          2.  Place of Employment.  The Executive's services
during the term of this Agreement shall be performed primarily at
the principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably
require in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees
to employ the Executive as its Senior Vice President and as the
President and Chief Operating Officer of Atlantic City Electric
Company ("Electric") for the Employment Period.  The Executive
shall exercise his reasonable best efforts in furtherance of, and
shall devote substantially all of his working time and attention
to the affairs of the Company and its affiliates, and shall
perform such duties and services as may reasonably be assigned to
him by, and shall report directly to the Chief Executive Officer
and the Board of Directors of the Company (the "Board").
   
          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees on
which he served prior to the Effective Date, in each case only if
and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of
vacation and sick leave to which he is entitled.  It is expressly
understood and agreed that the Executive's continuing to serve on
any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the Effective Date
which is not in violation of any Company policy shall not be
deemed to interfere with the performance of the Executive's
services to the Company.  In addition, the Executive may commence
service as a director of other corporations or organizations
after the Effective Date upon approval by the Board which, in the
judgment of the Board, will not present any conflict of interest
with the Company or any subsidiary or affiliate thereof, and
which would not affect the performance of Executive's duties
pursuant to this Agreement, which approval shall not be
unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility
under the Federal Power Act, or any successor act, (ii) any bank,
trust company, banking association or firm that is authorized by
law to underwrite or participate in the marketing of securities
of a public utility, or (iii) any company supplying electrical
equipment to the Company, nor (b) accept any such position and
commence the performance of any duties or services in such
capacity (an "Interlock"), unless the Executive shall have first
(x) furnished the Board with at least thirty (30) days prior
written notice of his intention to create such Interlock and (y)
secured, if the Board shall request that such action be taken,
any necessary authorization for such Interlock, in form and
substance satisfactory to the Board, from the Federal Energy
Regulatory Commission, or successor regulatory agency, pursuant
to Section 305(b) of the Federal Power Act, or any supplement or
amendment thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall
be reviewed at least once each year after the Effective Date, and
may be increased (but not decreased) at any time and from time to
time by action of the Board or any committee thereof or any
individual having authority to take such action in accordance
with the Company's regular practices.  Once increased, any
reference to Base Salary herein shall be a reference to such
increased amount.  Neither the Base Salary nor any increase in
Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid
to the Executive for the most recently completed fiscal year of
the Company or the target bonus for the then current fiscal year
(the "Minimum Bonus Amount").  Any amount payable in respect of
the Annual Bonus Opportunity or the Minimum Bonus Amount shall be
paid no later than sixty (60) days after the close of the fiscal
year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to
any deferral programs or arrangements that the Company may make
available to the Executive.

          (c)  Long-term Incentive Compensation Programs and
Equity Programs.  During the Employment Period, the Executive
shall participate in all long-term incentive compensation
programs and equity programs for key executives at a level that
is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter.

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
supplemental retirement or excess benefit (collectively, the
"Supplemental Retirement Benefits"), deferred compensation,
savings, medical, dental, health, disability, group life,
accidental death and travel accident insurance plans and programs
of the Company and its affiliated companies at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive's participation in such plans
immediately prior to the Effective Date (except for the Medical
Executive Reimbursement Plan (the "MERP"), it being understood
that the MERP shall be terminated as of September 30, 1995), or,
if more favorable to the Executive, at the level made available
to the Executive or other similarly situated executive officers
of the Company and its affiliated companies at any time
thereafter.

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time; provided; however, that in no event shall such
policies and procedures after the occurrence of a Change of
Control be less favorable to the Executive than immediately prior
to a Change of Control.  Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the
Change of Control date to the Executive, if such policies and
procedures are more favorable to the Executive than those in
effect immediately prior to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to

the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"); provided, however, that in no event shall
the protection afforded to the Executive hereunder be less than
that afforded under the Governing Documents as in effect im-
mediately prior to the Effective Date, or if later, the Change of
Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, the Executive may, upon not
less than 60 days' written notice to the Company, voluntarily
terminate employment for any reason (including early retirement
under the terms of any of the Company's retirement plans as in
effect from time to time); provided, however, any termination by
the Executive pursuant to Section 5(d) on account of Good Reason
(as defined therein) shall not be treated as a voluntary
termination under this Section 5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness),(ii) the
Executive's conviction or plea of nolo contendere to a felony;
(iii) the Executive's willful engagement in misconduct in
connection with employment which results in material damage to
the Company's business or reputation; or (iv) material breach of
Executive's duties hereunder which result in material damage to
the Company's business or reputation, in each of (ii) through
(iv) above, upon 30 days written notice to the Executive, the
opportunity for the Executive to be heard by the Board and the
good faith determination by at least two-thirds of the Company's
non-employee directors that Cause exists; provided, however, that
after the occurrence of a Change of Control (as hereinafter
defined), "Cause" shall be limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any
     duties inconsistent with the Executive's position, authority
     or responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

          (iv    any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the
     occurrence of a Change of Control; provided, however, the
     successor has had actual written notice of the existence of
     this Agreement and its terms and an opportunity to assume
     the Company's responsibilities under this Agreement during a
     period of 10 business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the Executive's having actual
knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.

          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representative under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i     the Executive's full Base Salary through the
     Date of Termination (the "Earned Salary");
     
          (ii    the Supplemental Retirement Benefits and the
     amount otherwise payable to or in respect of the Executive
     under the Company's otherwise applicable long-term incentive
     compensation and equity plans and programs (the "Incentive
     and Equity Amounts") it being understood that, in the event
     of death or disability, any applicable performance targets
     thereunder (to the extent not already determined as of the
     Termination Date) shall be deemed to have been met for the
     applicable performance period and that payments thereunder
     shall be pro-rated as of the Date of Termination; and in the
     event of a termination by reason of retirement, then the
     Supplemental Retirement Benefits and the Incentive and
     Equity Amounts, the Incentive and Equity Amounts being
     calculated and payable in accordance with the terms of the
     underlying plans and payable to the Executive when awards
     are payable to all other participants in such plans in
     accordance with the terms thereof, but prorated through the
     date of such retirement; and

          (iii   an amount (the "Pro-Rated Bonus") equal to the
     product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable
                    bonus plan (the "Actual Bonus Payment")
     
          (iv)        all vested amounts or benefits owing to the
     Executive under the Company's otherwise applicable employee
     benefit plans and programs, including any compensation
     previously deferred by the Executive (together with any
     accrued earnings thereon) and not yet paid by the Company
     and any accrued vacation pay not yet paid by the Company
     (the "Accrued Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall
be paid in cash in a single lump sum as soon as practicable ( but
in no event more than 20 days) following the Date of Termination.

Any Incentive and Equity Amounts and Supplemental Retirement
Benefits accrued by the Executive shall be payable in accordance
with the terms of the underlying plans.


          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason), the Company shall pay the Executive
the Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the
Date of Termination, or in accordance with the terms of the
underlying plan. 

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A),
               Executive's vested interest in such benefits shall
               accelerate; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a
     Change of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or, (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, it being
               understood that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination (the "Benefit Plans").  To
               the extent any such benefits cannot be provided
               under the terms of the applicable plan, policy or
               program, the Company shall provide a comparable
               benefit under another plan or from the Company's
               general assets.  The Executive's participation in
               the Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time permitted in
               accordance with the generally applicable terms of
               the governing Equity Documents) after the Date of
               Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

     (B) After the Occurrence of a Change of Control.

            (i   Payments.  If, following a Change of Control,
     the Company terminates the Executive's employment other than
     for Cause, or the Executive terminates his employment for
     Good Reason, the Company shall pay to the Executive the
     following amounts, either in a lump sum or in such other
     form of payment as is provided or elected by the Executive
     under the operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the
               calculation of Supplemental Retirement Benefits,
               Final Annual Compensation (as defined in the
               underlying plans) shall be equal to Final Annual
               Compensation as of the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein) and the elections of the Executive thereunder.

          (ii)  Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer,
               (the "End Date"), to continue participation
               (including, but not limited to, vesting and
               accruals) in all of the Company's employee and
               executive pension, welfare and fringe benefit
               plans, excluding the Supplemental Retirement
               Benefits (the "Benefit Plans").  To the extent any
               such benefits cannot be provided under the terms
               of the applicable plan, policy or program, the
               Company shall provide a comparable benefit under
               another plan or from the Company's general assets.

               The Executive's participation in the Benefit Plans
               will be on the same terms and conditions that
               would have applied had the Executive continued to
               be employed by the Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               Equity Documents for the period of time permitted
               in accordance with the generally applicable terms
               of the governing Equity Documents, after the Date
               of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
6(d), the amounts payable to the Executive pursuant to this
Section 6 following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under
this Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 6(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid
     or distributed to the Executive by the Company or any
     affiliated company (collectively, the "Covered Payments"),
     are or become subject to the tax (the "Excise Tax") imposed
     under Section 4999 of the Code or any similar tax that may
     hereafter be imposed, the Company shall pay to the Executive
     at the time specified in Section 6(e)(v) below an additional
     amount (the "Tax Reimbursement Payment") such that the net
     amount retained by the Executive with respect to such
     Covered Payments, after deduction of any Excise Tax on the
     Covered Payments and any Federal, state and local income,
     employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section 6(e), but
     before deduction for any Federal, state or local income or
     employment tax withholding on such Covered Payments, shall
     be equal to the amount of the Covered Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as
               "parachute payments" within the meaning of Section
               28OG of the Code, and all "parachute payments" in
               excess of the "base amount" (as defined under
               Section 28OG(b)(3) of the Code) shall be treated
               as subject to the Excise Tax, unless, and except
               to the extent that, in the good faith judgment of
               the Company's independent certified public
               accountants appointed prior to the Effective Date
               or tax counsel selected by such Accountants (the
               "Accountants"), the Company has a reasonable basis
               to conclude that such Covered Payments (in whole
               or in part) either do not constitute "parachute
               payments" or represent reasonable compensation for
               personal services actually rendered (within the
               meaning of Section 28OG(b)(4)(B) of the Code) in
               excess of the "base amount," or such "parachute
               payments" are otherwise not subject to such Excise
               Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the
     Tax Reimbursement Payment, the Executive shall be deemed to
     pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum
               reduction in Federal incomes taxes which could be
               obtained from the deduction of such state or local
               taxes if paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding
     or negotiations with the Internal Revenue Service to be less
     than the amount taken into account hereunder in calculating
     the Tax Reimbursement Payment made, the Executive shall
     repay to the Company, at the time that the amount of such
     reduction in the Excise Tax is finally determined, the
     portion of such prior Tax Reimbursement Payment that would
     not have been paid if such Excise Tax had been applied in
     initially calculating such Tax Reimbursement Payment, plus
     interest on the amount of such repayment at the rate
     provided in Section 1274(b)(2)(B) of the Code. 
     Notwithstanding the foregoing, in the event any portion of
     the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund
     or credit of such portion has been made to the Executive,
     and interest payable to the Company shall not exceed
     interest received or credited to the Executive by such tax
     authority for the period it held such portion.  The
     Executive and the Company shall mutually agree upon the
     course of action to be pursued (and the method of allocating
     the expenses thereof) if the Executive's good faith claim
     for refund or credit is denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service (the
     "Service") to exceed the amount taken into account hereunder
     at the time the Tax Reimbursement Payment is made
     (including, but not limited to, by reason of any payment the
     existence or amount of which cannot be determined at the
     time of the Tax Reimbursement Payment), the Company shall
     make an additional Tax Reimbursement Payment in respect of
     such excess (plus any interest or penalty payable with
     respect to such excess) at the time that the amount of such
     excess is finally determined, such that the net amount
     retained by the Executive with respect to the Covered
     Payments, after deduction of any Excise Tax on the Covered
     Payments and any Federal, state and local income, employment
     or other tax and Excise Tax on the Tax Reimbursement Payment
     provided for by this Section, but before deduction for any
     Federal, state or local income or employment tax withholding
     on such Covered Payments, shall be equal to the amount of
     the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises
     out of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for
     the cost of preparing the Executive's income tax returns for
     the year in which any payment by the Company may be
     characterized as a parachute payment.  The Executive shall
     notify the Company in writing of any such Claim as soon as
     practicable but in no event later than ten (10) business
     days after the Executive is informed of such Claim and shall
     cooperate with the Company in good faith to effectively
     contest the Claim.  The Company shall control all
     proceedings taken in connection with such contest and, at
     its sole option, may pursue or forego any and all
     administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect of such
     Claim and the Executive agrees to prosecute such contest as
     the Company shall determine.  Notwithstanding the foregoing,
     if the Company forgoes further prosecution of such contest,
     the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

          (v     The Tax Reimbursement Payment (or portion
     thereof) provided for in Section 6(e)(i) above shall be paid
     to the Executive not later than 10 business days following
     the payment of the Covered Payments; provided, however, that
     if the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date
     on which payment is due, the Company shall pay to the
     Executive by such date an amount estimated in good faith by
     the Accountants to be the minimum amount of such Tax Re-
     imbursement Payment and shall pay the remainder of such Tax
     Reimbursement Payment (together with interest at the rate
     provided in Section 1274(b)(2)(B) of the Code) as soon as
     the amount thereof can be determined, but in no event later
     than 45 calendar days after payment of the related Covered
     Payment.  In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

     7.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed  to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise
In the event that the Executive shall in good faith give a Notice
of Termination for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual
consent of the Company and the Executive and, except as provided
in the last preceding sentence, the Executive shall be entitled
to receive only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 11
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date, including,
but not limited to, that certain Employment Agreement between the
parties dated as of January 10, 1994.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City
of Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of
law or equity.  The arbitrator shall be acceptable to both the
Company and the Executive.  If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators, one appointed by each of the parties and the
third appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey 08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.

          (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.

          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.

                                 By:/s/  J. Michael Galvin, Jr.   
        
     Secretary                           J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee

                                 By: /s/ J. L. Jacobs            
                                         J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:

                              /s/  Michael J. Chesser             
        
                                   Michael J. Chesser

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
               ATLANTIC ENERGY, INC. and MICHAEL J. CHESSER
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and MICHAEL J. CHESSER (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________________       
BY:______________________________
                                   J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
                              Committee

                              BY:/s/ J. L. Jacobs
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Michael J. Chesser
                                  Michael J. Chesser

EX-99.5

                                                 EXHIBIT 10A(23)

                     EMPLOYMENT CONTINUATION AGREEMENT


          THIS AGREEMENT by and between Atlantic Energy, Inc., a
New Jersey corporation (the "Company"), and Marilyn T. Powell
(the "Executive"), is hereby dated this 10th day of August, 1995.


                           W I T N E S S E T H:


          WHEREAS, the Company or a subsidiary has employed the
Executive in an officer position and has determined that the
Executive holds an important position with the Company;

          WHEREAS, the Company believes that, in the event it is
confronted with a situation that could result in a change in
ownership or control of the Company or Atlantic City Electric
Company ("Electric"), continuity of management will be essential
to its ability to evaluate and respond to such situation in the
best interests of shareholders;

          WHEREAS, the Company understands that any such
situation will present significant concerns for the Executive
with respect to his financial and job security;

          WHEREAS, the Company desires to assure itself of the
Executive's services during the period in which it is confronting
such a situation, and to provide the Executive certain financial
assurances to enable the Executive to perform the
responsibilities of his position without undue distraction and to
exercise his judgment without bias due to his personal
circumstances;

          WHEREAS, to achieve these objectives, the Company and
the Executive desire to enter into an agreement providing the
Company and the Executive with certain rights and obligations
upon the occurrence of a Change of Control or Potential Change of
Control (as defined in Section 2);

          NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, it is hereby agreed by and
between the Company and the Executive as follows:

          1.  Operation of Agreement. (a)  Effective Date.  The
effective date of this Agreement shall be the earlier of the date
on which a Potential Change of Control or Change of Control
occurs (the "Effective Date"); provided, however, that if the
Executive is not employed by the Company or has received notice
of termination, on the Effective Date, this Agreement shall be
void and without effect.

          (b)  Termination of Agreement Following a Potential
Change of Control.  Notwithstanding Section l(a), in the event
the Effective Date occurs upon a Potential Change of Control,
this Agreement shall cease to be effective upon (i) a good faith
determination by the Board of Directors of the Company ("Board")
that the events giving rise to a Potential Change of Control will
not result in the occurrence of a Change of Control or (ii) the
discontinuance or termination of the events which constituted the
Potential Change of Control without resulting in a Change of
Control including, but not limited to, a failed hostile takeover
attempt.  Following such a determination by the Board, neither
the Company nor the Executive shall have any obligation to the
other under this Agreement, unless and until it thereafter again
becomes effective by reason of the occurrence of another
Potential Change of Control or any actual Change of Control.

     2.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

          (b)  Potential Change of Control.  For purposes of this
Agreement, a Potential Change of Control shall be deemed to have
occurred:

            (i   upon the approval by shareholders of an
     agreement by the Company, the consummation of which would
     result in a Change of Control of the Company as defined in
     (a) above; or

           (ii   upon the acquisition of beneficial ownership,
     directly or indirectly by any entity, person or group (other
     than the Company or a subsidiary or any Company employee
     benefit plan, including any trustee of such plan acting as
     such trustee) of securities of the Company representing 5%
     or more of the combined voting power of the Company's
     outstanding securities and the adoption by the Board of a
     resolution to the effect that a Potential Change of Control
     of the Company has occurred.

For purposes of this Section 2, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric. 

          3.  Employment Period.  Subject to Section 6 of this
Agreement, if the Executive is employed on the Effective Date,
the Company agrees to continue the Executive in its employ, and
the Executive agrees to remain in the employ of the Company, for
the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a
Change of Control occurs (the "Change of Control Date"). 
Notwithstanding the foregoing, if, prior to the Effective Date,
the Executive is demoted to a lower position than the position
held on the date first set forth above, the Board may declare
that this Agreement shall be without force and effect by written
notice delivered to the Executive within 30 days following such
demotion and prior to the occurrence of a Potential Change of
Control or a Change of Control.  Nothing contained herein is
intended to create a contract of employment between the Executive
and the Company prior to the Effective Date.

     4.  Position and Duties.  (a)  No Reduction in Position. 
During the Employment Period, the Executive's position (including
titles), authority and responsibilities shall be at least
commensurate with those held, exercised and assigned immediately
prior to the Effective Date; provided, however, that, during the
period from the occurrence of a Potential Change of Control until
the Change of Control Date (the "Pre-Change Effective Period"),
the Company may, in its discretion, reduce, modify or otherwise
change the Executive's position, authority or responsibilities,
and such reduction, modification or change shall not constitute
Good Reason.  Any subsequent reductions, modification or change
in the Executive's position, authority or responsibilities after
a Change of Control shall be governed by the provisions of
Article 6(d).  During the Pre-Change Effective Period the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date.

          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees,
in each case only if and to the extent not substantially
interfering with the performance of such responsibilities, and
(ii) periods of vacation and sick leave to which he is entitled. 
It is expressly understood and agreed that the Executive's
continuing to serve on any boards and committees on which he is
serving or with which he is otherwise associated immediately
preceding the Effective Date which is not in violation of any
Company policy shall not be deemed to interfere with the
performance of the Executive's services to the Company.

          5.  Compensation.  (a)  Base Salary.  During the
Employment Period, the Executive shall receive a base salary
("Base Salary") at an annual rate at least equal to the annual
salary paid to the Executive by the Company and any of its
affiliated companies immediately prior to the Effective Date. 
The Base Salary shall be reviewed at least once each year after
the Effective Date, and may be increased (but not decreased) at
any time and from time to time by action of the Board or any
committee thereof or any individual having authority to take such
action in accordance with the Company's regular practices.  Once
increased, any reference to Base Salary herein shall be a
reference to such increased amount.  Neither the Base Salary nor
any increase in Base Salary after the Effective Date shall serve
to limit or reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance, at least equal to the target percentage of his Base
Salary that could have been earned by, or awarded to, the
Executive in respect of the fiscal year in which the Effective
Date occurs.  Without limiting the generality of the foregoing,
following any Change of Control, the amount actually payable to
the Executive as an annual bonus shall not be less than an amount
equal to the higher of the bonus paid to the Executive for the
most recently ended fiscal year of the Company or the target
bonus for the relevant fiscal year (the "Minimum Bonus Amount"). 
Any amount payable in respect of the Annual Bonus Opportunity or
the Minimum Bonus Amount shall be paid not later than sixty (60)
days after the close of the fiscal year for which the amount (or
prorated portion) is earned or awarded, unless electively
deferred by the Executive pursuant to any deferral programs or
arrangements that the Company may make available to the
Executive.

     (c)  Long-term Incentive Compensation Programs and Equity
Programs.  During the Employment Period, the Executive shall par-
ticipate in all long-term incentive compensation programs and
equity programs for key executives at a level that is
commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter; provided,
however, that, during the Pre-Change Effective Period, the
Company may reduce the Executive's level of participation to the
extent that such reduction is part of a cost reduction program
that applies generally to all officers of the Company and such
reduction is in proportion to similar reductions applicable to
such other officers within the terms of the respective plan(s).

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
retirement, supplemental retirement or excess benefit (it being
understood that Executive's participation in the Supplemental
Retirement or Excess Benefit Plans shall be limited to
participation in the Supplemental Excess Retirement Plan II) 
(collectively, the "Supplemental Retirement Benefits"), deferred
compensation, savings, medical, dental, health, disability, group
life, accidental death and travel accident insurance plans and
programs of the Company and its affiliated companies at a level
that is commensurate with the Executive's participation in such
plans immediately prior to the Effective Date (except for the
Medical Executive Reimbursement Plan (the "MERP"), it being
understood that the MERP shall be terminated as of September 30,
1995), or, if more favorable to the Executive, at the level made
available to the Executive or other similarly situated executive
officers of the Company at any time thereafter; provided,
however, that, during the Pre-Change Effective Period, the
Company may reduce the Executive's level of participation (and
that of his dependents) to the extent that such reduction is part
of a cost reduction program that applies generally to all
officers of the Company and such reduction is in proportion to
similar reductions applicable to such other officers within the
terms of the respective plan(s).

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time during the Pre-Change Effective Period and, after
the occurrence of a Change in Control, as in effect immediately
prior to the Change of Control Date.  Notwithstanding the
foregoing, the Company may apply the policies and procedures in
effect after the Change of Control Date to the Executive, if such
policies and procedures are more favorable to the Executive than
those in effect immediately prior to the Change of Control Date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
Subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"), provided that in no event shall the
protection afforded to the Executive hereunder be less than that
afforded under the Governing Documents as in effect immediately
prior to the Effective Date.

          6.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, following a Change of Control
the Executive may, upon not less than 60 days' written notice to
the Company, voluntarily terminate employment for any reason
(including early retirement under the terms of any of the
Company's retirement plans as in effect from time to time);
provided, however, that any termination by the Executive pursuant
to Section 6(d) on account of Good Reason (as defined therein)
shall not be treated as a voluntary termination under this
Section 6(b).  The Executive expressly acknowledges and agrees
that any voluntary termination (other than a retirement under the
terms of any of the Company's plans) during the Pre-Change
Effective Period shall constitute a material breach of this
Agreement.

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) the Executive's conviction or plea of nolo contendere
to a felony; (ii) the Executive's willful engagement in
misconduct in connection with employment which results in
material damage to the Company's business or reputation; or (iii)
material breach of Executive's duties hereunder which result in
material damage to the Company's business or reputation, in each
of (i) through (iii) above, upon 30 days written notice to the
Executive, the opportunity for the Executive to be heard by the
Board and the good faith determination by at least two-thirds of
the Company's non-employee directors that Cause exists.

          (d)  Good Reason.  Following the occurrence of a Change
of Control, the Executive may terminate his employment for Good
Reason.  For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following, without the express written
consent of the Executive, after the occurrence of a Potential
Change of Control or a Change of Control:

            (i   (A) the assignment to the Executive of any
     duties inconsistent in any material adverse respect with the
     Executive's position, authority or responsibilities as
     contemplated by Section 4 of this Agreement, or (B) any
     other material adverse change in such position, including
     titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 4 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

           (iv   any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b), provided,
     however, that the successor has had actual written notice of
     the existence of this Agreement and its terms and an op-
     portunity to assume the Company's responsibilities under
     this Agreement during a period of 10 business days after
     receipt of such notice.

In no event shall the mere occurrence of a Change of Control,
absent any further impact on the Executive, be deemed to
constitute Good Reason.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the later of (x) the
occurrence of a Change of Control and (y) the Executive's having
actual knowledge of the events giving rise to such termination,
and which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon as
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.

          7.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representatives under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i)  the Executive's full Base Salary through the Date
               of Termination (the "Earned Salary");

          (ii)  the Supplemental Retirement Benefits, it being
          understood that upon the occurrence of a Change of
          Control, Executive's vested interest in such benefits 
          shall accelerate, and the amount otherwise payable to
          or in respect of the Executive under the Company's
          otherwise applicable long-term incentive compensation
          and equity plans and programs (the "Incentive and
          Equity Amounts"), all of which shall be fully
          accelerated and deemed earned upon the occurrence of a
          Change of Control, prorated through the Date of
          Termination in the event of death or disability, and,
          in the event of retirement, prorated through the date
          of retirement; and

          (iii)  an amount (the "Pro-Rated Bonus") equal to the
          product of (x) times (y), minus (z):

               (x) the Minimum Bonus Amount;

               (y) a fraction, the numerator of which is the
               number of days in the then current calendar year
               which have elapsed as of the Date of Termination,
               and the denominator of which is 365;

               (z) if Executive's termination occurs in the same
               calendar year as the Change of Control Date, an
               amount equal to the amount paid to the Executive
               under the Company's applicable bonus plan (the
               "Actual Bonus Payment")
     
          (iv)  all other vested amounts or benefits owing to the
          Executive under the Company's otherwise applicable
          employee benefit plans and programs, including any
          compensation previously deferred by the Executive
          (together with any accrued earnings thereon) and not
          yet paid by the Company and any accrued vacation pay
          not yet paid by the Company (the "Accrued
          Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall
be paid in cash in a single lump sum as soon as practicable (but
in no event more than 20 days) following the Date of Termination.

Any Incentive and Equity Amounts and Supplemental Retirement
Benefits accrued by the Executive shall be payable in accordance
with the terms of the underlying plans.

          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason following a Change of Control), the
Company shall pay the Executive the Earned Salary and the Accrued
Obligations (including, but not limited to, the Incentive and
Equity Amounts and Supplemental Retirement Benefits, each in
accordance with the terms of the underlying plan) in cash in a
single lump sum as soon as practicable (but in no event more than
20 days) following the Date of Termination, or in accordance with
the terms of the underlying plan.

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

            (i   Payments.  If, during the Employment Period, the
     Company terminates the Executive's employment other than for
     Cause, or after the occurrence of a Change of Control the
     Executive terminates his employment for Good Reason, the
     Company shall pay to the Executive the following amounts,
     either in a lump sum or in such other form of payment as is
     provided or elected by the Executive under the operative
     plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               two times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of two years and, after such
               credit has been granted, to be computed based upon
               the deemed age of the Executive at the end of such
               two year period, it being understood that upon the
               occurrence of a Change of Control, Executive's
               vested interest in such benefits shall accelerate
               and that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to the Final Compensation as of the
               Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein), and the elections of the Executive thereunder.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     his employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or (ii) the
               date on which the Executive is covered under any
               comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, excluding the
               Supplemental Retirement Benefits (the "Benefit
               Plans").  To the extent any such benefits cannot
               be provided under the terms of the applicable
               plan, policy or program, the Company shall provide
               a comparable benefit under another plan or from
               the Company's general assets.  The Executive's
               participation in the Benefit Plans will be on the
               same terms and conditions that would have applied
               had the Executive continued to be employed by the
               Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time permitted in
               accordance with the generally applicable terms of
               the governing Equity Documents after the Date of
               Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
7(d), the amounts payable to the Executive pursuant to this
Section 7 following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under
this Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 7(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e) Limitation on Payments.

          (i)  If any amounts payable to Executive pursuant to
     this Agreement are deemed to constitute Parachute Payments
     (as hereinafter defined) when added to any other payments
     which are deemed to constitute Parachute Payments, would
     result in the imposition on Executive of an excise tax under
     Section 4999 of the Code, such amounts shall be reduced by
     the smallest amount necessary to avoid the imposition of
     such excise tax; provided, however, that such amounts shall
     be so reduced only if, by reason of such reduction,
     Executive's Net After Tax Benefit (as hereinafter defined)
     shall exceed the Net After Tax Benefit if such reduction
     were not made.  The foregoing calculations (including any
     calculations required pursuant to the definition of Net
     After-Tax Benefit) shall be made by a certified public
     accountant mutually agreeable to the Company and the
     Executive.  In the event it becomes necessary to limit any
     payments to the Executive under this Agreement, Executive's
     health and life insurance shall be the last payments so
     limited.

          (ii)  For purposes of subparagraph (e)(i) above, the
     terms "Net After Tax Benefit" and "Parachute Payment" shall
     have the meanings set forth below:

          (a)  "Net After Tax Benefit" means the sum of (i) the
          total amounts payable to Executive under this
          Agreement, plus (ii) all other payments and benefits
          which Executive receives or is entitled to receive from
          the Company which would constitute a Parachute Payment,
          less (iii) the amount of federal income taxes payable
          with respect to the foregoing calculated at the maximum
          marginal income tax rate for each year in which the
          foregoing shall be paid to Executive (based upon the
          rate in effect for such year as set forth in the Code
          on the Date of Termination), less (iv) the amount of
          excise taxes imposed with respect to the payments and
          benefits described in (i) and (ii) above by Section
          4999 of the Code;

          (b)  "Parachute Payment" means any payment deemed to
          constitute a "parachute payment" as defined in Section
          280G of the Code.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or
otherwise, provided that, if the Executive's employment is
terminated during the Pre-Change Effective Period, the Company
reserves the right to assert any counterclaim it has against
Executive arising out of Executive's intentional or willful
misconduct (including, without limitation, fraud).  In the event
that the Executive shall in good faith give a Notice of
Termination for Good Reason and it shall thereafter be determined
that Good Reason did not exist, the employment of the Executive
shall, unless the Company and the Executive shall otherwise mu-
tually agree, be deemed to have terminated, at the date of giving
such purported Notice of Termination, by mutual consent of the
Company and the Executive and, except as provided in the last
preceding sentence, the Executive shall be entitled to receive
only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 12
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City
of Atlantic City, New Jersey or in the City of Pennsylvania and
except to the extent inconsistent with this Agreement, shall be
conducted in accordance with the Voluntary Labor Arbitration
Rules of the American Arbitration Association then in effect at
the time of the arbitration, and otherwise in accordance with
principles which would be applied by a court of law or equity. 
The arbitrator shall be acceptable to both the Company and the
Executive.  If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three
arbitrators, one appointed by each of the parties and the third
appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey  08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.
 (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.

          IN WITNESS WHEREOF, the Executive has hereunto set her
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.


                                 By:/s/ J. Michael Galvin, Jr.    
        
     Secretary                          J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel &
                                         Benefits Committee


                                 By:/s/ J. L. Jacobs           
                                        J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:


                                 /s/ Marilyn T. Powell      
                                     Marilyn T. Powell

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
                ATLANTIC ENERGY, INC. and MARILYN T. POWELL
                          Dated November 9, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 9th day of
November, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and MARILYN T. POWELL (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________________       
BY:______________________________
                                   J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits 
                              Committee

                              BY:/s/ J. L. Jacobs
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Marilyn T. Powell
                                  Marilyn T. Powell

EX-99.6

                                                 EXHIBIT 10A(6)1

                      ATLANTIC CITY ELECTRIC COMPANY 
                  SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                           Amendment No. 1995-1

          Atlantic City Electric Company, a New Jersey
corporation, hereby adopts this Amendment No. 1995-1 to the
Atlantic City Electric Company Supplemental Executive Retirement
Plan (the "Plan").  This amendment is adopted pursuant to the
provisions of Section 5.3 of the Plan.

          1.   Section 1.2 is added to the Plan and reads as
follows and the sections following such section shall be
renumbered accordingly as necessary:

               1.2  "Change of Control" means that one
          of the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii) when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.

          2.   Section 1.3 of the Plan is amended to read as
follows:

               1.3 "Company" means Atlantic City
          Electric Company, its successors (whether
          direct or indirect by purchase, merger,
          consolidation or otherwise) to all or
          substantially all of the business or assets
          of Atlantic City Electric Company or its
          assigns, except that for purposes of the
          definition of Change of Control it shall mean
          Atlantic Energy, Inc., and to the extent a
          participant is employed by Atlantic City
          Electric Company upon the occurrence of an
          event which constitutes a Change of Control,
          Atlantic City Electric Company.

          3.   Section 3.4 is added to the Plan and reads as
follows:

               3.4  Notwithstanding any other provision
          of the Plan, in the event of a Change of
          Control, the benefits described in sections
          3.1 through 3.3 shall become immediately
          vested to the extent not already vested.

          4.  Section 5.3 is amended to read as follows:

               5.3  Amendment and Termination.  In the
          event of a Change of Control, the SERP may
          not be amended, curtailed, or terminated.  In
          the absence of a Change of Control, the SERP
          may be amended, curtailed, or terminated at
          any time by the Board of Directors; provided,
          however, that at the time such action is
          taken, to the extent that a Qualified
          Executive or his Designated Beneficiary is
          then entitled to receive benefits pursuant to
          paragraph 2.1, 2.2 or 2.3, such benefits
          shall nonetheless be paid as if the SERP were
          still in existence and without reference to
          such change if the effect of such change
          would be to reduce the amount, frequency or
          duration of benefit payments; and further
          provided that no amendment or curtailment of
          the SERP pursuant hereto shall have the
          effect of reducing the accrued benefit under
          the SERP of any Qualified Executive.


          5.   The amendments memorialized in this instrument
were made by action of the Board of Directors of the Company on
August 10, 1995 and were effective on that date.


                              By:________________________


                              Title:_____________________
                                 RIDERS TO
                      ATLANTIC CITY ELECTRIC COMPANY
                SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - II
                                     
     
          1.   Section 1.2 of the Plan is modified to read as
follows:

               1.2  "Change of Control" means that one
          of the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii) when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.

          2.  Section 1.3 of the Plan is modified to read as
follows:

               1.3 "Company" means Atlantic City
          Electric Company, any of its subsidiaries
          authorized by the Board of Directors to
          participate in this Plan with respect to its
          employees, its successors (whether direct or
          indirect by purchase, merger, consolidation
          or otherwise) to all or substantially all of
          the business or assets of Atlantic City
          Electric Company, and its assigns, except
          that for purposes of the definition of Change
          of Control it shall mean Atlantic Energy,
          Inc., and to the extent a participant is
          employed by Atlantic City Electric Company
          upon the occurrence of an event which
          constitutes a Change of Control, Atlantic
          City Electric Company.

          3.  Section 2.1 of the Plan is modified to read as
follows:

          [1st paragraph and table remain, 2nd paragraph is
replaced with the following]

          Notwithstanding any other provision of the
          Plan, in the event of a Change of Control,
          each Qualified Executive shall be 100%
          vested.
          
          4.  Section 5.1 of the Plan is modified to read as
follows:

               5.1  Forfeitures.  In the event of a
          Change of Control this paragraph 5.1 of the
          Plan shall be void and of no force and
          effect.  In the absence of a Change of
          Control, notwithstanding anything contained
          in this Plan to the contrary, a Qualified
          Executive shall forfeit all benefits not yet
          paid from this Plan in the event the Company
          terminates his employment for Cause or for
          his breach of the Non-Competition or Non-
          Disclosure provisions specified in paragraphs
          5.2 and 5.3.  For purposes of this paragraph,
          "Cause" means:

          (i) willful and continuous failure by a
          participant to perform his duties (other than
          resulting from incapacity due to physical or
          mental illness), (ii) a participant's conviction
          or plea of nolo contendere to a felony; (iii) a
          participant's willful engagement in misconduct in
          connection with employment which results in
          material damage to the Company's business or
          reputation; or (iv) material breach of Executive's
          duties under any applicable employment agreement
          which results in material damage to the Company's
          business or reputation, in each of (ii) through
          (iv) above, upon 30 days written notice to the
          Executive, the opportunity for the Executive to be
          heard by the Board and the good faith
          determination by at least two-thirds of the
          Company's non-employee directors that Cause
          exists; provided, however, that after the
          occurrence of a Change of Control (as hereinafter
          defined), "Cause" shall be limited to (ii) through
          (iv) above.

          5.  Section 6.3 of the Plan is modified to read as
follows:

               6.3  Amendment and Termination.  In the
          event of a Change of Control, the Plan may
          not be amended, curtailed, or terminated.  In
          the absence of a Change of Control, the Plan
          may be amended, curtailed, or terminated at
          any time by the Board of Directors; provided,
          however, that at the time such action is
          taken, to the extent that a Qualified
          Executive or his Designated Beneficiary is
          then entitled to receive benefits pursuant to
          paragraph 2.1, 2.2 or 2.3, such benefits
          shall nonetheless be paid as if the Plan were
          still in existence and without reference to
          such change if the effect of such change
          would be to reduce the amount, frequency or
          duration of benefit payments; and further
          provided that no amendment or curtailment of
          the Plan pursuant hereto shall have the
          effect of reducing the accrued benefit under
          the Plan of any Qualified Executive.  

EX-99.7

                                                EXHIBIT 10a(14)1

                           ATLANTIC ENERGY, INC.
                       RETIREMENT PLAN FOR DIRECTORS

                           Amendment No. 1995-1

          Atlantic Energy, Inc. hereby adopts this Amendment No.
1995-1 to the instrument setting forth the Atlantic Energy, Inc.
Retirement Plan For Directors (the "Plan").  This amendment is
adopted pursuant to section 5.1 of the Plan.

          1.   Section 2.3 is added to the Plan and reads as
follows and sections following such section shall be renumbered
accordingly as necessary:

               2.3  "Change of Control" means that one
          of the following has occurred:

               (i)  when any "person" as defined in Section
          3(a)(9) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") and as used in
          Section 13(d) and 14(d) thereof, including a
          "group" as defined in Section 13(d) of the
          Exchange Act but excluding the Company and any
          subsidiary and any employee benefit plan sponsored
          or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as
          trustee), directly or indirectly, becomes the
          "beneficial owner" (as defined in Rule 13d-3 under
          the Exchange Act), of securities of the Company
          representing 20 percent or more of the combined
          voting power of the Company's then outstanding
          securities; or

               (ii) when, during any period of 24
          consecutive months during the existence of the
          Plan, the individuals who, at the beginning of
          such period, constitute the Board (the "Incumbent
          Directors") cease for any reason other than death
          to constitute at least a majority thereof;
          provided, however, that a director who is not a
          director at the beginning of such 24-month period
          shall be deemed  to have satisfied such 24-month
          requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation
          of or with the approval of, at least two-thirds of
          the directors who then qualified as Incumbent
          Directors either actually (because they were
          directors at the beginning of such 24-month
          period) or by prior operation of this Section; or

               (iii)  upon the occurrence of a transaction
          requiring stockholder approval for the acquisition
          of the Company by an entity other than the Company
          or a subsidiary through purchase of assets, or by
          merger, or otherwise.

          2.   Section 3.5 is added to the Plan and reads as
follows:

               3.5  Change of Control.  Notwithstanding
          any other provision of the Plan, in the event
          of a Change of Control, the benefits
          described in this Article of the Plan shall
          become immediately vested to the extent not
          already vested for each Eligible Director. 
          In the event any Eligible Director has served
          less than five full years as of the Change of
          Control, he shall be considered as having
          five full years of service for purposes of
          the actuarial calculations described in this
          Article of the Plan.  
          
          3.  Section 5.1 of the Plan is amended to read as
follows:

               5.1  Amendment, suspension or
          termination.  In the event of a Change of
          Control, this Plan may not be amended,
          suspended or terminated.  In the absence of a
          Change of Control, the Board reserves the
          right to amend, suspend, or terminate the
          Plan, or any provision hereof, including
          without limitation this Section 5.1, without
          the consent of any Eligible Director.  Unless
          an Eligible Director shall consent thereto in
          writing, no amendment, suspension or
          termination shall reduce the Annual
          Retirement Benefit of (a) any Eligible
          Director who at such time is entitled to an
          Annual Retirement Benefit, whether or not
          such Eligible Director is receiving an Annual
          Retirement Benefit at such time, or (b) any
          Eligible Director who would have been
          entitled to an Annual Retirement Benefit if
          such Eligible Director had retired on that
          date, calculated on the basis of such
          Eligible Director's service as a director and
          the annual retainer in effect at such time. 
          Amendment, suspension or termination of the
          Plan notwithstanding, the Annual Retirement
          Benefit shall commence and be paid in
          accordance with the otherwise applicable
          provision of the Plan (Section 3.3).


          4.  The amendments memorialized in this instrument were
made by action of the Committee on August 10, 1995 and were
effective on that date.

                              By:_____________________


                              Title:__________________

EX-99.8

                                              Exhibit #10a(17)1
                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey
corporation (the "Company"), and Meredith I. Harlacher, Jr. (the
"Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  The term of this Agreement
shall commence on the date hereof (the "Effective Date") and
shall continue until the second anniversary of the Effective Date
(the "Employment Period"); provided, however, that the Employment
Period shall be automatically renewed for two years unless either
party shall send the other written notice of its intention to
terminate the agreement at the end of such Employment Period one
year prior to the end of such Employment Period; and, provided,
further, that upon the occurrence of a Change of Control, the
Employment Period shall become three years and shall commence on
the date of the Change of Control, and shall thereafter be
automatically renewed for two years unless either party shall
send the other written notice of its intention to terminate the
agreement one year prior to the end of the then current
Employment Period.
          
          2.  Place of Employment.  The Executive's services
during the term of this Agreement shall be performed primarily at
the principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably
require in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees
to employ the Executive as its Vice President, Power System and
as the Senior Vice President, Power System of Atlantic City
Electric Company ("Electric") for the Employment Period.  The
Executive shall exercise his reasonable best efforts in
furtherance of, and shall devote substantially all of his working
time and attention to the affairs of the Company and its
affiliates, and shall perform such duties and services as may
reasonably be assigned to him by, and shall report directly to
the Chief Executive Officer and the Board of Directors of the
Company (the "Board").
   
          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company
and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees on
which he served prior to the Effective Date, in each case only if
and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of
vacation and sick leave to which he is entitled.  It is expressly
understood and agreed that the Executive's continuing to serve on
any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the Effective Date
which is not in violation of any Company policy shall not be
deemed to interfere with the performance of the Executive's
services to the Company.  In addition, the Executive may commence
service as a director of other corporations or organizations
after the Effective Date upon approval by the Board which, in the
judgment of the Board, will not present any conflict of interest
with the Company or any subsidiary or affiliate thereof, and
which would not affect the performance of Executive's duties
pursuant to this Agreement, which approval shall not be
unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility
under the Federal Power Act, or any successor act, (ii) any bank,
trust company, banking association or firm that is authorized by
law to underwrite or participate in the marketing of securities
of a public utility, or (iii) any company supplying electrical
equipment to the Company, nor (b) accept any such position and
commence the performance of any duties or services in such
capacity (an "Interlock"), unless the Executive shall have first
(x) furnished the Board with at least thirty (30) days prior
written notice of his intention to create such Interlock and (y)
secured, if the Board shall request that such action be taken,
any necessary authorization for such Interlock, in form and
substance satisfactory to the Board, from the Federal Energy
Regulatory Commission, or successor regulatory agency, pursuant
to Section 305(b) of the Federal Power Act, or any supplement or
amendment thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall
be reviewed at least once each year after the Effective Date, and
may be increased (but not decreased) at any time and from time to
time by action of the Board or any committee thereof or any
individual having authority to take such action in accordance
with the Company's regular practices.  Once increased, any
reference to Base Salary herein shall be a reference to such
increased amount.  Neither the Base Salary nor any increase in
Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid
to the Executive for the most recently completed fiscal year of
the Company or the target bonus for the then current fiscal year
(the "Minimum Bonus Amount").  Any amount payable in respect of
the Annual Bonus Opportunity or the Minimum Bonus Amount shall be
paid no later than sixty (60) days after the close of the fiscal
year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to
any deferral programs or arrangements that the Company may make
available to the Executive.

          (c)  Long-term Incentive Compensation Programs and
Equity Programs.  During the Employment Period, the Executive
shall participate in all long-term incentive compensation
programs and equity programs for key executives at a level that
is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to
the Executive, at the level made available to the Executive or
other similarly situated executive officers of the Company and
its affiliated companies at any time thereafter.

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall
be entitled to participate in or be covered under all pension,
supplemental retirement or excess benefit (collectively, the
"Supplemental Retirement Benefits"), deferred compensation,
savings, medical, dental, health, disability, group life,
accidental death and travel accident insurance plans and programs
of the Company and its affiliated companies at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive's participation in such plans
immediately prior to the Effective Date (except for the Medical
Executive Reimbursement Plan (the "MERP"), it being understood
that the MERP shall be terminated as of September 30, 1995), or,
if more favorable to the Executive, at the level made available
to the Executive or other similarly situated executive officers
of the Company and its affiliated companies at any time
thereafter.

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies and procedures of the Company as in effect from
time to time; provided; however, that in no event shall such
policies and procedures after the occurrence of a Change of
Control be less favorable to the Executive than immediately prior
to a Change of Control.  Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the
Change of Control date to the Executive, if such policies and
procedures are more favorable to the Executive than those in
effect immediately prior to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the
Employment Period, the Executive shall be entitled to paid
vacation and fringe benefits at a level that is commensurate with
the paid vacation and fringe benefits available to the Executive
immediately prior to the Effective Date, or, if more favorable to 
the Executive, at the level made available from time to time to
the Executive or other similarly situated executive officers at
any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the
"Governing Documents"); provided, however, that in no event shall
the protection afforded to the Executive hereunder be less than
that afforded under the Governing Documents as in effect im-
mediately prior to the Effective Date, or if later, the Change of
Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's
death, Permanent Disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"),
except that a six month period shall be substituted for the
twelve month period provided for therein) or voluntary retirement
under any of the Company's retirement plans as in effect from
time to time.

          (b)  Voluntary Termination.  Notwithstanding anything
in this Agreement to the contrary, the Executive may, upon not
less than 60 days' written notice to the Company, voluntarily
terminate employment for any reason (including early retirement
under the terms of any of the Company's retirement plans as in
effect from time to time); provided, however, any termination by
the Executive pursuant to Section 5(d) on account of Good Reason
(as defined therein) shall not be treated as a voluntary
termination under this Section 5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness),(ii) the
Executive's conviction or plea of nolo contendere to a felony;
(iii) the Executive's willful engagement in misconduct in
connection with employment which results in material damage to
the Company's business or reputation; or (iv) material breach of
Executive's duties hereunder which result in material damage to
the Company's business or reputation, in each of (ii) through
(iv) above, upon 30 days written notice to the Executive, the
opportunity for the Executive to be heard by the Board and the
good faith determination by at least two-thirds of the Company's
non-employee directors that Cause exists; provided, however, that
after the occurrence of a Change of Control (as hereinafter
defined), "Cause" shall be limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any
     duties inconsistent with the Executive's position, authority
     or responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company
     of this Agreement;

          (iii   the Company's requiring the Executive to be
     based at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change
     of Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

          (iv    any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the
     occurrence of a Change of Control; provided, however, the
     successor has had actual written notice of the existence of
     this Agreement and its terms and an opportunity to assume
     the Company's responsibilities under this Agreement during a
     period of 10 business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events
giving rise to such termination, and in the case of a termination
for Good Reason, within 180 days of the Executive's having actual
knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after
the giving of such notice).  The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case
of a termination for which a Notice of Termination is required,
the date of receipt of such Notice of Termination or, if later,
the date specified therein, as the case may be, and (ii) in all
other cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon
practicable following the Date of Termination, the Executive
shall return to the Company all property of the Company and all
copies thereof in the Executive's possession or under his
control.

          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the
Executive's employment is terminated during the Employment Period
by reason of the Executive's death, Permanent Disability or
voluntary retirement this Agreement shall terminate without
further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations
accrued hereunder at the Date of Termination, and the Company
shall pay or provide to the Executive or the Executive's legal
representative under this Agreement the following amounts either
in a lump sum or in such other form of payment as is provided or
elected by the Executive under the operative plan:

          (i     the Executive's full Base Salary through the
     Date of Termination (the "Earned Salary");
     
          (ii    the Supplemental Retirement Benefits and the
     amount otherwise payable to or in respect of the Executive
     under the Company's otherwise applicable long-term incentive
     compensation and equity plans and programs (the "Incentive
     and Equity Amounts") it being understood that, in the event
     of death or disability, any applicable performance targets
     thereunder (to the extent not already determined as of the
     Termination Date) shall be deemed to have been met for the
     applicable performance period and that payments thereunder
     shall be pro-rated as of the Date of Termination; and in the
     event of a termination by reason of retirement, then the
     Supplemental Retirement Benefits and the Incentive and
     Equity Amounts, the Incentive and Equity Amounts being
     calculated and payable in accordance with the terms of the
     underlying plans and payable to the Executive when awards
     are payable to all other participants in such plans in
     accordance with the terms thereof, but prorated through the
     date of such retirement; and

          (iii   an amount (the "Pro-Rated Bonus") equal to the
     product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable
                    bonus plan (the "Actual Bonus Payment")
     
          (iv)        all vested amounts or benefits owing to the
     Executive under the Company's otherwise applicable employee
     benefit plans and programs, including any compensation
     previously deferred by the Executive (together with any
     accrued earnings thereon) and not yet paid by the Company
     and any accrued vacation pay not yet paid by the Company
     (the "Accrued Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall
be paid in cash in a single lump sum as soon as practicable ( but
in no event more than 20 days) following the Date of Termination. 
Any Incentive and Equity Amounts and Supplemental Retirement
Benefits accrued by the Executive shall be payable in accordance
with the terms of the underlying plans.


          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than
on account of Good Reason), the Company shall pay the Executive
the Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the
Date of Termination, or in accordance with the terms of the
underlying plan. 

          (c)  Termination by the Company other than for Cause
and Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of
     payment as is provided or elected by the Executive under the
     operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A),
               Executive's vested interest in such benefits shall
               accelerate; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a
     Change of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or, (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all
               of the Company's employee and executive pension,
               welfare and fringe benefit plans, it being
               understood that for purposes of the calculation of
               Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination (the "Benefit Plans").  To
               the extent any such benefits cannot be provided
               under the terms of the applicable plan, policy or
               program, the Company shall provide a comparable
               benefit under another plan or from the Company's
               general assets.  The Executive's participation in
               the Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               option agreement and the applicable equity
               incentive plan of the Company (such agreements and
               plans referred to collectively as the "Equity
               Documents") for the period of time permitted in
               accordance with the generally applicable terms of
               the governing Equity Documents) after the Date of
               Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

     (B) After the Occurrence of a Change of Control.

            (i   Payments.  If, following a Change of Control,
     the Company terminates the Executive's employment other than
     for Cause, or the Executive terminates his employment for
     Good Reason, the Company shall pay to the Executive the
     following amounts, either in a lump sum or in such other
     form of payment as is provided or elected by the Executive
     under the operative plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder
               shall be deemed to have been met upon the
               occurrence of a Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the
               calculation of Supplemental Retirement Benefits,
               Final Annual Compensation (as defined in the
               underlying plans) shall be equal to Final Annual
               Compensation as of the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations,
     and Pro-Rated Bonus shall be paid in cash, or in the case of
     the Incentive and Equity Amounts, in kind if so provided
     under the relevant plan, in a single lump sum as soon as
     practicable (but in no event more than 20 days) following
     the Date of Termination.  The Supplemental Retirement
     Benefits shall be payable in accordance with the terms of
     the underlying plans (after giving effect to the
     acceleration and granting of service credit provided for
     herein) and the elections of the Executive thereunder.

          (ii)  Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii)
               the date on which the Executive is covered under
               any comparable plans of a subsequent employer,
               (the "End Date"), to continue participation
               (including, but not limited to, vesting and
               accruals) in all of the Company's employee and
               executive pension, welfare and fringe benefit
               plans, excluding the Supplemental Retirement
               Benefits (the "Benefit Plans").  To the extent any
               such benefits cannot be provided under the terms
               of the applicable plan, policy or program, the
               Company shall provide a comparable benefit under
               another plan or from the Company's general assets. 
               The Executive's participation in the Benefit Plans
               will be on the same terms and conditions that
               would have applied had the Executive continued to
               be employed by the Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase
               shares of Common Stock of the Company then
               exercisable by the Executive or which would become
               exercisable in accordance with the applicable
               Equity Documents for the period of time permitted
               in accordance with the generally applicable terms
               of the governing Equity Documents, after the Date
               of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
6(d), the amounts payable to the Executive pursuant to this
Section 6 following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under
this Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such
amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged
from any and all liability to the Executive in connection with
this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries.  Nothing in
this Section 6(d) shall be construed to release the Company from
its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action
arising from or out of the Executive's performance as an officer,
director or employee of the Company or any of its Subsidiaries or
in any other capacity, including any fiduciary capacity, in which
the Executive served at the request of the Company to the maximum
extent permitted by applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid
     or distributed to the Executive by the Company or any
     affiliated company (collectively, the "Covered Payments"),
     are or become subject to the tax (the "Excise Tax") imposed
     under Section 4999 of the Code or any similar tax that may
     hereafter be imposed, the Company shall pay to the Executive
     at the time specified in Section 6(e)(v) below an additional
     amount (the "Tax Reimbursement Payment") such that the net
     amount retained by the Executive with respect to such
     Covered Payments, after deduction of any Excise Tax on the
     Covered Payments and any Federal, state and local income,
     employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section 6(e), but
     before deduction for any Federal, state or local income or
     employment tax withholding on such Covered Payments, shall
     be equal to the amount of the Covered Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as
               "parachute payments" within the meaning of Section
               28OG of the Code, and all "parachute payments" in
               excess of the "base amount" (as defined under
               Section 28OG(b)(3) of the Code) shall be treated
               as subject to the Excise Tax, unless, and except
               to the extent that, in the good faith judgment of
               the Company's independent certified public
               accountants appointed prior to the Effective Date
               or tax counsel selected by such Accountants (the
               "Accountants"), the Company has a reasonable basis
               to conclude that such Covered Payments (in whole
               or in part) either do not constitute "parachute
               payments" or represent reasonable compensation for
               personal services actually rendered (within the
               meaning of Section 28OG(b)(4)(B) of the Code) in
               excess of the "base amount," or such "parachute
               payments" are otherwise not subject to such Excise
               Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the
     Tax Reimbursement Payment, the Executive shall be deemed to
     pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum
               reduction in Federal incomes taxes which could be
               obtained from the deduction of such state or local
               taxes if paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding
     or negotiations with the Internal Revenue Service to be less
     than the amount taken into account hereunder in calculating
     the Tax Reimbursement Payment made, the Executive shall
     repay to the Company, at the time that the amount of such
     reduction in the Excise Tax is finally determined, the
     portion of such prior Tax Reimbursement Payment that would
     not have been paid if such Excise Tax had been applied in
     initially calculating such Tax Reimbursement Payment, plus
     interest on the amount of such repayment at the rate
     provided in Section 1274(b)(2)(B) of the Code. 
     Notwithstanding the foregoing, in the event any portion of
     the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund
     or credit of such portion has been made to the Executive,
     and interest payable to the Company shall not exceed
     interest received or credited to the Executive by such tax
     authority for the period it held such portion.  The
     Executive and the Company shall mutually agree upon the
     course of action to be pursued (and the method of allocating
     the expenses thereof) if the Executive's good faith claim
     for refund or credit is denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service (the
     "Service") to exceed the amount taken into account hereunder
     at the time the Tax Reimbursement Payment is made
     (including, but not limited to, by reason of any payment the
     existence or amount of which cannot be determined at the
     time of the Tax Reimbursement Payment), the Company shall
     make an additional Tax Reimbursement Payment in respect of
     such excess (plus any interest or penalty payable with
     respect to such excess) at the time that the amount of such
     excess is finally determined, such that the net amount
     retained by the Executive with respect to the Covered
     Payments, after deduction of any Excise Tax on the Covered
     Payments and any Federal, state and local income, employment
     or other tax and Excise Tax on the Tax Reimbursement Payment
     provided for by this Section, but before deduction for any
     Federal, state or local income or employment tax withholding
     on such Covered Payments, shall be equal to the amount of
     the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises
     out of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for
     the cost of preparing the Executive's income tax returns for
     the year in which any payment by the Company may be
     characterized as a parachute payment.  The Executive shall
     notify the Company in writing of any such Claim as soon as
     practicable but in no event later than ten (10) business
     days after the Executive is informed of such Claim and shall
     cooperate with the Company in good faith to effectively
     contest the Claim.  The Company shall control all
     proceedings taken in connection with such contest and, at
     its sole option, may pursue or forego any and all
     administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect of such
     Claim and the Executive agrees to prosecute such contest as
     the Company shall determine.  Notwithstanding the foregoing,
     if the Company forgoes further prosecution of such contest,
     the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

          (v     The Tax Reimbursement Payment (or portion
     thereof) provided for in Section 6(e)(i) above shall be paid
     to the Executive not later than 10 business days following
     the payment of the Covered Payments; provided, however, that
     if the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date
     on which payment is due, the Company shall pay to the
     Executive by such date an amount estimated in good faith by
     the Accountants to be the minimum amount of such Tax Re-
     imbursement Payment and shall pay the remainder of such Tax
     Reimbursement Payment (together with interest at the rate
     provided in Section 1274(b)(2)(B) of the Code) as soon as
     the amount thereof can be determined, but in no event later
     than 45 calendar days after payment of the related Covered
     Payment.  In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

     7.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9)
     of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") and as used in Section 13(d) and 14(d)
     thereof, including a "group" as defined in Section 13(d) of
     the Exchange Act but excluding the Company and any
     subsidiary and any employee benefit plan sponsored or
     maintained by the Company or any subsidiary (including any
     trustee of such plan acting as trustee), directly or
     indirectly, becomes the "beneficial owner" (as defined in
     Rule 13d-3 under the Exchange Act), of securities of the
     Company representing 20 percent or more of the combined
     voting power of the Company's then outstanding securities;
     or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the
     "Incumbent Directors") cease for any reason other than death
     to constitute at least a majority thereof; provided,
     however, that a director who is not a director at the
     beginning of such 24-month period shall be deemed  to have
     satisfied such 24-month requirement (and be an Incumbent
     Director) if such director was elected by, or on the
     recommendation of or with the approval of, at least two-
     thirds of the directors who then qualified as Incumbent
     Directors either actually (because they were directors at
     the beginning of such 24-month period) or by prior operation
     of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by
     an entity other than the Company or a subsidiary through
     purchase of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Electric while the Executive is employed by Electric,
"Company" shall include Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies, including employment agreements or stock option
agreements.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise
In the event that the Executive shall in good faith give a Notice
of Termination for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual
consent of the Company and the Executive and, except as provided
in the last preceding sentence, the Executive shall be entitled
to receive only his Earned Salary and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or
by the Company) as to the validity, enforceability or
interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses
to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof
of such expenses in a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By
and in consideration of the salary and benefits to be provided by
the Company hereunder, including the severance arrangements set
forth herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, (i) obtained by the Executive during his
employment by the Company or any of its affiliated companies and
(ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive).  After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, unless
compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect
to Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique
and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available
at law.  Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 11 and (ii)
have no further obligation to make any payments to the Executive
hereunder following any material violation of the covenants and
obligations contained in this Section 11.  These remedies are
cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.  In connection with the
foregoing provisions of this Section 11, the Executive represents
that his economic means and circumstances are such that such
provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.  In no event shall an
asserted violation of the provisions of this Section 11
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution.  This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and
be binding upon the Company and its successors.  The Company
shall require any successor to all or substantially all of the
business and/or assets of the Company, whether direct or
indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date, including,
but not limited to, that certain Employment Agreement between the
parties dated as of February 10th, 1994.

          (b)  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City
of Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of
law or equity.  The arbitrator shall be acceptable to both the
Company and the Executive.  If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators, one appointed by each of the parties and the
third appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is
sought.  There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein.  The Executive acknowledges that he
is entering into this Agreement of his own free will and accord,
and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the
                              Executive noted on the records of
                              the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey 08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one
or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.  In the event that any of the
provisions of any of Section 11(a) are not enforceable in
accordance with its terms, the Executive and the Company agree
that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum
rights permitted at law.

          (i)  Waiver.  Waiver by any party hereto of any breach
or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or
default waived.  No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its
or his rights hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.


          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.

ATTEST:                          Atlantic Energy, Inc.

                                 By:  /s/ J. Michael Galvin, Jr.
Secretary                                J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee

                                 By:/s/  J. L. Jacobs          
                                         J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:

                              /s/  Meredith I. Harlacher, Jr.              
                                   Meredith I. Harlacher, Jr.
 
                   SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
           ATLANTIC ENERGY, INC. and MEREDITH I. HARLACHER, JR.
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and MEREDITH I. HARLACHER, JR. (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one  (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

__________________            BY:/s/ J. Michael Galvin, Jr.
                                     J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
Committee

                              BY:/s/ J. L. Jacobs         
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Meredith I. Harlacher, Jr.
                                  Meredith I. Harlacher, Jr.

EX-99.9

                                                 Exhibit 10a(24)

                           EMPLOYMENT AGREEMENT


          THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey corporation
(the "Company"), and Scott B. Ungerer, (the "Executive").

          In consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company
and the Executive as follows:

          1.  Term of Agreement.  The term of this Agreement shall
commence on the date hereof (the "Effective Date") and shall
continue until the second anniversary of the Effective Date (the
"Employment Period"); provided, however, that the Employment Period
shall be automatically renewed for two years unless either party
shall send the other written notice of its intention to terminate
the agreement at the end of such Employment Period one year prior
to the end of such Employment Period; and, provided, further, that
upon the occurrence of a Change of Control, the Employment Period
shall become three years and shall commence on the date of the
Change of Control, and shall thereafter be automatically renewed
for two years unless either party shall send the other written
notice of its intention to terminate the agreement one year prior
to the end of the then current Employment Period.
          
          2.  Place of Employment.  The Executive's services during
the term of this Agreement shall be performed primarily at the
principal offices of the Company in Egg Harbor Township, New
Jersey.  The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably require
in performing his obligations under this Agreement.

          3.  Employment Obligations.  

          (a)   Position and Duties.  The Company hereby agrees to
employ the Executive as its Vice President, Enterprise Activities
and as President and Chief Operating Officer of Atlantic Energy
Enterprises, Inc. for the Employment Period.  The Executive shall
exercise his reasonable best efforts in furtherance of, and shall
devote substantially all of his working time and attention to the
affairs of the Company and its affiliates, and shall perform such
duties and services as may reasonably be assigned to him by, and
shall report directly to the Chief Executive Officer and the Board
of Directors of the Company (the "Board") and the Board of
Directors of AEE.
   
          (b)  Business Time.  From and after the Effective Date,
the Executive agrees to devote his full business time during normal
business hours to the business and affairs of the Company and to
use his best efforts to perform faithfully and efficiently the
responsibilities assigned to him hereunder, to the extent necessary
to discharge such responsibilities, except for (i) time spent in
managing his personal, financial and legal affairs and serving on
corporate, civic or charitable boards or committees on which he
served prior to the Effective Date, in each case only if and to the
extent not substantially interfering with the performance of such
responsibilities, and (ii) periods of vacation and sick leave to
which he is entitled.  It is expressly understood and agreed that
the Executive's continuing to serve on any boards and committees on
which he is serving or with which he is otherwise associated im-
mediately preceding the Effective Date which is not in violation of
any Company policy shall not be deemed to interfere with the
performance of the Executive's services to the Company.  In
addition, the Executive may commence service as a director of other
corporations or organizations after the Effective Date upon
approval by the Board which, in the judgment of the Board, will not
present any conflict of interest with the Company or any subsidiary
or affiliate thereof, and which would not affect the performance of
Executive's duties pursuant to this Agreement, which approval shall
not be unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility under
the Federal Power Act, or any successor act, (ii) any bank, trust
company, banking association or firm that is authorized by law to
underwrite or participate in the marketing of securities of a
public utility, or (iii) any company supplying electrical equipment
to the Company, nor (b) accept any such position and commence the
performance of any duties or services in such capacity (an
"Interlock"), unless the Executive shall have first (x) furnished
the Board with at least thirty (30) days prior written notice of
his intention to create such Interlock and (y) secured, if the
Board shall request that such action be taken, any necessary
authorization for such Interlock, in form and substance
satisfactory to the Board, from the Federal Energy Regulatory
Commission, or successor regulatory agency, pursuant to Section
305(b) of the Federal Power Act, or any supplement or amendment
thereto.

     4.  Compensation.  (a)  Base Salary.  During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual salary paid to the
Executive by the Company and any of its affiliated companies
immediately prior to the Effective Date.  The Base Salary shall be
reviewed at least once each year after the Effective Date, and may
be increased (but not decreased) at any time and from time to time
by action of the Board or any committee thereof or any individual
having authority to take such action in accordance with the
Company's regular practices.  Once increased, any reference to Base
Salary herein shall be a reference to such increased amount. 
Neither the Base Salary nor any increase in Base Salary after the
Effective Date shall serve to limit or reduce any other obligation
of the Company hereunder.

          (b)  Annual Bonus.  During the Employment Period, in
addition to the Base Salary, for each fiscal year of the Company
ending during the Employment Period, the Executive shall have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance.  Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid to
the Executive for the most recently completed fiscal year of the
Company or the target bonus (which, if established in an affiliate
company, to be consistent with AEI shall mean one hundred percent
as the target rather than any greater percentage) for the then
current fiscal year (the "Minimum Bonus Amount").  Any amount
payable in respect of the Annual Bonus Opportunity or the Minimum
Bonus Amount shall be paid no later than sixty (60) days after the
close of the fiscal year for which the amount (or prorated portion)
is earned or awarded, unless electively deferred by the Executive
pursuant to any deferral programs or arrangements that the Company
may make available to the Executive.

          (c)  Long-term Incentive Compensation Programs and Equity
Programs.  During the Employment Period, the Executive shall par-
ticipate in all long-term incentive compensation programs and
equity programs for key executives at a level that is commensurate
with the Executive's participation in such plans immediately prior
to the Effective Date, or, if more favorable to the Executive, at
such level(s) as may be made available to the Executive and other
similarly situated executive officers of the Company or to
Executive as an Officer of an affiliated company, from time to time
thereafter.

          (d)  Benefit Plans.  During the Employment Period, the
Executive (and, to the extent applicable, his dependents) shall be
entitled to participate in or be covered under all pension,
supplemental retirement or excess benefit (collectively, the
"Supplemental Retirement Benefits"), deferred compensation,
savings, medical, dental, health, disability, group life,
accidental death and travel accident insurance plans and programs
of the Company and its affiliated companies at a level that is
commensurate with and provides the same level and quality of
coverage as the Executive's participation in such plans immediately
prior to the Effective Date (except for the Medical Executive
Reimbursement Plan (the "MERP"), it being understood that the MERP
shall be terminated as of September 30, 1995), or, if more
favorable to the Executive, at the level made available to the
Executive as an Officer of an affiliated company, from time to time
thereafter.

          (e)  Expenses.  During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the policies and procedures of the Company as in effect from time
to time; provided; however, that in no event shall such policies
and procedures after the occurrence of a Change of Control be less
favorable to the Executive than immediately prior to a Change of
Control.  Notwithstanding the foregoing, the Company may apply the
policies and procedures in effect after the Change of Control date
to the Executive, if such policies and procedures are more
favorable to the Executive than those in effect immediately prior
to the Change of Control date.

          (f)  Vacation and Fringe Benefits.  During the Employment
Period, the Executive shall be entitled to paid vacation and fringe
benefits at a level that is commensurate with the paid vacation and
fringe benefits available to the Executive immediately prior to the
Effective Date, or, if more favorable to  the Executive, at the
level made available from time to time to the Executive or other
similarly situated executive officers at any time thereafter.

          (g)  Indemnification.  During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the "Governing
Documents"); provided, however, that in no event shall the
protection afforded to the Executive hereunder be less than that
afforded under the Governing Documents as in effect immediately
prior to the Effective Date, or if later, the Change of Control.

 
          5.  Termination. (a)  Death, Permanent Disability or
Retirement.  Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's death,
Permanent Disability (as defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), except that
a six month period shall be substituted for the twelve month period
provided for therein) or voluntary retirement under any of the
Company's retirement plans as in effect from time to time.

          (b)  Voluntary Termination.  Notwithstanding anything in
this Agreement to the contrary, the Executive may, upon not less
than 60 days' written notice to the Company, voluntarily terminate
employment for any reason (including early retirement under the
terms of any of the Company's retirement plans as in effect from
time to time); provided, however, any termination by the Executive
pursuant to Section 5(d) on account of Good Reason (as defined
therein) shall not be treated as a voluntary termination under this
Section 5(b).  

          (c)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness),(ii) the Executive's
conviction or plea of nolo contendere to a felony; (iii) the
Executive's willful engagement in misconduct in connection with
employment which results in material damage to the Company's
business or reputation; or (iv) material breach of Executive's
duties hereunder which result in material damage to the Company's
business or reputation, in each of (ii) through (iv) above, upon 30
days written notice to the Executive, the opportunity for the
Executive to be heard by the Board and the good faith determination
by at least two-thirds of the Company's non-employee directors that
Cause exists; provided, however, that after the occurrence of a
Change of Control (as hereinafter defined), "Cause" shall be
limited to (ii) through (iv) above.

          (d)  Good Reason.  During the Employment Period,
Executive may terminate his employment for Good Reason.  For
purposes of this Agreement, "Good Reason" means the occurrence of
any of the following, without the express written consent of the
Executive:

            (i   (A) the assignment to the Executive of any duties
     inconsistent with the Executive's position, authority or
     responsibilities as contemplated by Section 3 of this
     Agreement, or (B) any other adverse change in such position,
     including titles, authority or responsibilities;

           (ii   reduction of Executives's base salary or bonus
     opportunities, or any other material breach by the Company of
     this Agreement;

          (iii   the Company's requiring the Executive to be based
     at any office or location more than 25 miles from that
     location at which he performed his services specified under
     the provisions of Section 2 immediately prior to the Change of
     Control, except for travel reasonably required in the
     performance of the Executive's responsibilities; or

          (iv    any failure by the Company to obtain the
     assumption and agreement to perform this Agreement by a
     successor as contemplated by Section 12(b) upon the occurrence
     of a Change of Control; provided, however, the successor has
     had actual written notice of the existence of this Agreement
     and its terms and an opportunity to assume the Company's
     responsibilities under this Agreement during a period of 10
     business days after receipt of such notice.

          (e)  Notice of Termination.  Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(f).  For purposes of this
Agreement, a "Notice of Termination" means a written notice given,
in the case of a termination for Cause, within 10 business days of
the Company's having actual knowledge of the events giving rise to
such termination, and in the case of a termination for Good Reason,
within 180 days of the Executive's having actual knowledge of the
events giving rise to such termination, and which (i) indicates the
specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment
under the provision so indicated, and (iii) if the termination date
is other than the date of receipt of such notice, specifies the
termination date of this Agreement (which date shall be not more
than 15 days after the giving of such notice).  The failure by the
Executive to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall
not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his
rights hereunder.

          (f)  Date of Termination.  For purposes of this
Agreement, the term "Date of Termination" means (i) in the case of
a termination for which a Notice of Termination is required, the
date of receipt of such Notice of Termination or, if later, the
date specified therein, as the case may be, and (ii) in all other
cases, the actual date on which the Executive's employment
terminates during the Employment Period.  On or as soon practicable
following the Date of Termination, the Executive shall return to
the Company all property of the Company and all copies thereof in
the Executive's possession or under his control.

          6.  Obligations of the Company upon Termination.
(a)  Death, Permanent Disability or Retirement.  If the Executive's
employment is terminated during the Employment Period by reason of
the Executive's death, Permanent Disability or voluntary retirement
this Agreement shall terminate without further obligations to the
Executive or the Executive's legal representatives under this
Agreement other than those obligations accrued hereunder at the
Date of Termination, and the Company shall pay or provide to the
Executive or the Executive's legal representative under this
Agreement the following amounts either in a lump sum or in such
other form of payment as is provided or elected by the Executive
under the operative plan:

          (i     the Executive's full Base Salary through the Date
     of Termination (the "Earned Salary");
     
          (ii    the Supplemental Retirement Benefits and the
     amount otherwise payable to or in respect of the Executive
     under the Company's otherwise applicable long-term incentive
     compensation and equity plans and programs (the "Incentive and
     Equity Amounts") it being understood that, in the event of
     death or disability, any applicable performance targets
     thereunder (to the extent not already determined as of the
     Termination Date) shall be deemed to have been met for the
     applicable performance period and that payments thereunder
     shall be pro-rated as of the Date of Termination; and in the
     event of a termination by reason of retirement, then the
     Supplemental Retirement Benefits and the Incentive and Equity
     Amounts, the Incentive and Equity Amounts being calculated and
     payable in accordance with the terms of the underlying plans
     and payable to the Executive when awards are payable to all
     other participants in such plans in accordance with the terms
     thereof, but prorated through the date of such retirement; and

          (iii   an amount (the "Pro-Rated Bonus") equal to the
     product of (x) times (y), minus (z):

                    (x) the Minimum Bonus Amount;

                    (y) a fraction, the numerator of which is the
                    number of days in the then current calendar
                    year which have elapsed as of the Date of
                    Termination, and the denominator of which is
                    365;

                    (z) if Executive's termination occurs in the
                    same calendar year as the Change of Control,
                    an amount equal to the amount paid to the
                    Executive under the Company's applicable bonus
                    plan (the "Actual Bonus Payment")
     
          (iv)        all vested amounts or benefits owing to the
     Executive under the Company's otherwise applicable employee
     benefit plans and programs, including any compensation
     previously deferred by the Executive (together with any
     accrued earnings thereon) and not yet paid by the Company and
     any accrued vacation pay not yet paid by the Company (the
     "Accrued Obligations").

Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall be
paid in cash in a single lump sum as soon as practicable ( but in
no event more than 20 days) following the Date of Termination.  Any
Incentive and Equity Amounts and Supplemental Retirement Benefits
accrued by the Executive shall be payable in accordance with the
terms of the underlying plans.


          (b)  Cause and Voluntary Termination.  If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than on
account of Good Reason), the Company shall pay the Executive the
Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the Date
of Termination, or in accordance with the terms of the underlying
plan. 

          (c)  Termination by the Company other than for Cause and
Termination by the Executive for Good Reason.

     (A) Prior to the Occurrence of a Change of Control.

            (i   Payments.  If, prior to a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of payment
     as is provided or elected by the Executive under the operative
     plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Pre-Change Severance Amount")
               equal to two multiplied by the sum of

                    (1)  the Executive's annual Base Salary; plus

                    (2)  the Minimum Bonus Amount.

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts;

          (E)  the Supplemental Retirement Benefits, it being
               understood that upon the occurrence of a
               termination under this Section 6(c)(A), Executive's
               vested interest in such benefits shall accelerate;
               and

          (F)  the Accrued Obligations.

     Any Earned Salary, Pre-Change Severance Amount, Accrued
     Obligations and Pro-Rated Bonus shall be paid in cash in a
     single lump sum as soon as practicable (but in no event more
     than 20 days) following the Date of Termination.  The
     Supplemental Retirement Benefits and Incentive and Equity
     Amounts shall be payable in accordance with the terms of the
     underlying plans.

           (ii   Continuation of Benefits.  If, during the
     Employment Period, the Company terminates the Executive's
     employment other than for Cause, or the Executive terminates
     employment for Good Reason prior to the occurrence of a Change
     of Control:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the second
               anniversary of the Date of Termination or, (ii) the
               date on which the Executive is covered under any
               comparable plans of a subsequent employer (the "End
               Date"), to continue participation (including, but
               not limited to, vesting and accruals) in all of the
               Company's employee and executive pension, welfare
               and fringe benefit plans, it being understood that
               for purposes of the calculation of Supplemental
               Retirement Benefits, Final Annual Compensation (as
               defined in the underlying plans) shall be equal to
               Final Annual Compensation as of the Date of
               Termination (the "Benefit Plans").  To the extent
               any such benefits cannot be provided under the
               terms of the applicable plan, policy or program,
               the Company shall provide a comparable benefit
               under another plan or from the Company's general
               assets.  The Executive's participation in the
               Benefit Plans will be on the same terms and
               conditions that would have applied had the
               Executive continued to be employed by the Company
               through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase shares
               of Common Stock of the Company then exercisable by
               the Executive or which would become exercisable in
               accordance with the applicable option agreement and
               the applicable equity incentive plan of the Company
               (such agreements and plans referred to collectively
               as the "Equity Documents") for the period of time
               permitted in accordance with the generally
               applicable terms of the governing Equity Documents)
               after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

     (B) After the Occurrence of a Change of Control.

            (i   Payments.  If, following a Change of Control, the
     Company terminates the Executive's employment other than for
     Cause, or the Executive terminates his employment for Good
     Reason, the Company shall pay to the Executive the following
     amounts, either in a lump sum or in such other form of payment
     as is provided or elected by the Executive under the operative
     plan:

          (A)  the Executive's Earned Salary;

          (B)  a cash amount (the "Severance Amount") equal to
               three times the sum of

                    (1)  the Executive's annual Base Salary; and

                    (2)  the Minimum Bonus Amount;

          (C)  the Pro-Rated Bonus;

          (D)  the Incentive and Equity Amounts, all of which
               shall be fully accelerated and deemed earned, and
               all applicable performance targets thereunder shall
               be deemed to have been met upon the occurrence of a
               Change of Control;

          (E)  the Supplemental Retirement Benefits, which shall
               be determined based on the granting of service
               credit for a period of three years and, after such
               credit has been granted, shall be computed based
               upon the deemed age of the Executive at the end of
               such three year period, it being understood that
               upon the occurrence of a Change of Control,
               Executive's vested interest in such benefits shall
               accelerate and that for purposes of the calculation
               of Supplemental Retirement Benefits, Final Annual
               Compensation (as defined in the underlying plans)
               shall be equal to Final Annual Compensation as of
               the Date of Termination; and

          (F)  the Accrued Obligations.

     Any Earned Salary, Severance Amount, Accrued Obligations, and
     Pro-Rated Bonus shall be paid in cash, or in the case of the
     Incentive and Equity Amounts, in kind if so provided under the
     relevant plan, in a single lump sum as soon as practicable
     (but in no event more than 20 days) following the Date of
     Termination.  The Supplemental Retirement Benefits shall be
     payable in accordance with the terms of the underlying plans
     (after giving effect to the acceleration and granting of
     service credit provided for herein) and the elections of the
     Executive thereunder.

          (ii)  Continuation of Benefits.  If, during the
     Employment Period and after the occurrence of a Change of
     Control, the Company terminates the Executive's employment
     other than for Cause or the Executive terminates his
     employment for Good Reason:

          (A)  the Executive (and, to the extent applicable, his
               dependents) shall be entitled, after the Date of
               Termination until the earlier of (i) the third
               anniversary of the Date of Termination, or (ii) the
               date on which the Executive is covered under any
               comparable plans of a subsequent employer, (the
               "End Date"), to continue participation (including,
               but not limited to, vesting and accruals) in all of
               the Company's employee and executive pension,
               welfare and fringe benefit plans, excluding the
               Supplemental Retirement Benefits (the "Benefit
               Plans").  To the extent any such benefits cannot be
               provided under the terms of the applicable plan,
               policy or program, the Company shall provide a
               comparable benefit under another plan or from the
               Company's general assets.  The Executive's
               participation in the Benefit Plans will be on the
               same terms and conditions that would have applied
               had the Executive continued to be employed by the
               Company through the End Date;

          (B)  the Executive (or, in the event of the Executive's
               death during such period, the Executive's
               beneficiary or estate) shall have the right to
               exercise any outstanding options to purchase shares
               of Common Stock of the Company then exercisable by
               the Executive or which would become exercisable in
               accordance with the applicable Equity Documents for
               the period of time permitted in accordance with the
               generally applicable terms of the governing Equity
               Documents, after the Date of Termination; and

          (C)  for purposes of the Benefit Plans and the Equity
               Documents, the Executive will be deemed to have
               terminated employment under mutually satisfactory
               conditions.

          (d)  Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
6(d), the amounts payable to the Executive pursuant to this Section
6 following termination of his employment shall be in full and
complete satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries.  Such amounts
shall constitute liquidated damages with respect to any and all
such rights and claims and, upon the Executive's receipt of such
amounts, the Company shall be released and discharged from any and
all liability to the Executive in connection with this Agreement or
otherwise in connection with the Executive's employment with the
Company and its Subsidiaries.  Nothing in this Section 6(d) shall
be construed to release the Company from its commitment to
indemnify the Executive and hold the Executive harmless from and
against any claim, loss or cause of action arising from or out of
the Executive's performance as an officer, director or employee of
the Company or any of its Subsidiaries or in any other capacity,
including any fiduciary capacity, in which the Executive served at
the request of the Company to the maximum extent permitted by
applicable law and the Governing Documents.

          (e)  Certain Further Payments by the Company.

            (i   In the event that any amount or benefit paid
     or distributed to the Executive pursuant to this Agreement,
     taken together with any amounts or benefits otherwise paid or
     distributed to the Executive by the Company or any affiliated
     company (collectively, the "Covered Payments"), are or become
     subject to the tax (the "Excise Tax") imposed under Section
     4999 of the Code or any similar tax that may hereafter be
     imposed, the Company shall pay to the Executive at the time
     specified in Section 6(e)(v) below an additional amount (the
     "Tax Reimbursement Payment") such that the net amount retained
     by the Executive with respect to such Covered Payments, after
     deduction of any Excise Tax on the Covered Payments and any
     Federal, state and local income, employment or other tax and
     Excise Tax on the Tax Reimbursement Payment provided for by
     this Section 6(e), but before deduction for any Federal, state
     or local income or employment tax withholding on such Covered
     Payments, shall be equal to the amount of the Covered
     Payments.

           (ii   For purposes of determining whether any of the
     Covered Payments will be subject to the Excise Tax and the
     amount of such Excise Tax,

          (A)  such Covered Payments will be treated as "parachute
               payments" within the meaning of Section 28OG of the
               Code, and all "parachute payments" in excess of the
               "base amount" (as defined under Section 28OG(b)(3)
               of the Code) shall be treated as subject to the
               Excise Tax, unless, and except to the extent that,
               in the good faith judgment of the Company's
               independent certified public accountants appointed
               prior to the Effective Date or tax counsel selected
               by such Accountants (the "Accountants"), the
               Company has a reasonable basis to conclude that
               such Covered Payments (in whole or in part) either
               do not constitute "parachute payments" or represent
               reasonable compensation for personal services
               actually rendered (within the meaning of Section
               28OG(b)(4)(B) of the Code) in excess of the "base
               amount," or such "parachute payments" are otherwise
               not subject to such Excise Tax, and 

          (B)  the value of any non-cash benefits or any deferred
               payment or benefit shall be determined by the
               Accountants in accordance with the principles of
               Section 28OG of the Code.

          (iii   For purposes of determining the amount of the Tax
     Reimbursement Payment, the Executive shall be deemed to pay:

          (A)  Federal income taxes at the highest applicable
               marginal rate of Federal income taxation for the
               calendar year in which the Tax Reimbursement
               Payment is to be made, and

          (B)  any applicable state and local income taxes at the
               highest applicable marginal rate of taxation for
               the calendar year in which the Tax Reimbursement
               Payment is to be made, net of the maximum reduction
               in Federal incomes taxes which could be obtained
               from the deduction of such state or local taxes if
               paid in such year.

           (iv   In the event that the Excise Tax is subsequently
     determined by the Accountants or pursuant to any proceeding or
     negotiations with the Internal Revenue Service to be less than
     the amount taken into account hereunder in calculating the Tax
     Reimbursement Payment made, the Executive shall repay to the
     Company, at the time that the amount of such reduction in the
     Excise Tax is finally determined, the portion of such prior
     Tax Reimbursement Payment that would not have been paid if
     such Excise Tax had been applied in initially calculating such
     Tax Reimbursement Payment, plus interest on the amount of such
     repayment at the rate provided in Section 1274(b)(2)(B) of the
     Code.  Notwithstanding the foregoing, in the event any portion
     of the Tax Reimbursement Payment to be refunded to the Company
     has been paid to any Federal, state or local tax authority,
     repayment thereof shall not be required until actual refund or
     credit of such portion has been made to the Executive, and
     interest payable to the Company shall not exceed interest
     received or credited to the Executive by such tax authority
     for the period it held such portion.  The Executive and the
     Company shall mutually agree upon the course of action to be
     pursued (and the method of allocating the expenses thereof) if
     the Executive's good faith claim for refund or credit is
     denied.

          In the event that the Excise Tax is later determined by
     the Accountants or pursuant to any proceeding or negotiations
     with the Internal Revenue Service (the "Service") to exceed
     the amount taken into account hereunder at the time the Tax
     Reimbursement Payment is made (including, but not limited to,
     by reason of any payment the existence or amount of which
     cannot be determined at the time of the Tax Reimbursement
     Payment), the Company shall make an additional Tax
     Reimbursement Payment in respect of such excess (plus any
     interest or penalty payable with respect to such excess) at
     the time that the amount of such excess is finally determined,
     such that the net amount retained by the Executive with
     respect to the Covered Payments, after deduction of any Excise
     Tax on the Covered Payments and any Federal, state and local
     income, employment or other tax and Excise Tax on the Tax
     Reimbursement Payment provided for by this Section, but before
     deduction for any Federal, state or local income or employment
     tax withholding on such Covered Payments, shall be equal to
     the amount of the Covered Payments.

     The Company agrees to reimburse the Executive for reasonable
     fees and expenses in connection with any audit or assessment
     by the Service if a claim ("Claim") by the Service arises out
     of, or results from the treatment by the Service of any
     payments made by the Company as parachute payments and for the
     cost of preparing the Executive's income tax returns for the
     year in which any payment by the Company may be characterized
     as a parachute payment.  The Executive shall notify the
     Company in writing of any such Claim as soon as practicable
     but in no event later than ten (10) business days after the
     Executive is informed of such Claim and shall cooperate with
     the Company in good faith to effectively contest the Claim. 
     The Company shall control all proceedings taken in connection
     with such contest and, at its sole option, may pursue or
     forego any and all administrative appeals, proceedings,
     hearings and conferences with the taxing authority in respect
     of such Claim and the Executive agrees to prosecute such
     contest as the Company shall determine.  Notwithstanding the
     foregoing, if the Company forgoes further prosecution of such
     contest, the Executive may elect to continue such prosecution;
     provided, however, that in no event shall the Company be
     liable for the fees and expenses in connection with such
     further prosecution. 

          (v     The Tax Reimbursement Payment (or portion thereof)
     provided for in Section 6(e)(i) above shall be paid to the
     Executive not later than 10 business days following the
     payment of the Covered Payments; provided, however, that if
     the amount of such Tax Reimbursement Payment (or portion
     thereof) cannot be finally determined on or before the date on
     which payment is due, the Company shall pay to the Executive
     by such date an amount estimated in good faith by the Ac-
     countants to be the minimum amount of such Tax Reimbursement
     Payment and shall pay the remainder of such Tax Reimbursement
     Payment (together with interest at the rate provided in
     Section 1274(b)(2)(B) of the Code) as soon as the amount
     thereof can be determined, but in no event later than 45
     calendar days after payment of the related Covered Payment. 
     In the event that the amount of the estimated Tax
     Reimbursement Payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by the Company to the Executive, payable on the fifth
     business day after written demand by the Company for payment
     (together with interest at the rate provided in Section 1274
     (b)(2)(B) of the Code).

     7.  Definitions.  (a)  Change of Control.  For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:

            (i   when any "person" as defined in Section 3(a)(9) of
     the Securities Exchange Act of 1934, as amended (the "Exchange
     Act") and as used in Section 13(d) and 14(d) thereof,
     including a "group" as defined in Section 13(d) of the
     Exchange Act but excluding the Company and any subsidiary and
     any employee benefit plan sponsored or maintained by the
     Company or any subsidiary (including any trustee of such plan
     acting as trustee), directly or indirectly, becomes the
     "beneficial owner" (as defined in Rule 13d-3 under the
     Exchange Act), of securities of the Company representing 20
     percent or more of the combined voting power of the Company's
     then outstanding securities; or

           (ii   when, during any period of 24 consecutive months
     during the Employment Period, the individuals who, at the
     beginning of such period, constitute the Board (the "Incumbent
     Directors") cease for any reason other than death to
     constitute at least a majority thereof; provided, however,
     that a director who is not a director at the beginning of such
     24-month period shall be deemed  to have satisfied such 24-
     month requirement (and be an Incumbent Director) if such
     director was elected by, or on the recommendation of or with
     the approval of, at least two-thirds of the directors who then
     qualified as Incumbent Directors either actually (because they
     were directors at the beginning of such 24-month period) or by
     prior operation of this Section; or

          (iii)  upon the occurrence of a transaction requiring
     stockholder approval for the acquisition of the Company by an
     entity other than the Company or a subsidiary through purchase
     of assets, or by merger, or otherwise.

For purposes of this Section 7, if any of the above occur with
respect to Atlantic City Electric Company ("Electric") in the event
that the Executive is employed by Electric, "Company" shall include
Electric.

          8.  Non-exclusivity of Rights.  Except as expressly
provided herein, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company
or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise prejudice
such rights as the Executive may have under any other agreements
with the Company or any of its affiliated companies, including
employment agreements or stock option agreements.  Amounts which
are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any of its
affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan or program.

          9.  Full Settlement.  The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company
may have against the Executive or others whether by reason of the
subsequent employment of the Executive or otherwise In the event
that the Executive shall in good faith give a Notice of Termination
for Good Reason and it shall thereafter be determined that Good
Reason did not exist, the employment of the Executive shall, unless
the Company and the Executive shall otherwise mutually agree, be
deemed to have terminated, at the date of giving such purported
Notice of Termination, by mutual consent of the Company and the
Executive and, except as provided in the last preceding sentence,
the Executive shall be entitled to receive only his Earned Salary
and the Accrued Obligations.

          10.  Legal Fees and Expenses.  If the Executive asserts
any claim in any contest (whether initiated by the Executive or by
the Company) as to the validity, enforceability or interpretation
of any provision of this Agreement, the Company shall pay the
Executive's legal expenses (or cause such expenses to be paid)
including, without limitation, his reasonable attorney's fees, on
a quarterly basis, upon presentation of proof of such expenses in
a form reasonably acceptable to the Company.

          11.  Confidential Information; Company Property.  By and
in consideration of the salary and benefits to be provided by the
Company hereunder, including the severance arrangements set forth
herein, the Executive agrees that:

          (a)  Confidential Information.  The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, (i) obtained by the Executive during his employment by
the Company or any of its affiliated companies and (ii) not
otherwise public knowledge (other than by reason of an unauthorized
act by the Executive).  After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company, unless compelled pursuant to
an order of a court or other body having jurisdiction over such
matter, communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated by it.

          (b)  Injunctive Relief and Other Remedies with Respect to
Covenants.  The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property relate to special, unique and
extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause the Company irreparable
injury for which adequate remedies are not available at law. 
Therefore, the Executive agrees that the Company shall (i) be
entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond) restraining
Executive from committing any violation of the covenants and
obligations contained in this Section 11 and (ii) have no further
obligation to make any payments to the Executive hereunder
following any material violation of the covenants and obligations
contained in this Section 11.  These remedies are cumulative and
are in addition to any other rights and remedies the Company may
have at law or in equity.  In connection with the foregoing
provisions of this Section 11, the Executive represents that his
economic means and circumstances are such that such provisions will
not prevent him from providing for himself and his family on a
basis satisfactory to him.  In no event shall an asserted violation
of the provisions of this Section 11 constitute a basis for
deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.

          12.  Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution.  This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.

          (b)  This Agreement shall inure to the benefit of and be
binding upon the Company and its successors.  The Company shall
require any successor to all or substantially all of the business
and/or assets of the Company, whether direct or indirect, by
purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance satisfactory to
the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company
would be required to perform if no such succession had taken place.

          13.  Miscellaneous. (a)  Effect of this Agreement on
Existing Employment Agreements.  Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date.

          (b)  Applicable Law.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New
Jersey, applied without reference to principles of conflict of
laws.

          (c)  Arbitration.  Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration.  The arbitration shall be held in the City of
Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of law
or equity.  The arbitrator shall be acceptable to both the Company
and the Executive.  If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three
arbitrators, one appointed by each of the parties and the third
appointed by the other two arbitrators.

          (d)  Amendments.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.

          (e)  Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters referred to herein.  No other agreement relating to the
terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is sought. 
There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained
herein.  The Executive acknowledges that he is entering into this
Agreement of his own free will and accord, and with no duress, that
he has read this Agreement and that he understands it and its legal
consequences.

          (f)  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:          at the home address of the Executive
                              noted on the records of the Company

If to the Company:            Atlantic Energy, Inc.
                              6801 Black Horse Pike
                              Pleasantville, New Jersey 08232
                              Attention: Secretary

with a copy to:               Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, York, NY  10019
                              Attention: Alvin H. Brown, Esq.

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.

          (g)  Tax Withholding.  The Company may withhold from any
amounts payable under this Agreement such Federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (h)  Severability; Reformation.  In the event that one or
more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not be affected thereby.  In the event that any of the provisions
of any of Section 11(a) are not enforceable in accordance with its
terms, the Executive and the Company agree that such Section shall
be reformed to make such Section enforceable in a manner which
provides the Company the maximum rights permitted at law.

          (i)  Waiver.  Waiver by any party hereto of any breach or
default by the other party of any of the terms of this Agreement
shall not operate as a waiver of any other breach or default,
whether similar to or different from the breach or default waived. 
No waiver of any provision of this Agreement shall be implied from
any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights
hereunder on any occasion or series of occasions.

          (j)  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

          (k)  Captions.  The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.


          IN WITNESS WHEREOF, the Executive has hereunto set his
hand and the Company has caused this Agreement to be executed in
its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year
first above written.


ATTEST:                          Atlantic Energy, Inc.

                                 By:/s/ J. Michael Galvin, Jr.
Secretary                                J. Michael Galvin, Jr.
       (Seal)                    Title:  Chairman, Personnel & 
                                         Benefits Committee

                                 By:/s/ J. L. Jacobs             
                                        J. L. Jacobs
                                 Title:  President & Chief
                                         Executive Officer

                                 EXECUTIVE:

                              /s/ Scott B. Ungerer                         
                                   Scott B. Ungerer

                    SUPPLEMENT TO EMPLOYMENT AGREEMENT
                                  BETWEEN
                ATLANTIC ENERGY, INC. and SCOTT B. UNGERER
                           Dated August 10, 1995


     THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and SCOTT B. UNGERER (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
     In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
     1.   Capitalized Terms.  Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
     2.   Agreement Not To Compete.  The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates.  This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
          It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
          Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.

     IN WITNESS WHEREOF, intending to be legally bound the
Executive has hereunto set his hand and the Company has caused
this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

ATTEST:                       ATLANTIC ENERGY, INC.
(Seal)

____________________          BY:/s/ J. Michael Galvin, Jr.
                                 J. Michael Galvin, Jr.
                              Chairman, Personnel & Benefits
Committee

                              BY:/s/ J. L. Jacobs
                                     J. L. Jacobs
                              President & Chief Executive Officer

                              EXECUTIVE:

                              /s/ Scott B. Ungerer
                                  Scott B. Ungerer

EX-99.10

                                                     EXHIBIT 4F(6)
     [Conformed Copy]



                  REVOLVING CREDIT AGREEMENT (FACILITY A)



                               by and among



                          ATLANTIC ENERGY, INC.,

                         THE LENDERS PARTY HERETO,


                                    AND


                      THE BANK OF NEW YORK, AS AGENT




                             ________________

                                $35,000,000
                             ________________



                                                      Facilty A

                      Dated as of September 28, 1995

                             TABLE OF CONTENTS


1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION               1

  1.1.  Definitions                                          1
  1.2.  Principles of Construction                          15

2.  AMOUNT AND TERMS OF LOANS                               16

  2.1.  Revolving Credit Loans                              16
  2.2.  Revolving Credit Notes                              16
  2.3.  Procedure for Borrowing Revolving Credit Loans      17
  2.4.  Competitive Bid Loans; Procedure                    18
  2.5.  Voluntary Reduction or Termination of Aggregate
        Commitments                                         21
  2.6.  Prepayments of the Loans                            21
  2.7.  Conversions and Continuations                       22
  2.8.  Interest Rate and Payment Dates                     23
  2.9.  Substituted Interest Rate                           24
  2.10. Taxes                                               25
  2.11. Illegality                                          27
  2.12. Increased Costs                                     27
  2.13. Indemnification for Loss                            28
  2.14. Survival of Certain Obligations                     29
  2.15. Use of Proceeds                                     29
  2.16. Capital Adequacy                                    29
  2.17. Change of Lending Office; Right to Substitute
        Lender                                              29 
  2.18. Extension of Maturity Date                          30
  2.19. Change in Control                                   32
  2.20. Agent's Records                                     33

3.  FEES; PAYMENTS                                          33

  3.1.  Facility Fee                                        33
  3.2.  Agent's Fees                                        33
  3.3.  Pro Rata Treatment and Application of Principal
        Payments                                            33

4.  REPRESENTATIONS AND WARRANTIES                          34

  4.1.  Subsidiaries                                        34
  4.2.  Existence and Power                                 34
  4.3.  Authority; Enforceability                           34
  4.4.  Required Consents                                   34
  4.5.  No Conflicting Agreements, Compliance with
        Laws; Taxes                                         35
  4.6.  Franchises, Licenses, Etc.                          35

                                                      Facility A

  4.7.   Investment Company Act                             35
  4.8.   Public Utility Status                              35
  4.9.   Federal Reserve Regulations; Use of Loan
         Proceeds                                           35
  4.10.  Litigation                                         36
  4.11.  Financial Statements                               36
  4.12.  Plans                                              36
  4.13.  Ownership of Property; Liens                       36
  4.14.  Security Interests                                 37
  4.15.  Environmental Matters                              37
  4.16.  Certain Business Activities                        37

5.  CONDITIONS TO FIRST LOANS                               37

  5.1.  Evidence of Action                                  37
  5.2.  This Agreement; Notes                               38
  5.3.  Certificate as to Approvals and Liens               38
  5.4.  Pledge Agreement                                    38
  5.5.  Facility B Loan Documents                           38
  5.6.  Other Credit Facilities                             38
  5.7.  ACE Preferred Stock                                 39
  5.8.  Opinions of Counsel                                 39
  5.9.  Opinion of Special Counsel                          39
  5.10. Fees                                                39

6.  CONDITIONS OF LENDING - ALL LOANS                       39

  6.1.  Compliance                                          39
  6.2.  Borrowing Request; Competitive Bid Request          40

7.  AFFIRMATIVE COVENANTS                                   40

  7.1.  Financial Statements                                40
  7.2.  Certificates; Other Information                     40
  7.3.  Legal Existence                                     41
  7.4.  Taxes                                               41
  7.5.  Insurance                                           42
  7.6.  Condition of Property                               42
  7.7.  Observance of Legal Requirements                    42
  7.8.  Inspection of Property; Books and Records;
        Discussions                                         42
  7.9.  Licenses, Franchises, Intellectual Property,
        Etc.                                                42
  7.10. Indebtedness Capitalization Ratio                   42
  7.11. Ratio of Indebtedness to Annualized ACE
        Dividends                                           43

                                                      Facility A

8.  NEGATIVE COVENANTS                                      43

  8.1.  Indebtedness                                        43
  8.2.  Liens                                               43
  8.3.  Merger; Consolidation                               44
  8.4.  Restricted Payments                                 44
  8.5.  Investments, Acquisitions, Loans, Etc.              45
  8.6.  Amendments, Etc. of Intercompany Notes              46
  8.7.  Designation of Operating Subsidiaries               46
  8.8.  Certain Business Activities                         46

9.  DEFAULT                                                 46

  9.1.  Events of Default                                   46

10.  THE AGENT                                              49

  10.1.  Appointment                                        49
  10.2.  Delegation of Duties                               49
  10.3.  Exculpatory Provisions                             50
  10.4.  Reliance by Agent                                  50
  10.5.  Notice of Default                                  50
  10.6.  Non-Reliance on Agent and Other Lenders            51
  10.7.  Indemnification                                    51
  10.8.  Agent in Its Individual Capacity                   52
  10.9.  Successor Agent                                    52

11.  OTHER PROVISIONS                                       53

  11.1.  Amendments and Waivers                             53
  11.2.  Notices                                            53
  11.3.  No Waiver; Cumulative Remedies                     54
  11.4.  Survival of Representations and Warranties         55
  11.5.  Payment of Expenses and Taxes                      55
  11.6.  Lending Offices                                    55
  11.7.  Assignments and Participations                     56
  11.8.  Counterparts                                       57
  11.9.  Adjustments; Set-off                               58
  11.10. Indemnity                                          59
  11.11. Governing Law                                      59
  11.12. Headings Descriptive                               59
  11.13. Severability                                       59
  11.14. Integration                                        60
  11.15. Consent to Jurisdiction                            60
  11.16. Service of Process                                 60
  11.17. No Limitation on Service or Suit                   60
  11.18. WAIVER OF TRIAL BY JURY                            60

EXHIBITS

Exhibit A       List of Commitments
Exhibit B-1     Form of Revolving Credit Note
Exhibit B-2     Form of Competitive Bid Note
Exhibit C       Form of Borrowing Request
Exhibit D       Form of Competitive Bid Request
Exhibit E       Form of Invitation to Bid
Exhibit F       Form of Competitive Bid
Exhibit G       Form of Competitive Bid Accept/Reject Letter
Exhibit H       Form of Competitive Bid Loan Confirmation
Exhibit I       Form of Notice of Conversion/Continuation
Exhibit J       [Reserved]
Exhibit K       Form of Compliance Certificate
Exhibit L       Form of Pledge Agreement
Exhibit M       Form of Intercompany Note
Exhibit N       Form of Opinion of Counsel to the Borrower
Exhibit O       Form of Opinion of Special Counsel 
Exhibit P       Form of Assignment and Acceptance Agreement
Exhibit Q       Form of Guaranty


SCHEDULES

Schedule 1.1    List of Lending Offices
Schedule 4.1    List of Subsidiaries
Schedule 4.1    List of Existing Pension Plans
Schedule 8.1    List of Existing Indebtedness
Schedule 8.2    List of Existing Liens
Schedule 8.5    List of Existing Investments



 REVOLVING CREDIT AGREEMENT (FACILITY A), dated as of
  September 28, 1995, by and among ATLANTIC ENERGY, INC., a New
  Jersey corporation (the "Borrower"), the lenders party hereto
  (together with their respective assigns, the "Lenders", each a
  "Lender") and THE BANK OF NEW YORK, as agent for the Lenders (in
  such capacity, the "Agent").
  
  1.  DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
  
      1.1. Definitions
  
           As used in this Agreement, terms defined in the preamble
  have the meanings therein indicated, and the following terms have
  the following meanings:
  
           "ABR Advances": the Revolving Credit Loans (or any
  portions thereof) at such time as they (or such portions) are
  made and/or being maintained at a rate of interest based upon the
  Alternate Base Rate.
  
           "ACE": Atlantic City Electric Company, a New Jersey
  corporation and a wholly owned Subsidiary of the Borrower.
  
           "ACE Preferred Stock": the Cumulative Preferred Stock,
  $100 par value, the No Par Preferred Stock and the Preference
  Stock, No Par Value of ACE outstanding from time to time.
  
           "Accountants": Deloitte & Touche LLP (or any successor
  thereto), or such other firm of certified public accountants of
  recognized national standing selected by the Borrower.
  
           "Acquisition": the acquisition of a business by the
  Borrower or any of its Subsidiaries through either a merger with
  another Person or the purchase of all or substantially all of the
  capital Stock of another Person or all or substantially all of
  the assets of another Person or of a division of another Person.
  
           "Accumulated Funding Deficiency": as defined in Section
  302 of ERISA.
  
           "Advance": with respect to a Revolving Credit Loan, an ABR
  Advance or a Eurodollar Advance, as the case may be.
  
           "Affected Advance": as defined in Section 2.9.
  
           "Affiliate": as to any Person, any other Person which,
  directly or indirectly, is in control of, is controlled by, or is
  under common control with, such Person.  For purposes of this
  definition, control of a Person shall mean the power, direct or
  indirect, (i) to vote 5% or more of the securities or other
  interests having ordinary voting power for the election of
  directors or other managing Persons thereof or (ii) to direct or
  cause the direction of the management and policies of such
  Person, whether by contract or otherwise.
  
           "Aggregate Commitments": on any date, the sum of all
  Commitments on such date.
  
           "Aggregate Credit Exposure": as of any date of
  determination, the sum of the aggregate outstanding principal
  balance of all Revolving Credit Loans and Competitive Bid Loans
  of all Lenders.
  
           "Aggregate Facility B Commitments": the aggregate of the
  Facility B Commitments of the Facility B Lenders.
  
           "Agreement": this Revolving Credit Agreement (Facility A),
  as the same may be amended, supplemented or otherwise modified
  from time to time.
  
           "Alternate Base Rate": on any date, a rate of interest per
  annum equal to the higher of (i) the Federal Funds Rate in effect
  on such date plus 1/2 of 1% or (ii) the BNY Rate in effect on
  such date.
  
           "Annualized ACE Dividends": at any date of determination,
  an amount equal to (i) the amount of dividends paid to the
  Borrower by ACE during the fiscal quarter ending on such date of
  determination or, if such date of determination is not a fiscal
  quarter ending date, the immediately preceding fiscal quarter,
  multiplied by (ii) four.
  
           "Applicable Fee Percentage": with respect to the amount of
  the Aggregate Commitments, at all times during which the
  applicable Pricing Level set forth below is in effect, the
  percentage set forth below next to such Pricing Level, subject to
  the provisos set forth below:
  
                                                   Applicable
              Pricing Level                        Fee Percentage
  
              Pricing Level I                      0.125%
              Pricing Level II                     0.150%
              Pricing Level III                    0.175%
              Pricing Level IV                     0.250%
  
  
  provided that (i) changes in the Applicable Fee Percentage
  resulting from a change in the Pricing Level shall become
  effective on the effective date of any change in the Senior Debt
  Rating by Moody's or S&P and (ii) in the event of a split in
  ratings resulting in the Senior Debt Rating by S&P and Moody's
  falling within different Pricing Levels, the Applicable Fee
  Percentage shall be the lower percentage.
  
           "Applicable Lending Office": in respect of any Lender, (i)
  in the case of such Lender's ABR Advances and Competitive Bid
  Loans, its Domestic Lending Office and (ii) in the case of such
  Lender's Eurodollar Advances, its Eurodollar Lending Office.
  
           "Applicable Margin": with respect to the unpaid principal
  amount of Eurodollar Advances, at all times during which the
  applicable Pricing Level set forth below is in effect, the
  percentage set forth below next to such Pricing Level, subject to
  the provisos set forth below:
  
                Pricing Level                    Applicable Margin
  
                Pricing Level I                  0.300%
                Pricing Level II                 0.325%
                Pricing Level III                0.425%
                Pricing Level IV                 0.500%
  
  provided that (i) changes in the Applicable Margin resulting from
  a change in the Pricing Level shall become effective on the
  effective date of any change in the Senior Debt Rating by Moody's
  or S&P and (ii) in the event of a split in ratings resulting in
  the Senior Debt Rating by each of S&P and Moody's falling within
  different Pricing Levels, the Applicable Margin shall be the
  lower percentage.
  
           "Approved Financial Institutions": collectively, (i) each
  Lender, (ii) those major United States and foreign commercial
  banks with which the Borrower or its affiliates have formal line-
  of-credit relationships as of the Effective Date, (iii) domestic
  branches of major Canadian banks and (iv) such other banks as
  appropriate officers of the Borrower may deem appropriate and
  with respect to which the Agent shall have received advance
  written notice.
    
      "Assignment and Acceptance Agreement": an assignment and
  acceptance agreement executed by an assignor and an assignee
  pursuant to which the assignor assigns to the assignee all or any
  portion of such assignor's (i) Notes, (ii) Commitment, (iii)
  Facility B Notes and (iv) Facility B Commitment, substantially in
  the form of Exhibit P.
  
           "Assignment Fee": as defined in Section 11.7(b).
  
           "Atlantic Thermal": Atlantic Thermal Systems, Inc., a New
  Jersey corporation and a wholly owned Subsidiary of the Borrower.
  
           "ATE": ATE Investment, Inc., a New Jersey corporation and
  a wholly owned Subsidiary of the Borrower.
  
           "ATE Credit Agreement": the Revolving Credit and Term Loan
  Agreement, dated as of May 24, 1988, as amended, between ATE and
  BNY.
  
           "Authorized Signatory": as to (i) any Person which is a
  corporation, the chairman of the board, the president, any vice
  president, the chief financial officer or any other duly
  authorized officer (acceptable to the Agent) of such Person and
  (ii) any Person which is not a corporation, the general partner
  or other managing Person thereof.
  
           "Benefited Lender": as defined in Section 11.9.
  
           "Bid Rate": as defined in Section 2.4(b).
  
           "BNY": The Bank of New York.
  
           "BNY Rate": a rate of interest per annum equal to the rate
  of interest publicly announced in New York City by BNY from time
  to time as its prime commercial lending rate, such rate to be
  adjusted automatically (without notice) on the effective date of
  any change in such publicly announced rate.
  
           "Borrowing Date": any Business Day on which (i) the
  Lenders make Revolving Credit Loans in accordance with a
  Borrowing Request or (ii) one or more Lenders make Competitive
  Bid Loans pursuant to Competitive Bids which have been accepted
  by the Borrower.
  
           "Borrowing Request": a request for Revolving Credit Loans
  in the form of Exhibit C.
  
           "Business Day": any day other than a Saturday, a Sunday or
  a day on which commercial banks located in New York City are
  authorized or required by law or other governmental action to
  close.
  
           "Capital Lease Obligations": with respect to any Person,
  obligations of such Person with respect to leases which, in
  accordance with GAAP, are required to be capitalized on the
  financial statements of such Person.
  
           "Change in Control": either (i) any "person" or "group"
  (within the meaning of Sections 13(d) and 14(d)(2) of the
  Exchange Act) becoming the "beneficial owner" (as defined in Rule
  13d-3 under the Exchange Act) of shares of capital Stock of the
  Borrower entitled to exercise more than 50% of the total voting
  power of all outstanding shares of capital Stock, unless such
  beneficial ownership is approved by the board of directors of the
  Borrower prior to the acquisition; or (ii) a majority of the
  board of directors of the Borrower are not Continuing Directors. 
  
           "Code": the Internal Revenue Code of 1986, as the same may
  be amended from time to time, or any successor thereto, and the
  rules and regulations issued thereunder, as from time to time in
  effect.
  
           "Collateral": collectively, the collateral under and as
  defined in the Pledge Agreement.
  
           "Commitment": in respect of any Lender, such Lender's
  undertaking during the Commitment Period to make Revolving Credit
  Loans, subject to the terms and conditions hereof, in an
  aggregate outstanding principal amount not exceeding the amount
  set forth next to the name of such Lender in Exhibit A under the
  heading "Commitment", as the same may be reduced pursuant to
  Section 2.5.
  
           "Commitment Period": the period from the Effective Date
  until the day before the Maturity Date.
  
           "Commitment Percentage": as to any Lender, the percentage
  set forth opposite the name of such Lender in Exhibit A under the
  heading "Commitment Percentage".
  
           "Competitive Bid": an offer by a Lender, in the form of
  Exhibit F, to make a Competitive Bid Loan.
  
           "Competitive Bid Accept/Reject Letter": a notification
  given by the Borrower pursuant to Section 2.4 in the form of
  Exhibit G.
  
           "Competitive Bid Loan": each Loan from a Lender to the
  Borrower pursuant to Section 2.4.
  
           "Competitive Bid Loan Confirmation": a confirmation by the
  Agent to a Lender of the acceptance by the Borrower of any
  Competitive Bid (or Portion thereof) made by such Lender,
  substantially in the form of Exhibit H.
  
           "Competitive Bid Note" and "Competitive Bid Notes": as
  defined in Section 2.4(g).
  
           "Competitive Bid Request": a request by the Borrower, in
  the form of Exhibit D, for Competitive Bids.
  
           "Competitive Interest Period": with respect to any
  Competitive Bid Loan, the period commencing on the date of such
  Competitive Bid Loan and ending on the date requested in the
  Competitive Bid Request with respect to such Competitive Bid
  Loan, which date shall not be earlier than 7 days after the date
  of such Competitive Bid Loan or later than 180 days after the
  date of such Competitive Bid Loan; provided, however, that if any
  Competitive Interest Period would end on a day other than a
  Business Day, such Interest Period shall be extended to the next
  succeeding Business Day, unless such next succeeding Business Day
  would be a date on or after the Maturity Date, in which case such
  Competitive Interest Period shall end on the next preceding
  Business Day, and provided further that no Competitive Interest
  Period shall end after the Maturity Date.  Interest shall accrue
  from and including the first day of a Competitive Interest Period
  to but excluding the last day of such Competitive Interest
  Period.
  
           "Compliance Certificate": a certificate in the form of
  Exhibit K.
  
           "Consenting Lenders": as defined in Section 2.18(b).
  
           "Consolidated": the Borrower and its Subsidiaries which
  are consolidated for financial reporting purposes.
  
           "Consolidated Total Indebtedness": at any date of
  determination, total Indebtedness of the Borrower and its
  Subsidiaries determined on a Consolidated basis in accordance
  with GAAP.
  
           "Consolidated Total Capitalization": at any date of
  determination with respect to the Borrower and its Subsidiaries
  on a Consolidated basis in accordance with GAAP, the sum of (i)
  the amount classified as common shareholders equity for purposes
  of balance sheet presentation in accordance with GAAP, plus (ii)
  the amount classified as preferred stock for purposes of balance
  sheet presentation in accordance with GAAP, plus (iii) all
  Indebtedness (net of unamortized premium and discount), less (iv)
  unamortized capital Stock expense.
  
           "Contingent Obligation": as to any Person (the "secondary
  obligor"), any obligation of such secondary obligor (i)
  guaranteeing or in effect guaranteeing any return on any
  investment made by another Person, or (ii) guaranteeing or in
  effect guaranteeing any Indebtedness, lease, dividend or other
  monetary obligation ("primary obligation") of any other Person
  (the "primary obligor") in any manner, whether directly or
  indirectly, including, without limitation, any obligation of such
  secondary obligor, whether contingent, (A) to purchase any such
  primary obligation or any Property constituting direct or
  indirect security therefor, (B) to advance or supply funds (x)
  for the purchase or payment of any such primary obligation or (y)
  to maintain working capital or equity capital of the primary
  obligor or otherwise to maintain the net worth or solvency of the
  primary obligor, (C) to purchase Property, securities or services
  primarily for the purpose of assuring the beneficiary of any such
  primary obligation of the ability of the primary obligor to make
  payment of such primary obligation, (D) otherwise to assure or
  hold harmless the beneficiary of such primary obligation against
  loss in respect thereof, and (E) in respect of the liabilities of
  any partnership in which such secondary obligor is a general
  partner, except to the extent that such liabilities of such
  partnership are nonrecourse to such secondary obligor and its
  separate Property, provided, however, that the term "Contingent
  Obligation" shall not include the indorsement of instruments for
  deposit or collection in the ordinary course of business.  The
  amount of any Contingent Obligation of a Person shall be deemed
  to be an amount equal to the stated or determinable amount of the
  primary obligation in respect of which such Contingent Obligation
  is made or, if not stated or determinable, the maximum reasonably
  anticipated liability in respect thereof as determined by such
  Person in good faith.
  
           "Continuing Director": at any date of determination, a
  member of the board of directors of the Borrower who (i) was a
  member of such board for the prior of 24 months prior to such
  date or (ii) was nominated for election or elected to such board
  with the affirmative vote of at least two-thirds of the
  Continuing Directors.
  
           "Control Person": as defined in Section 2.16.
  
           "Conversion/Continuation Date": the date on which (i) a
  Eurodollar Advance is converted to an ABR Advance, (ii) the date
  on which an ABR Advance is converted to a Eurodollar Advance or
  (iii) the date on which a Eurodollar Advance is continued as a
  new Eurodollar Advance.
  
           "Credit Exposure": with respect to any Lender as of any
  date, the sum as of such date of the outstanding principal
  balance of such Lender's Revolving Credit Loans.
  
           "Default": any event or condition which constitutes an
  Event of Default or which, with the giving of notice, the lapse
  of time, or any other condition, would, unless cured or waived,
  become an Event of Default.
  
           "District Heating and Cooling Project": a proposed
  centralized steam and chilled water production facility located
  in Atlantic City, New Jersey.
  
           "Dollars" and "$": lawful currency of the United States of
  America.
  
           "Domestic Lending Office": in respect of any Lender,
  initially, the office or offices of such Lender designated as
  such on Schedule 1.1; thereafter, such other office  of such
  Lender through which it shall be making or maintaining ABR
  Advances or Competitive Bid Loans, as reported by such Lender to
  the Agent and the Borrower, provided that any Lender may so
  report different Domestic Lending Offices for all of its ABR
  Advances and all of its Competitive Bid Loans, whereupon
  references to the Domestic Lending Office of such Lender shall
  mean either or both of such offices, as applicable.
  
           "Effective Date": September 28, 1995.
  
           "Employee Benefit Plan": an employee benefit plan within
  the meaning of Section 3(3) of ERISA maintained, sponsored or
  contributed to by the Borrower, any of its Subsidiaries or any
  ERISA Affiliate.
  
           "Environmental Laws": any and all federal, state and local
  laws relating to the environment, the use, storage, transporting,
  manufacturing, handling, discharge, disposal or recycling of
  hazardous substances, materials or pollutants or industrial
  hygiene, and including, without limitation, (i) the Comprehensive
  Environmental Response, Compensation and Liability Act, as
  amended, 42 USCA 9601 et seq.; (ii) the Resource Conservation
  and Recovery Act of 1976, as amended, 42 USCA 6901 et seq.;
  (iii) the Toxic Substance Control Act, as amended, 15 USCA 2601
  et seq.; (iv) the Water Pollution Control Act, as amended, 33
  USCA 1251 et seq.; (v) the Clean Air Act, as amended, 42 USCA
  7401 et seq.; (vi) the Hazardous Material Transportation
  Authorization Act of 1994, as amended, 49 USCA 5101 et seq. and
  (viii) all rules, regulations, judgments, decrees, injunctions
  and restrictions thereunder and any analogous state law.
  
           "ERISA": the Employee Retirement Income Security Act of
  1974, as amended from time to time, and the rules and regulations
  issued thereunder, as from time to time in effect.
  
           "ERISA Affiliate": when used with respect to an Employee
  Benefit Plan, ERISA, the PBGC or a provision of the Code
  pertaining to employee benefit plans, any Person that is a member
  of any group of organizations within the meaning of Sections
  414(b) or (c) of the Code (or, solely for purposes of potential
  liability under Section 302(c)(11) of ERISA and Section
  412(c)(11) of the Code and the lien created under Section 302(f)
  of ERISA and Section 412(n) of the Code, Sections 414(m) or (o)
  of the Code) of which the Borrower or any of its Subsidiaries is
  a member.
  
           "Eurodollar Advances": collectively, the Revolving Credit
  Loans (or any portions thereof) at such time as they (or such
  portions) are made and/or being maintained at a rate of interest
  based upon the Eurodollar Rate.
  
           "Eurodollar Interest Period": with respect to any
  Eurodollar Advance requested by the Borrower, the period
  commencing on, as the case may be, the Borrowing Date or
  Conversion/Continuation Date with respect to such Eurodollar
  Advance and ending one, two, three or six months thereafter, as
  selected by the Borrower in its irrevocable Borrowing Request or
  its irrevocable Notice of Conversion/Continuation, provided,
  however, that (i) if any Eurodollar Interest Period would
  otherwise end on a day which is not a Business Day, such
  Eurodollar Interest Period shall be extended to the next
  succeeding Business Day unless the result of such extension would
  be to carry such  Interest Period into another calendar month, in
  which event such Eurodollar Interest Period shall end on the
  immediately preceding Business Day, (ii) any Eurodollar Interest
  Period that begins on the last Business Day of a calendar month
  (or on a day for which there is no numerically corresponding day
  in the calendar month at the end of such Eurodollar Interest
  Period) shall end on the last Business Day of a calendar month
  and (iii) the Borrower shall select Interest Periods so as not to
  have more than three different Eurodollar Interest Periods
  outstanding at any one time for all Eurodollar Advances.
  
           "Eurodollar Lending Office": in respect of any Lender,
  initially, the office, branch or affiliate of such Lender
  designated as such on Schedule 1.1 (or, if no such office branch
  or affiliate is specified, its Domestic Lending Office);
  thereafter, such other office, branch or affiliate of such Lender
  through which it shall be making or maintaining Eurodollar
  Advances, as reported by such Lender to the Agent and the
  Borrower.
  
           "Eurodollar Rate": with respect to the Eurodollar Interest
  Period applicable to any Eurodollar Advance, a rate of interest
  per annum, as determined by the Agent, obtained by dividing (and
  then rounding to the nearest 1/16 of 1% or, if there is no
  nearest 1/16 of 1%, then to the next higher 1/16 of 1%):
  
                (a)  the rate, as reported by BNY to the Agent,
  quoted by BNY to leading banks in the interbank eurodollar market
  as the rate at which BNY is offering Dollar deposits in an amount
  equal approximately to the Eurodollar Advance of BNY to which
  such Interest Period shall apply for a period equal to such
  Interest Period, as quoted at approximately 11:00 a.m. two
  Business Days prior to the first day of such Interest Period, by
  
                (b)  a number equal to 1.00 minus the aggregate of
  the then stated maximum rates during such Interest Period of all
  reserve requirements (including, without limitation, marginal,
  emergency, supplemental and special reserves), expressed as a
  decimal, established by the Board of Governors of the Federal
  Reserve System and any other banking authority to which BNY and
  other major United States money center banks are subject, in
  respect of eurocurrency funding (currently referred to as
  "Eurocurrency liabilities" in Regulation D of the Board of
  Governors of the Federal Reserve System) or in respect of any
  other category of liabilities including deposits by reference to
  which the interest rate on Eurodollar Advances is determined or
  any category of extensions of credit or other assets which
  includes loans by non-domestic offices of any Lender to United
  States Residents.  Such reserve requirements shall include,
  without limitation, those imposed under such Regulation D. 
  Eurodollar Advances shall be deemed to constitute Eurocurrency
  liabilities and as such shall be deemed to be subject to such
  reserve requirements without benefit of credits for proration,
  exceptions or offsets which may be available from time to time to
  any Lender under such Regulation D. The Eurodollar Rate shall be
  adjusted automatically on and as of the effective date of any
  change in any such reserve requirement.
  
           "Event of Default": any of the events specified in Section
  9.1, provided that any requirement for the giving of notice, the
  lapse of time, or any other condition has been satisfied.
  
           "Exchange Act": the Securities and Exchange Act of 1934,
  as amended.
  
           "Existing Pension Plans": as defined in Section 4.12.
  
           "Extension Consent Period": the period which is less than
  35 days, but equal to or greater than 30 days, prior to the then
  current Maturity Date (provided, however, that if such 30th prior
  day falls on a day that is not a Business Day, such date shall be
  extended to the next following Business Day).
  
           "Extension Consent Required Lenders": Lenders having at
  least 66 2/3% of the Aggregate Commitments (without giving effect
  to any Loans outstanding).
  
           "Extension Request": as defined in Section 2.18.
  
           "Facility B": the $40,000,000 senior three-year revolving
  credit facility established pursuant to the Facility B Loan
  Documents.
  
           "Facility B Agent": The Bank of New York, in its capacity
  as agent for the Facility B Lenders under the Facility B Loan
  Documents.
  
           "Facility B Commitment": in respect of any Facility B
  Lender, such Facility B Lender's undertaking during the
  Commitment Period (as defined in the Facility B Credit Agreement)
  to make Facility B Loans, in an amount not in excess, and subject
  to the terms and conditions, of the Facility B Credit Agreement.
  
           "Facility B Commitment Percentage": as to any Facility B
  Lender, such Facility B Lender's Commitment Percentage as defined
  in the Facility B Credit Agreement.
  
           "Facility B Credit Agreement": the Revolving Credit
  Agreement (Facility B), dated as of the date hereof, among the
  Borrower, the Facility B Agent and the Facility B Lenders, as the
  same may be amended, supplemented or otherwise modified from time
  to time.
      
           "Facility B Lenders": the Lenders party to the Facility B
  Loan Documents.
  
           "Facility B Loan Documents": collectively, the Facility B
  Credit Agreement, the Facility B Notes and the Pledge Agreement.
  
           "Facility B Maturity Date": the maturity date under the
  Facility B Credit Agreement, as from time to time extended
  pursuant thereto.
  
           "Facility B Notes": collectively, (i) the Revolving Credit
  Notes (Facility B) and (ii) the Competitive Bid Notes (Facility
  B) made by the Borrower pursuant to the Facility B Credit
  Agreement, as indorsed or modified from time to time.
  
           "Facility Fee": as defined in Section 3.1.
  
           "Federal Funds Rate": for any day, a rate per annum
  (expressed as a decimal, rounded upwards, if necessary, to the
  next higher 1/100 of 1%), 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 by  the Federal Reserve Bank of New York on the
  Business Day next succeeding such day, provided that (i) if the
  day for which such rate is to be determined is not a Business
  Day, the Federal Funds Rate for such day shall be such rate on
  such transactions on the next preceding Business Day as so
  published on the next succeeding Business Day, and (ii) if such
  rate is not so published for any day, the Federal Funds Rate for
  such day shall be the average of the quotations for such day on
  such transactions received by BNY as determined by BNY and
  reported to the Agent.
  
           "Financial Statements": as defined in Section 4.11.
  
           "GAAP": generally accepted accounting principles set forth
  in the opinions and pronouncements of the Accounting Principles
  Board and the American Institute of Certified Public Accountants
  and in the statements and pronouncements of the Financial
  Accounting Standards Board or in such other statement by such
  other entity as may be approved by a significant segment of the
  accounting profession, which are applicable to the circumstances
  as of the date of determination, consistently applied.  If at any
  time any change in GAAP would affect the computation of any
  financial ratio or requirement set forth in this Agreement, the
  Agent, the Lenders and the Borrower shall negotiate in good faith
  to amend such ratio or requirement to reflect such change in GAAP
  (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 GAAP prior to such change therein
  and (ii) the Borrower shall provide to the Agent and the Lenders
  financial statements and other documents required under this
  Agreement or as reasonably requested hereunder setting forth a
  reconciliation between calculations of such ratio or requirement
  made before and after giving effect to such change in GAAP.
  
           "Governmental Authority": any nation or government, any
  state or other political subdivision thereof, any entity
  exercising executive, legislative, judicial, regulatory or
  administrative functions of or pertaining to government and any
  court or arbitrator.
  
           "Highest Lawful Rate": as to any Lender, the maximum rate
  of interest, if any, that at any time or from time to time may be
  contracted for, taken, charged or received by such Lender on the
  Notes, or which may be owing to such Lender pursuant the Loan
  Documents under the laws applicable to such Lender and this
  transaction.
  
           "Indebtedness": as to any Person, at a particular time,
  all items which constitute, without duplication, (i) indebtedness
  for borrowed money or the deferred purchase price of Property
  (other than trade payables incurred in the ordinary course of
  business), (ii) indebtedness evidenced by notes, bonds,
  debentures or similar instruments, (iii) obligations with respect
  to any conditional sale or title retention agreement, (iv)
  indebtedness arising under acceptance facilities and the amount
  available to be drawn under all letters of credit (other than
  trade letters of credit) issued for the account of such Person
  and, without duplication, all drafts drawn thereunder to the
  extent such Person shall not have reimbursed the issuer in
  respect of the issuer's payment of such drafts, (v) all
  liabilities secured by any Lien on any Property owned by such
  Person even though such Person has not assumed or otherwise
  become liable for the payment thereof (other than (A) carriers',
  warehousemen's, mechanics', repairmen's or other like non-
  consensual statutory Liens arising in the ordinary course of
  business and (B) liabilities of Subsidiaries (other than ACE and
  Operating Subsidiaries) for which recourse may be had by the 
  creditor only to the Property secured by the Lien), (vi) Capital
  Lease Obligations and (vii) Contingent Obligations.
  
           "Indebtedness Capitalization Ratio": the ratio of (i)
  Consolidated Total Indebtedness to (ii) Consolidated Total
  Capitalization.
  
           "Indemnified Person": as defined in Section 11.10.
  
           "Intercompany Loans": loans from time to time made by the
  Borrower to an Operating Subsidiary.
  
           "Intercompany Note": a promissory note made by an
  Operating Subsidiary to the Borrower evidencing the Intercompany
  Loans made by the Borrower to such Operating Subsidiary,
  substantially in the form of Exhibit M, as the same may be
  amended, modified or supplemented.
  
           "Interest Payment Date": (i) as to any ABR Advance, the
  last day of each March, June, September and December commencing
  on the first of such days to occur after such ABR Advance is made
  or any Eurodollar Advance is converted to an ABR Advance, (ii) as
  to any Eurodollar Advance in respect of which the Borrower has
  selected a Eurodollar Interest Period of one, two or three
  months, the last day of such Interest Period, (iii) as to any
  Eurodollar Advance in respect of which the Borrower has selected
  a Eurodollar Interest Period of six months, the day which is
  three months after the first day of such Interest Period and the
  last day of such Interest Period, (iv) as to any Competitive Bid
  Loan as to which the Borrower has selected an Interest Period of
  90 days or less, the last day of such Competitive Interest
  Period, and (v) as to any Competitive Bid Loan as to which the
  Borrower has selected a Competitive Interest Period of more than
  90 days, the day which is 90 days after the first day of such
  Competitive Interest Period and the last day of such Competitive
  Interest Period.
  
           "Interest Period": a Eurodollar Interest Period or a
  Competitive Interest Period, as the context may require.
  
           "Investments": as defined in Section 8.5.
  
           "Invitation to Bid": an invitation to make Competitive
  Bids in the form of Exhibit E.
  
           "Lien": any mortgage, pledge, hypothecation, assignment,
  deposit or preferential arrangement, encumbrance, lien (statutory
  or other), or other security agreement or security interest of
  any kind or nature whatsoever, including, without limitation, any
  conditional sale or other title retention agreement and any
  capital or financing lease having substantially the same economic
  effect as any of the foregoing.
  
           "Loan Documents": collectively, this Agreement, the Notes
  and the Pledge Agreement.
  
           "Loans": the Revolving Credit Loans and/or the Competitive
  Bid Loans, as the case may be.
      
           "Margin Stock": any "margin stock", as defined in
  Regulation U of the Board of Governors of the Federal Reserve
  System, as the same may be amended or supplemented from time to
  time.
  
           "Material Adverse Change": a material adverse change in
  (i) the financial condition, operations, business or Property of
  the Borrower and its Subsidiaries taken as a whole or (ii) the
  ability of the Borrower to perform its obligations under the Loan
  Documents.
  
           "Material Adverse Effect": a material adverse effect on
  (i) the financial condition, operations, business or Property of
  the Borrower and its Subsidiaries taken as a whole or (ii) the
  ability of the Borrower to perform its obligations under the Loan
  Documents.
  
           "Maturity Date": September 26, 1996, or any date
  subsequent thereto resulting from an extension of the Maturity
  Date pursuant to Section 2.18, or such earlier date on which the
  Notes shall become due and payable, whether by acceleration or
  otherwise.
  
           "Maximum Offer": as defined in Section 2.4(b).
  
           "Maximum Request": as defined in Section 2.4(a).
  
           "Moody's": Moody's Investors Service, Inc., or any
  successor thereto.
  
           "Multiemployer Plan": a Pension Plan which is a
  multiemployer plan as defined in Section 4001(a)(3) of ERISA.
  
           "Nonconsenting Lender": as defined in Section 2.18.
  
           "Note": a Revolving Credit Note or a Competitive Bid Note,
  as the case may be.
  
           "Notes": the Revolving Credit Notes and/or the Competitive
  Bid Notes, as the case may be.
  
           "Notice of Conversion/Continuation": a notice
  substantially in the form of Exhibit I.
  
           "Operating Subsidiaries": collectively (i) Atlantic
  Generation, Inc., (ii) ATE, (iii) Atlantic Thermal, (iv) Atlantic
  Jersey Thermal Systems, Inc., (v) Atlantic Energy Technologies,
  Inc. and (vi) and each other Subsidiary of the Borrower engaged
  in the conduct of an active trade or business which is designated
  as an Operating Subsidiary pursuant to Section 8.7.
  
           "PBGC": the Pension Benefit Guaranty Corporation
  established pursuant to Subtitle A of Title IV of ERISA, or any
  Governmental Authority succeeding to the functions thereof.
  
           "Pension Plan": at any date of determination, any Employee
  Benefit Plan (including a Multiemployer Plan), the funding
  requirements of which (under Section 302 of ERISA or Section 412
  of the Code) are, or at any time within the six years immediately
  preceding such date, were in whole or in part, the responsibility
  of the Borrower, any of its Subsidiaries or any ERISA Affiliate.
  
           "Permitted Investments": Investments permitted under
  Section 8.5.
  
           "Permitted Liens": Liens permitted to exist under Section
  8.2.
  
           "Permitted Recipient": a Person in which the Borrower owns
  50% or less of the Stock or voting power.
  
           "Permitted Recipient Loans": loans from time to time made
  to a Permitted Recipient by the Borrower to the extent permitted
  by Section 8.5.
  
           "Person": any individual, firm, partnership, joint
  venture, corporation, association, business enterprise, limited
  liability company, joint stock company, unincorporated
  association, trust, Governmental Authority or any other entity,
  whether acting in an individual, fiduciary, or other capacity,
  and for the purpose of the definition of "ERISA Affiliate", a
  trade or business.
  
           "Pledge Agreement": the Pledge Agreement, made by the
  Borrower in favor of the Agent, as collateral agent for itself,
  the Lenders, the Facility B Agent and the Facility B Lenders,
  substantially in the form of Exhibit L, as the same may be
  amended, supplemented or otherwise modified from time to time.
  
           "Portion": as defined in Section 2.4(b).
  
           "Pricing Level I": any time when the Senior Debt Rating is
  (i) A- or higher by S&P or (ii) A3 or higher by Moody's,
  provided, however, that in the event that (x) the Senior Debt
  Rating is not available from either S&P or Moody's, such rating
  agency shall be deemed to have assigned its lowest rating and (y)
  the Senior Debt Rating is not available from both S&P and
  Moody's, Pricing Level IV shall be applicable.
  
           "Pricing Level II": any time when (i) the Senior Debt
  Rating is (a) BBB or higher by S&P or (b) Baa2 or higher by
  Moody's and (ii) Pricing Level I does not apply, provided,
  however, that in the event that (x) the Senior Debt Rating is not
  available from either S&P or Moody's, such rating agency shall be
  deemed to have assigned its lowest rating and (y) the Senior Debt
  Rating is not available from both S&P and Moody's, Pricing Level
  IV shall be applicable.
  
           "Pricing Level III": any time when (i) the Senior Debt
  Rating is (a) BBB- or higher by S&P or (b) Baa3 or higher by
  Moody's and (ii) Pricing Levels I and II do not apply, provided,
  however, that in the event that (x) the Senior Debt Rating is not
  available from either S&P or Moody's, such rating agency shall be
  deemed to have assigned its lowest rating and (y) the Senior Debt
  Rating is not available from both S&P and Moody's, Pricing Level
  IV shall be applicable.
  
           "Pricing Level IV": any time when Pricing Levels I, II and
  III do not apply.
  
           "Prohibited Transaction": a transaction that is prohibited
  under Section 4975 of the Code or Section 406 of ERISA and not
  exempt under Section 4975 of the Code or Section 408 of ERISA.
  
           "Property": all types of real, personal, tangible,
  intangible or mixed property.
  
           "Real Property": all real property owned or leased (or
  previously owned or leased) by the Borrower or any of its
  Subsidiaries (or any of their respective predecessors).
  
           "Replacement Lender": as defined in Section 2.18.
  
           "Reportable Event": with respect to any Pension Plan, (i)
  any event set forth in Sections 4043(b) (other than a Reportable
  Event as to which the 30 day notice requirement is waived by the
  PBGC under applicable regulations), 4062(c) or 4063(a) of ERISA
  or the regulations thereunder, (ii) an event requiring the
  Borrower, any of its Subsidiaries or any ERISA Affiliate to
  provide security to a Pension Plan under Section 401(a)(29) of
  the Code, or (iii) any failure to make any payment required by
  Section 412(m) of the Code.
  
           "Required Lenders": (i) if the Commitments exist and no
  Revolving Credit Loans are outstanding, Lenders having
  Commitments equal to at least 66-2/3% of the sum of the Aggregate
  Commitments; (ii) if the Commitments exist and Revolving Credit
  Loans are outstanding, Lenders holding Revolving Credit Notes
  having an aggregate unpaid principal balance equal to at least
  66-2/3% of the aggregate of Revolving Credit Loans outstanding;
  and (iii) if the Commitments have been terminated or otherwise no
  longer exist, Lenders holding Notes having an aggregate unpaid
  principal balance equal to at least 66-2/3% of the aggregate of
  Loans outstanding.
  
           "Restricted Payment": as to any Person (i) any dividend or
  other distribution, direct or indirect, on account of any shares
  of any class of Stock or other equity interest in such Person now
  or hereafter outstanding (other than a dividend payable solely in
  shares of such Stock to the holders of such shares) and (ii) any
  redemption, retirement, sinking fund or similar payment, purchase
  or other acquisition, direct or indirect, of any shares of any
  class of Stock or other equity interest in such Person now or
  hereafter outstanding.
  
           "Restricted Subsidiaries": collectively, the Operating
  Subsidiaries and ACE. 
  
           "Revolving Credit Loans": as defined in Section 2.1.
  
           "Senior Debt Rating": the long-term senior secured debt
  rating of ACE as from time to time determined by S&P and/or
  Moody's.
  
           "S&P": Standard & Poor's Ratings Group, a division of
  McGraw-Hill, Inc., or any successor thereto.
  
           "SEC": the Securities and Exchange Commission or any
  Governmental Authority succeeding to the functions thereof.
  
           "Special Counsel": Emmet, Marvin & Martin, LLP, special
  counsel to the Agent.
  
           "Stock": any and all shares, rights, interests,
  participations, warrants or other equivalents (however
  designated) of corporate stock.
  
           "Submission Deadline": as defined in Section 2.4(b).
  
           "Subsidiary": as to any Person, any corporation,
  association, partnership, limited liability company, joint
  venture or other business entity of which such Person or any
  Subsidiary of such Person, directly or indirectly, either (i) in
  respect of a corporation, owns or controls more than 50% of the
  outstanding Stock having ordinary voting power to elect a
  majority of the board of directors or similar managing body,
  irrespective of whether a class or classes shall or might have
  voting power by reason of the happening of any contingency, or
  (ii) in respect of an association, partnership, joint venture or
  other business entity, is entitled to share in more than 50% of
  the profits and losses, however determined.
  
           "Tax": any present or future tax, levy, impost, duty,
  charge, fee, deduction or withholding of any nature and whatever
  called, by a Governmental Authority, on whomsoever and wherever
  imposed, levied, collected, withheld or assessed.
  
           "Tax on the Overall Net Income": as to any Person, a Tax
  imposed by the jurisdiction in which that Person's principal
  office (and/or, in the case of a Lender, its Domestic Lending
  Office) is located or by any political subdivision or taxing
  authority thereof or in which that Person is deemed to be doing
  business on all or part of the net income, profits or gains of
  that Person (whether worldwide, or only insofar as such income,
  profits or gains are considered to arise in or to relate to a
  particular jurisdiction, or otherwise).
  
           "Termination Event": with respect to any Pension Plan, (i)
  a Reportable Event, (ii) the termination of a Pension Plan, or
  the filing of a notice of intent to terminate a Pension Plan, or
  the treatment of a Pension Plan amendment as a termination under
  Section 4041(c) of ERISA, (iii) the institution of proceedings to
  terminate a Pension Plan under Section 4042 of ERISA, or (iv) the
  appointment of a trustee to administer any Pension Plan under
  Section 4042 of ERISA.
  
           "United States": the United States of America (including
  the States thereof and the District of Columbia).
  
      1.2. Principles of Construction
  
           (a)  All terms defined in a Loan Document shall have the
  meanings given such terms therein when used in the other Loan
  Documents or any certificate,  opinion or other document made or
  delivered pursuant thereto, unless otherwise defined therein.
  
           (b)  As used in the Loan Documents and in any certificate,
  opinion or other document made or delivered pursuant thereto,
  accounting terms not defined in Section 1.1, and accounting terms
  partly defined in Section 1.1, to the extent not defined, shall
  have the respective meanings given to them under GAAP.
  
           (c)  The words "hereof", "herein", "hereto" and
  "hereunder" and similar words when used in a Loan Document shall
  refer to such Loan Document as a whole and not to any particular
  provision thereof, and Section, schedule and exhibit references
  contained therein shall refer to Sections thereof or schedules or
  exhibits thereto unless otherwise expressly provided therein.
  
           (d)  The phrase "may not" is prohibitive and not
  permissive.
  
           (e)  Unless the context otherwise requires, words in the
  singular number include the plural, and words in the plural
  include the singular.
  
           (f)  Unless specifically provided in a Loan Document to
  the contrary, references to a time shall refer to New York City
  time.
  
           (g)  Unless specifically provided in a Loan Document to
  the contrary, in the computation of periods of time from a
  specified date to a later specified date, the word "from" means
  "from and including" and the words "to" and "until" each means
  "to but excluding".
  
           (h)  References in any Loan Document to a fiscal period
  shall refer to that fiscal period of the Borrower.
  
  
  2.  AMOUNT AND TERMS OF LOANS
  
      2.1. Revolving Credit Loans
  
           Subject to the terms and conditions hereof, each Lender
  severally agrees to make revolving credit loans (each a
  "Revolving Credit Loan" and, as the context may require,
  collectively with all other Revolving Credit Loans of such Lender
  and with the Revolving Credit Loans of all other Lenders, the
  "Revolving Credit Loans") to the Borrower from time to time
  during the Commitment Period, provided, however, that immediately
  after giving effect thereto (i) such Lender's Credit Exposure
  would not exceed such Lender's Commitment, and (ii) the Aggregate
  Credit Exposure would not exceed the Aggregate Commitments. 
  During the Commitment Period, the Borrower may borrow, prepay in
  whole or in part and reborrow under the Aggregate Commitments,
  all in accordance with the terms and conditions of this
  Agreement.
  
      2.2. Revolving Credit Notes
  
           The Revolving Credit Loans made by a Lender shall be
  evidenced by a promissory note of the Borrower, substantially in
  the form of Exhibit B-1, with  appropriate insertions therein as
  to date and principal amount (each, as indorsed or modified from
  time to time, a "Revolving Credit Note" and, collectively with
  the Revolving Credit Notes of all other Lenders, the "Revolving
  Credit Notes"), payable to the order of such Lender for the
  account of its Applicable Lending Office and representing the
  obligation of the Borrower to pay the lesser of (i) the original
  amount of the Commitment of such Lender and (ii) the aggregate
  unpaid principal balance of all Revolving Credit Loans made by
  such Lender, with interest thereon as prescribed in Section 2.8. 
  Each Revolving Credit Note shall (iii) be dated the first
  Borrowing Date, (iv) be stated to mature on the Maturity Date and
  (v) bear interest from the date thereof on the unpaid principal
  balance thereof at the applicable interest rate or rates per
  annum determined as provided in Section 2.8. Interest shall be
  payable as specified in Section 2.8.
  
      2.3. Procedure for Borrowing Revolving Credit Loans
  
           (a)  The Borrower may borrow Revolving Credit Loans under
  the Aggregate Commitments on any Business Day during the
  Commitment Period, provided, however, that the Borrower shall
  notify the Agent in writing by facsimile transmission no later
  than (i) 12:00 p.m., three Business Days prior to the requested
  Borrowing Date, in the case of Eurodollar Advances and (ii) 11:30
  a.m. on the requested Borrowing Date, in the case of ABR
  Advances, in each case specifying (A) the aggregate principal
  amount to be borrowed under the Aggregate Commitments, (B) the
  requested Borrowing Date, (C) whether such borrowing is to
  consist of one or more Eurodollar Advances, ABR Advances, or a
  combination thereof and (D) if the borrowing is to consist of one
  or more Eurodollar Advances, the length of the Eurodollar
  Interest Period for each such Eurodollar Advance, provided,
  however, that no Eurodollar Interest Period selected in respect
  of any Revolving Credit Loan shall end after the Maturity Date. 
  If the Borrower fails to give timely notice in connection with a
  request for a Eurodollar Advance, the Borrower shall be deemed to
  have elected that such Advance shall be made as an ABR Advance. 
  Each such notice shall be irrevocable and confirmed promptly (and
  in any event within five Business Days) by delivery to the Agent
  of a manually signed Borrowing Request.  Each ABR Advance shall
  be in an aggregate principal amount equal to $1,000,000 or an
  integral multiple of $1,000,000 in excess thereof (or, if the
  unused amount of the Aggregate Commitments is less than such
  amount, then such lesser amount of the Aggregate Commitments),
  and each Eurodollar Advance shall be in an aggregate principal
  amount equal to $1,000,000 or an integral multiple of $1,000,000
  in excess thereof.
  
           (b)  Upon receipt of each notice of borrowing from the
  Borrower, the Agent shall promptly notify each Lender thereof. 
  Subject to its receipt of the notice referred to in the preceding
  sentence, each Lender will make the amount of its Commitment
  Percentage of each borrowing available to the Agent for the
  account of the Borrower at the office of the Agent set forth in
  Section 11.2 not later than 2:00 p.m. on the relevant Borrowing
  Date requested by the Borrower, in funds immediately available to
  the Agent at such office.  The amounts so made available to the
  Agent on such Borrowing Date will then, subject to the
  satisfaction of the terms and conditions of this Agreement, as
  determined by the Agent, be made available on such date to the
  Borrower by the Agent at the office of the Agent specified in
  Section 11.2 by crediting the account of the Borrower on the
  books of such office with the aggregate of said amounts received
  by the Agent.
  
           (c)  Unless the Agent shall have received prior notice
  from a Lender (by telephone or otherwise, such notice to be
  promptly confirmed by fax or other writing) that such Lender will
  not make available to the Agent such Lender's Commitment
  Percentage of the Revolving Credit Loans requested by the
  Borrower, the Agent may assume that such Lender has made such
  share available to the Agent on the Borrowing Date in accordance
  with this Section, provided that such Lender received notice of
  the proposed borrowing from the Agent, and the Agent may, in
  reliance upon such assumption, make available to the Borrower on
  the Borrowing Date a corresponding amount.  If and to the extent
  such Lender shall not have so made its Commitment Percentage of
  such Loans available to the Agent, such Lender and the Borrower
  severally agree to pay to the Agent forthwith on demand such
  corresponding amount (to the extent not previously paid by the
  other), together with interest thereon for each day from the date
  such amount is made available to the Borrower to the date such
  amount is paid to the Agent, at a rate per annum equal to, in the
  case of the Borrower, the applicable interest rate set forth in
  Section 2.8 for such Loans, and, in the case of such Lender, the
  Federal Funds Rate in effect on each such day (as determined by
  the Agent).  Such payment by the Borrower, however, shall be
  without prejudice to its rights against such Lender.  If such
  Lender shall pay to the Agent such corresponding amount, such
  amount so paid shall constitute such Lender's Revolving Credit
  Loan as part of the Revolving Credit Loans for purposes of this
  Agreement, which Revolving Credit Loan shall be deemed to have
  been made by such Lender on the Borrowing Date applicable to such
  Revolving Credit Loans.
  
           (d)  If a Lender makes a new Revolving Credit Loan on a
  Borrowing Date on which the Borrower is to repay a Revolving
  Credit Loan or Competitive Bid Loan from such Lender, such Lender
  shall apply the proceeds of such new Revolving Credit Loan to
  make such repayment, and only the excess of the proceeds of such
  new Revolving Credit Loan over the Revolving Credit Loan or
  Competitive Bid Loan being repaid need be made available to the
  Agent.
  
           (e)  Notwithstanding the provisions of Section 2.3(a), the
  Agent may act without liability upon the basis of telephonic
  notice of borrowing believed by the Agent in good faith to be
  from an authorized officer of the Borrower prior to receipt of
  written notice and confirmation by facsimile or otherwise.  In
  each such case, the Borrower waives the right to dispute the
  Agent's record of the terms of such telephone notice of such
  borrowing.
  
      2.4. Competitive Bid Loans; Procedure
  
           (a)  The Borrower may make Competitive Bid Requests by
  12:00 p.m. at least one Business Day prior to the proposed
  Borrowing Date for one or more Competitive Bid Loans.  Each
  Competitive Bid Request given to the Agent (which shall promptly
  on the same day give notice thereof to each Lender by facsimile
  transmission of an Invitation to Bid if the Competitive Bid
  Request is not rejected pursuant to this Section), shall be given
  in writing by facsimile transmission (confirmed promptly, and in
  any event within five Business Days, by the delivery to the Agent
  of a Competitive Bid Request manually signed by the Borrower),
  and shall specify (i) the proposed Borrowing Date, which shall be
  a Business Day, (ii) the aggregate amount of the requested
  Competitive Bid Loans (the "Maximum Request") which amount (A)
  shall not exceed an amount which, on the proposed Borrowing Date
  and after giving effect to the requested Competitive Bid Loans,
  would cause the Aggregate Credit Exposure to exceed the 
  Aggregate Commitments and (B) shall be in a principal amount
  equal to $1,000,000 or an integral multiple of $1,000,000 in
  excess thereof, (iii) the Competitive Interest Period(s) therefor
  and the last day of each such Competitive Interest Period, and
  (iv) if more than one Competitive Interest Period is so
  specified, the principal amount allocable to each such
  Competitive Interest Period (which amount shall not be less than
  $1,000,000 or an integral multiple of $1,000,000 in excess
  thereof).  A Competitive Bid Request that does not conform
  substantially to the form of Exhibit D shall be rejected, and the
  Agent shall promptly notify the Borrower of such rejection. 
  Notwithstanding anything contained herein to the contrary, (1)
  not more than three Competitive Interest Periods may be requested
  pursuant to any Competitive Bid Request and (2) not more than
  three Competitive Bid Loans may be outstanding at any one time.
  
           (b)  Each Lender in its sole discretion may (but is not
  obligated to) submit one or more Competitive Bids to the Agent
  not later than 10:00 a.m. on the proposed Borrowing Date
  specified in such Competitive Bid Request (such time being herein
  called the "Submission Deadline"), by fax or other writing, and
  thereby irrevocably offer to make all or any part (any such part
  referred to as a "Portion") of any Competitive Bid Loan described
  in the relevant Competitive Bid Request at a rate of interest per
  annum (each a "Bid Rate") specified therein in an aggregate
  principal amount of not less than $1,000,000 or an integral
  multiple of $1,000,000 in excess thereof, provided that
  Competitive Bids submitted by BNY may only be submitted if BNY
  notifies the Borrower of the terms of its Competitive Bid not
  later than thirty minutes prior to the Submission Deadline. 
  Multiple Competitive Bids may be delivered to the Agent by a
  Lender.  The aggregate Portions of Competitive Bid Loans for any
  or all Competitive Interest Periods offered by each Lender in its
  Competitive Bid may exceed the Maximum Request contained in the
  relevant Competitive Bid Request, provided that each Competitive
  Bid shall set forth the maximum aggregate amount of the
  Competitive Bid Loans offered thereby which the Borrower may
  accept (the "Maximum Offer"), which Maximum Offer shall not
  exceed the Maximum Request.  If the Agent has not received a
  Competitive Bid from any Lender by the Submission Deadline, such
  Lender shall be deemed not to have made a Competitive Bid and
  shall not be permitted or obligated to make a Competitive Bid
  Loan on the proposed Borrowing Date.
  
           (c)  The Agent shall promptly give notice by telephone
  (promptly confirmed by fax or other writing) to the Borrower of
  all Competitive Bids received by the Agent prior to the
  Submission Deadline which comply in all material respects with
  this Section.  The Borrower shall, in its sole discretion but
  subject to Section 2.4(d), irrevocably accept or reject any such
  Competitive Bid (or any Portion thereof) not later than 10:30
  a.m. on the day of the Submission Deadline by notice to the Agent
  by telephone (confirmed by fax or other writing in the form of a
  Competitive Bid Accept/Reject Letter promptly the same day). 
  Promptly upon receipt by the Agent of such a Competitive Bid
  Accept/Reject Letter, the Agent will give notice to each Lender
  that submitted a Competitive Bid as to the extent, if any, that
  such Lender's Competitive Bid shall have been accepted.  If the
  Agent fails to receive notice from the Borrower of its acceptance
  or rejection of any Competitive Bids at or prior to 10:30 a.m. on
  the day of the Submission Deadline, all such Competitive Bids
  shall be deemed to have been rejected by the Borrower, and the
  Agent will give to each Lender that submitted a Competitive Bid
  notice of such rejection by telephone on such day.  In due course
  following the acceptance of any Competitive Bid, the Agent shall
  notify each Lender which submitted a  Competitive Bid, in the
  form of a Competitive Bid Loan Confirmation, of the amount,
  maturity date and Bid Rate for each Competitive Bid Loan.
  
           (d)  If the Borrower accepts a Portion of a proposed
  Competitive Bid Loan for a single Competitive Interest Period at
  the Bid Rate provided therefor in a Lender's Competitive Bid,
  such Portion shall be in a principal amount of $1,000,000 or an
  integral multiple of $1,000,000 in excess thereof (subject to
  such lesser allocation as may be made pursuant to the provisions
  of this Section 2.4(d)).  The aggregate principal amount of
  Competitive Bid Loans accepted by the Borrower following
  Competitive Bids responding to a Competitive Bid Request shall
  not exceed the Maximum Request.  The aggregate principal amount
  of Competitive Bid Loans accepted by the Borrower pursuant to a
  Lender's Competitive Bid shall not exceed the Maximum Offer
  therein contained.  If the Borrower accepts any Competitive Bid
  Loans or Portion offered in any Competitive Bid, the Borrower
  must accept Competitive Bids (and Competitive Bid Loans and
  Portions thereby offered) based exclusively upon the successively
  lowest Bid Rates within each Competitive Interest Period and no
  other criteria.  If two or more Lenders submit Competitive Bids
  with identical Bid Rates for the same Competitive Interest Period
  and the Borrower accepts any thereof, the Borrower shall, subject
  to the first three sentences of this Section 2.4(d), accept all
  such Competitive Bids as nearly as possible in proportion to the
  amounts of such Lender's respective Competitive Bids with
  identical Bid Rates for such Competitive Interest Period,
  provided, that if the amount of Competitive Bid Loans to be so
  allocated is not sufficient to enable each such Lender to make
  such Competitive Bid Loan (or Portions thereof) in an aggregate
  principal amount of $1,000,000 or an integral multiple of
  $1,000,000 in excess thereof, the Borrower shall round the
  Competitive Bid Loans (or Portions thereof) allocated to such
  Lender or Lenders as the Borrower shall select as necessary to a
  minimum of $1,000,000 or an integral multiple of $500,000 in
  excess thereof.
  
           (e)  Not later than 2:00 p.m. on the relevant Borrowing
  Date, each Lender whose Competitive Bid was accepted by the
  Borrower shall make available to the Agent at its office set
  forth in Section 11.2, in immediately available funds, the
  proceeds of such Lender's Competitive Bid Loan(s). The amounts so
  made available to the Agent on such Borrowing Date will then,
  subject to the satisfaction of the terms and conditions of this
  Agreement, as determined by the Agent, be made available on such
  date to the Borrower by the Agent at the office of the Agent
  specified in Section 11.2 by crediting the account of the
  Borrower on the books of such office with the aggregate of said
  amounts received by the Agent.
  
           (f)  All notices required by this Section 2.4 shall be
  given in accordance with Section 11.2.
  
           (g)  The Competitive Bid Loans made by each Lender shall
  be evidenced by a promissory note of the Borrower, substantially
  in the form of Exhibit B-2 (each, as indorsed or modified from
  time to time, a "Competitive Bid Note" and, collectively with the
  Competitive Bid Notes of all other Lenders, the "Competitive Bid
  Notes"), payable to the order of such Lender for the account of
  its Applicable Lending Office, and dated the first Borrowing
  Date.  Each Competitive Bid Loan shall be due and payable on the
  earlier of (i) the last day of the Competitive Interest Period
  applicable thereto and (ii) the Maturity Date.
  
      2.5. Voluntary Reduction or Termination of Aggregate
  Commitments
  
           The Borrower shall have the right, upon at least three
  Business Days' prior written notice to the Agent, at any time to
  terminate the Aggregate Commitments or from time to time to
  permanently reduce the Aggregate Commitments, provided, however,
  that each such reduction shall be in the amount of $5,000,000 or
  an integral multiple of $1,000,000 in excess thereof.  Each
  reduction of the Aggregate Commitments shall be applied pro rata
  according to the Commitment Percentage of each Lender. 
  Simultaneously with each reduction of the Aggregate Commitments
  under this Section, the Borrower shall (i) pay the Facility Fee
  accrued on the amount by which the Aggregate Commitments have
  been reduced and (ii) prepay the Loans as required by Section
  2.6.  The Aggregate Commitments shall not be reduced below an
  amount equal to the Aggregate Credit Exposure (after giving
  effect to any prepayment of the Loans made simultaneously with
  such reduction of the Aggregate Commitments). The Aggregate
  Commitments shall not be reduced to the extent that, immediately
  after giving effect thereto, the Commitment of any Lender would
  exceed the the aggregate principal amount of all Revolving Credit
  Loans then outstanding from such Lender.
  
      2.6. Prepayments of the Loans
  
           (a)  Voluntary Prepayments. The Borrower may, at its
  option, prepay the Revolving Credit Loans without premium or
  penalty, in full at any time or in part from time to time by
  notifying the Agent in writing no later than 11:30 a.m. on the
  date of the proposed prepayment date, in the case of Revolving
  Credit Loans consisting of ABR Advances and no later than 12:00
  p.m. on the third Business Day prior to the proposed prepayment
  date, in the case of Revolving Credit Loans consisting of
  Eurodollar Advances, specifying the Revolving Credit Loans to be
  prepaid, the amount to be prepaid and the date of prepayment. 
  Competitive Bid Loans may not be prepaid.  Such notice shall be
  irrevocable and the amount specified in such notice shall be due
  and payable on the date specified, together with accrued interest
  to the date of such payment on the amount prepaid.  Upon receipt
  of such notice, the Agent shall promptly notify each Lender
  thereof.  Each partial prepayment of Revolving Credit Loans shall
  be in an aggregate principal amount of (A) $1,000,000 or an
  integral multiple of $1,000,000 in excess thereof, or (B) if the
  outstanding principal balance of the Revolving Credit Loans is
  less that the minimum amounts set forth in clause (A), then such
  lesser outstanding principal balance.  After giving effect to any
  partial prepayment with respect to Eurodollar Advances which were
  made (whether as the result of a borrowing or a conversion) on
  the same date and which had the same Interest Period, the
  outstanding principal amount of such Eurodollar Advances shall
  exceed (subject to Section 2.7) $1,000,000 or an integral
  multiple of $1,000,000 in excess thereof.  If any prepayment is
  made in respect of any Eurodollar Advance or Competitive Bid
  Loan, in whole or in part, prior to the last day of the
  applicable Interest Period, the Borrower agrees to indemnify the
  applicable Lenders in accordance with Section 2.13.
  
           (b)  Mandatory Prepayments Relating to Reductions of the
  Aggregate Commitments. Simultaneously with each reduction of the
  Aggregate Commitments under Section 2.5, the Borrower shall
  prepay the Loans by the amount, if any, by which the aggregate
  unpaid principal balance of the Loans exceeds the amount of the
  Aggregate Commitments as so reduced.  Such prepayments shall be
  applied (i) first, to prepay the Revolving Credit Loans pro rata
  according to the Commitment of each Lender, and (ii)  then, to
  the extent of any excess remaining, to prepay the Competitive Bid
  Loans, pro rata according to the outstanding amount of each
  Competitive Bid Loan.
  
      2.7. Conversions and Continuations
  
           (a)  The Borrower may elect from time to time to convert
  Eurodollar Advances to ABR Advances by giving the Agent at least
  one Business Day's prior irrevocable notice in writing by
  facsimile transmission of such election (confirmed promptly, and
  in any event within five Business Days, by the delivery of a
  manually signed Notice of Conversion/Continuation), specifying
  the amount to be so converted, provided, that any such conversion
  of Eurodollar Advances shall only be made on the last day of the
  Interest Period applicable thereto.  In addition, the Borrower
  may elect from time to time to (i) convert ABR Advances to
  Eurodollar Advances and (ii) to continue Eurodollar Advances by
  selecting a new Interest Period therefor, in each case by giving
  the Agent at least three Business Days' prior irrevocable notice
  in writing by facsimile transmission of such election (confirmed
  promptly, and in any event within five Business Days, by the
  delivery of a manually signed Notice of Conversion/Continuation),
  in the case of a conversion to, or continuation of, Eurodollar
  Advances, specifying the amount to be so converted and the
  initial Interest Period relating thereto, provided that any such
  conversion of ABR Advances to Eurodollar Advances shall only be
  made on a Business Day and any such continuation of Eurodollar
  Advances shall only be made on the last day of the Interest
  Period applicable to the Eurodollar Advances which are to be
  continued as such new Eurodollar Advances.  The Agent shall
  promptly provide the Lenders with a copy of each such Notice of
  Conversion/Continuation.  ABR Advances and Eurodollar Advances
  may be converted or continued pursuant to this Section in whole
  or in part, provided that conversions of ABR Advances to
  Eurodollar Advances, or continuations of Eurodollar Advances
  shall be in an aggregate principal amount of $1,000,000 or such
  amount plus a whole multiple of $1,000,000 in excess thereof.
  
           (b)  Notwithstanding anything in this Section to the
  contrary, no ABR Advance may be converted to a Eurodollar Advance
  and no Eurodollar Advance may be continued, if the Borrower or
  the Agent has knowledge that a Default or Event of Default has
  occurred and is continuing either (i) at the time the Borrower
  shall notify the Agent of its election to convert or continue or
  (ii) on the requested Conversion/Continuation Date.  In such
  event, such ABR Advance shall be automatically continued as an
  ABR Advance, or such Eurodollar Advance shall be automatically
  converted to an ABR Advance on the last day of the Interest
  Period applicable to such Eurodollar Advance.  If an Event of
  Default shall have occurred and be continuing, the Agent shall,
  at the request of the Required Lenders, notify the Borrower (by
  telephone or otherwise) that all, or such lesser amount as the
  Required Lenders shall designate, of the outstanding Eurodollar
  Advances shall be automatically converted to ABR Advances, in
  which event such Eurodollar Advances shall be automatically
  converted to ABR Advances on the date such notice is given.
  
           (c)  No Interest Period selected in respect of conversion
  or continuation of any Eurodollar Advance shall end after the
  Maturity Date.
  
           (d)  Each conversion or continuation shall be effected by
  each Lender by applying the proceeds of its new ABR Advance or
  Eurodollar Advance, as the case may  be, to its Advances (or
  portion thereof) being converted (it being understood that such
  conversion shall not constitute a borrowing for purposes of
  Sections 4, 5 or 6).
  
           (e)  Notwithstanding the provisions of Section 2.7(a), the
  Agent may act without liability upon the basis of telephonic
  notice of such conversion or continuation believed by the Agent
  in good faith to be from an authorized officer of the Borrower
  prior to receipt of written notice and confirmation, by facsimile
  or otherwise.  In each such case, the Borrower waives the right
  to dispute the Agent's record of the terms of such telephone
  notice of such conversion or continuation.
  
      2.8. Interest Rate and Payment Dates
  
           (a)  Prior to Maturity. Except as otherwise provided in
  Section 2.8(b), prior to maturity, the Loans shall bear interest
  on the outstanding principal balance thereof at the applicable
  interest rate or rates per annum set forth below:
    
     ADVANCES                                RATE
  
  Each ABR Advance                      Alternate Base Rate.
  
  Each Eurodollar Advance               Eurodollar Rate for the     
                                        applicable Interest Period  
                                      plus the Applicable Margin.
  
  Each Competitive                      Bid Rate applicable thereto
  Bid Loan                              for the applicable
                                        Competitive Interest        
                                        Period.
  
  
  Late Charges. If all or any portion of the principal balance of
  or interest payable on any of the Loans or any other amount
  payable under the Loan Documents shall not be paid when due
  (whether at the stated maturity thereof, by acceleration or
  otherwise), such overdue balance or amount shall bear interest at
  a rate per annum (whether before or after the entry of a judgment
  thereon) equal to 2% plus the rate which would otherwise be
  applicable pursuant to Section 2.8(a), from the date of such
  nonpayment to, but not including, the date such balance is paid
  in full.  All such interest shall be payable on demand.
  
           (b)  In General. Interest on (i) ABR Advances to the
  extent based on the BNY Rate shall be calculated on the basis of
  a 365 or 366-day year (as the case may be), and (ii) ABR Advances
  to the extent based on the Federal Funds Rate, on Eurodollar
  Advances and on Competitive Bid Loans shall be calculated on the
  basis of a 360-day year, in each case, for the actual number of
  days elapsed, including the first day but excluding the last. 
  Except as otherwise provided in Section 2.8(b), interest shall be
  payable in arrears on each Interest Payment Date and upon each
  payment (including prepayment) of the Loans.  Any change in the
  interest rate on the Loans resulting from a change in the
  Alternate Base Rate or reserve requirements shall become
  effective as of the opening of business on the day on which such
  change shall become effective.  The Agent shall, as soon as
  practicable, notify the Borrower and the Lenders of the effective
  date and the amount of each such change in the BNY Rate, but any
  failure to so notify shall not in any manner affect the
  obligation of the Borrower to pay interest on the Loans in the
  amounts and on the dates required.  Each determination of the
  Alternate Base Rate or a  Eurodollar Rate by the Agent pursuant
  to this Agreement shall be conclusive and binding on all parties
  hereto absent manifest error.  At no time shall the interest rate
  payable on the Loans, together with the Facility Fee and all
  other amounts payable under the Loan Documents, to the extent the
  same are construed to constitute interest, exceed the Highest
  Lawful Rate.  If any amount paid hereunder would exceed the
  maximum amount of interest permitted by the Highest Lawful Rate,
  then such amount shall automatically be reduced to such maximum
  permitted amount, and interest for any subsequent period, to the
  extent less than the maximum amount permitted for such period by
  the Highest Lawful Rate, shall be increased by the unpaid amount
  of such reduction.  Any interest actually received for any period
  in excess of such maximum allowable amount for such period shall
  be deemed to have been applied as a prepayment of the Loans.  The
  Borrower acknowledges that to the extent interest payable on ABR
  Advances is based on the BNY Rate, the BNY Rate is only one of
  the bases for computing interest on loans made by the Lenders,
  and by basing interest payable on ABR Advances on the BNY Rate,
  the Lenders have not committed to charge, and the Borrower has
  not in any way bargained for, interest based on a lower or the
  lowest rate at which the Lenders may now or in the future make
  loans to other borrowers.
  
      2.9. Substituted Interest Rate
  
           In the event that (i) the Agent shall have determined
  (which determination shall be conclusive and binding upon the
  Borrower) that by reason of circumstances affecting the interbank
  eurodollar market either adequate and reasonable means do not
  exist for ascertaining the Eurodollar Rate or (ii) any Lender
  shall have notified the Agent that it has determined (which
  determination shall be conclusive and binding on the Borrower)
  that the applicable Eurodollar Rate will not adequately and
  fairly reflect the cost to such Lender of maintaining or funding
  loans bearing interest based on such Eurodollar Rate, with
  respect to any portion of the Revolving Credit Loans that the
  Borrower has requested be made as Eurodollar Advances or
  Eurodollar Advances that will result from the requested
  conversion or continuation of any portion of the Advances into or
  as Eurodollar Advances (each, an "Affected Advance"), the Agent
  shall promptly notify the Borrower and the Lenders (by telephone
  or otherwise, to be promptly confirmed in writing) of such
  determination on or, to the extent practicable, prior to the
  requested Borrowing Date or Conversion/Continuation Date for such
  Affected Advances.  If the Agent shall give such notice, (a) any
  Affected Advances shall be made as ABR Advances, (b) the Advances
  (or any portion thereof) that were to have been converted to or
  continued as Affected Advances shall be converted to or continued
  as ABR Advances and (c) any outstanding Affected Advances shall
  be converted, on the last day of the then current Interest Period
  with respect thereto, to ABR Advances.  Until any notice under
  clauses (i) or (ii), as the case may be, of this Section has been
  withdrawn by the Agent (by notice to the Borrower promptly upon
  either (1) the Agent having determined that such circumstances
  affecting the interbank eurodollar market no longer exist and
  that adequate and reasonable means do exist for determining the
  Eurodollar Rate pursuant to Section 2.8 or (2) the Agent having
  been notified by such Lender that circumstances no longer render
  the Advances (or any portion thereof) Affected Advances, no
  further Eurodollar Advances shall be required to be made by the
  Lenders, nor shall the Borrower have the right to convert or
  continue all or any portion of the Loans to Eurodollar Advances.
  
      2.10.     Taxes
  
           (a)  Payments to Be Free and Clear. Provided that all
  documentation, if any, then required to be delivered by any
  Lender or the Agent pursuant to subsection (c) has been
  delivered, all sums payable by the Borrower under the Loan
  Documents shall (except to the extent required by law) be paid
  free and clear of and without any deduction or withholding on
  account of any Tax (other than a Tax on the Overall Net Income of
  any Lender (for which payment need not be free and clear but no
  deduction or withholding shall be made unless then required by
  applicable law)) imposed, levied, collected, withheld or assessed
  by or within the United States or any political subdivision in or
  of the United States or any other jurisdiction from or to which a
  payment is made by or on behalf of the Borrower or by any
  federation or organization of which the United States or any such
  jurisdiction is a member at the time of payment.
  
           (b)  Grossing-up of Payments. If the Borrower or any other
  Person is required by law to make any deduction or withholding on
  account of any such Tax (other than a Tax on the Overall Net
  Income of a Lender) from any sum paid or payable by the Borrower
  to the Agent or any Lender under any of the Loan Documents:
  
                (i) the Borrower shall notify the Agent and such
        Lender of any such requirement or any change in any such
        requirement as soon as the Borrower becomes aware of it;
      
                (ii) the Borrower shall pay any such Tax before the
        date on which penalties attach thereto, such payment to be made
        (if the liability to pay is imposed on the Borrower) for its
        own account or (if that liability is imposed on the Agent or
        such Lender, as the case may be) on behalf of and in the name
        of the Agent or such Lender;
      
                (iii) the sum payable by the Borrower to the Agent or
        a Lender in respect of which the relevant deduction,
        withholding or payment is required shall be increased to the
        extent necessary to ensure that, after the making of that
        deduction, withholding or payment, the Agent or such Lender, as
        the case may be, receives on the due date therefor a net sum
        equal to what it would have received had no such deduction,
        withholding or payment been required or made; and
      
                (iv) within 30 days after paying any sum from which
        it is required by law to make any deduction or withholding, and
        within 30 days after the due date of payment of any Tax which
        it is required by clause (b) above to pay, the Borrower shall
        deliver to the Agent and the applicable Lender evidence
        satisfactory to the other affected parties of such deduction,
        withholding or payment and of the remittance thereof to the
        relevant Governmental Authority;
  
  provided that no such additional amount shall be required to be
  paid to any Lender under clause (iii) above except to the extent
  that any change after the date hereof (in the case of each Lender
  listed on the signature pages hereof) or after the date of the
  Assignment and Acceptance Agreement pursuant to which such Lender
  became a Lender (in the case of each other Lender) in any such
  requirement for a deduction, withholding or payment as is
  mentioned therein shall result in an increase in the rate of such
  deduction, withholding or  payment from that in effect at the
  date of this Agreement or at the date of such Assignment and
  Acceptance, as the case may be, in respect of payments to such
  Lender.
  
           (c)  Refunds and Credits. If the Borrower makes any
  additional payment to any Lender pursuant to this Section 2.10 in
  respect of any Tax, and such Lender determines that it has
  received (i) a refund of such Tax or (ii) a credit against or
  relief or remission for, or a reduction in the amount of, any tax
  or other governmental charge attributable solely to any deduction
  or credit for any Tax with respect to which it has received
  payments under this Section 2.10, such Lender shall to the extent
  that it can do so without prejudice to the retention of such
  refund, credit, relief, remission or reduction, pay to the
  Borrower such amount as such Lender shall have determined to be
  attributable to the deduction or withholding of such Tax.  If,
  within one year after the payment of any such amount to the
  Borrower, such Lender determines that it was not entitled to such
  refund, credit, relief, remission or reduction to the full extent
  of any payment made pursuant to the first sentence of this
  Section 2.10(c), the Borrower shall upon notice and demand of
  such Lender promptly repay the amount of such overpayment.  Any
  determination made by such Lender pursuant to this Section
  2.10(c) shall in the absence of bad faith or manifest error be
  conclusive, and nothing in this Section 2.10(c) shall be
  construed as requiring any Lender to conduct its business or to
  arrange or alter in any respect its tax or financial affairs
  (except as required by Section 2.17(a)) so that it is entitled to
  receive such a refund, credit or reduction or as allowing any
  person to inspect any records, including tax returns of any
  Lender.
  
           (d)  Limitation of Liability. No Lender shall be entitled
  to demand any payment under this Section 2.10 more than six
  months following the payment to or for the account of such Lender
  of all other amounts payable hereunder and under any Note held by
  such Lender and the termination of such Lender's Commitment;
  provided, however, that the foregoing proviso shall in no way
  limit the right of any Lender to demand or receive any payment
  under this Section 2.10 to the extent that such payment relates
  to the retroactive application of any Tax if such demand is made
  within six months after the implementation of such Tax.
  
           (e)  U.S. Tax Certificates. Each Lender that is organized
  under the laws of any jurisdiction other than the United States
  shall deliver to the Agent for transmission to the Borrower, on
  or prior to the Effective Date (in the case of each Lender listed
  on the signature pages hereof) or on the effective date of the
  Assignment and Acceptance Agreement pursuant to which it becomes
  a Lender (in the case of each other Lender), and at such other
  times as may be necessary in the determination of the Borrower or
  the Agent (each in the reasonable exercise of its discretion),
  such certificates, documents or other evidence, properly
  completed and duly executed by such Lender (including, without
  limitation, Internal Revenue Service Form W-8, Form 1001 or Form
  4224 or any other certificate or statement of exemption required
  by Treasury Regulations Section 1.1441-4(a) or Section
  1.1441-6(c), or Temporary Treasury Regulations Section 35a9999-4T
  or Section 35a9999-5, or any successor thereto) to establish that
  such Lender is not subject to deduction or withholding of United
  States federal income tax under Section 1441 or 1442 of the Code
  or otherwise (or under any comparable provisions of any successor
  statute) with respect to any payments to such Lender of
  principal, interest, fees or other amounts payable under any of
  the Loan Documents.  The Borrower shall not be required to pay
  any additional amount to any such Lender under subsection
  (b)(iii) above if such Lender shall have failed to satisfy the
  requirements of the immediately preceding  sentence; provided
  that if such Lender shall have satisfied such requirements on the
  Effective Date (in the case of each Lender listed on the
  signature pages hereof) or on the effective date of the
  Assignment and Acceptance Agreement pursuant to which it became a
  Lender (in the case of each other Lender), nothing in this
  subsection shall relieve the Borrower of its obligation to pay
  any additional amounts pursuant to subsection (b)(iii) in the
  event that, as a result of any change in applicable law, such
  Lender is no longer properly entitled to deliver certificates,
  documents or other evidence at a subsequent date establishing the
  fact that such Lender is not subject to withholding as described
  in the immediately preceding sentence.
  
      2.11.     Illegality
  
           Notwithstanding any other provisions herein, if any law,
  regulation, treaty or directive, or any change therein or in the
  interpretation or application thereof, shall make it unlawful for
  any Lender to make or maintain its Eurodollar Advances as
  contemplated by this Agreement, (i) the commitment of such Lender
  hereunder to make Eurodollar Advances or convert ABR Advances to
  Eurodollar Advances shall forthwith be suspended and (ii) such
  Lender's Loans then outstanding as Eurodollar Advances affected
  hereby, if any, shall be converted automatically to ABR Advances
  on the last day of the then current Interest Period applicable
  thereto or within such earlier period as required by law.  If the
  commitment of any Lender with respect to Eurodollar Advances is
  suspended pursuant to this Section and such Lender shall notify
  the Agent and the Borrower that it is once again legal for such
  Lender to make or maintain Eurodollar Advances, such Lender's
  commitment to make or maintain Eurodollar Advances shall be
  reinstated.
  
           Increased Costs
  
           In the event that any law, regulation, treaty or directive
  hereafter enacted, promulgated, approved or issued or any change
  in any presently existing law, regulation, treaty or directive
  therein or in the interpretation or application thereof by any
  Governmental Authority charged with the administration thereof or
  compliance by any Lender (or any corporation directly or
  indirectly owning or controlling such Lender) with any request or
  directive from any Governmental Authority:
  
      (a)  does or shall subject any Lender to any Taxes of any kind
  whatsoever with respect to any Eurodollar Advances or its
  obligations under this Agreement to make Eurodollar Advances, or
  change the basis of taxation of payments to any Lender of
  principal, interest or any other amount payable hereunder in
  respect of its Eurodollar Advances, including any Taxes required
  to be withheld from any amounts payable under the Loan Documents
  (except for imposition of, or change in the rate of, Tax on the
  Overall Net Income of such Lender or its Applicable Lending
  Office for any of such Advances by the jurisdiction in which such
  Lender is incorporated or has its principal office or such
  Applicable Lending Office, including, in the case of Lenders
  incorporated in any State of the United States, such tax imposed
  by the United States); or
      
      (b)  does or shall impose, modify or make applicable any
  reserve, special deposit, compulsory loan, assessment, increased
  cost or similar requirement against assets held by, or deposits
  of, or advances or loans by, or other credit extended by, or any
  other acquisition of funds by, any office of such Lender in 
  respect of its Eurodollar Advances which is not otherwise
  included in the determination of a Eurodollar Rate;
  
  and the result of any of the foregoing is to increase the cost to
  such Lender of making, renewing, converting, continuing or
  maintaining its Eurodollar Advances or its commitment to make
  such Eurodollar Advances, or to reduce any amount receivable
  hereunder in respect of its Eurodollar Advances, then, in any
  such case, the Borrower shall pay such Lender, upon its demand,
  any additional amounts necessary to compensate such Lender for
  such additional cost or reduction in such amount receivable which
  such Lender deems to be material as determined by such Lender;
  provided, however, that (i) nothing in this Section shall require
  the Borrower to indemnify the Lenders with respect to withholding
  Taxes for which the Borrower has no obligation under Section
  2.10, and (ii) no Lender shall be entitled to demand any payment
  under this Section 2.12 more than six months following the
  payment to or for the account of such Lender of all other amounts
  payable hereunder and under any Note held by such Lender and the
  termination of such Lender's Commitment; provided, however, that
  the foregoing proviso shall in no way limit the right of any
  Lender to demand or receive any payment under this Section 2.12
  to the extent that such payment relates to the retroactive
  application of any law, regulation, treaty or directive if such
  demand is made within six months after the implementation of such
  retroactive application.  A statement setting forth the
  calculations of any additional amounts payable pursuant to the
  foregoing sentence submitted by a Lender to the Borrower shall be
  conclusive absent manifest error.
  
      2.12.     Indemnification for Loss
  
           Notwithstanding anything contained herein to the contrary,
  if the Borrower shall fail to borrow, convert or continue an
  Advance after it shall have given notice to do so in which it
  shall have requested a Eurodollar Advance pursuant to Section 2.3
  or 2.7, as the case may be, or if the Borrower shall fail to
  borrow a Competitive Bid Loan after it shall have accepted one or
  more offers therefor pursuant to Section 2.4, or if a Eurodollar
  Advance or a Competitive Bid Loan shall be terminated for any
  reason prior to the last day of the Interest Period applicable
  thereto, or if any repayment or prepayment of the principal
  amount of a Eurodollar Advance or a Competitive Bid Loan is made
  for any reason on a date which is prior to the last day of the
  Interest Period applicable thereto, the Borrower agrees to
  indemnify each Lender against, and to pay on written demand
  directly to such Lender the amount (calculated by such Lender
  using any method chosen by such Lender which is reasonable and
  customarily used by such Lender for such purpose) equal to any
  loss or out-of-pocket expense suffered by such Lender as a result
  of such failure to borrow, convert or continue, or such
  termination, repayment or prepayment, including any loss, cost or
  expense suffered by such Lender in liquidating or employing
  deposits acquired to fund or maintain the funding of such
  Eurodollar Advance or Competitive Bid Loan, as the case may be,
  or redeploying funds prepaid or repaid, in amounts which
  correspond to such Eurodollar Advance or Competitive Bid Loan, as
  the case may be, and any internal processing charge customarily
  charged by such Lender in connection therewith.  Calculations of
  all amounts payable under this Section shall be made on the
  assumption that each Lender has funded each of its relevant
  Eurodollar Advances and Competitive Bid Loans through the
  purchase of deposits bearing interest at the applicable rate of
  interest for, in an amount equal to the principal amount of, and
  with a maturity equivalent to the Interest Period applicable to,
  such Eurodollar Advance or Competitive Bid Loan, as the case may
  be.
  
      2.13.     Survival of Certain Obligations
  
           The obligations of the Borrower under Sections 2.10, 2.12,
  2.13, 2.16, 11.5 and 11.10 shall survive the termination of the
  Aggregate Commitments and the payment of the Loans and all other
  amounts payable under the Loan Documents.
  
      2.14.     Use of Proceeds
  
           The proceeds of the Loans shall be used solely to (i) pay
  all of the fees due hereunder, (ii) pay the reasonable
  out-of-pocket fees and expenses incurred by the Borrower in
  connection with the Loan Documents, (iii) for the general
  corporate purposes of the Borrower, including, without
  limitation, the making of Intercompany Loans to Operating
  Subsidiaries of the Borrower and Permitted Recipient Loans to
  Permitted Recipients to the extent permitted by Section 8.5 and
  (iv) to make repurchases of its stock to the extent permitted by
  Section 8.4. Notwithstanding anything to the contrary contained
  in any Loan Document, the Borrower agrees that no part of the
  proceeds of any Loan will be used, directly or indirectly, for a
  purpose which violates any law, including, without limitation,
  the provisions of Regulations G, U or X of the Board of Governors
  of the Federal Reserve System, as amended.
  
      2.15.     Capital Adequacy
  
           If the amount of capital required or expected to be
  maintained by any Lender or any Person directly or indirectly
  owning or controlling such Lender (each a "Control Person"),
  shall be affected by (i) the introduction or phasing in of any
  law, rule or regulation after the Effective Date, (ii) any change
  after the Effective Date in the interpretation of any existing
  law, rule or regulation by any Governmental Authority charged
  with the administration thereof, or (iii) compliance by such
  Lender or such Control Person with any directive, guideline or
  request from any Governmental Authority (whether or not having
  the force of law) promulgated or made after the Effective Date,
  and such Lender shall have determined that such introduction,
  phasing in, change or compliance shall have had or will
  thereafter have the effect of reducing (A) the rate of return on
  such Lender's or such Control Person's capital, or (B) the asset
  value to such Lender or such Control Person of the Loans made or
  maintained by such Lender, in either case to a level below that
  which such Lender or such Control Person could have achieved or
  would thereafter be able to achieve but for such introduction,
  phasing in, change or compliance (after taking into account such
  Lender's or such Control Person's policies regarding capital
  adequacy) by an amount deemed by such Lender to be material to
  such Lender or Control Person, then, within ten days after demand
  by such Lender, the Borrower shall pay to such Lender or such
  Control Person such additional amount or amounts as shall be
  sufficient to compensate such Lender or such Control Person, as
  the case may be, for such reduction.
  
      2.16.     Change of Lending Office; Right to Substitute Lender
  
           (a)  Each Lender agrees that, upon the occurrence of any
  event giving rise to the operation of Section 2.12 or 2.13  or to
  a requirement under Section 2.10 to withhold and deduct taxes, it
  will, if requested by the Borrower, use reasonable efforts
  (subject to overall policy considerations of such Lender) to
  designate another Applicable Lending Office for any Loans
  affected by such event, provided that such designation is  made
  on such terms that such Lender and its Applicable Lending Office
  suffer no economic, legal or regulatory disadvantage, with the
  object of avoiding the consequence of the event giving rise to
  the operation of any such Section.  Except in the case of a
  change of Applicable Lending Office made at the request of the
  Borrower, no change in Applicable Lending Office will be made if
  greater costs and expenses would result under Section 2.12 or
  2.13 or if the aforementioned requirement under Section 2.10
  would result from any such change in designation.  Nothing in
  this Section shall affect or postpone any of the obligations of
  the Borrower or the rights of any Lender provided in Section
  2.10, 2.12, or 2.16.
  
           (b)  In addition to the Borrower's rights under subsection
  (a) of this Section, upon the occurrence of any event giving rise
  to the operation of Section 2.10, 2.12 or 2.13, the Borrower may,
  within a period of 60 days following the Borrower's obtaining
  knowledge of the occurrence of the event giving rise to the
  operation of such provisions, at its own expense, make
  arrangements for another bank or financial institution reasonably
  acceptable to the Agent to purchase and accept the rights and
  obligations under this Agreement of any Lender entitled to
  payment under Section 2.10, 2.12 or 2.13, whereupon such Lender
  shall assign to the bank or financial institution designated by
  the Borrower its rights and obligations hereunder pursuant to the
  provisions of Section 11.7 of this Agreement.
  
      2.17.     Extension of Maturity Date
  
           (a)  Provided that no Default or Event of Default exists
  during the periods set forth below, the Borrower may request that
  the Maturity Date be extended for additional 329-day periods by
  giving written notice of such request (each, an "Extension
  Request") to the Agent during the period not more than 90 days
  but not less than 60 days prior to the then Maturity Date and,
  upon the receipt of such notice, the Agent shall promptly notify
  each Lender of such Extension Request.
  
                (i)  If all Lenders consent to an Extension Request
  during the Extension Consent Period by giving written notice
  thereof to the Borrower and the Agent, then, effective on the
  then current Maturity Date, such Maturity Date shall be extended
  by 329 days from and including the then current Maturity Date,
  provided, however, that if the 329th day of such extension falls
  on a day that is not a Business Day, such Maturity Date shall be
  the next following Business Day.
  
                (ii) If at least Extension Consent Required Lenders
  (but not all Lenders) consent to an Extension Request during the
  Extension Consent Period (by giving written notice thereof to the
  Borrower and the Agent) the Maturity Date shall be extended by
  329 days (subject to the proviso in subsection (a)(i) above) from
  and including the then current Maturity Date, with respect to the
  Commitments of the Lenders consenting to such Extension Request.
  
                (iii) If Lenders (each a "Nonconsenting Lender") hav-
  ing Commitments equal to less than 33 1/3% of the Aggregate
  Commitments (without giving effect to any Loans outstanding) do
  not consent to an Extension Request during the Extension Consent
  Period, the Borrower may elect to (A) withdraw such Extension
  Request, (B) terminate the Commitment of each Nonconsenting
  Lender effective on the then current Maturity Date (with the
  Commitments of each other Consenting Lender continuing in full 
  force and effect) and, on such Maturity Date, pay to the Agent
  for distribution to each such Nonconsenting Lender the out-
  standing principal balance, if any, of the Notes of each such
  Nonconsenting Lender, together with any accrued and unpaid inter-
  est thereon to the date of such payment, any accrued and unpaid
  Facility Fees due to such Lender, and any other amount due to
  such Lender whereupon (1) effective on such then current Maturity
  Date, such Maturity Date shall be extended for 329 days (subject
  to the proviso in subsection (a)(i) above), and (2) each
  Nonconsenting Lender shall cease to be a "Lender" for all pur-
  poses of this Agreement (except with respect to its rights
  hereunder to be reimbursed for costs and expenses in connection
  with, and to indemnification with respect to, matters at-
  tributable to events, acts or conditions occurring prior to such
  payment) and shall no longer have any obligations hereunder, (C)
  request one or more of the Consenting Lenders (each, a
  "Replacement Lender") to elect to increase its Commitment by an
  amount up to the amount of the Commitment of such Nonconsenting
  Lenders, or (D) designate another bank or banks (any such bank,
  also a "Replacement Lender") acceptable to the Agent and willing
  to assume the Commitments of any such Nonconsenting Lender or
  Lenders.  Upon the Commitment of a Nonconsenting Lender being as-
  sumed by a Replacement Lender under clauses (C) or (D) above,
  effective on the then current Maturity Date or such earlier date
  as shall be determined by the Borrower and the Agent, each such
  Replacement Lender shall assume the Commitment of each such
  Nonconsenting Lender by executing and delivering an Assignment
  and Acceptance Agreement and, if such Nonconsenting Lender is the
  holder of Notes, by purchasing such Notes of such Nonconsenting
  Lender, which shall sell the same without recourse or warranty
  (except as to the amount due thereon, its title to such Notes and
  its right to sell the same) to such Replacement Lender at a price
  in immediately available funds equal to the amount payable under
  clause (B) above, whereupon (x) effective on the then current
  Maturity Date, such Maturity Date shall be extended by 329 days
  (subject to the proviso in subsection (a)(i) above) from and
  including the then current Maturity Date, (y) each Replacement
  Lender, if applicable, shall be deemed to be a "Lender" for all
  purposes of this Agreement, and (z) each Nonconsenting Lender
  shall cease to be a "Lender" for all purposes of this Agreement
  (except with respect to its rights hereunder to be reimbursed for
  costs and expenses in connection with, and to indemnification
  with respect to, matters attributable to events, acts or
  conditions occurring prior to such assumption and purchase) and
  shall no longer have any obligations hereunder.
  
                (iv) If Extension Consent Required Lenders do not
  consent to an Extension Request during the Extension Consent
  Period, the Maturity Date shall not be extended.
  
                (v)  Each Lender will use its best efforts to respond
  during the Extension Consent Period to any Extension Request,
  provided that no Lender's failure to so respond shall create any
  claim against it or have the effect of extending the Maturity
  Date or such Lender's Commitment beyond the Maturity Date.
  
           (b)  In the event the Borrower elects to terminate the
  Commitment of a Nonconsenting Lender under Section
  2.18(a)(iii)(B) above, the Agent is authorized to amend Exhibit
  A, effective on the then current Maturity Date, and promptly
  distribute a copy thereof to the Borrower and the remaining
  Lenders (the "Consenting Lenders") reflecting the names of all
  Consenting Lenders and Replacement Lenders and the new Commitment
  Percentage of each such Consenting Lender and Replacement Lender
  (after  giving effect to the termination of each Nonconsenting
  Lender's Commitment and the assumption by any Replacement Lender
  of such Commitment).
  
           (c)  Notwithstanding anything to the contrary set forth
  herein, in the event that at the time of an Extension Request,
  the Facility B Credit Agreement is then in effect and the
  Borrower has requested an extension of the Facility B Maturity
  Date pursuant thereto, then (i) each Consenting Lender must
  consent to an extension of both this Agreement and the Facility B
  Credit Agreement, (ii) each Nonconsenting Lender whose Commitment
  is terminated shall also have its Facility B Commitment
  terminated and (iii) each Replacement Lender which assumes all or
  a portion of the Commitment of a Nonconsenting Lender shall
  assume all or a like portion of such Nonconsenting Lender's
  Facility B Commitment, it being the intention of the parties that
  at all times during which this Agreement and the Facility B
  Credit Agreement are both in effect, each Lender shall also be a
  Facility B Lender and its Commitment Percentage shall equal its
  Facility B Commitment Percentage.
  
      2.18.     Change in Control
  
           (a)  The Borrower will notify the Agent and the Lenders in
  writing within one Business Day after the occurrence of a Change
  in Control. Upon receipt of such notice, each Lender shall have
  the right to terminate its Commitment and Facility B Commitment
  within five Business Days of the receipt of such notice.  If a
  Lender so elects to terminate its Commitment and Facility B
  Commitment, the Borrower shall, not later than five Business Days
  after such Lender has given such notice, repay such Lender's
  Loans and Facility B Loans together with any accrued interest and
  fees and other amounts due such Lender under the Loan Documents
  and the Facility B Loan Documents.
  
           (b)  Notwithstanding the foregoing, in lieu of terminating
  the Commitments and Facility B Commitments of the Lenders and
  Facility B Lenders as provided in subsection (a) hereof, the
  Borrower may request one or more of the Lenders not terminating
  its Commitment and Facility B Commitment (also, a "Replacement
  Lender") to elect to increase its Commitment and Facility B
  Commitment by an amount up to the amount of the Commitment and
  Facility B Commitment of such terminating Lender, or may
  designate another bank or banks (any such bank, also a
  "Replacement Lender") reasonably acceptable to the Agent and
  willing to assume the Commitments and Facility B Commitments of
  any such terminating Lender or Lenders.  Upon the Commitment and
  Facility B Commitment of a terminating Lender being assumed by a
  Replacement Lender, each such Replacement Lender shall assume the
  Commitment and Facility B Commitment of each such terminating
  Lender by executing and delivering an Assignment and Acceptance
  Agreement and, if such terminating Lender is the holder of Notes
  or Facility B Notes, by purchasing such Notes or Facility B
  Notes, as the case may be, of such terminating Lender, which
  shall sell the same without recourse or warranty (except as to
  the amount due thereon, its title to such Notes or Facility B
  Notes, as the case may be, and its right to sell the same) to
  such Replacement Lender at a price in immediately available funds
  equal to the outstanding principal balance, if any, of the Notes
  and Facility B notes, as the case may be, of each such
  terminating Lender, together with any accrued and unpaid interest
  thereon to the date of such payment, any accrued and unpaid fees
  due to such Lender hereunder and under the Facility B Loan
  Documents, whereupon each Replacement Lender shall be deemed to
  be a "Lender" for all purposes of this Agreement, and (z) each
  terminating Lender shall cease to be a "Lender" for all purposes
  of this  Agreement (except with respect to its rights hereunder
  and under the Facility B Loan Documents to be reimbursed for
  costs and expenses in connection with, and to indemnification
  with respect to, matters attributable to events, acts or
  conditions occurring prior to such assumption and purchase) and
  shall no longer have any obligations hereunder.
  
      2.19.     Agent's Records
  
           The Agent's records regarding the amount of each Loan,
  each payment by the Borrower of principal and interest on the
  Loans and other information relating to the Loans shall be
  presumptively correct absent manifest error.
  
  
  3.  FEES; PAYMENTS
  
      3.1. Facility Fee
  
           The Borrower agrees to pay to the Agent, for the account
  of the Lenders in accordance with each Lender's Commitment
  Percentage, during the period from and including the Effective
  Date through but excluding the Maturity Date, a fee (the
  "Facility Fee") equal to the Applicable Fee Percentage per annum
  of the average daily sum of the Aggregate Commitments, regardless
  of usage, during such period. The Facility Fee shall be payable
  (i) quarterly in arrears on the last day of each March, June,
  September and December during such period, (ii) on the date of
  any reduction in the Aggregate Commitments (to the extent of such
  reduction) and (iii) on the Maturity Date. The Facility Fee shall
  be calculated on the basis of a 360-day year for the actual
  number of days elapsed.
  
      3.2. Agent's Fees
  
           The Borrower agrees to pay to the Agent, for its own
  account, such other fees as have been agreed to in writing by the
  Borrower and the Agent.
  
      3.3. Pro Rata Treatment and Application of Principal Payments
  
           Each payment, including each prepayment, of principal and
  interest on the Loans and of the Facility Fee shall be made by
  the Borrower to the Agent at its office set forth in Section 11.2
  in funds immediately available to the Agent at such office by
  12:00 p.m. on the due date for such payment, and, promptly upon
  receipt thereof by the Agent, shall be remitted by the Agent in
  like funds as received, to the Lenders according to the
  Commitment Percentage of each Lender, in the case of the Facility
  Fee and pro rata according to the aggregate outstanding principal
  balance of the Loans, in the case of principal and interest due
  thereon.  The failure of the Borrower to make any such payment by
  such time shall not constitute a default hereunder, provided that
  such payment is made on such due date, but any such payment made
  after 12:00 p.m. on such due date shall be deemed to have been
  made on the next Business Day for the purpose of calculating
  interest on amounts outstanding on the Loans.  If any payment
  hereunder or under the Notes shall be due and payable on a day
  which is not a Business Day, the due date thereof (except as
  otherwise provided in the definition of Interest Period) shall be
  extended to the next Business Day and (except with respect to
  payments in respect of the Facility Fee) interest  shall be
  payable at the applicable rate specified herein during such
  extension.  If any payment is made with respect to any Eurodollar
  Advance prior to the last day of the applicable Interest Period,
  the Borrower shall indemnify each Lender in accordance with
  Section 2.13.
  
  
  4.  REPRESENTATIONS AND WARRANTIES
  
      In order to induce the Agent and the Lenders to enter into this
  Agreement and to make the Loans, the Borrower makes the following
  representations and warranties to the Agent and each Lender:
  
      4.1. Subsidiaries
  
           On the Effective Date, the Borrower has only the
  Subsidiaries set forth on Schedule 4.1.  The shares of each
  Subsidiary are duly authorized, validly issued, fully paid and
  nonassessable and are owned free and clear of any Liens.
  
      4.2. Existence and Power
  
           Each of the Borrower and its Subsidiaries is duly
  organized or formed and validly existing in good standing under
  the laws of the jurisdiction of its incorporation or formation,
  has all requisite power and authority to own its Property and to
  carry on its business as now conducted, and is in good standing
  and authorized to do business as a foreign corporation in each
  jurisdiction in which the nature of the business conducted
  therein or the Property owned therein makes such qualification
  necessary, except where such failure to qualify, singly or in the
  aggregate, could not reasonably be expected to have a Material
  Adverse Effect.
  
      4.3. Authority; Enforceability
  
           The Borrower has full legal power and authority and has
  taken all necessary actions, including, without limitation, any
  necessary stockholder action, to enter into, execute, deliver and
  perform the terms of the Loan Documents and to make the
  borrowings contemplated hereby and by the Notes and to incur the
  obligations provided for herein and therein, all of which have
  are in full compliance with its articles of incorporation and by-
  laws or its other organization documents.  The Loan Documents
  (other than the Notes) constitute, and the Notes, when issued and
  delivered pursuant hereto for value received, will constitute,
  the valid and legally binding obligations of the Borrower,
  enforceable in accordance with their respective terms, except as
  such enforceability may be limited by applicable bankruptcy,
  insolvency, reorganization or other similar laws affecting the
  enforcement of creditors' rights generally.
  
      4.4. Required Consents
  
           Except for information filings required to be made in the
  ordinary course of business which are not a condition to the
  Borrower's performance under the Loan Documents, no consent,
  authorization or approval of, filing with, notice to, or
  exemption by, stockholders, any Governmental Authority or any
  other Person is required to authorize, or is required in
  connection with the execution, delivery and performance by  the
  Borrower of the Loan Documents or is required as a condition to
  the validity or enforceability of the Loan Documents against the
  Borrower.
  
      4.5. No Conflicting Agreements, Compliance with Laws; Taxes
  
           On the initial Borrowing Date, (i) neither the Borrower
  nor any of its Subsidiaries will be in default, (A) under any
  mortgage, indenture, contract or agreement to which it is a party
  or by which it or any of its Property is bound or (B) with
  respect to any judgment, order, writ, injunction, decree or
  decision of any Governmental Authority, the effect of which
  default could reasonably be expected to have a Material Adverse
  Effect, and (ii) the execution, delivery or carrying out of the
  terms of the Loan Documents will not constitute a default under,
  or require the mandatory repayment of, or result in the creation
  or imposition of, or obligation to create, any Lien upon any
  Property of the Borrower or any of its Subsidiaries pursuant to
  the terms of, any such mortgage, indenture, contract or
  agreement.
  
      4.6. Franchises, Licenses, Etc.
  
           Each of the Borrower and ACE possesses or has the right to
  use all franchises, licenses, privileges and other rights that
  are material and necessary for the conduct of its business, and
  with respect to which it is in compliance, with no known conflict
  with the valid rights of others which could reasonably be
  expected to have a Material Adverse Effect.
  
      4.7. Investment Company Act
  
           The Borrower is not an "investment company" or a company
  "controlled" by an "investment company" as defined in, or is
  otherwise subject to regulation under, the Investment Company Act
  of 1940, as amended.
  
      4.8. Public Utility Status
  
           The Borrower and each of its Subsidiaries are exempt from
  the provisions of the Public Utility Holding Company Act of 1935,
  as amended, except Section 9(a)(2) thereof, pursuant to Rule 2 of
  the General Rules and Regulations of the SEC under said Act.
  
      4.9. Federal Reserve Regulations; Use of Loan Proceeds
  
           Neither the Borrower nor any of its Subsidiaries is
  engaged principally, or as one of its important activities, in
  the business of extending credit for the purpose of purchasing or
  carrying any Margin Stock.  No part of the proceeds of the Loans
  will be used, directly or indirectly, for a purpose which
  violates any law, rule or regulation of any Governmental
  Authority, including, without limitation, the provisions of
  Regulations G, T, U or X of the Board of Governors of the Federal
  Reserve System, as amended.  No part of the proceeds of the Loans
  will be used, directly or indirectly, to purchase or carry Margin
  Stock or to extend credit to others for the purpose of purchasing
  or carrying Margin Stock.
  
      4.10.     Litigation
  
           Except as set forth in the Financial Statements or as
  disclosed after the date of the Financial Statements in the most
  recent annual report filed by the Borrower with the SEC pursuant
  to Section 13 or 15(d) of the Exchange Act, or in a quarterly or
  periodic report filed with the SEC pursuant to Section 13 or
  15(d) of the Exchange Act with respect to a period or date
  subsequent to the end of the fiscal year covered by such annual
  report, there are no actions, suits or proceedings at law or in
  equity or by or before any Governmental Authority (whether
  purportedly on behalf of the Borrower or any of its Subsidiaries)
  pending or, to the knowledge of the Borrower, threatened against
  the Borrower or any of its Subsidiaries or any of their
  respective Properties or rights, which (i) reasonably may be
  expected to have a Material Adverse Effect or (ii) call into
  question the validity or enforceability of any of the Loan
  Documents.
  
      4.11.     Financial Statements
  
           The Borrower has heretofore delivered to the Agent and the
  Lenders copies of its Form 10-K for the fiscal year ending
  December 31, 1994, containing the audited Consolidated Balance
  Sheets of the Borrower and its Subsidiaries and the related
  Consolidated Statements of Operations, Stockholder's Equity and
  Cash Flows for the period then ended, and its Form 10-Q for the
  fiscal quarter ended March 31, 1995, containing the unaudited
  Consolidated Balance Sheet of the Borrower and its Subsidiaries
  for such fiscal quarter, together with the related Consolidated
  Statements of Operations and Cash Flows for the fiscal quarter
  then ended (with the applicable related notes and schedules, the
  "Financial Statements").  The Financial Statements have been
  prepared in accordance with GAAP and fairly present the
  Consolidated financial condition and results of the operations of
  the Borrower and its Subsidiaries as of the dates and for the
  periods indicated therein.  Except as reflected in the Financial
  Statements or in the notes thereto, neither the Borrower nor any
  of its Subsidiaries has any obligation or liability of any kind
  (whether fixed, accrued, Contingent, unmatured or otherwise)
  which, in accordance with GAAP, should have been shown on the
  Financial Statements and was not.  Since December 31, 1994, there
  has been no Material Adverse Change.
  
      4.12.     Plans
  
           The only Pension Plans in effect as of the Effective Date
  (the "Existing Pension Plans") are listed on Schedule 4.12.  Each
  Employee Benefit Plan of the Borrower, its Subsidiaries and their
  respective ERISA Affiliates is in compliance with ERISA and the
  Code, where applicable, in all material respects and there is no
  event or condition existing or anticipated under or with respect
  to any Existing Pension Plan that could have a Material Adverse
  Effect.
  
      4.13.     Ownership of Property; Liens
  
           The Borrower has good and marketable title to, or a valid
  leasehold interest in, all of its Property, subject to no Liens,
  except Permitted Liens, and each Subsidiary has good and
  marketable title to, or a valid leasehold interest in, all of its
  Property, except to the extent that the failure to have such
  title or leasehold interest could not reasonably be expected to
  have a Material Adverse Effect.
  
      4.14.     Security Interests
  
           The Pledge Agreement is effective to create in favor of
  the Agent, for (i) the benefit of the Agent and the Facility B
  Agent and for the ratable benefit of the Lenders and the Facility
  B Lenders, a legal, valid and enforceable security interest in
  the Collateral, and, on and after the taking of possession of the
  Intercompany Notes by the Agent as collateral agent, and assuming
  the continued possession thereof by the Agent as collateral
  agent, the security interest granted by the Pledge Agreement
  shall at all times constitute a fully perfected Lien on, and
  security interest in, all right, title and interest of the
  Borrower in such Collateral, in each case prior and superior in
  right to any other Person.
  
      4.15.     Environmental Matters
  
           Except as disclosed in the most recent report filed by the
  Borrower with the SEC pursuant to Section 13 or 15(d) of the
  Exchange Act, or in a quarterly or periodic report filed with the
  SEC pursuant to Section 13 or 15(d) of the Exchange Act with
  respect to a period or date subsequent to the end of the fiscal
  year covered by such annual report, (i) the Borrower and each of
  its Subsidiaries is in compliance with the requirements of all
  applicable Environmental Laws, noncompliance with which
  reasonably may be expected to have a Material Adverse Effect,
  (ii) there have been no releases or disposals of hazardous
  wastes, hazardous substances or other substances in quantities or
  locations which might result in the Borrower or any of its
  Subsidiaries incurring any remedial obligations under applicable
  law which could, either singly or in the aggregate, reasonably be
  expected to have Material Adverse Effect, and (iii) neither the
  Borrower nor any of its Subsidiaries has received notice or order
  advising it that it has or may have any remedial obligation with
  respect to any such releases or disposals or that it is or may be
  responsible for the costs of any remedial action taken or to be
  taken by any other Persons with respect to any such releases or
  disposals, which obligation or cost, if fully payable could,
  either singly or in the aggregate, reasonably may be expected to
  have Material Adverse Effect.
  
      4.16.     Certain Business Activities
  
           The Borrower does not engage in any business other than
  the holding of Permitted Investments.
  
  
  5.  CONDITIONS TO FIRST LOANS
  
  
           In addition to the conditions precedent set forth in
  Section 6, the obligation of each Lender to make its first
  Revolving Credit Loan, or of any Lender to make the first
  Competitive Bid Loan, on the first Borrowing Date shall be
  subject to the fulfillment of the following conditions precedent:
  
      5.1. Evidence of Action
  
           The Agent shall have received a certificate, dated the
  Effective Date, of the Secretary or Assistant Secretary of the
  Borrower (i) attaching a true and complete copy of  the
  resolutions of its Board of Directors and of all documents
  evidencing other necessary corporate action (in form and
  substance satisfactory to the Agent) taken by it to authorize the
  Loan Documents and the transactions contemplated thereby, (ii)
  attaching a true and complete copy of its articles of
  incorporation and by-laws, (iii) setting forth the incumbency of
  its officer or officers who may sign the Loan Documents,
  including therein a signature specimen of such officer or
  officers and (iv) attaching a certificate of good standing of the
  Secretary of State of the jurisdiction of its incorporation and
  of each other jurisdiction in which it is qualified to do
  business.
  
      5.2. This Agreement; Notes
  
           The Agent shall have received (i) counterparts of this
  Agreement signed by each of the parties hereto (or receipt by the
  Agent from a party hereto of a fax signature page signed by such
  party which shall have agreed to promptly provide the Agent with
  originally executed counterparts hereof) and (ii) for each
  Lender, a Revolving Credit Note and a Competitive Bid Note, duly
  executed by an Authorized Signatory of the Borrower.
  
      5.3. Certificate as to Approvals and Liens
  
           The Agent shall have received a certificate of an
  Authorized Signatory of the Borrower certifying that (i) all
  approvals and consents of all Persons required to be obtained in
  connection with the consummation of the transactions contemplated
  by the Loan Documents and the Facility B Loan Documents have been
  duly obtained and are in full force and effect, and that all
  required notices have been given and all required waiting periods
  have expired and (ii) upon the making of the first Loans under
  the Agreement and under the Facility B Loan Documents there will
  exist no Liens on the Collateral other than Liens in favor of the
  Facility B Agent, the Facility B Lenders, the Agent and the
  Lenders under the Pledge Agreement.
  
      5.4. Pledge Agreement
  
           The Agent shall have received the Pledge Agreement, duly
  executed by an Authorized Signatory of the Borrower, together
  with Intercompany Notes duly executed by each Operating
  Subsidiary, duly indorsed by the Borrower to the order of the
  Agent, as collateral agent for itself, the Lenders, the Facility
  B Agent and the Facility B Lenders.
  
      5.5. Facility B Loan Documents
  
           Each of the Facility B Credit Agreement and the Facility B
  Notes shall have been duly executed and delivered by the parties
  thereto.
  
      5.6. Other Credit Facilities
  
           (a)  The Revolving Credit Commitment under the ATE Credit
  Agreement shall have been permanently reduced to an amount not in
  excess of $25,000,000, and the Agent shall have received
  satisfactory evidence thereof; and
  
           (b)  The Borrower shall have paid, or made arrangements
  satisfactory to the Agent to pay on the Borrowing Date, with the
  proceeds of a Loan under this Agreement, a borrowing under the
  Facility B Credit Agreement, or both, all principal and  accrued
  interest due to BNY under the Borrower's $20,000,000 unsecured
  line of credit with BNY.
  
      5.7. ACE Preferred Stock
  
           The Agent shall have received a copy of the relevant
  portions of the charter of ACE, and of each certificate of
  designation filed pursuant to such charter, setting forth the
  terms applicable to each class and series of the ACE Preferred
  Stock outstanding on the Effective Date, certified by an
  Authorized Signatory of the Borrower to be a true and complete
  copy thereof, and such terms shall be satisfactory to the Agent.
  
      5.8. Opinions of Counsel
  
           The Agent shall have received (i) an opinion of Ballard
  Spahr Andrews & Ingersoll, counsel to the Borrower, and (ii) an
  opinion of James E. Franklin II, Esq., general counsel of the
  Borrower, in each case addressed to the Facility B Agent, the
  Facility B Lenders, the Agent, the Lenders and Special Counsel
  and dated the Effective Date, covering the matters set forth in
  Exhibit N and satisfactory in form and substance to the Agent.
  
      5.9. Opinion of Special Counsel
  
           The Agent shall have received an opinion of Special
  Counsel, addressed to the Facility B Agent, the Facility B
  Lenders, the Agent, the Lenders and Special Counsel,
  substantially in the form of Exhibit O.
  
      5.10.     Fees
  
           All fees payable to the Agent on the first Borrowing Date,
  and the fees and expenses of Special Counsel incurred and
  recorded to date in connection with the preparation, negotiation
  and closing of the Loan Documents, shall have been paid.
  
  
  6.  CONDITIONS OF LENDING - ALL LOANS
  
      The obligation of each Lender to make any Loan is subject to
  the satisfaction of the following conditions precedent as of the
  date of such Loan:
  
      6.1. Compliance
  
           On each Borrowing Date and after giving effect to the
  Loans to be made thereon, (i) the Borrower shall have complied
  with all of the terms, covenants and conditions of this Agreement
  relating to such Loans, (ii) there shall exist no Event of
  Default, (iii) the representations and warranties contained in
  the Loan Documents shall be true and correct with the same effect
  as though such representations and warranties had been made on
  such Borrowing Date except to the extent such representations and
  warranties specifically relate to an earlier date, in which case
  such representations and warranties shall have been true and
  correct in all material respects on and as of such earlier date,
  and (iv) the Aggregate Credit Exposure will not exceed the
  Aggregate Commitments.  Each borrowing by the Borrower shall
  constitute a certification by the  Borrower as of such Borrowing
  Date that each of the foregoing matters is true and correct in
  all respects.
  
      6.2. Borrowing Request; Competitive Bid Request
  
           In the case of the borrowing of Revolving Credit Loans,
  the Agent shall have received a Borrowing Request, and in the
  case of a borrowing of a Competitive Bid Loan, the Agent shall
  have received a Competitive Bid Request and such other documents
  required to be delivered by the Borrower pursuant to Section 2.4,
  in each case duly executed by an Authorized Signatory of the
  Borrower.
  
  
  7.  AFFIRMATIVE COVENANTS
  
      The Borrower agrees that, so long as this Agreement is in
  effect, any Loan remains outstanding and unpaid, or any other
  amount is owing under any Loan Document to any Lender or the
  Agent, the Borrower shall:
  
      7.1. Financial Statements
  
           Maintain a standard system of accounting in accordance
  with GAAP, and furnish or cause to be furnished to the Agent and
  each Lender:
  
                (a)  As soon as available, but in any event not later
        than 5 days after the due date thereof, or if an extension of
        time to file has been obtained by the Borrower pursuant to Rule
        12b-25 under the Exchange Act, not later than 5 days after the
        expiration of such extension, (i) a complete copy of the
        Borrower's Annual Report on Form 10-K in respect of each fiscal
        year as filed by the Borrower with the SEC, together with a
        copy all financial statements and financial statement schedules
        incorporated therein by reference, and (ii) a complete copy of
        the Borrower's Quarterly Report on Form 10-Q in respect of each
        fiscal quarter as filed by the Borrower with the SEC, together
        with a copy of any financial statements incorporated therein by
        reference.
      
                (b)  Within 45 days after the end of each of the
        first three fiscal quarters (90 days after the end of the last
        fiscal quarter), a Compliance Certificate, duly executed by the
        chief financial officer of the Borrower (or such other officer
        as may be reasonably acceptable to the Agent).
      
                (c)  Such other information as the Agent or any
        Lender may reasonably request from time to time.
  
      7.2. Certificates; Other Information
  
           Furnish to the Agent and each Lender:
  
                (a)  Prompt written notice if any Default or Event of
        Default shall have occurred and be continuing;
      
                     (b)  Promptly upon becoming available, copies of
             all (i) annual reports to shareholders, proxy statements
             and other materials (other than reports specified in
             Section 7.1) which the Borrower or any of its Subsidiaries
             may now or hereafter be required to file with or deliver
             to any securities exchange or the SEC, or any other
             Governmental Authority succeeding to the functions thereof
             and (ii) material news releases and annual reports
             relating to the Borrower or any of its Subsidiaries;
      
                (c)  Prompt written notice of any change by either
        Moody's or S&P in the Senior Debt Rating;
      
                (d)  Prompt written notice of any agreement,
        indenture or other document or instrument entered into by, or
        which becomes binding upon, ACE which restricts or has the
        effect of restricting the payment by ACE of dividends with
        respect to its Stock;
      
                (e)  Prompt written notice of the forgiveness of any
        Intercompany Note or the conversion thereof to Stock or other
        instruments, in each case to the extent permitted by Section
        8.6, together with a total of all such forgiveness or
        conversions since the Effective Date; and
      
                (f)  Such other information as the Agent or any
        Lender shall reasonably request from time to time.
  
      7.3. Legal Existence
  
           Maintain, and cause each of its Restricted Subsidiaries so
  to maintain, its legal existence in good standing in the
  jurisdiction of its incorporation or formation and in each other
  jurisdiction in which the failure so to do could reasonably be
  expected to have a Material Adverse Effect.
  
      7.4. Taxes
  
           Pay and discharge when due, and cause each of its
  Restricted Subsidiaries so to do, all Taxes, assessments and
  governmental charges, license fees and levies upon, or with
  respect to the Borrower, such Restricted Subsidiary and all Taxes
  upon the income, profits and Property of the Borrower and its
  Restricted Subsidiaries which if unpaid, could reasonably be
  expected to have a Material Adverse Effect or become a Lien on
  the Property of the Borrower or such Restricted Subsidiary (other
  than a Lien described in Section 8.2(i)), unless and to the
  extent only that such Taxes, assessments, charges, license fees
  and levies shall be contested in good faith and by appropriate
  proceedings diligently conducted by the Borrower or such
  Restricted Subsidiary and provided that any such contested Tax,
  assessment, charge, license fee or levy shall not constitute, or
  create, a Lien on any Property of the Borrower or such Restricted
  Subsidiary senior to the Liens granted to the Agent and the
  Lenders under the Pledge Agreement on such Property, and,
  provided further, that the Borrower shall give the Agent prompt
  notice of such contest and that such reserve or other appropriate
  provision as shall be required by the Accountants in accordance
  with GAAP shall have been made therefor.
  
      7.5. Insurance
  
           Maintain, and cause each of its Restricted Subsidiaries to
  maintain insurance on all its Property in at least such amounts
  and against at least such risks (but including in any event
  public liability, product liability and business interruption
  coverage) as is consistent with industry standards followed by
  companies engaged in the same business; and furnish to the Agent,
  upon written request, full information as to insurance policies
  and reserves for self insurance.
  
      7.6. Condition of Property
  
           At all times, maintain, protect and keep in good repair,
  working order and condition (ordinary wear and tear excepted),
  and cause each of its Restricted Subsidiaries so to do, all
  Property necessary to the operation of the Borrower's or such
  Restricted Subsidiary's business.
  
      7.7. Observance of Legal Requirements
  
           Observe and comply, and cause each of its Restricted
  Subsidiaries so to do, with all laws, ordinances, orders,
  judgments, rules, regulations, certifications, franchises,
  permits, licenses, directions and requirements of all
  Governmental Authorities, which now or at any time hereafter may
  be applicable to it, including, without limitation, ERISA and all
  Environmental Laws, noncompliance with which could reasonably be
  expected to have a Material Adverse Effect.
  
      7.8. Inspection of Property; Books and Records; Discussions
  
           Keep proper books of record and account in which full,
  true and correct entries in conformity with GAAP and all
  requirements of law shall be made of all dealings and
  transactions in relation to its business and activities and
  permit representatives of the Agent and any Lender to visit its
  offices, to inspect any of its Property and examine and make
  copies or abstracts from any of its books and records at any
  reasonable time and as often as may reasonably be desired, and to
  discuss the business, operations, prospects, licenses, Property
  and financial condition of the Borrower and its Restricted
  Subsidiaries with the officers thereof and the Accountants.
  
      7.9. Licenses, Franchises, Intellectual Property, Etc.
  
           Obtain or maintain, as applicable, and cause ACE to obtain
  or maintain, as applicable, in full force and effect, all
  licenses, franchises, Intellectual Property, permits,
  authorizations and other rights as are necessary for the conduct
  of its business and the failure of which to obtain or maintain
  could reasonably be expected to have a Material Adverse Effect.
  
      7.10.     Indebtedness Capitalization Ratio
  
           Maintain as of the last day of each fiscal quarter of the
  Borrower, an Indebtedness Capitalization Ratio of less than or
  equal to 0.65:1.00.
  
      7.11.     Ratio of Indebtedness to Annualized ACE Dividends
  
           Maintain at all times, a ratio of (i) Indebtedness of the
  Borrower to (ii) Annualized ACE Dividends of less than or equal
  to 2.50:1.00.
  
  
  8.  NEGATIVE COVENANTS
  
      The Borrower agrees that, so long as this Agreement is in
  effect, any Loan remains outstanding and unpaid, or any other
  amount is owing under any Loan Document to any Lender or the
  Agent, the Borrower shall not:
  
      8.1. Indebtedness
  
           Create, incur, assume or suffer to exist any liability for
  Indebtedness except (i) Indebtedness due under the Loan Documents
  and the Facility B Loan Documents, (ii) Indebtedness of the
  Borrower existing on the date hereof as set forth on Schedule
  8.1, excluding increases and refinancings thereof, (iii) provided
  that no Default or Event of Default would exist before and after
  giving effect thereto, Contingent Obligations of the Borrower not
  in excess of $70,000,000 in respect of Indebtedness for borrowed
  money of Atlantic Thermal or any of its Subsidiaries in
  connection with its District Heating and Cooling Project,
  provided that any Contingent Obligation of the Borrower with
  respect to such Indebtedness is unsecured and (iv) provided no
  Default or Event of Default would exist before and after giving
  effect thereto other Indebtedness and Contingent Obligations of
  the Borrower in an aggregate amount not in excess of $10,000,000
  provided that any such Indebtedness constituting a Contingent
  Obligation shall be unsecured.
  
      8.2. Liens
  
           Create, incur, assume or suffer to exist any Lien upon any
  of its Property, whether now owned or hereafter acquired except
  (i) Liens for Taxes, assessments or similar charges incurred in
  the ordinary course of business which are not delinquent or which
  are being contested in accordance with Section 7.4, provided that
  enforcement of such Liens is stayed pending such contest, (ii)
  Liens in connection with workers' compensation, unemployment
  insurance or other social security obligations (but not ERISA),
  (iii) deposits or pledges to secure bids, tenders, contracts
  (other than contracts for the payment of money), leases,
  statutory obligations, surety and appeal bonds and other
  obligations of like nature arising in the ordinary course of
  business, (iv) zoning ordinances, easements, rights of way, minor
  defects, irregularities, and other similar restrictions affecting
  real Property which do not adversely affect the value of such
  real Property or the financial condition of the Borrower or
  impair its use for the operation of the business of the Borrower,
  (v) Liens arising by operation of law such as mechanics',
  materialmen's, carriers', warehousemen's liens incurred in the
  ordinary course of business which are not delinquent or which are
  being contested in good faith and by appropriate proceedings
  diligently conducted by it, provided that enforcement of such
  Liens is stayed pending such contest, (vi) Liens arising out of
  judgments or decrees which are being contested in good faith and
  by appropriate proceedings diligently conducted by it, provided
  that enforcement of such Liens is stayed pending such contest,
  (vii) Liens in favor of the Agent and the Lenders under the Loan
  Documents and the Facility B Agent and the Facility B Lenders
  under the Facility B Loan Documents, (viii) Liens on Property  of
  the Borrower existing on the Effective Date as set forth on
  Schedule 8.2 as renewed from time to time, but not any increases
  in the amounts secured thereby, (ix) Liens on Property of the
  Borrower acquired after the Effective Date provided that such
  Liens are limited to the Property so acquired and were not
  created in contemplation of such acquisition and (x) Liens
  securing Indebtedness for borrowed money (or Contingent
  Obligations in connection therewith) of the Borrower provided
  that the Agent, the Lenders, the Facility B Agent and the
  Facility B Lenders are ratably secured pursuant to documentation
  in form and substance satisfactory to the Agent and the Facility
  B Agent.
  
      8.3. Merger; Consolidation
  
           (a)  Consolidate with, be acquired by, or merge into or
  with any Person, or permit any of its Restricted Subsidiaries so
  to do, except that if no Default or Event of Default would exist
  before and after giving effect thereto, (i) the Borrower or any
  Restricted Subsidiary may merge with another entity provided that
  the resulting corporation shall have a net worth not less than
  the net worth of the Borrower or Restricted Subsidiary involved
  in such merger, (ii) the entity to be merged with is in the same
  business as a Restricted Subsidiary of the Borrower or in a
  related business (including other types of utilities), (iii) in
  the case of a merger involving the Borrower, the Borrower is the
  survivor and (iv) in the case of a merger involving an Operating
  Subsidiary, the survivor (if not such Operating Subsidiary) shall
  assume the obligations of such Operating Subsidiary under the
  Intercompany Note theretofore delivered by such Operating
  Subsidiary to the Borrower by an instrument in form and substance
  satisfactory to the Agent.
  
           (b)  Sell, lease or otherwise dispose of all or any part
  of its Property, or enter into any sale-leaseback transaction
  except:
  
                (i)  Sales or other dispositions of inventory in the
        ordinary course of business;
      
                (ii) Sales or other dispositions of equipment and
        materials in the ordinary course of business which, in the
        reasonable opinion of the Borrower, is obsolete or no longer
        useful in the conduct of its business; and
      
                (iii)     Sales or other dispositions of other
        Property for consideration not in excess of $25,000,000 per
        sale or other disposition provided that no Default or Event of
        Default shall exist immediately before or after giving effect
        thereto.
  
      8.4. Restricted Payments
  
           Declare or pay any Restricted Payments payable in cash or
  otherwise or apply any of its Property thereto or set apart any
  sum therefor, or permit any of its Restricted Subsidiaries so to
  do, except that (i) a Restricted Subsidiary may declare and pay
  Restricted Payments to its parent or to the Borrower, (ii)
  provided that no Default or Event of Default has occurred and is
  then continuing or would occur giving effect thereto, (A) the
  Borrower may (1) declare and pay cash dividends on its common
  Stock in any fiscal year and (2) repurchase its Stock, and (B)
  ACE may declare and pay cash dividends  on, and make mandatory
  and optional sinking fund payments with respect to, the ACE
  Preferred Stock.
  
      8.5. Investments, Acquisitions, Loans, Etc.
  
           At any time, purchase or otherwise acquire, hold or invest
  in the Stock of, or any other interest in, any Person, or make
  any loan or advance to, or enter into any arrangement for the
  purpose of providing funds or credit to, or make any other
  investment, whether by way of capital contribution, time deposit
  or otherwise, in or with any Person, or make any Acquisition (all
  of which are sometimes referred to herein as "Investments")
  except:
  
                (a)  Investments in (i) obligations issued or
  guaranteed by the United States Government, (ii) obligations of
  Federal agencies; (iii) State general obligation or revenue bonds
  having a rating category not less than Aa or AA by Moody's or
  S&P, respectively; (iv) State bond anticipation, tax anticipation
  or revenue anticipation notes having a rating category not less
  than MIG-2 or AA by Moody's or S&P, respectively; (v) any of the
  following which, by their terms, mature within twelve months from
  the date of issuance: (A) commercial paper rated not less than
  Prime-1 or A-1 by Moody's or S&P, respectively; (B) bankers'
  acceptance drawn on and accepted by Approved Financial
  Institutions; (C) certificates of deposit issued by Approved
  Financial Institutions and (D) money market mutual funds
  investing in securities rated as "First Tier Eligible Securities"
  by Moody's or S&P.
  
                (b)  Investments existing on the Effective Date as
  set forth on Schedule 8.5.
  
                (c)  Investments consisting of Intercompany Loans to
  Operating Subsidiaries, provided that (i) no Default or Event of
  Default shall exist before and after giving effect thereto and
  (ii) such Operating Subsidiary shall have executed and delivered
  to the Borrower an Intercompany Note, which Intercompany Note
  shall be in form and substance satisfactory to the Agent, shall
  have been duly indorsed by the Borrower to the order of the
  Agent, as collateral agent for itself, the Lenders, the Facility
  B Agent and the Facility B Lenders and shall have been delivered
  to the Agent, as such collateral agent.
  
                (d)  Investments consisting of loans to Permitted
  Recipients, provided that (i) no Default or Event of Default
  shall exist before and after giving effect thereto, and (ii) the
  aggregate amount of all such Investments shall not exceed
  $10,000,000.
  
                (e)  Acquisitions provided that (i) no Default or
  Event of Default shall exist before and after giving effect
  thereto, (ii) the Person or business to be acquired is in the
  same or a related business to a Subsidiary of the Borrower
  (including other types of utilities) or the assets or to be
  acquired are devoted to or usable in such a business and (iii) no
  more than $25,000,000 of proceeds of Loans are used therefor.
  
                (f)  Equity Investments in Operating Subsidiaries,
  provided (i) that no Default or Event of Default would exist
  before or after giving effect thereto and (ii) not more than
  $20,000,000 of such Investments in the aggregate shall be made
  with  the proceeds of Loans or the forgiveness of Indebtedness or
  the conversion to equity of any such Indebtedness, in each case
  to the extent permitted by Section 8.6.
  
      8.6. Amendments, Etc. of Intercompany Notes
  
           Enter into or agree to any amendment, modification or
  waiver of any term or condition of any Intercompany Note or
  forgive all or any portion of any amount due thereunder or
  convert all or any portion thereof into Stock or other interests
  or instruments, provided, however, that if no Default or Event of
  Default exists before and after giving effect thereto, the
  Borrower may so convert or forgive such Intercompany Note or
  Intercompany Notes not in excess of $20,000,000 in the aggregate,
  provided further that any such conversion or forgiveness in
  excess thereof may only be made if the Agent shall have received
  30 days prior written notice thereof and the Operating Subsidiary
  whose Intercompany Note is to be forgiven or converted shall have
  executed and delivered to the Agent a guaranty substantially in
  the form of Exhibit Q hereto, together with such legal opinions,
  certificates and other documents as the Agent reasonably may
  request, each in form and substance satisfactory to the Agent.
  
      8.7. Designation of Operating Subsidiaries
  
           Designate any Subsidiary as an additional Operating
  Subsidiary to whom proceeds of Loans may be loaned by the
  Borrower unless (i) no Default or Event of Default shall exist
  before or after giving effect thereto, (ii) the prospective
  Operating Subsidiary is a Subsidiary of the Borrower, (iii) the
  prospective Operating Subsidiary is engaged in the conduct of an
  active trade or business, (iv) the prospective Operating
  Subsidiary executes an Intercompany Note, in favor of the
  Borrower and in form and substance satisfactory to the Agent,
  evidencing its obligation to repay Intercompany Loans made to it
  by the Borrower from time to time, which Intercompany Note has
  been duly indorsed by the Borrower to the order of the Agent, as
  collateral agent for itself, the Lenders, the Facility B Agent
  and the Facility B Lenders, and (v) the Agent shall have received
  a written certificate signed by an Authorized Signatory of the
  Borrower designating such Operating Subsidiary and certifying as
  to its status as described in clauses (ii) and (iii) above.
  
      8.8. Certain Business Activities
  
           Engage in any business other than the holding of Permitted
  Investments.
  
  
  9.  DEFAULT
  
      9.1. Events of Default
  
           The following shall each constitute an "Event of Default"
  hereunder:
  
                (a)  The failure of the Borrower to pay any
  installment of principal on any Note on the date when due and
  payable; or
  
                (b)  The failure of the Borrower to pay any
  installment of interest or any other fees or expenses payable
  under any Loan Document or otherwise to the Agent  with respect
  to the loan facilities established hereunder within three
  Business Days of the date when due and payable; or
  
                (c)  The use of the proceeds of any Loan in a manner
  inconsistent with or in violation of Section 2.15; or
  
                (d)  The failure of the Borrower to observe or
  perform any covenant or agreement contained in Sections 7.3,
  7.10, 7.11 or Section 8; or
  
                (e)  The failure of the Borrower to observe or
  perform any other term, covenant, or agreement contained in any
  Loan Document and such failure shall have continued unremedied
  for a period of 30 days after the Borrower shall have obtained
  knowledge thereof; or
  
                (f)  Any representation or warranty made in any Loan
  Document or in any certificate delivered or to be delivered
  pursuant thereto shall prove to have been incorrect or misleading
  (whether because of misstatement or omission) in any material
  respect when made; or
  
                (g)  Obligations of the Borrower (other than its
  obligations under the Notes), ACE or any of any Operating
  Subsidiary, whether as principal, guarantor, surety or other
  obligor, for the payment of any Indebtedness or operating leases
  in excess of $10,000,000 in the aggregate (i) shall become or
  shall be declared to be due and payable prior to the expressed
  maturity thereof, or (ii) shall not be paid when due or within
  any grace period for the payment thereof, or (iii) the holders of
  any such obligations shall have the right to declare such
  obligation due and payable prior to the expressed maturity
  thereof;
  
                (h)  The Borrower, ACE or any Operating Subsidiary
  shall (i) suspend or discontinue its business, (ii) make an
  assignment for the benefit of creditors, (iii) generally not be
  paying its debts as such debts become due, (iv) admit in writing
  its inability to pay its debts as they become due, (v) file a
  voluntary petition in bankruptcy, (vi) become insolvent (however
  such insolvency shall be evidenced), (vii) file any petition or
  answer seeking for itself any reorganization, arrangement,
  composition, readjustment of debt, liquidation or dissolution or
  similar relief under any present or future statute, law or
  regulation of any jurisdiction, (viii) petition or apply to any
  tribunal for any receiver, custodian or any trustee for any
  substantial part of its Property, (ix) be the subject of any such
  proceeding filed against it which remains undismissed for a
  period of 60 days, (x) file any answer admitting or not
  contesting the material allegations of any such petition filed
  against it or any order, judgment or decree approving such
  petition in any such proceeding, (xi) seek, approve, consent to,
  or acquiesce in any such proceeding, or in the appointment of any
  trustee, receiver, sequestrator, custodian, liquidator, or fiscal
  agent for it, or any substantial part of its Property, or an
  order is entered appointing any such trustee, receiver,
  custodian, liquidator or fiscal agent and such order remains in
  effect for 60 days, or (xii) take any formal action for the
  purpose of effecting any of the foregoing or looking to the
  liquidation or dissolution of the Borrower or such Subsidiary; or
  
                (i)  An order for relief is entered under the United
  States bankruptcy laws or any other decree or order is entered by
  a court having jurisdiction (i) adjudging the Borrower, ACE or
  any Operating Subsidiary bankrupt or insolvent, (ii)  approving
  as properly filed a petition seeking reorganization, liquidation,
  arrangement, adjustment or composition of or in respect of the
  Borrower or any of its Subsidiaries under the United States
  bankruptcy laws or any other applicable Federal or state law,
  (iii) appointing a receiver, liquidator, assignee, trustee,
  custodian, sequestrator (or other similar official) of the
  Borrower or any of its Subsidiaries or of any substantial part of
  the Property thereof, or (iv) ordering the winding up or
  liquidation of the affairs of the Borrower or any of its
  Subsidiaries, and any such decree or order continues unstayed and
  in effect for a period of 60 days; or
  
                (j)  Judgments or decrees against the Borrower or any
  of its Subsidiaries aggregating in excess of $10,000,000 shall
  remain unpaid, unstayed on appeal, undischarged, unbonded or
  undismissed for a period of 30 consecutive days from the entry
  thereof; or
  
                (k)  Any Loan Document shall cease, for any reason,
  to be in full force and effect or the Borrower shall so assert in
  writing or shall disavow any of its obligations thereunder; or
  
                (l)  The occurrence of an Event of Default under and
  as defined in the Pledge Agreement; or
  
                (m)  The occurrence of an Event of Default under and
  as defined in any Facility B Loan Document; or
  
                (n)  The Borrower shall own less than 100% of the
  issued and outstanding common Stock of ACE; or
  
                (o)  (i) any Termination Event shall occur; (ii) any
  Accumulated Funding Deficiency, whether waived, shall exist with
  respect to any Pension Plan; (iii) any Person shall engage in any
  Prohibited Transaction involving any Employee Benefit Plan; (iv)
  the Borrower, any of its Subsidiaries or any ERISA Affiliate
  shall fail to pay when due an amount which is payable by it to
  the PBGC or to a Pension Plan under Title IV of ERISA; or (v) any
  other event or condition shall occur or exist with respect to an
  Employee Benefit Plan; and the occurrence of any of such events
  would have a Material Adverse Effect.
  
           Upon the occurrence of an Event of Default or at any time
  thereafter during the continuance thereof, (a) if such event is
  an Event of Default specified in clause (h) or (i) above, the
  Aggregate Commitments shall immediately and automatically
  terminate and the Loans, all accrued and unpaid interest thereon,
  and all other amounts owing under the Loan Documents shall
  immediately become due and payable, and the Agent may, and, upon
  the direction of the Required Lenders shall, exercise any and all
  remedies and other rights provided in the Loan Documents, and (b)
  if such event is any other Event of Default, any or all of the
  following actions may be taken: (i) with the consent of the
  Required Lenders, the Agent may, and upon the direction of the
  Required Lenders shall, by notice to the Borrower, declare the
  Aggregate Commitments to be terminated forthwith, whereupon the
  Aggregate Commitments shall immediately terminate, and (ii) with
  the consent of the Required Lenders, the Agent may, and upon the
  direction of the Required Lenders shall, by notice of default to
  the Borrower, declare the Loans, all accrued and unpaid interest
  thereon, and all other amounts owing under the Loan  Documents to
  be due and payable forthwith, whereupon the same shall
  immediately become due and payable, and the Agent may, and upon
  the direction of the Required Lenders shall, exercise any and all
  remedies and other rights provided pursuant to the Loan
  Documents.  Except as otherwise provided in this Section,
  presentment, demand, protest and all other notices of any kind
  are hereby expressly waived.  The Borrower hereby further
  expressly waives and covenants not to assert any appraisement,
  valuation, stay, extension, redemption or similar laws, now or at
  any time hereafter in force which might delay, prevent or
  otherwise impede the performance or enforcement of any Loan
  Document.
  
           In the event that the Aggregate Commitments shall have
  been terminated or the Notes shall have been declared due and
  payable pursuant to the provisions of this Section, any funds
  received by the Agent and the Lenders from or on behalf of the
  Borrower shall be applied by the Agent and the Lenders in
  liquidation of the Loans and the obligations of the Borrower
  under the Loan Documents in the following manner and order, in
  each case pro rata in proportion to the amounts due to each
  Person entitled to payment: (i) first, to the payment of interest
  on, and then the principal portion of, any Loans which the Agent
  may have advanced on behalf of any Lender for which the Agent has
  not then been reimbursed by such Lender or the Borrower; (ii)
  second, to the payment of any fees or expenses due the Agent from
  the Borrower, (iii) third, to reimburse the Agent and the Lenders
  for any expenses (to the extent not paid pursuant to clause (ii)
  above due from the Borrower pursuant to the provisions of Section
  11.5; (iv) fourth, to the payment of accrued Facility Fees and
  all other fees, expenses and amounts due under the Loan Documents
  (other than principal and interest on the Notes); (v) fifth, to
  the payment of interest due on the Notes; (vi) sixth, to the
  payment of principal outstanding on the Revolving Credit Notes;
  (vii) seventh, to the payment of principal outstanding on the
  Competitive Bid Notes; and (viii) eighth, to the payment of any
  other amounts owing to the Agent and the Lenders under any Loan
  Document.
  
  
  10. THE AGENT
  
      10.1.     Appointment
  
           Each Lender hereby irrevocably designates and appoints BNY
  as the Agent of such Lender under the Loan Documents and each
  such Lender hereby irrevocably authorizes BNY, as the Agent for
  such Lender, to take such action on its behalf under the
  provisions of the Loan Documents and to exercise such powers and
  perform such duties as are expressly delegated to the Agent by
  the terms of the Loan Documents, together with such other powers
  as are reasonably incidental thereto.  Notwithstanding any
  provision to the contrary elsewhere in any Loan Document, the
  Agent shall not have any duties or responsibilities other than
  those expressly set forth therein, or any fiduciary relationship
  with any Lender, and no implied covenants, functions,
  responsibilities, duties, obligations or liabilities shall be
  read into the Loan Documents or otherwise exist against the
  Agent.
  
      10.2.     Delegation of Duties
  
           The Agent may execute any of its duties under the Loan
  Documents by or through agents or attorneys-in-fact and shall be
  entitled to rely upon the advice of counsel concerning all
  matters pertaining to such duties.
  
      10.3.     Exculpatory Provisions
  
           Neither the Agent nor any of its officers, directors,
  employees, agents, attorneys-in-fact or affiliates shall be (i)
  liable for any action lawfully taken or omitted to be taken by it
  or such Person under or in connection with the Loan Documents
  (except the Agent for its own gross negligence or willful
  misconduct), or (ii) responsible in any manner to any of the
  Lenders for any recitals, statements, representations or
  warranties made by the Borrower or any officer thereof contained
  in the Loan Documents or in any certificate, report, statement or
  other document referred to or provided for in, or received by the
  Agent under or in connection with, the Loan Documents or for the
  value, validity, effectiveness, genuineness, perfection,
  enforceability or sufficiency of any of the Loan Documents or for
  any failure of the Borrower or any other Person to perform its
  obligations thereunder.  The Agent shall not be under any
  obligation to any Lender to ascertain or to inquire as to the
  observance or performance of any of the agreements contained in,
  or conditions of, the Loan Documents, or to inspect the
  properties, books or records of the Borrower.  The Agent shall
  not be under any liability or responsibility whatsoever, as
  Agent, to the Borrower or any other Person as a consequence of
  any failure or delay in performance, or any breach, by any Lender
  of any of its obligations under any of the Loan Documents.
  
      10.4.     Reliance by Agent
  
           The Agent shall be entitled to rely, and shall be fully
  protected in relying, upon any writing, resolution, notice,
  consent, certificate, affidavit, opinion, letter, cablegram,
  telegram, fax, telex or teletype message, statement, order or
  other document or conversation believed by it to be genuine and
  correct and to have been signed, sent or made by the proper
  Person or Persons and upon advice and statements of legal counsel
  (including, without limitation, counsel to the Borrower),
  independent accountants and other experts selected by the Agent. 
  The Agent may treat each Lender, or the Person designated in the
  last notice filed with it under this Section, as the holder of
  all of the interests of such Lender in its Loans and in its Notes
  until written notice of transfer, signed by such Lender (or the
  Person designated in the last notice filed with the Agent) and by
  the Person designated in such written notice of transfer, in form
  and substance satisfactory to the Agent, shall have been filed
  with the Agent.  The Agent shall not be under any duty to examine
  or pass upon the validity, effectiveness, enforceability,
  perfection or genuineness of the Loan Documents or any
  instrument, document or communication furnished pursuant thereto
  or in connection therewith, and the Agent shall be entitled to
  assume that the same are valid, effective and genuine, have been
  signed or sent by the proper parties and are what they purport to
  be.  The Agent shall be fully justified in failing or refusing to
  take any action under the Loan Documents unless it shall first
  receive such advice or concurrence of the Required Lenders as it
  deems appropriate.  The Agent shall in all cases be fully
  protected in acting, or in refraining from acting, under the Loan
  Documents in accordance with a request or direction of the
  Required Lenders, and such request or direction and any action
  taken or failure to act pursuant thereto shall be binding upon
  all the Lenders and all future holders of the Notes.
  
      10.5.     Notice of Default
  
           The Agent shall not be deemed to have knowledge or notice
  of the occurrence of any Default or Event of Default unless the
  Agent has received written notice  thereof from a Lender or the
  Borrower.  In the event that the Agent receives such a notice,
  the Agent shall promptly give notice thereof to the Lenders and
  the Borrower.  The Agent shall take such action with respect to
  such Default or Event of Default as shall be directed by the
  Required Lenders, provided, however, that unless and until the
  Agent shall have received such directions, the Agent may (but
  shall not be obligated to) take such action, or refrain from
  taking such action, with respect to such Default or Event of
  Default as it shall deem to be in the best interests of the
  Lenders.
  
      10.6.     Non-Reliance on Agent and Other Lenders
  
           Each Lender expressly acknowledges that neither the Agent
  nor any of its respective officers, directors, employees, agents,
  attorneys-in-fact or affiliates has made any representations or
  warranties to it and that no act by the Agent hereinafter,
  including any review of the affairs of the Borrower, shall be
  deemed to constitute any representation or warranty by the Agent
  to any Lender.  Each Lender represents to the Agent that 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 evaluation of and investigation
  into the business, operations, Property, financial and other
  condition and creditworthiness of the Borrower and made its own
  decision to enter into this Agreement.  Each Lender also
  represents that it will, independently and without reliance upon
  the Agent 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 analyses, evaluations and decisions in taking
  or not taking action under any Loan Document, and to make such
  investigation as it deems necessary to inform itself as to the
  business, operations, Property, financial and other condition and
  creditworthiness of the Borrower.  Except for notices, reports
  and other documents expressly required to be furnished to the
  Lenders by the Agent hereunder, the Agent shall not have any duty
  or responsibility to provide any Lender with any credit or other
  information concerning the business, operations, Property,
  financial and other condition or creditworthiness of the Borrower
  which may come into the possession of the Agent or any of its
  officers, directors, employees, agents, attorneys-in-fact or
  affiliates.
  
      10.7.     Indemnification
  
           Each Lender agrees to indemnify and reimburse the Agent in
  its capacity as such (to the extent not promptly reimbursed by
  the Borrower and without limiting the obligation of the Borrower
  to do so), pro rata according to the outstanding principal
  balance of the Loans (or at any time when no Loans are
  outstanding, according to its Commitment Percentage), from and
  against any and all liabilities, obligations, losses, damages,
  penalties, actions, judgments, suits, costs, expenses or
  disbursements of any kind whatsoever including, without
  limitation, any amounts paid to the Lenders (through the Agent)
  by the Borrower pursuant to the terms of the Loan Documents, that
  are subsequently rescinded or avoided, or must otherwise be
  restored or returned) which may at any time (including, without
  limitation, at any time following the payment of the Notes) be
  imposed on, incurred by or asserted against the Agent in any way
  relating to or arising out of the Loan Documents or any other
  documents contemplated by or referred to therein or the
  transactions contemplated thereby or any action taken or omitted
  to be taken by the Agent under or in connection with any of the
  foregoing; provided, however, that no Lender shall be liable for
  the payment of any portion of such liabilities, obligations,
  losses, damages, penalties, actions, judgments, suits, costs,
  expenses or disbursements to  the extent resulting solely from
  the finally adjudicated gross negligence or willful misconduct of
  the Agent.  Without limitation of the foregoing, each Lender
  agrees to reimburse the Agent promptly upon demand for its pro
  rata share of any unpaid fees owing to the Agent, and any costs
  and expenses (including, without limitation, reasonable fees and
  expenses of counsel) payable by the Borrower under Section 11.5,
  to the extent that the Agent has not been paid such fees or has
  not be reimbursed for such costs and expenses by the Borrower. 
  The failure of any Lender to reimburse the Agent promptly upon
  demand for its pro rata share of any amount required to be by the
  Lenders to the Agent as provided in this Section shall not
  relieve any other Lender of its obligation hereunder to reimburse
  the Agent for its pro rata share of such amount, but no Lender
  shall be responsible for the failure of other Lender to reimburse
  the Agent for such other Lender's pro rata share of such amount. 
  The agreements in this Section shall survive the payment of all
  amounts payable under the Loan Documents.
  
      10.8.     Agent in Its Individual Capacity
  
           BNY and its respective affiliates may make loans to,
  accept deposits from, issue letters of credit for the account of,
  and generally engage in any kind of business with, the Borrower
  as though BNY were not Agent hereunder.  With respect to the
  Commitment made or renewed by BNY and the Notes issued to BNY,
  BNY shall have the same rights and powers under the Loan
  Documents as any Lender and may exercise the same as though it
  were not the Agent, and the terms "Lender" and "Lenders" shall in
  each case include BNY.
  
      10.9.     Successor Agent
  
           If at any time the Agent deems it advisable, in its sole
  discretion, it may submit to each of the Lenders a written notice
  of its resignation as Agent under the Loan Documents, such
  resignation to be effective upon the earlier of (i) the written
  acceptance of the duties of the Agent under the Loan Documents by
  a successor Agent and (ii) on the 30th day after the date of such
  notice.  Upon any such resignation, the Required Lenders shall
  have the right, with the prior written consent of the Borrower
  (which consent shall not be unreasonably withheld or delayed and
  which consent of the Borrower shall not be required upon the
  occurrence and during the continuance of a Default or an Event of
  Default), to appoint from among the Lenders a successor Agent. 
  If no successor Agent shall have been so appointed by the
  Required Lenders and accepted such appointment in writing within
  30 days after the retiring Agent's giving of notice of
  resignation, then the retiring Agent may, on behalf of the
  Lenders, appoint a successor Agent, which successor Agent shall
  be a commercial bank organized under the laws of the United
  States of America or any State thereof and having a combined
  capital, surplus, and undivided profits 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 retiring Agent, and the retiring Agent's rights,
  powers, privileges and duties as Agent under the Loan Documents
  shall be terminated.  The Borrower and the Lenders shall execute
  such documents as shall be necessary to effect such appointment. 
  After any retiring Agent's resignation as Agent, the provisions
  of the Loan Documents shall inure to its benefit as to any
  actions taken or omitted to be taken by it while it was Agent
  under the Loan Documents.  If at any time there shall not be a
  duly appointed and acting Agent, the  Borrower agrees to make
  each payment due under the Loan Documents directly to the Lenders
  entitled thereto during such time.
  
  
  11. OTHER PROVISIONS
  
      11.1.     Amendments and Waivers
  
           With the written consent of the Required Lenders, the
  Agent and the Borrower may, from time to time, enter into written
  amendments, supplements or modifications of the Loan Documents
  and, with the consent of the Required Lenders, the Agent on
  behalf of the Lenders may execute and deliver to any such parties
  a written instrument waiving or a consent to a departure from, on
  such terms and conditions as the Agent may specify in such
  instrument, any of the requirements of the Loan Documents or any
  Default or Event of Default and its consequences; provided,
  however, that:
  
           (a)  no such amendment, supplement, modification, waiver
  or consent shall, without the written consent of all of the
  Lenders, (i) increase the Commitment of any Lender or the
  Aggregate Commitments, (ii) extend the Maturity Date (except as
  provided in Section 2.18); (iii) decrease the rate, or extend the
  time of payment, of interest of, or change or forgive the
  principal amount of, or change the pro rata allocation of
  payments under, any Note; (iv) release all or any part of the
  Collateral; (v) change the provisions of Sections 3.4, 11.1 or
  11.7(a) or (vi) change the definition of Required Lenders;
  
           (b)  without the written consent of BNY, no such
  amendment, supplement, modification or waiver shall amend, modify
  or waive any provision of Section 10 or otherwise change any of
  the rights or obligations of the Agent hereunder or under the
  Loan Documents.
  
           Any such amendment, supplement, modification or waiver
  shall apply equally to each of the Lenders and shall be binding
  upon the parties to the applicable Loan Document, the Lenders,
  the Agent and all future holders of the Notes.  In the case of
  any waiver, the parties to the applicable Loan Document, the
  Lenders and the Agent shall be restored to their former position
  and rights hereunder and under the outstanding Notes and other
  Loan Documents to the extent provided for in such waiver, and any
  Default or Event of Default waived shall not extend to any
  subsequent or other Default or Event of Default, or impair any
  right consequent thereon.  The Loan Documents may not be amended
  orally or by any course of conduct.
  
      11.2.     Notices
  
           All notices, requests and demands to or upon the
  respective parties to the Loan Documents to be effective shall be
  in writing and, unless otherwise expressly provided therein,
  shall be deemed to have been duly given or made when delivered by
  hand, or when deposited in the mail, first-class postage prepaid,
  or, in the case of notice by fax, when sent, addressed as follows
  in the case of the Borrower or the Agent, at the Domestic Lending
  Office, in the case of each Lender, or to such other addresses as
  to which the Agent may be hereafter notified by the respective
  parties thereto or any future holders of the Notes:
  
           The Borrower:
  
           Atlantic Energy, Inc.
           6801 Black Horse Pike
           Pleasantville, New Jersey 08232-4130
           Attention:     Louis M. Walters,
                     Treasurer
           Telephone:     (609) 645-4441
           Fax:      (609) 645-4550
  
           The Agent:
  
           The Bank of New York
           One Wall Street
           Agency Function Administration
           18th Floor
           New York, New York 10286
           Attention:     Patricia Clancy
           Telephone:     (212) 635-4696
           Fax:      (212) 635-6365 or 6366 or 6367
  
           with a copy to:
  
           The Bank of New York
           Energy Industries Division
           One Wall Street
           19th Floor
           New York, New York 10286
           Attention:     Mary Lou Bradley,
                     Vice President
           Telephone:     (212) 635-7533
           Fax:      (212) 635-7923
  
  except that any notice, request or demand by the Borrower to or
  upon the Agent or the Lenders pursuant to Sections 2.3, 2.4 or
  2.7 shall not be effective until received.  Any party to a Loan
  Document may rely on signatures of the parties thereto which are
  transmitted by fax or other electronic means as fully as if
  originally signed.
  
      11.3.     No Waiver; Cumulative Remedies
  
           No failure to exercise and no delay in exercising, on the
  part of the Agent or any Lender, any right, remedy, power or
  privilege under any Loan Document shall operate as a waiver
  thereof; nor shall any single or partial exercise of any right,
  remedy, power or privilege under any Loan Document preclude any
  other or further exercise thereof or the exercise of any other
  right, remedy, power or privilege.  The rights, remedies, powers
  and privileges under the Loan Documents are cumulative and not
  exclusive of any rights, remedies, powers and privileges provided
  by law.
  
      11.4.     Survival of Representations and Warranties
  
           All representations and warranties made under the Loan
  Documents and in any document, certificate or statement delivered
  pursuant thereto or in connection therewith shall survive the
  execution and delivery of the Loan Documents.
  
      11.5.     Payment of Expenses and Taxes
  
           The Borrower agrees, promptly upon presentation of a
  statement or invoice therefor, and whether any Loan is made (i)
  to pay or reimburse the Agent for all its out-of-pocket costs and
  expenses reasonably incurred in connection with the development,
  preparation, execution and syndication of, the Loan Documents and
  any amendment, supplement or modification thereto (whether or not
  executed), any documents prepared in connection therewith and the
  consummation of the transactions contemplated thereby, including,
  without limitation, the reasonable fees and disbursements of
  Special Counsel, (ii) to pay or reimburse the Agent and the
  Lenders for all of their respective costs and expenses,
  including, without limitation, reasonable fees and disbursements
  of counsel, incurred in connection with (A) any Default or Event
  of Default and any enforcement or collection proceedings
  resulting therefrom or in connection with the negotiation of any
  restructuring or "work-out" (whether consummated or not) of the
  obligations of the Borrower under any of the Loan Documents and
  (B) the enforcement of this Section, (iii) to pay, indemnify, and
  hold each Lender and the Agent harmless from and against, any and
  all recording and filing fees and any and all liabilities with
  respect to, or resulting from any delay in paying, stamp, excise
  and other similar taxes, if any, which may be payable or
  determined to be payable in connection with the execution and
  delivery of, or consummation of any of the transactions
  contemplated by, or any amendment, supplement or modification of,
  or any waiver or consent under or in respect of, the Loan
  Documents and any such other documents, and (iv) to pay,
  indemnify and hold each Lender and the Agent and each of their
  respective officers, directors and employees harmless from and
  against any and all other liabilities, obligations, claims,
  losses, damages, penalties, actions, judgments, suits, costs,
  expenses or disbursements of any kind or nature whatsoever
  (including, without limitation, reasonable counsel fees and
  disbursements) with respect to the enforcement and performance of
  the Loan Documents and the enforcement and performance of the
  provisions of any subordination agreement in favor of the Agent
  and the Lenders (all the foregoing, collectively, the
  "indemnified liabilities") and, if and to the extent that the
  foregoing indemnity may be unenforceable for any reason, the
  Borrower agrees to make the maximum payment permitted or not
  prohibited under applicable law; provided, however, that the
  Borrower shall have no obligation hereunder to pay indemnified
  liabilities to the Agent or any Lender arising from the finally
  adjudicated gross negligence or willful misconduct of the Agent
  or such Lender or claims between one indemnified party and
  another indemnified party.  The agreements in this Section shall
  survive the termination of the Aggregate Commitments and the
  payment of all amounts payable under the Loan Documents.
  
      11.6.     Lending Offices
  
           Each Lender shall have the right at any time and from time
  to time to transfer its Loans to a different office, provided
  that such Lender shall promptly notify the Agent and the Borrower
  of any such change of office.  Such office shall thereupon become
  such Lender's Domestic Lending Office or Eurodollar Lending
  Office, as the case  may be, provided, however, that no such
  Lender shall be entitled to receive any greater amount under
  Sections 2.10, 2.12 or 2.13 as a result of a transfer of any such
  Loans to a different office of such Lender than it would be
  entitled to immediately prior thereto unless such claim would
  have arisen even if such transfer had not occurred.
  
      11.7.     Assignments and Participations
  
           (a)  The Loan Documents shall be binding upon and inure to
  the benefit of the Borrower, the Lenders, the Agent, all future
  holders of the Notes and their respective successors and assigns,
  except that the Borrower may not assign, delegate or transfer any
  of its rights or obligations under the Loan Documents without the
  prior written consent of the Agent and each Lender.
  
           (b)  Each Lender shall have the right at any time, upon
  written notice to the Agent of its intent to do so, to sell,
  assign, transfer or negotiate all or any part of such Lender's
  rights under the Loan Documents and the Facility B Loan Documents
  to one or more of its affiliates, to one or more of the other
  Lenders (or to affiliates of such other Lenders) or, with the
  prior written consent of the Borrower and the Agent (which
  consent shall not be unreasonably withheld or delayed and which
  consent of the Borrower shall not be required upon the occurrence
  and during the continuance of an Event of Default), to sell,
  assign, transfer or negotiate all or any part of such Lender's
  rights and obligations under the Loan Documents and the Facility
  B Loan Documents to any other bank, insurance company, pension
  fund, mutual fund or other financial institution, provided that
  (i) each such sale, assignment, transfer or negotiation (other
  than sales, assignments, transfers or negotiations (x) to
  affiliates of such Lender or (y) of a Lender's entire interest)
  shall be in a minimum amount of $5,000,000, (ii) each such sale,
  assignment, transfer or negotiation shall be of an equal
  percentage of such Lenders interest under the Loan Documents and
  the Facility B Loan Documents (it being the intention of the
  parties that at all times during which the Loan Documents and the
  Facility B Loan Documents are both in effect, each Lender shall
  also be a Facility B Lender and its Commitment Percentage shall
  equal its Facility B Commitment Percentage) and (iii) there shall
  be paid to the Agent by the assigning Lender a fee (the
  "Assignment Fee") of $3,000 for the assignment of both the Loan
  Documents and the Facility B Loan Documents.  For each
  assignment, the parties to such assignment shall execute and
  deliver to the Agent for its acceptance and recording an
  Assignment and Acceptance Agreement.  Upon such execution,
  delivery, acceptance and recording by the Agent, from and after
  the effective date specified in such Assignment and Acceptance
  Agreement, the assignee thereunder shall be a party hereto and,
  to the extent provided in such Assignment and Acceptance
  Agreement, the assignor Lender thereunder shall be released from
  its obligations under the Loan Documents.  The Borrower agrees
  upon written request of the Agent and at the Borrower's expense
  to execute and deliver (A) to such assignee, a Revolving Credit
  Note, dated the effective date of such Assignment and Acceptance
  Agreement, in an aggregate principal amount equal to the Loans
  assigned to, and Commitments assumed by, such assignee, (B) to
  such assignee, a Competitive Bid Note, dated the effective date
  of such Assignment and Acceptance Agreement and (C) to such
  assignee, a Revolving Credit Note, dated the effective date of
  such Assignment and Acceptance Agreement, in an aggregate
  principal amount equal to the balance of such assignor Lender's
  Revolving Credit Loans and Commitments, if any, and each assignor
  Lender shall cancel and return to the Borrower its existing
  Revolving Credit Note.  Upon any such sale, assignment or other
  transfer, the Commitments and the  Commitment Percentages set
  forth in Exhibit A shall be adjusted accordingly by the Agent.
  
           (c)  Each Lender may grant participations in all or any
  part of its Loans, its Notes and its Commitment to one or more
  banks, insurance companies, financial institutions, pension funds
  or mutual funds, provided that (i) such Lender's obligations
  under the Loan Documents shall remain unchanged, (ii) such Lender
  shall remain solely responsible to the other parties to the Loan
  Documents for the performance of such obligations, (iii) the
  Borrower, the Agent and the other Lenders shall continue to deal
  solely and directly with such Lender in connection with such
  Lender's rights and obligations under the Loan Documents, (iv) no
  sub-participations shall be permitted and (v) the voting rights
  of any holder of any participation shall be limited to decisions
  that only do any of the following: (A) subject the participant to
  any additional obligation, (B) reduce the principal of, or
  interest on the Notes or any fees or other amounts payable
  hereunder, (C) postpone any date fixed for the payment of
  principal of, or interest on the Notes or any fees or other
  amounts payable hereunder, (D) release any security interest or
  Collateral except to the extent that such release is specifically
  provided for in any Loan Document or (E) release any guarantor
  under any guarantee.  The Borrower acknowledges and agrees that
  any such participant shall for purposes of Sections 2.10, 2.12,
  2.13 and 2.16 be deemed to be a "Lender"; provided, however, the
  Borrower shall not, at any time, be obligated to pay any
  participant in any interest of any Lender hereunder any sum in
  excess of the sum which the Borrower would have been obligated to
  pay to such Lender in respect of such interest had such Lender
  not sold such participation.
  
           (d)  If any (i) assignment is made pursuant to subsection
  (b) above or (ii) any participation is granted pursuant to
  subsection (c) above, shall be made to any Person that is not a
  U.S. Person, such Person shall furnish such certificates,
  documents or other evidence to the Borrower and the Agent, in the
  case of clause (i) and to the Borrower and the Lender which sold
  such participation in the case of clause (ii), as shall be
  required by Section 2.10(e).
  
           (e)  No Lender shall, as between and among the Borrower,
  the Agent and such Lender, be relieved of any of its obligations
  under the Loan Documents as a result of any sale, assignment,
  transfer or negotiation of, or granting of participations in, all
  or any part of its Loans, its Commitment or its Note, except that
  a Lender shall be relieved of its obligations to the extent of
  any such sale, assignment, transfer, or negotiation of all or any
  part of its Loans, its Commitment or its Notes pursuant to
  subsection (b) above.
  
           (f)  Notwithstanding anything to the contrary contained in
  this Section, any Lender may at any time or from time to time
  assign all or any portion of its rights under the Loan Documents
  to a Federal Reserve Bank, provided that any such assignment
  shall not release such assignor from its obligations thereunder.
  
      11.8.     Counterparts
  
           Each Loan Document (other than the Notes) may be executed
  by one or more of the parties thereto on any number of separate
  counterparts and all of said counterparts taken together shall be
  deemed to constitute one and the same document.  It shall not be
  necessary in making proof of any Loan Document to produce or
  account for  more than one counterpart signed by the party to be
  charged.  A counterpart of any Loan Document or to any document
  evidencing, and of any an amendment, modification, consent or
  waiver to or of any Loan Document transmitted by fax shall be
  deemed to be an originally executed counterpart.  A set of the
  copies of the Loan Documents signed by all the parties thereto
  shall be deposited with each of the Borrower and the Agent.  Any
  party to a Loan Document may rely upon the signatures of any
  other party thereto which are transmitted by fax or other
  electronic means to the same extent as if originally signed.
  
      11.9.     Adjustments; Set-off
  
           (a)  If any Lender (a "Benefited Lender") shall at any
  time receive any payment of all or any part of its Loans, or
  interest thereon, or receive any collateral in respect thereof
  (whether voluntarily or involuntarily, by set-off, pursuant to
  events or proceedings of the nature referred to in Section 9.1
  (h) or (i), or otherwise) in a greater proportion than any such
  payment to and collateral received by any other Lender in respect
  of such other Lender's Loans, or interest thereon, such Benefited
  Lender shall purchase for cash from each of the other Lenders
  such portion of each such other Lender's Loans, and shall provide
  each of such other Lenders with the benefits of any such
  collateral, or the proceeds thereof, as shall be necessary to
  cause such Benefited Lender to share the excess payment or
  benefits of such collateral or proceeds ratably with each of the
  Lenders, provided, however, that if all or any portion of such
  excess payment or benefits is thereafter recovered from such
  Benefited Lender, such purchase shall be rescinded, and the
  purchase price and benefits returned, to the extent of such
  recovery, but without interest.  The Borrower agrees that each
  Lender so purchasing a portion of another Lender's Loans may
  exercise all rights of payment (including, without limitation,
  rights of set-off, to the extent not prohibited by law) with
  respect to such portion as fully as if such Lender were the
  direct holder of such portion.
  
           (b)  In addition to any rights and remedies of the Lenders
  provided by law, upon the occurrence of an Event of Default and
  the acceleration of the obligations owing in connection with the
  Loan Documents, or at any time upon the occurrence and during the
  continuance of an Event of Default, under Section 9.1(a) or (b),
  each Lender shall have the right, without prior notice to the
  Borrower, any such notice being expressly waived by the Borrower
  to the extent not prohibited by applicable law, to set-off and
  apply against any indebtedness, whether matured or unmatured, of
  the Borrower to such Lender, any amount owing from such Lender to
  the Borrower, at, or at any time after, the happening of any of
  the above-mentioned events.  To the extent not prohibited by
  applicable law, the aforesaid right of set-off may be exercised
  by such Lender against the Borrower or against any trustee in
  bankruptcy, custodian, debtor in possession, assignee for the
  benefit of creditors, receiver, or execution, judgment or
  attachment creditor of the Borrower, or against anyone else
  claiming through or against the Borrower or such trustee in
  bankruptcy, custodian, debtor in possession, assignee for the
  benefit of creditors, receiver, or execution, judgment or
  attachment creditor, notwithstanding the fact that such right of
  set-off shall not have been exercised by such Lender prior to the
  making, filing or issuance, or service upon such Lender of, or of
  notice of, any such petition, assignment for the benefit of
  creditors, appointment or application for the appointment of a
  receiver, or issuance of execution, subpoena, order or warrant. 
  Each Lender agrees promptly to notify the Borrower and the Agent
  after any such set-off and application made by such Lender,
  provided that the failure to give such notice shall not affect
  the validity of such set-off and application.
  
      11.10.    Indemnity
  
           The Borrower agrees to indemnify and hold harmless the
  Agent and each Lender and their respective affiliates, directors,
  officers, employees, attorneys and agents (each an "Indemnified
  Person") from and against any loss, cost, liability, damage or
  expense (including the reasonable fees and disbursements of
  counsel of such Indemnified Person, including all local counsel
  hired by any such counsel) incurred by such Indemnified Person in
  investigating, preparing for, defending against, or providing
  evidence, producing documents or taking any other action in
  respect of, any commenced or threatened litigation,
  administrative proceeding or investigation under any federal
  securities law or any other statute of any jurisdiction, or any
  regulation, or at common law or otherwise, which is alleged to
  arise out of or is based upon (i) any untrue statement or alleged
  untrue statement of any material fact by the Borrower in any
  document or schedule executed or filed with any Governmental
  Authority by or on behalf of the Borrower; (ii) any omission or
  alleged omission to state any material fact required to be stated
  in such document or schedule, or necessary to make the statements
  made therein, in light of the circumstances under which made, not
  misleading; (iii) any acts, practices or omissions or alleged
  acts, practices or omissions of the Borrower or its agents
  relating to the use of the proceeds of any or all borrowings made
  by the Borrower which are alleged to be in violation of Section
  2.15, or in violation of any federal securities law or of any
  other statute, regulation or other law of any jurisdiction
  applicable thereto; or (iv) any acquisition or proposed
  acquisition by the Borrower of all or a portion of the Stock, or
  all or a portion of the assets, of any Person whether such
  Indemnified Person is a party thereto.  The indemnity set forth
  herein shall be in addition to any other obligations or
  liabilities of the Borrower to each Indemnified Person under the
  Loan Documents or at common law or otherwise, and shall survive
  any termination of the Loan Documents, the expiration of the
  Aggregate Commitments and the payment of all indebtedness of the
  Borrower under the Loan Documents, provided that the Borrower
  shall have no obligation under this Section to an Indemnified
  Person with respect to any of the foregoing to the extent found
  in a final judgment of a court having jurisdiction to have
  resulted primarily out of the gross negligence or wilful
  misconduct of such Indemnified Person or arising solely from
  claims between one such Indemnified Person and another such
  Indemnified Person.
  
      11.11.    Governing Law
  
           The Loan Documents and the rights and obligations of the
  parties thereunder shall be governed by, and construed and
  interpreted in accordance with, the internal laws of the State of
  New York, without regard to principles of conflict of laws.
  
      11.12.    Headings Descriptive
  
           Section headings have been inserted in the Loan Documents
  for convenience only and shall not be construed to be a part
  thereof.
  
      11.13.    Severability
  
           Every provision of the Loan Documents is intended to be
  severable, and if any term or provision thereof shall be invalid,
  illegal or unenforceable for any reason, the validity, legality
  and enforceability of the remaining provisions thereof shall not
  be  affected or impaired thereby, and any invalidity, illegality
  or unenforceability in any jurisdiction shall not affect the
  validity, legality or enforceability of any such term or
  provision in any other jurisdiction.
  
      11.14.    Integration
  
           All exhibits to a Loan Document shall be deemed to be a
  part thereof.  Except for agreements between the Agent and the
  Borrower with respect to certain fees, the Loan Documents embody
  the entire agreement and understanding among the Borrower, the
  Agent and the Lenders with respect to the subject matter thereof
  and supersede all prior agreements and understandings among the
  Borrower, the Agent and the Lenders with respect to the subject
  matter thereof.
  
      11.15.    Consent to Jurisdiction
  
           The Borrower hereby irrevocably submits to the
  jurisdiction of any New York State or Federal court sitting in
  the City of New York over any suit, action or proceeding arising
  out of or relating to the Loan Documents.  The Borrower hereby
  irrevocably waives, to the fullest extent permitted or not
  prohibited by law, any objection which it may now or hereafter
  have to the laying of the venue of any such suit, action or
  proceeding brought in such a court and any claim that any such
  suit, action or proceeding brought in such a court has been
  brought in an inconvenient forum.  The Borrower hereby agrees
  that a final judgment in any such suit, action or proceeding
  brought in such a court, after all appropriate appeals, shall be
  conclusive and binding upon it.
  
      11.16.    Service of Process
  
           The Borrower hereby irrevocably consents to the service of
  process in any suit, action or proceeding by sending the same by
  first class mail, return receipt requested or by overnight
  courier service, to the address of the Borrower set forth in
  Section 11.2.  The Borrower hereby agrees that any such service
  (i) shall be deemed in every respect effective service of process
  upon it in any such suit, action, or proceeding, and (ii) shall
  to the fullest extent enforceable by law, be taken and held to be
  valid personal service upon and personal delivery to it.
  
      11.17.    No Limitation on Service or Suit
  
           Nothing in the Loan Documents or any modification, waiver,
  consent or amendment thereto shall affect the right of the Agent
  or any Lender to serve process in any manner permitted by law or
  limit the right of the Agent or any Lender to bring proceedings
  against the Borrower in the courts of any jurisdiction or
  jurisdictions in which the Borrower may be served.
  
      11.18.    WAIVER OF TRIAL BY JURY
  
           THE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY,
  VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A
  TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER
  OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
  CONTEMPLATED THEREIN.  FURTHER, THE BORROWER  HEREBY CERTIFIES
  THAT NO REPRESENTATIVE OR AGENT OF THE AGENT, OR THE LENDERS, OR
  COUNSEL TO THE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY
  OR OTHERWISE, THAT THE AGENT OR THE LENDERS WOULD NOT, IN THE
  EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
  JURY TRIAL PROVISION.  THE BORROWER ACKNOWLEDGES THAT THE AGENT
  AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
  BY, INTER ALIA, THE PROVISIONS OF THIS SECTION.
  
  
             [Remainder of page intentionally left blank]
    
      IN WITNESS WHEREOF, the parties hereto have caused this
  Revolving Credit Agreement (Facility A) to be duly executed and
  delivered by their proper and duly authorized officers as of the
  day and year first above written.
  
  
                               ATLANTIC ENERGY, INC.
  
  
  
                               By:   /s/ Jerrold L. Jacobs
                               Name: Jerrold L. Jacobs
                               Title:                      President & Chief
                                     Executive Officer
  
  
                               THE BANK OF NEW YORK,
                               Individually and as Agent
  
  
  
                               By:   /s/ Mary Lou Bradley
                               Name: Mary Lou Bradley
                               Title:                      Vice President
  
  
  
                               THE FIRST NATIONAL BANK
                                 OF CHICAGO
  
  
  
                               By:   /s/ Kenneth J. Bauer
                               Name: Kenneth J. Bauer
                               Title:                      Authorized Agent
  
  
  
                               MELLON BANK, N.A.
  
  
                               By:   /s/ A. Gary Chace
                               Name: A. Gary Chace
                               Title:                      Senior Vice President
                       ATLANTIC ENERGY EXHIBIT A
  
                          LIST OF COMMITMENTS
  
                             (Facility A)
                                                         Commitment
  Lender                        Commitment               Percentage
  
  The Bank of New York         $18,666,000               53.3314%
  
  The First National Bank      $11,667,000               33.3343%
    of Chicago
  
  Mellon Bank, N.A.            $ 4,667,000               13.3343%
  
    Total                      $35,000,000              100.0000%
    
                      ATLANTIC ENERGY EXHIBIT B-1
                     FORM OF REVOLVING CREDIT NOTE
  
                             (Facility A)
  
  $________
                                       ______, 1995
                                       New York, New York
  
  
                               FOR VALUE RECEIVED, on the Maturity Date, 
ATLANTIC ENERGY,
  INC., a New Jersey corporation (the "Borrower"), hereby promises
  to pay to the order of ________________ (the "Lender"), at the
  office of THE BANK OF NEW YORK, as Agent (the "Agent"), located
  at One Wall Street, New York, New York or at such other place as
  the Agent may specify from time to time, in lawful money of the
  United States of America, the principal sum of $_____, or such
  lesser unpaid principal balance as shall be outstanding here-
  under, together with interest from the date hereof, on the unpaid
  principal balance hereof, payable at the rate or rates and at the
  time or times provided for in the Revolving Credit Agreement
  (Facility A), dated as of September 28, 1995, among the Borrower,
  the Lenders party thereto and the Agent (as the same may be
  amended, modified or supplemented from time to time, the
  "Agreement").  Capitalized terms used herein that are defined in
  the Agreement shall have the meanings therein defined.  In no
  event shall interest payable hereon exceed the Highest Lawful
  Rate.
  
                               This Note is one of the Revolving Credit Notes 
referred to in
  the Agreement and is entitled to the benefits of, and is subject
  to the terms set forth in, the Agreement.  The principal of this
  Note is payable in the amounts and under the circumstances, and
  its maturity is subject to acceleration upon the terms, set forth
  in the Agreement.  Except as otherwise provided in the Agreement,
  if any payment on this Note becomes due and payable on a day
  which is not a Business Day, the maturity thereof shall be
  extended to the next Business Day and interest shall be payable
  at the applicable rate or rates specified in the Agreement during
  such extension period.
  
                               The (i) date and amount of each Revolving Credit
 Loan made by
  the Lender, (ii) its character as an ABR Advance or a Eurodollar
  Advance, (iii) the Eurodollar Rate and Eurodollar Interest Period
  applicable to any Eurodollar Advances, and (iv) each payment and
  prepayment of the principal thereof, shall be recorded by the
  Lender on its books and, prior to any transfer of this Note, may
  be indorsed by the Lender on the schedule attached hereto or any
  continuation thereof, provided that the failure of the Lender to
  make any such recordation or indorsement shall not affect the
  obligations of the Borrower to make payment when due of any
  amount owing hereunder.
  
                               Presentment for payment, demand, protest, notice
 of protest and
  notice of dishonor and all other demands and notices in
  connection with the delivery, performance and enforcement of this
  Note are hereby waived, except as specifically otherwise provided
  in the Agreement.
  
                               This Note is being delivered in, is intended to
 be performed
  in, and shall be construed and interpreted in accordance with and
  be governed by the internal laws of, the State of New York,
  without regard to principles of conflicts of law.
  
                               This Note may only be amended by an instrument
 in writing
  executed pursuant to the provisions of Section 11.1 of the
  Agreement.
  
  
                                  ATLANTIC ENERGY, INC.
  
  
                                  By:                      
                                  Name:                    
                                  Title:                   
    
                              SCHEDULE TO
                          REVOLVING CREDIT NOTE
  
  
  
                                                      Interest
                                                      Rate on
                                                      Eurodollar
                                                      Advances
           Type of                       Amount of    (without
           Advance(ABR                   principal     regard to
           or Eurodollar    Amount of    paid or       Applicable
  Date     Rate)            Advance      prepaid       Margin    
    
                              SCHEDULE TO
                    REVOLVING CREDIT NOTE - continued
  
  
  
  
  
  
  
  
  Interest
  Period (if
  Eurodollar                      Notation 
  Advance)                        Made By  
  
  
    
                        ATLANTIC ENERGY EXHIBIT B-2

                       FORM OF COMPETITIVE BID NOTE

                               (Facility A)

                                                ________, 1995
                                            New York, New York


 FOR VALUE RECEIVED, ATLANTIC ENERGY, INC., a New Jersey cor-
poration (the "Borrower"), hereby promises to pay to the order of
____________________ (the "Lender"), at the office of THE BANK OF
NEW YORK, as Agent (the "Agent"), located at One Wall Street, New
York, New York or at such other place as the Agent may specify
from time to time, in lawful money of the United States of
America, the outstanding principal balance of the Lender's
Competitive Bid Loans, together with interest thereon payable at
the rate or rates and at the time or times provided for in the
Revolving Credit Agreement (Facility A), dated as of
September 28, 1995, among the Borrower, the Lenders party thereto
and the Agent (as the same may be amended, modified or
supplemented from time to time, the "Agreement").  Capitalized
terms used herein that are defined in the Agreement shall have
the meanings therein defined.  In no event shall interest payable
hereon exceed the Highest Lawful Rate.

 This Note is one of the Competitive Bid Notes referred to in
the Agreement and is entitled to the benefits of, and is subject
to the terms set forth in, the Agreement.  The principal of this
Note is payable in the amounts and under the circumstances, and
its maturity is subject to acceleration upon the terms, set forth
in the Agreement.  Except as otherwise provided in the Agreement,
if any payment on this Note becomes due and payable on a day
which is not a Business Day, the maturity thereof shall be
extended to the next Business Day and interest shall be payable
at the applicable rate or rates specified in the Agreement during
such extension period.

 The (i) date and amount of each Competitive Bid Loan made by
the Lender, (ii) the interest rate and Interest Period applicable
thereto and (iii) each payment and prepayment of the principal
thereof, shall be recorded by the Lender on its books and, prior
to any transfer of this Note, may be indorsed by the Lender on
the schedule attached hereto or any continuation thereof,
provided that the failure of the Lender to make any such
recordation or indorsement shall not affect the obligations of
the Borrower to make payment when due of any amount owing
hereunder.

 Presentment for payment, demand, protest, notice of protest and
notice of dishonor and all other demands and notices in
connection with the delivery, performance and enforcement of this
Note are hereby waived, except as specifically otherwise provided
in the Agreement.

 This Note is being delivered in, is intended to be performed
in, and shall be construed and interpreted in accordance with and
be governed by the internal laws of, the State of New York,
without regard to principles of conflicts of law.

      This Note may only be amended by an instrument in writing
executed pursuant to the provisions of Section 11.1 of the
Agreement.


                          ATLANTIC ENERGY, INC.


                          By:                            
                          Name:                          
                          Title:                         


                                SCHEDULE TO
                           COMPETITIVE BID NOTE


                                  Amount of
 Amount of                                     Principal
 Competitive          Interest     Bid         Payment or        Notation
Date   Loan           Period       Rate        Prepayment        Made by 


                           ATLANTIC ENERGY EXHIBIT C

                           FORM OF BORROWING REQUEST

                                  (Facility A)

                                                                      
     _______ __ 
                                                       ,199_


The Bank of New York, as Agent
Agency Function Administration
One Wall Street
18th Floor
New York, New York 10286
Attention:  Patricia Clancy

The Bank of New York, as Agent
Energy Industries Division
One Wall Street
19th Floor
New York, New York 10286
Attention:  Mary Lou Bradley,
     Vice President

       Re: Revolving Credit Agreement (Facility A),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
           
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      (a)  Pursuant to Section 2.3 of the Agreement, the Bor-
  rower hereby gives notice of its intention to borrow
  Revolving Credit Loans in an aggregate principal amount of
  $_______ on ______ __, 19__, which borrowing(s) shall consist
  of the following Advances:
                                           Initial Interest
  Type of Advance                                          
  Period for Eurodollar
  (Eurodollar or ABR)                      Amount          
  Advances              
  
  (a)
  (b)
  
      (b)  The Borrower hereby certifies that on the date
  hereof and, after giving effect to the Loans requested hereby
  on the Borrowing Date set forth above:
  
           (a)  The Borrower is and shall be in compliance
  with all of the terms, covenants and conditions of the
  Agreement relating to such Loan.
  
           (b)  There exists and there shall exist no Event of
  Default under the Agreement.
  
           (c)  Each of the representations and warranties
  contained in the Agreement shall be true and correct with the
  same effect as though such representations and warranties had
  been made on such Borrowing Date, except to the extent such
  representations and warranties specifically relate to an
  earlier date, in which case such representations and
  warranties are true and correct in all material respects on
  and as of such earlier date.
  
           (d)  After giving effect to the Revolving Credit
  Loans requested to be made hereby, the Aggregate Credit
  Exposure will not exceed the Aggregate Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                             By:                         
                             Name:                       
                             Title:                      
    
                      ATLANTIC ENERGY EXHIBIT D
  
                   FORM OF COMPETITIVE BID REQUEST
  
                             (Facility A)
  
                                         [Date]
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:    Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention: Mary Lou Bradley
           Vice President
  
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
                Capitalized terms used herein which defined in the
  Agreement shall have the meanings therein defined.
  
           Pursuant to Section 2.4 of the Agreement, the Bor-
  rower hereby gives notice of its request to borrow
  Competitive Bid Loans in the aggregate sum of $____________
  on ____________, which borrowing shall consist of the
  following Competitive Interest Periods and amounts
  corresponding thereto:
  
  Competitive
  Interest Period                        Amount
  (1)
  (2)
  (3)
  
      The Borrower hereby certifies that on the date hereof
  and, after giving effect to the Competitive Bid Loans requested
  hereby, on the Borrowing Date set forth above:
  
           (a)  The Borrower is and shall be in compliance
  with all of the terms, covenants and conditions of the
  Agreement relating to such Loans.
  
           (b)  There exists and there shall exist no Event of
  Default under the Agreement.
  
           (c)  Each of the representations and warranties
  contained in the Agreement shall be true and correct with the
  same effect as though such representations and warranties had
  been made on such Borrowing Date, except to the extent such
  representations and warranties specifically relate to an
  earlier date, in which case such representations and
  warranties are true and correct in all material respects on
  and as of such earlier date.
  
           (d)  After giving effect to the Competitive Bid
  Loans requested to be made hereby, the Aggregate Credit
  Exposure will not exceed the Aggregate  Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                             By:                         
                             Name:                       
                             Title:                      
    
                       ATLANTIC ENERGY EXHIBIT E
  
                       FORM OF INVITATION TO BID
  
                             (Facility A)
  
                                           _____ __, 199_
  
  To the Lenders under the Credit
  Agreement referred to below
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
           
           
                Capitalized terms used herein which are defined in
  the Agreement shall have the meanings therein defined.
  
           Pursuant to a Competitive Bid Request, a copy of
  which is appended hereto or enclosed herewith, the Borrower
  has given notice of its request to borrow Competitive Bid
  Loans in the aggregate sum of $____________ on ____________
  
           The Lenders are hereby invited to bid to make such
  Competitive Bid Loans by 10:00 a.m. on the proposed Borrowing
  Date, pursuant to the terms and conditions of the Agreement.
  
                               Very truly yours,
  
                               THE BANK OF NEW YORK,
                               as Agent
  
  
                               By:                       
                               Name:                     
                               Title:                    
    
                       ATLANTIC ENERGY EXHIBIT F
                        FORM OF COMPETITIVE BID
                             (Facility A)
  
                                               _____ __, 199_
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:  Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:  Mary Lou Bradley,
              Vice President
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
           In response to a Competitive Bid Request, the
  undersigned Lender hereby offers to lend Competitive Bid
  Loans in the aggregate sum of $____________ on ____________,
  which borrowing shall consist of the following Competitive
  Interest Periods and the amounts and Bid Rates corresponding
  thereto:
  
  Competitive
  Interest Period           Amount               Bid Rate 
  
  (1)
  (2)
  (3)
   
                                    Very truly yours,
                                    [LENDER]
                                    By:                  
                                    Name:                
                                    Title:               
    
                       ATLANTIC ENERGY EXHIBIT G
             FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
                             (Facility A)
  
                          _______ __, 199_
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:    Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:    Mary Lou Bradley,
           Vice President
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
       
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      Pursuant to Section 2.4(c) of the Agreement, the Bor-
  rower hereby gives notice of its [rejection/acceptance] of
  [Lender's] Competitive Bid, dated _____ __, 199_, in the
  aggregate sum of $_________ on ________, which borrowing
  shall consist of the following Competitive Interest Periods
  and the amounts and Bid Rates corresponding thereto:
    Competitive
  Interest Period           Amount                Bid Rate  
  (1)
  (2)
  (3)                                                        
                                  Very truly yours,
                                  ATLANTIC ENERGY, INC.
                                  By:    
                                  Name:  
                                  Title:                        
                      ATLANTIC ENERGY EXHIBIT H
  
              FORM OF COMPETITIVE BID LOAN CONFIRMATION
  
                             (Facility A)
  
  
                                         _____ __, 199_
  To [Lender]
  
  Re: Revolving Credit Agreement (Facility A), dated as of
        September 28, 1995, by and among ATLANTIC ENERGY, INC.
        (the "Borrower"), the Lenders party thereto, and THE
        BANK OF NEW YORK, as Agent (the "Agreement")            
      
      
      
           Capitalized terms used herein that are defined in
  the Agreement shall have the meanings therein defined.
  
           In accordance with Section 2.4(c) of the Agreement
  we hereby notify you that pursuant to a Competitive Bid
  Accept Letter, the Borrower gave notice of its acceptance of
  [Lender's] Competitive Bid, dated _____________, in the
  aggregate sum of $____________ on ____________, which
  borrowing shall consist of the following Competitive Interest
  Periods and the following amounts and Bid Rates corresponding
  thereto:
  
  Competitive
  Interest Period             Amount              Bid Rate
  
  (1)
  (2)
  (3)
  
      Pursuant to Section 2.4(e) of the Agreement, [Lender]
  is required to make available to the Agent at its office the
  proceeds of Lender's Competitive Bid Loan(s) set forth in
  Section 11.2 of the Agreement, in immediately available
  funds, not later than 2:00 p.m. on the Borrowing Date
  specified above.
  
                                  Very truly yours,
  
                                  THE BANK OF NEW YORK,
                                  as Agent
  
                                  By:                    
                                  Name:                  
                                  Title:                 
                       ATLANTIC ENERGY EXHIBIT I
  
               FORM OF NOTICE OF CONVERSION/CONTINUATION
  
                             (Facility A)
  
                                         _______ __, 199_
  
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:    Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:    Mary Lou Bradley,
           Vice President
  
  Re: Revolving Credit Agreement (Facility A),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
           
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      1.   Pursuant to Section 2.7 of the Agreement, the Bor-
  rower requests to convert or continue Advances as set forth
  below:
  
           (a) on ____ __, 199_, to convert $_______ in
  principal amount of presently outstanding Eurodollar Advances
  having an Interest Period that expires on ____ __, 199_ to
  ABR Advances.
  
           (b) on ____ __, 199_, to continue as Eurodollar Ad-
  vances, $_______ in principal amount of presently outstanding
  Eurodollar Advances having an Interest Period that expires on
  ____ __, 199_ for an additional Interest Period of __ months;
  
           (c) on ____ __, 199_, to convert $_______ in
  principal amount of presently outstanding ABR Advances to
  Eurodollar Advances that have an initial Interest Period of
  __ months.
  
      2.   The Borrower hereby certifies that on the date
  hereof and on the requested Conversion/Continuation Date set
  forth above, there exists and there shall exist no Default or
  Event of Default under the Agreement.
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                             By:  
                             Name:     
                             Title:    
    
                       ATLANTIC ENERGY EXHIBIT K
  
                    FORM OF COMPLIANCE CERTIFICATE
  
                             (Facility A)
  
  I, ______________, do hereby certify that I am the
  ___________ of ATLANTIC ENERGY, INC., a New Jersey
  corporation (the "Borrower"), and that, as such, I am duly
  authorized to execute and deliver this Compliance Certificate
  on the Borrower's behalf pursuant to Section 7.1(c) of each
  of (i) the Revolving Credit Agreement (Facility A), dated as
  of September 28, 1995, among the Borrower, the Lenders party
  thereto and The Bank of New York, as Agent (as the same may
  be amended, supplemented or otherwise modified from time to
  time, the "Facility A Agreement") and (ii) the Revolving
  Credit Agreement (Facility B), dated as of September 28,
  1995, among the Borrower, the Lenders party thereto and The
  Bank of New York, as Agent (as the same may be amended,
  supplemented or otherwise modified from time to time, the
  "Facility B Agreement" and, together with the Facility A
  Agreement, the "Agreements").  Capitalized terms used herein
  that are defined in the Agreements shall have the meanings
  therein defined.
  
  I hereby certify that:
  
  1.  The Indebtedness Capitalization Ratio as of ______ __,
  199_ , is _.__:1.00, calculated as set forth on Schedule 1.
  
  2  The Ratio of Indebtedness of the Borrower to Annualized
  ACE Dividends as of ______ __, 199_, is _.__:1.00, calculated
  as set forth on Schedule 2.
  
  3.  There exists no Event of Default under the Agreement.
  
                             IN WITNESS WHEREOF, I have
  executed this Compliance Certificate on this ___ day of
  ______________, 19__.
  
  
                                                       
    _______________________
  
  
    
Schedule 1 to Compliance Certificate
dated __/__/__

             COMPUTATION OF INDEBTEDNESS CAPITALIZATION RATIO

1. Total Indebtedness of the Borrower
and its Subsidiaries determined
on a Consolidated basis
in accordance with GAAP                           $_________

2.  Preferred Stock and any premium
thereon of the Borrower and its
Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

3.  Common Stock and any premium
thereon of the Borrower and its
Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

4.  Retained earnings of the Borrower
and its Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

5.  All Indebtedness (net of unamortized
premium and discount) of the Borrower
and its Subsidiaries determined on a
Consolidated basis in accordance
with GAAP                                         $_________

6.  Sum of Items 2 through 5                      $_________

7.  Unamortized capital Stock expense
of the Borrower and its Subsidiaries
determined on a Consolidated basis
in accordance with GAAP                           $_________

8.  Items 6 minus Item 7                          $_________

9.  Indebtedness Capitalization Ratio
Item 1:Item 8                                     _.__:1.00

11. Maximum permitted ratio
pursuant to Section 7.10 of
each of the Agreements                            0.65:1.00

Schedule 2 to Compliance Certificate
dated __/__/__

        CALCULATION OF RATIO OF TOTAL INDEBTEDNESS OF THE BORROWER
                        TO ANNUALIZED ACE DIVIDENDS


1.  Indebtedness of the Borrower
$_________

2.The amount of dividends paid
to the Borrower by ACE during
the fiscal quarter ending on
the date of determination or,
if such date of determination
is not a fiscal quarter ending
date, the immediately preceding
fiscal quarter                                    $_________

3.  Annualized ACE Dividends
(Item 2 multiplied by 4)                          $_________

4.  Ratio of Indebtedness to Annualized
ACE Dividends
(Item 1:Item 3)                                   _.__:1.00

5.  Maximum permitted ratio
pursuant to Section 7.11 of
each of the Agreements                            2.50:1.00.

                         ATLANTIC ENERGY EXHIBIT L

                         FORM OF PLEDGE AGREEMENT

                               (Facility A)


PLEDGE AGREEMENT (as amended, modified or supplemented from
time to time, this "Agreement"), dated as of ______ __, 1995,
made by ATLANTIC ENERGY, INC., a New Jersey corporation (the
"Borrower"), to THE BANK OF NEW YORK, in its capacity as
collateral agent (in such capacity, the "Secured Party") for
itself in its capacity as Agent and for the Lenders under and
as defined in each of the Facility A Credit Agreement as
defined below (in such capacity, the "Facility A Agent") and
the Facility B Credit Agreement as defined below (in such
capacity, the "Facility B Agent" and, together with the
Facility A Agent, the "Agents").

                                 RECITALS

         I.                     The Borrower has entered into
a. the Revolving Credit Agreement (Facility A), dated as of
the date hereof, among the Borrower, the Lenders party
thereto (each, a "Facility A Lender", and collectively, the
"Facility A Lenders") and the Facility A Agent (as the same
may be amended, supplemented or otherwise modified from time
to time, the "Facility A Credit Agreement") and b. the
Revolving Credit Agreement (Facility B), dated as of the date
hereof among the Borrower, the Lenders party thereto (each, a
"Facility B Lender", collectively, the "Facility B Lenders"
and together with the Facility A Lenders, the "Lenders") and
the Facility B Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the
"Facility B Credit Agreement" and, together with the Facility
B Credit Agreement, the "Credit Agreements").  Capitalized
terms used herein that are not defined herein and are defined
in the Credit Agreements shall have the meanings defined
therein.

         II.                    The Lenders have agreed a. to
make loans to the Borrower pursuant to, and upon the terms
and subject to the conditions specified in, the Facility A
Credit Agreement and b. to make loans to the Borrower and to
participate in Letters of Credit issued by Issuing Bank (as
defined in the Facility B Credit Agreement) pursuant to, and
upon the terms and subject to the conditions specified in,
the Facility B Credit Agreement.  The Borrower desires to
secure the prompt and complete payment, observance and
performance of all of its obligations of every kind and
nature now or hereafter incurred, existing or created under
or in respect of the Loan Documents (as defined in the
Facility A Credit Agreement which Loan Documents are herein
referred to as the "Facility A Loan Documents") and the Loan
Documents (as defined in the Facility B Credit Agreement
which Loan Documents are herein referred to as the "Facility
B Loan Documents" and, together with the "Facility A Loan
Documents", the "Loan Documents"), as such obligations may be
amended, increased, modified, renewed, refinanced, refunded
or extended from time to time, (collectively, the
"Obligations").

         III.                   The obligations of the
Lenders to make loans under the Credit Agreements and the
Issuing Bank to issue Letters of Credit under the Facility B
Credit Agreement and the Facility B Lenders to participate
therein are conditioned upon, among other things, the
execution and delivery by the Borrower of this Agreement.

         In consideration of the premises
and in order to induce the Secured Party and the Lenders to
enter into the Credit Agreements and make the loans under the
Credit Agreements and the Issuing Bank to issue the Letters
of Credit under the Facility B Credit Agreement and the
Facility B Lenders to participate therein, the Borrower
hereby agrees with the Secured Party for its benefit and for
the ratable benefit of the Lenders as follows:

A.Grant of Security

                                To secure the prompt and complete
payment, observance and performance of all of the
Obligations, the Borrower hereby assigns and pledges to the
Secured Party, for its benefit, for the benefit of the
Agents, for the benefit of the Issuing Bank and for the
ratable benefit of the Lenders, and hereby grants to the
Secured Party, for its benefit, for the benefit of the
Agents, for the benefit of the Issuing Bank and for the
ratable benefit of the Lenders, a continuing first priority
security interest in all of the Borrower's right, title and
interest in and to all promissory notes and other debt
instruments evidencing Indebtedness owed by any of the
Borrower's Operating Subsidiaries to the Borrower (each, an
"Intercompany Note"), in each case whether now owned or
hereafter acquired, including, without limitation, the
Intercompany Notes owned on the date hereof as set forth on
Schedule 1, and all interest and other payments thereunder
and instruments and other Property from time to time
delivered in respect thereof or in exchange therefor, and all
additions thereto, substitutions and replacements therefor,
and the products and Proceeds thereof (the "Collateral").

                                As used herein, the term
"Proceeds" shall have the meaning as set forth in Article 9
of the New York Uniform Commercial Code (as the same is
amended from time to time, the "UCC") and, to the extent not
otherwise included, shall include, but not be limited to, a.
distributions payable in Property; b. any and all proceeds of
causes and rights of action or settlements thereof, escrowed
amounts or Property, judicial and arbitration judgments and
awards, payable to the Borrower from or in respect of any
Person from time to time; c. all claims of the Borrower for
losses or damages arising out of or relating to or for any
breach of any agreements, covenants, representations or
warranties or any default whether or not with respect to or
under any of the foregoing Collateral (without limiting any
direct or independent rights of the Secured Party or any
Lender with respect to the Collateral); and d. any and all
other amounts from time to time paid or payable under or in
connection with the Collateral.

         B.                     Delivery of Collateral

                                All notes and other instruments
representing or evidencing the Collateral at any time owned
or acquired by the Borrower shall be delivered to and held by
or on behalf of the Secured Party pursuant hereto and shall
be in suitable form for transfer by delivery, and shall bear
appropriate indorsements or shall be accompanied by duly
executed instruments of transfer or assignments in blank, all
in form and substance satisfactory to the Secured Party. 
Upon the occurrence and during the continuance of an Event of
Default, the Secured Party shall have the right, at any time
in its discretion and without notice to the Borrower, to
transfer to or to register in the name of the Secured Party
or any of its nominees any or all of the Collateral.  In
addition, upon the occurrence and during the continuance of
an Event of Default, the Secured Party shall have the right
at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.

         C.                     Representations and Warranties

The Borrower represents and warrants as follows:

                      1.    The Borrower is the legal and
beneficial owner of the Collateral, free and clear of all
Liens other than the Lien created by this Agreement.

                         2.   This Agreement creates a valid
security interest in the Collateral, securing the payment of
the Obligations. The delivery and pledge of the Collateral
pursuant to this Agreement create a valid and perfected first
priority security interest in the Collateral securing the
payment of the Obligations.

                           3.    The Intercompany Notes listed
on Schedule 1 constitute all of the Intercompany Notes held
by the Borrower on the date of this Agreement.  To the best
of the Borrower's knowledge, each of such Intercompany Notes
has been duly authorized, issued and delivered, and
constitutes the legal, valid, binding and enforceable
obligations of the respective makers thereof.

         D.                     Further Assurances

                            1.  The Borrower agrees that from
time to time, at its expense, the Borrower shall promptly
execute and deliver all further instruments and documents,
and take all further action, that the Secured Party may
reasonably request, in order to perfect and protect any
security interests granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.  Without limiting
the generality of the foregoing, the Borrower shall promptly
execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices,
and promptly take such other action as the Secured Party may
reasonably request, in order to perfect and preserve the
security interests granted hereby.

                                2.     The Borrower hereby authorizes
the Secured Party to file one or more financing or
continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of
the Borrower where permitted by law.  The Secured Party shall
provide the Borrower with a copy of any such statement or
amendment, provided that no failure to do so shall affect the
rights of the Secured Party hereunder, result in any
liability of the Secured Party or the Lenders to the Borrower
or in any way affect the validity of such filing.  A
photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where
permitted by law.

                                3.     The Borrower shall furnish to
the Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such
other reports in connection with the Collateral as the
Secured Party may reasonably request, all in reasonable
detail.

E.  Certain Rights as to the Collateral

                            4.        So long as no Event of Default
shall have occurred and be continuing:

                             a.   The Borrower shall be entitled
to exercise any and all consensual rights pertaining to the
Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement and the Credit
Agreements, provided, however, that the Borrower shall not
exercise or refrain from exercising any such right without
the consent of the Secured Party if such action or inaction
would have a material adverse effect on the fair market value
of any part of the Collateral or the validity, priority or
perfection of the security interests granted hereby or the
remedies of the Secured Party hereunder.

                     b.   The Borrower shall be entitled
to receive and retain any and all principal, interest and
other distributions paid in respect of the Collateral to the
extent not prohibited by this Agreement, provided, however,
that any and all principal, interest and other distributions
paid or payable other than in cash in respect of, and
instruments and other Property received, receivable or
otherwise distributed in respect of, or in exchange for,
Collateral, shall forthwith be delivered to the Secured Party
to be held as Collateral and shall, if received by the
Borrower, be received in trust for the benefit of the Secured
Party, be segregated from the other Property of the Borrower,
and be forthwith delivered to the Secured Party, as
Collateral in the same form as so received (with any
necessary indorsement).

                     c.   The Secured Party shall execute
and deliver (or cause to be executed and delivered) to the
Borrower all instruments as the Borrower may reasonably
request for the purpose of enabling the Borrower to exercise
the rights which it is entitled to exercise pursuant to
clause (i) above and to receive the principal or interest
payments, or other distributions which it is authorized to
receive and retain pursuant to clause (ii) above.

        5.                              Upon the occurrence and during
the continuance of an Event of Default and at the Secured
Party's option and following written notice by the Secured
Party to the relevant Borrower:

                            a.   All rights of
the Borrower to
exercise the consensual rights which it would otherwise be
entitled to exercise pursuant to Section 5(a)(i) and to
receive the principal, and interest payments and other
distributions which it would otherwise be authorized to
receive and retain pursuant to Section 5(a)(ii) shall cease,
and all such rights shall thereupon become vested in the
Secured Party, who shall thereupon have the sole right to
exercise such consensual rights and to receive and hold as
Collateral such principal or interest payments and
distributions.

                         b.   All principal and interest
payments and other distributions which are received by the
Borrower contrary to the provisions of Section 5(b)(i) shall
be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of the Borrower and
shall be forthwith paid over to the Secured Party as
Collateral in the same form as so received (with any
necessary indorsement).

                        6.                     In the event that all or any
part of the instruments constituting the Collateral are lost,
destroyed or wrongfully taken while such instruments are in
the possession of the Secured Party, the Borrower agrees that
it will cause the delivery of new instruments in place of the
lost, destroyed or wrongfully taken securities or instruments
upon request therefor by the Secured Party without the
necessity of any indemnity bond or  other security other than
the Secured Party's agreement or indemnity therefor customary
for security agreements similar to this Agreement.

         E.                     Other Covenants and Agreements
of the Borrower

                                The Borrower covenants and agrees
that on and after the date hereof until the indefeasible cash
payment in full of the Obligations, unless the Secured Party
shall otherwise consent in writing:

       1.                              Defense of Collateral. It will
defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein
adverse to the interests of the Secured Party.

      2.                              Security Interest. The security
interest granted hereby constitutes and will at all times
constitute a continuing (and so long as the Secured Party has
possession of the Collateral) perfected first priority
security interests in the Collateral.

    3.                              Encumbrances; Filings. It will
not (i) further hypothecate, pledge, encumber, transfer, sell
or otherwise suffer to exist a security interest in, or a
Lien on, the Collateral or any portion thereof in favor of
any Person other than the Secured Party as provided herein,
except for transfers or sales to the extent permitted under
the Credit Agreements or (ii) sign or file or authorize the
signing or filing of any document or instrument perfecting
any Lien on the Collateral. The inclusion of "Proceeds" of
the Collateral under the security interest granted herein
shall not be deemed a consent by the Secured Party to any
sale or other disposition of any Collateral.

         F.                     Secured Party Appointed
Attorney-in-Fact

                                Effective upon the occurrence and
during the continuance of an Event of Default, the Borrower
hereby irrevocably appoints the Secured Party the Borrower's
attorney-in-fact, with full authority in the place and stead
of the Borrower and in the name of the Borrower or otherwise,
from time to time in the Secured Party's discretion, to take
any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:

                            1.   to ask, demand, collect, sue
for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in respect
of any of the Collateral,

                               2.   to file any claims or take any
action or institute any proceedings which the Secured Party
may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the
Secured Party with respect to any of the Collateral, and

                        3.   to receive, indorse and collect
all instruments made payable to the Borrower representing any
principal payment, interest payment or other distribution in
respect of the Collateral or any part thereof and to give
full discharge for the same. The powers granted to the
Secured Party under this Section constitute a power coupled
with an interest which shall survive until all of the
Obligations have been indefeasibly paid in full in cash.

         G.                     The Secured Party May Perform

                                If the Borrower fails to perform
any agreement contained herein, the Secured Party may itself
perform, or cause performance of, such agreement, and the
reasonable expenses of the Secured Party incurred in
connection therewith shall be payable by the Borrower under
Section 12.

         H.                     The Secured Party's Duties

                                The powers conferred on the
Secured Party hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to
exercise any such powers.  Except for the safe custody of any
Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall
have no duty as to any Collateral.  The Secured Party shall
be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that
which the Secured Party accords its own property, it being
understood that the Secured Party shall not be under any
obligation to (i) ascertain or take action with respect to
exchanges, maturities, tenders or other matters relative to
any Collateral, whether the Secured Party or any Lender has
or is deemed to have knowledge of such matters, or (ii) take
any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral, but may do
so at its option, and all reasonable expenses incurred in
connection therewith shall be for the sole account of the
Borrower and shall be added to the Obligations.

         I.                     Events of Default

                                The following shall each
constitute an "Event of Default" hereunder:

                             1.   If any representation or
warranty made herein or in any certificate furnished by the
Borrower in connection with this Agreement shall prove to
have been incorrect or misleading (whether because of
misstatement or omission) in any material respect when made;
or

                                  2.   If the Borrower shall fail to
observe or perform any term, covenant or agreement contained
in Section 6(c) of this Agreement; or

                                  3.   If the Borrower shall fail to
perform or observe any other covenant or agreement on its
part to be performed or observed pursuant to this Agreement
and such failure shall have continued unremedied for a period
of thirty days after the Borrower shall become aware of such
failure; or

                                4.   The occurrence of an Event of
Default under and as defined in either of the Credit
Agreements; or

                                 5.   If the Borrower shall contest
or disavow its obligations under this Agreement or this
Agreement shall not remain in full force and effect.

         J.                     Remedies

                                Upon the occurrence of an Event
of Default or at any time thereafter during the continuance
thereof, the Secured Party may, and upon direction of the
Required Lenders shall, exercise any and all remedies and
other rights provided under this Agreement, including,
without limitation, the following:

                          1.   The Secured Party may exercise
in respect of the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default
under the UCC (whether or not the UCC applies to the
Collateral) and also may without notice, except as specified
below, sell, assign, grant an option or options to purchase
or otherwise dispose of the Collateral or any part thereof at
public or private sale, at any exchange, broker's board or at
any of the Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as
may be commercially reasonable.  The Borrower agrees that, to
the extent notice of sale shall be required by law, at least
five Business Days' notice to the Borrower of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. 
The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. 
The Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.

                                 2.   Any cash held by the Secured
Party as Collateral and all cash proceeds received by the
Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may,
in the discretion of the Secured Party, be held by the
Secured Party as Collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to
the Secured Party pursuant to Section 12) in whole or in part
by the Secured Party, for the ratable benefit of the Lenders,
against all or any part of the Obligations in accordance with
Section 9.1 of each Credit Agreement.  Any surplus of such
cash or cash proceeds held by the Secured Party and remaining
after payment in full of all the Obligations shall be
promptly paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.

                           3.   The Borrower hereby expressly
waives and covenants not to assert any appraisement,
valuation, stay, extension, redemption or similar laws, now
or at any time hereafter in force, which might delay, prevent
or otherwise impede the performance or enforcement of this
Agreement.

         K.                     No Segregation of Moneys; No
Interest

                                No moneys or any other Property
received by the Secured Party hereunder need be segregated in
any manner except to the extent required by law, and any such
moneys or other Property may be deposited under such general
conditions as may be prescribed by law applicable to the
Secured Party, and neither the Secured Party nor any Lender
shall be liable for any interest thereon.

         L.                     Notices

                                All notices and other
communications provided for hereunder shall be given in the
manner and to the addresses set forth in Section 11.2 of the
Facility A Credit Agreement.  Any notice given to the Secured
Party as Secured Party thereunder shall be deemed to have
been given to The Bank of New York as Agent under the
Facility B Credit Agreement.

         M.                     Continuing Security Interest;
Transfer of Notes

                                This Agreement shall create a
continuing security interest in the Collateral and shall (i)
remain in full force and effect until the indefeasible cash
payment in full of the Obligations and the termination of the
Credit Agreement, (ii) be binding upon the Borrower, its
successors and assigns and (iii) inure, together with the
rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party, any successor to Secured Party
as agent and the ratable benefit of the Lenders.  Except to
the extent not permitted by Section 11.7 of the Credit
Agreements, any Lender may assign or otherwise transfer the
notes held by it under the Credit Agreements to any other
Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such
Lender herein or otherwise.  Nothing set forth herein or in
any other Loan Document is intended or shall be construed to
give any other Person any right, remedy or claim under, to or
in respect of this Agreement, any other Loan Document, or any
Collateral.  The Borrower's successors and assigns shall
include, without limitation, a receiver, trustee or debtor-
in-possession thereof or therefor.

         N.                     Other Provisions

         1.                              This Agreement is the "Pledge
 Agreement" referred to in each of the Credit Agreements. 
Each of the Secured Party and the Borrower acknowledges that
certain provisions of each of the Credit Agreements,
including, without limitation, Sections 1.2 (Other
Definitional Provisions), 11.1 (Amendments and Waivers), 11.3
(No Waiver; Cumulative Remedies), 11.4 (Survival of
Representations and Warranties), 11.7 (Assignments and
Participations), 11.8 (Counterparts), 11.12 (Headings
Descriptive), 11.13 (Severability), 11.14 (Integration),
11.15 (Consent to Jurisdiction), 11.16 (Service of Process),
11.17 (No Limitation on Service or Suit) and 11.18 (WAIVER OF
TRIAL BY JURY) thereof, are made applicable to this Agreement
and all such provisions are incorporated by reference herein
as if fully set forth herein.

          2.                              All Schedules hereto shall be
deemed to be a part hereof. 

       3.                              Each and every right, remedy
and power granted to the Secured Party hereunder or allowed
at law or by any other agreement shall be cumulative and not
exclusive, and may be exercised by the Secured Party from
time to time.

         4.                              This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York without regard to conflict of laws rules,
except to the extent that the validity or perfection of the
security interest hereunder, or remedies hereunder, in
respect of any particular Collateral are governed by the laws
of a jurisdiction other than the State of New York.  Unless
otherwise defined herein, terms used in Articles 8 and 9 of
the UCC are used herein as therein defined.

         The parties hereto have caused
this Pledge Agreement to be duly executed and delivered by
its officer thereunto duly authorized as of the date first
above written.

                          ATLANTIC ENERGY, INC.



                          By:  
                          Name:                         
                          Title:                        


                          THE BANK OF NEW YORK,
                           as Collateral Agent for the
                           Facility A Lenders under the
                           Facility A Credit Agreement
                           and the Facility B Lenders
                           under the Facility B Credit
                           Agreement


                          By:  
                          Name:                         
                          Title:                        

                              Schedule 1
                       to the Pledge Agreement,
                      Dated as of _____ __, 1995
  
  
                      LIST OF INTERCOMPANY NOTES
  
  
  Maker                                       Date
  
  Atlantic Generation, Inc.                   _____ __, 1995
  
  
  ATE Investment, Inc.                        _____ __, 1995
  
  
  Atlantic Thermal Systems, Inc.              _____ __, 1995
  
  
  Atlantic Jersey Thermal Systems, Inc.       _____ __, 1995
  
  
  Atlantic Energy Technologies, Inc.          _____ __, 1995
    
                       ATLANTIC ENERGY EXHIBIT M
  
                       FORM OF INTERCOMPANY NOTE
  
                             (Facility A)
  
  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
  1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR
  QUALIFIED UNDER ANY SECURITIES OR BLUE SKY LAWS.  IT MAY NOT
  BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
  IN A TRANSACTION COMPLYING WITH OR EXEMPT FROM THE
  REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
  ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE.
  
  
                                         ____________ __, 199_
  
  
      FOR VALUE RECEIVED, the undersigned, _________________,
  a __________ corporation (the "Borrower"), hereby promises to
  pay to the order of ATLANTIC ENERGY, INC. (the "Company"), at
  the office of the Company, upon demand by the Company, the
  aggregate unpaid principal amount of all loans made by the
  Company to the Borrower from time to time as reflected on the
  attached Schedule hereto, pursuant to an intercompany account
  or otherwise, in lawful money of the United States of America
  in same day funds, and to pay interest from the date set
  forth on the attached Schedule on which principal is advanced
  hereunder on the unpaid principal amount from time to time
  outstanding, in like funds, at said office, with each
  repayment of principal hereunder, at a rate per annum equal
  to 1/4% above the borrowing rate of the Company for amounts
  advanced hereunder and provided to the Borrower by the
  Company on the date of any such advance.  All interest
  hereunder shall be calculated on the basis of the actual
  number of days that principal is outstanding over a year of
  365 or 366 days, as appropriate.
  
      The unpaid principal amount hereof may be declared due
  and payable by the Company, whereupon the same shall
  immediately become due and payable, upon the occurrence or at
  any time during the continuance of an Event of Default under,
  and as defined in, either of the Revolving Credit Agreements
  (Facility A or Facility B) among the Company, the Lenders
  parties thereto, and The Bank of New York, as Agent.
  
      The Borrower hereby waives diligence, presentment, de-
  mand, protest and notice of any kind whatsoever.  The
  nonexercise by the holder of any of its rights hereunder in
  any particular instance shall not constitute a waiver thereof
  in that or any subsequent instance.
  
      All borrowings evidenced by this Intercompany Note and
  all payments and prepayments of the principal hereof and
  interest hereon and the respective dates thereof shall be
  endorsed by the holder hereof on the schedule attached hereto
  and made a part hereof, or on a continuation thereof which
  shall be attached hereto and made a part hereof, or otherwise
  recorded by such holder in its internal records; provided,
  however, that any failure of the holder hereof to make such a
  notation or any error in such notation shall not in any
  manner affect the obligation of the Borrower to make payments
  of principal and interest in accordance with the terms of
  this Intercompany Note.
  
      NEITHER THE BORROWER NOR ANY OTHER PERSONS LIABLE FOR
  THE INDEBTEDNESS TO THE COMPANY, NOR ANY ASSIGNEE, SURVIVOR,
  HEIR OR PERSONAL REPRESENTATIVE OF THE BORROWER OR ANY SUCH
  OTHER PERSON OR ENTITY SHALL SEEK A JURY TRIAL IN ANY
  LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
  PROCEDURE BASED UPON OR ARISING OUT OF THIS INTERCOMPANY
  NOTE, ANY RELATED INSTRUMENT OR AGREEMENT, ANY COLLATERAL FOR
  THE PAYMENT HEREOF OR THE DEALINGS OR THE RELATIONSHIP
  BETWEEN THE COMPANY AND SUCH PERSONS OR ENTITIES, OR ANY OF
  THEM.  NEITHER THE BORROWER NOR ANY SUCH PERSON OR ENTITY
  WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY
  TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY
  TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THE PROVISIONS OF
  THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BORROWER AND
  THE COMPANY AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO
  EXCEPTIONS.  THE BORROWER HAS NOT IN ANY WAY AGREED WITH OR
  REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
  PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
  
      THIS INTERCOMPANY NOTE SHALL BE CONSTRUED IN ACCORDANCE
  WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY AND
  ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
  
  
                               [BORROWER]
  
  
  
                               By:                       
                               Name:                     
                               Title:                    
  
    
                     SCHEDULE TO INTERCOMPANY NOTE
  
                              [BORROWER]
  
                       LOANS BALANCE OUTSTANDING
                         INTERCOMPANY ACCOUNT
  
                                              Loan Balance
  Date          Advance        Repayment           Outstanding
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
  _____    _______        _________           ____________
  
                              ENDORSEMENT
  
  
       The undersigned, ATLANTIC ENERGY, INC. a New Jersey
  corporation (the "Company"), hereby assigns, transfers and
  endorses to and makes payable to the order of The Bank of New
  York, as collateral agent for itself in its capacity as Agent
  and the Lenders under and as defined in each of the (i)
  Revolving Credit Agreement (Facility A), dated as of
  September 28, 1995, among the Borrower, the Lenders party
  thereto and the Agent (as the same may be amended,
  supplemented or otherwise modified from time to time) and
  (ii) Revolving Credit Agreement (Facility B), dated as of
  September 28, 1995, among the Borrower, the Lenders party
  thereto and the Agent (as the same may be amended,
  supplemented or otherwise modified from time to time), that
  certain Intercompany Note, dated ___________ __, ____, made
  by ___________________ to the order of the Company.  This
  endorsement is made with recourse to the undersigned for
  payment or collection.
  
  DATED:  __________ __, 199_
  
  

                                                                                
 ATLANTIC ENERGY, INC.
  
  
  
                               By:                        
                               Name:                      
                               Title:                     
  
    
                       ATLANTIC ENERGY EXHIBIT N
  
                  MEMORANDUM OF OPINIONS TO BE GIVEN
                      BY COUNSEL TO THE BORROWER
  
  
  
      In connection with the (i) Revolving Credit Agreement
  (Facility A) (the "Facility A Agreement"), dated as of
  September 28, 1995, by and among Atlantic Energy, Inc.  (the
  "Borrower"), the Lenders party thereto (the "Facility A
  Lenders") and The Bank of New York, as Agent (the "Facility A
  Agent") and (ii) Revolving Credit Agreement (Facility B) (the
  "Facility B Agreement" and, together with the Facility A
  Agreement, the "Agreements"), dated as of September 28, 1995,
  by and among the Borrower, the Lenders party thereto (the
  "Facility B Lenders"), The Bank of New York, as Issuing Bank
  and The Bank of New York, as Agent (the "Facility B Agent"),
  set forth below is the substance of the opinions to be
  included in the opinion letters referred to in Section 5.8 of
  the Facility B Agreement and the corresponding provision of
  the Facility A Agreement (collectively, the "Opinions"). 
  
           The opinion letters should be addressed to "The
  Bank of New York, as Agent and as Issuing Bank and the
  Lenders under the Credit Agreements referred to below".  It
  should specifically authorize Special Counsel's reliance
  thereon.
  
           Capitalized terms used in the Opinions and which
  are not otherwise defined therein shall have the respective
  meanings ascribed thereto in the Agreements.  For purposes
  of the opinions set forth below,  the term "Transaction
  Documents" means, collectively, the "Loan Documents" under
  and as defined in each of the Agreements and the term "Notes"
  means, collectively, the "Notes" under and as defined in each
  of the Agreements.
    
Opinions:
  
           1.   The Borrower has only the Subsidiaries set
  forth on Schedule 4.1 to each Agreement.  The shares of each
  Subsidiary are duly authorized, validly issued, fully paid
  and nonassessable and are owned free and clear of any Liens.
  
           2.   Each of the Borrower and its Subsidiaries is
  duly organized or formed and validly existing in good
  standing under the laws of the jurisdiction of its in-
  corporation or formation, has all requisite power and au-
  thority to own its Property and to carry on its business as
  now conducted, and is in good standing and authorized to do
  business as a foreign corporation in each jurisdiction in
  which the nature of the business conducted therein or the
  Property owned therein makes such qualification necessary,
  except where such failure to qualify, singly or in the
  aggregate, could not reasonably be expected to have a
  Material Adverse Effect.
  
           3.   The Borrower has full legal power and
  authority and has taken all necessary actions, including,
  without limitation, any necessary stockholder action, to
  enter into, execute, deliver and perform the terms of the
  Transaction Documents and to make the borrowings contemplated
  thereby and by the Notes, to execute, deliver and carry out
  the terms of the Notes and to incur the obligations provided
  for therein, all of which have been duly authorized by all
  proper and necessary corporate or other applicable action and
  are in full compliance with its charter and by-laws or its
  other organization documents. 
  
           4.   Each of the Transaction Documents (other than
  the Notes) constitutes, and the Notes, when issued and
  delivered pursuant to the applicable Agreement for value
  received, will constitute, the valid and legally binding
  obligations of the Borrower, enforceable in accordance with
  its respective terms.
  
           5.   To the best of counsel's knowledge after due
  inquiry, except as set forth in the Financial Statements,
  there are no actions, suits or proceedings at law or in
  equity or by or before any Governmental Authority (whether or
  not purportedly on behalf of the Borrower or any of its
  Subsidiaries) pending or threatened against the Borrower or
  any of its Subsidiaries or any of their respective Properties
  or rights, which (i) reasonably may be expected to have a
  Material Adverse Effect, or (ii) call into question the
  validity or enforceability of any of the Transaction Docu-
  ments.
  
           6.   Except for information filings required to be
  made in the ordinary course of business which are not a
  condition to the Borrower's performance under the Transaction
  Documents, no consent, authorization or approval of, filing
  with, notice to, or exemption by, stockholders, any
  Governmental Authority or any other Person is required to
  authorize, or is required in connection with the execution,
  delivery and performance of the Transaction Documents or is
  required as a condition to the validity or enforceability of
  the Transaction Documents.
  
           7.   To the best of counsel's knowledge after due
  inquiry, neither the Borrower nor any of its Subsidiaries is
  in default (x) under any mortgage, indenture, contract or
  agreement to which it is a party or by which it or any of its
  Property is bound or (y) with respect to any judgment, order,
  writ, injunction, decree or decision of any Governmental
  Authority, the effect of which default could reasonably be
  expected to have a Material Adverse Effect.
  
           8.   The execution, delivery or carrying out of the
  terms of the Transaction Documents will not constitute a
  default under, or require the mandatory repayment of, or
  result in the creation or imposition of, or obligation to
  create, any Lien upon any Property of the Borrower or any of
  its Subsidiaries pursuant to the terms of, any such mortgage,
  indenture, contract or agreement. 
  
           9.   To the best of counsel's knowledge after due
  inquiry, each of the Borrower and ACE possesses or has the
  right to use all franchises, licenses, privileges and other
  rights as are material and necessary for the conduct of its
  business, and with respect to which it is in compliance, with
  no known conflict with the valid rights of others which could
  reasonably be expected to have a Material Adverse Effect.
  
           10.  The Borrower is not an "investment company" or
  a company "controlled" by an "investment company" as defined
  in, or is otherwise subject to regulation under, the
  Investment Company Act of 1940, as amended.
  
           11.  The Borrower and each of its Subsidiaries are
  exempt from the provisions of the Public Utility Holding
  Company Act of 1935, as amended, except Section 9(a)(2)
  thereof, pursuant to Rule 2 of the General Rules and
  Regulations of the SEC under said Act.
  
           12.  To the best of counsel's knowledge after due
  inquiry, neither the Borrower nor any of its Subsidiaries is
  engaged principally, or as one of its important activities,
  in the business of extending credit for the purpose of
  purchasing or carrying any Margin Stock.  If used in
  accordance with Section 2.15 of each Agreement, no part of
  the proceeds of the Loans will be used, directly or indi-
  rectly, for a purpose which violates any law, rule or regula-
  tion of any Governmental Authority, including without limita-
  tion the provisions of Regulations G, T, U or X of the Board
  of Governors of the Federal Reserve System, as amended.  If
  used in accordance with Section 2.15 of each Agreement, no
  part of the proceeds of the Loans will be used, directly or
  indirectly, to purchase or carry Margin Stock or to extend
  credit to others for the purpose of purchasing or carrying
  Margin Stock.
  
           13.  The Pledge Agreement is effective to create in
  favor of The Bank of New York, as collateral agent for each
  of The Bank of New York, as Agent under the Facility A
  Agreement, The Bank of New York, as Agent under the Facility
  B Agreement, The Bank of New York, Issuing Bank under the
  Facility B Agreement and each of the Lenders under the
  Agreements in all of the Borrower's right, title and interest
  in and to all Intercompany Notes (as defined in the Pledge
  Agreement) when issued and delivered, provided that such
  Intercompany Notes remain in the continued possession of such
  collateral agent.
  
      14.  To the best of counsel's knowledge after due
  inquiry, no indenture, certificate of designation for pre-
  ferred Stock, agreement or instrument to which the Borrower
  or ACE is a party, prohibits or restrains, directly or indi-
  rectly, the payment of dividends or other payments by ACE to
  the Borrower except for the terms of the ACE Preferred Stock
  as in existence on the Effective Date.
    
                       ATLANTIC ENERGY EXHIBIT O
  
                  FORM OF OPINION OF SPECIAL COUNSEL
  
  
                                              _____ __, 1995
  
  
  The Bank of New York,
  as Agent and the other
  Lenders under the Credit
  Agreements referred to below
  
  
  Ladies and Gentlemen:
  
  
      We have acted as Special Counsel to (1) The Bank of New
  York, as Agent (in such capacity, the "Facility A Agent") in
  connection with the Revolving Credit Agreement (Facility A),
  dated as of September 28, 1995, by and among Atlantic Energy,
  Inc. (the "Borrower"), the Lenders party thereto and the
  Facility A Agent (the "Facility A Agreement") and (2) The
  Bank of New York, as Agent (in such capacity, the "Facility B
  Agent") in connection with the Revolving Credit Agreement
  (Facility B), dated as of September 28, 1995, by and among
  the Borrower, the Lenders party thereto and the Facility B
  Agent (the "Facility B Agreement" and, together with the
  Facility A Agreement, the "Agreements").  Capitalized terms
  used herein which are defined in the Facility A Agreement
  shall have the meanings therein defined, unless the context
  hereof otherwise requires.
      
      We have examined originals or copies certified to our
  satisfaction of the documents required to be delivered pursu-
  ant to the provisions of Sections 5 and 6 of each of the
  Agreements.  In conducting such examination, we have assumed
  the genuineness of all signatures, the authenticity of all
  documents submitted to us as originals, and the conformity to
  originals of all documents submitted to us as copies.
  
      Based upon the foregoing examination, and relying with
  your permission upon the opinions of Ballard Spahr Andrews &
  Ingersoll, special counsel to the Borrower, and James E.
  Franklin II, Esq., General Counsel of the Borrower, we are of
  the opinion that all legal preconditions to the making of the
  first Loans under and as defined in each of the Agreements
  and the issuance of the first Letter of Credit under and as
  defined in the Facility B Agreement have been satisfactorily met.
  
      This opinion is rendered solely for your benefit in
  connection with the transactions referred to herein and may
  not be relied upon by any other Person.
  
      In rendering the foregoing opinion, we express no
  opinion as to laws other than the laws of the State of New
  York and the federal laws of the United States of America.
  
  
                                    Very truly yours,
  
                                    
                                    EMMET, MARVIN & MARTIN,
                                      LLP
    
                       ATLANTIC ENERGY EXHIBIT P
  
              FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
  
  
      This Assignment and Acceptance Agreement is made and en-
  tered into as of _____ __, 19__, by and between ____________
  (the "Assignor") and ____________ (the "Assignee").
  
                            R E C I T A L S
  
      (i)  All capitalized terms not otherwise defined herein
  which are used herein shall have the meanings set forth in the
  Facility A Credit Agreement (as defined below).
  
      (ii) The Assignor, certain other lenders (together with
  any prior assignees, the "Facility A Lenders") and The Bank of
  New York, as agent (in such capacity the "Facility A Agent"),
  are parties to that certain Revolving Credit Agreement
  (Facility A), dated as of September 28, 1995 (the "Facility A
  Credit Agreement") with ATLANTIC ENERGY, INC., a New Jersey
  corporation (the "Borrower").  Pursuant to the Facility A
  Credit Agreement, the Facility A Lenders (i) agreed to make
  Revolving Credit Loans (the "Facility A Revolving Credit
  Loans") under the Aggregate Commitments (as defined in the
  Facility A Credit Agreement, which Aggregate Commitments are
  hereinafter referred to as the "Aggregate Facility A
  Commitments") in the aggregate amount of $35,000,000 and (ii)
  may, in their sole discretion and upon the Borrower's request,
  make Competitive Bid Loans to the Borrower from time to time
  (the "Facility A Competitive Bid Loans" and, together with the
  Facility A Revolving Credit Loans, the "Facility A Loans").
  
      (iii)     The amount of the Assignor's Facility A
  Commitment (without giving effect to the assignment effected
  hereby or to other assignments thereof which have not yet be-
  come effective) is specified in Item 1 of Schedule 1 hereto. 
  The outstanding principal amount of the Assignor's Facility A
  Loans (without giving effect to the assignment effected hereby
  or to other assignments thereof which have not yet become
  effective) is specified in Item 2 of Schedule 1 hereto. 
  
      (iv) The Assignor, certain other lenders (together with
  any prior assignees, the "Facility B Lenders") and The Bank of
  New York, as agent (in such capacity the "Facility B Agent"
  and, together with it in its capacity as Facility A Agent, the
  "Agent"), are parties to that certain Revolving Credit
  Agreement (Facility B), dated as of September 28, 1995 (the
  "Facility B Credit Agreement") with the Borrower.  Pursuant to
  the Facility B Credit Agreement, the Facility B Lenders (i)
  agreed to make Revolving Credit Loans (the "Facility B
  Revolving Credit Loans") under the Aggregate Commitments (as
  defined in the Facility B Credit Agreement, which Commitments
  are hereinafter referred to as the "Aggregate Facility B
  Commitments" and, together with the Aggregate Facility A Com-
  mitments, the "Aggregate Commitments") in the aggregate amount
  of $40,000,000 and to participate in Letters of Credit issued
  by the Issuing Bank (under and as defined in the Facility B
  Credit Agreement) and (ii) may, in their sole discretion and
  upon the Borrowers' request make Competitive Bid Loans to the
  Borrower from time to time (the "Facility B Competitive Bid
  Loans" and, together with the Facility B Revolving Credit
  Loans, the "Facility B Loans").
  
      (v)  The amount of the Assignor's Facility B Commitment,
  including its Letter of Credit Commitment (as defined in the
  Facility B Credit Agreement and without giving effect to the
  assignment effected hereby or to other assignments thereof
  which have not yet become effective), is specified in Item 1 of
  Schedule 1 hereto.  The outstanding principal amount of the
  Assignor's Facility B Loans, including its Letter of Credit
  Exposure (as defined in the Facility B Credit Agreement and
  without giving effect to the assignment effected hereby or to
  other assignments thereof which have not yet become effective),
  is specified in Item 2 of Schedule 1 hereto. 
  
      (vi) The Assignor wishes to sell and assign to the As-
  signee, and the Assignee wishes to purchase and assume from the
  Assignor, (i) the portion of the Assignor's Facility A
  Commitment and Facility B Commitment specified in Item 3 of
  Schedule 1 hereto (the "Assigned Commitment") and (ii) the
  portion of the Assignor's Facility A Revolving Credit Loans,
  Facility B Revolving Credit Loans and/or the portion of the
  Assignor's Facility A Competitive Bid Loans or Facility B
  Competitive Bid Loans specified in Item 5 of Schedule 1 hereto
  (the "Assigned Loans").
  
      The parties agree as follows:
  
      (a)  Assignment
  
           Subject to the terms and conditions set forth herein
  and in the Credit Agreements, the Assignor hereby sells and
  assigns to the Assignee, and the Assignee hereby purchases and
  assumes from the Assignor, without recourse, on the date set
  forth above (the "Assignment Date") (i) all right, title and
  interest of the Assignor to the Assigned Loans and (ii) all
  obligations of the Assignor under the Credit Agreements with
  respect to the Assigned Commitment.  As full consideration for
  the sale of the Assigned Loans and the Assigned Commitment, the
  Assignee shall pay to the Assignor on the Assignment Date the
  principal amount of the Assigned Loans (the "Purchase Price")
  [and the Assignor shall pay to the Assignee on the Assignment
  Date the fee specified in Item 6 of Schedule 1 hereto].  It is
  understood by the parties hereto that each sale, assignment,
  transfer or negotiation of rights under the Credit Agreements
  shall be of an equal percentage of such Lenders interest under
  in each of the Credit Agreements, it being the intention that
  at all times during which the Facility A Credit Agreement and
  Facility B Credit Agreement are both in effect, each Facility
  A Lender shall be a Facility B Lender and its Commitment
  Percentage in each thereof shall be identical.
  
      (b)  Representation and Warranties
  
           Each of the Assignor and the Assignee represents and
  warrants to the other that (i) it has full power and legal
  right to execute and deliver this Agreement and to perform the
  provisions of this Agreement; (ii) the execution, delivery and
  performance of this Agreement have been authorized by all
  action, corporate or otherwise, and do not violate any
  provisions of its charter or by-laws or any contractual
  obligations or requirement of law binding on it; and (iii) this
  Agreement constitutes its legal, valid and binding obligation,
  enforceable against it in accordance with its terms.  The
  Assignor further represents that it is the legal and beneficial
  owner of the interest being assigned by it  hereunder and that
  such interest is free and clear of any adverse claim created by
  the Assignor.
  
      (c)  Condition Precedent
  
           The obligations of the Assignor and the Assignee
  hereunder shall be subject to the fulfillment of the conditions
  that the Assignor shall have (i) received payment in full of
  the Purchase Price and (ii) complied with the other applicable
  provisions of Section 11.7 of each Credit Agreement.
  
      (d)  Notice of Assignment
  
           The Assignor agrees to give notice of the
  assignment and assumption of the Assigned Loans and the
  Assigned Commitment to the Agent and the Borrower and hereby
  instructs the Agent and the Borrower to make all payments
  with respect to the Assigned Loans and the Assigned Com-
  mitment directly to the Assignee at the applicable Lending
  Offices specified on Schedule 2 hereto; provided, however,
  that the Borrower and the Agent shall be entitled to continue
  to deal solely and directly with the Assignor in connection
  with the interests so assigned until the Agent, the Issuing
  Bank and the Borrower, to the extent required by Section 11.7
  of each Credit Agreements, shall have received notice of the
  assignment and  shall have consented in writing thereto by
  signing this Agreement and the Agent shall have recorded and
  accepted this Agreement and received the Assignment Fee
  required to be paid pursuant to Section 11.7 of each Credit
  Agreement.  From and after the date (the "Assignment Effec-
  tive Date") on which the Agent shall notify the Borrower and
  the Assignor that the requirements set forth in the foregoing
  sentence shall have occurred and all consents (if any)
  required shall have been given, (i) the Assignee shall be
  deemed to be a party to the Credit Agreements and, to the
  extent that rights and obligations thereunder shall have been
  assigned to the Assignee as provided in such notice of as-
  signment to the Agent, shall have the rights and obligations
  of a Lender under the Credit Agreements, and (ii) the
  Assignee shall be deemed to have appointed 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.  After the Assignment
  Effective Date, the Agent shall make all payments in respect
  of the interest assigned hereby (including payments of prin-
  cipal, interest, fees and other amounts) to the Assignee. 
  The Assignor and Assignee shall make all appropriate adjust-
  ment in payments under the Assigned Loans and the Assigned
  Commitment for periods prior to the Assignment Effective Date
  hereof directly between themselves.  If the Assignee is not a
  United States Person as defined in Section 7701(a)(30) of the
  Code, the Assignee shall deliver herewith the forms required
  by Section 2.10(c) of the Credit Agreements to evidence the
  Assignee's complete exemption from United States withholding
  taxes with respect to payments under the Loan Documents.
  
      (e)  Independent Investigation
  
           The Assignee acknowledges that it is purchasing the
  Assigned Loans and the Assigned Commitments from the Assignor
  totally without recourse and, except as provided in Section 2
  hereof, without representation or warranty.  The Assignee
  further acknowledges that it has made its own independent
  investigation and credit evaluation of the Borrower in
  connection with its purchase of the Assigned Loans and the
  Assigned  Commitments.  Except for the representations or
  warranties set forth in Section 2, the Assignee acknowledges
  that it is not relying on any representation or warranty of
  the Assignor, expressed or implied, including, without
  limitation, any representation or warranty relating to the
  legality, validity, genuineness, enforceability,
  collectibility, interest rate, repayment schedule or accrual
  status of the Assigned Loans or the Assigned Commitment, the
  legality, validity, genuineness or enforceability of any 
  Loan Document, or financial condition or creditworthiness of
  the Borrower or any other Person.  The Assignor has not and
  will not be acting as either the representative, agent or
  trustee of the Assignee with respect to matters arising out
  of or relating to the Credit Agreements or this Agreement. 
  From and after the Assignment Effective Date, except as set
  forth in Section 4 above, the Assignor shall have no rights
  or obligations with respect to the Assigned Loans or the
  Assigned Commitments.
  
      (f)  Consent of the Borrower; Issuance of Notes.
  
           1.   Pursuant to the provisions of Section 11.7 of
  each  Credit Agreement, and to the extent required thereby,
  the Borrower, by signing below, consents to this Agreement
  and to the assignment contemplated herein.  The Borrower
  further agrees to execute and deliver:
  
                (i)  to the Assignee, (a) a Facility A
  Revolving Credit Note, in an aggregate principal amount of
  $____, (b) a Facility B Revolving Credit Note, in an ag-
  gregate principal amount of $____, (c) a Facility A
  Competitive Bid Note and (d) a Facility B Competitive Bid
  Note; and
  
                (ii) to the Assignor, (a) a Facility A
  Revolving Credit Note, in an aggregate principal amount of
  $____, and (b) a Facility B Revolving Credit Note, in an ag-
  gregate principal amount of $____.
  
           2.   Upon receipt of its new Notes as set forth in
  subsection (a)(ii) above, the Assignor shall deliver its
  replaced Facility A Revolving Credit Note and Facility B
  Revolving Credit Note to the Borrower.
  
      (g)  Method of Payment
  
           All payments to be made by either party hereunder
  shall be in funds available at the place of payment on the
  same day and shall be made by wire transfer to the account
  designated by the party to receive payment.
  
      (h)  Integration
  
           This Agreement shall supersede any prior agreement
  or understanding between the parties (other than the Credit
  Agreements) as to the subject matter hereof.
  
      (i)  Counterparts
  
           This Agreement may be executed in any number of
  counterparts, each of which shall be deemed to be an original
  and shall be binding upon both parties, their successors and
  assigns.
  
      (j)  Headings
  
           Section headings have been inserted herein for
  convenience only and shall not be construed to be a part
  hereof.
  
      (k)  Amendments; Waivers
  
           This Agreement may not be amended, changed, waived
  or modified except by a writing executed by the parties
  hereto, and may not be amended, changed, waived or modified
  in any manner inconsistent with Section 11.7 of each  Credit
  Agreement without the prior written consent of the Agent.
  
      (l)  Governing Law.
  
           This Agreement shall be governed by, and construed
  and interpreted in accordance with, the internal laws of the
  State of New York, without regard to principles of conflict
  of laws.
  
    
 IN WITNESS WHEREOF, the parties hereto have caused this
  Assignment and Acceptance Agreement to be duly executed and
  delivered by their proper and duly authorized officers as of
  the day and year first above written.
  
  
                                               , as Assignor
  
  
                                  By:                       
                                  Name:                     
                                  Title:                    
  
  
                                               , as Assignee
  
  
                                  By:                       
                                  Name:                     
                                  Title:                    
  
  
  Consented to:
  
  ATLANTIC ENERGY, INC.
  
  
  By:                         
  Name:                       
  Title:                      
  
  
  Accepted:
  
  THE BANK OF NEW YORK, as Agent
  
  
  By:                         
  Name:                       
  Title:                      
  
  
  THE BANK OF NEW YORK, as Issuing Bank
  
  
  By:                         
  Name:                       
  Title:                      
  
                              SCHEDULE 1
  
                                  TO
  
                  ASSIGNMENT AND ACCEPTANCE AGREEMENT
  
                                between
                  _____________________, as Assignor
                                  and
                  _____________________, as Assignee
  
                              relating to
  
              Revolving Credit Agreement (Facility A) and
               Revolving Credit Agreement (Facility B),
                  each dated as of September 28, 1995
                                 among
                        ATLANTIC ENERGY, INC.,
                 the respective Lenders party thereto,
                                  and
                    The Bank of New York, as Agent,
  
  
  Item 1.  Assignor's Commitments*
  
      (a)  Facility A Commitment              $___________
      (b)  Facility B Commitment              $___________
  
  
  Item 2.  Assignor's Loans:                  
  
      (a)  Facility A Revolving
           Credit Loans* consisting
           of:
                ABR Advances                       $___________
           Eurodollar Advances                $___________
           Letter of Credit Exposure          $___________
  
  *   Without giving effect to the assisgnment contemplated
  hereby or other assignments which have not as yet become
    efective.
      (b)  Facility A Competitive
           Bid Loans* consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
  
      (c)  Facility B Revolving
           Credit Loans* consisting
           of:
           ABR Advances                       $___________
           Eurodollar Advances                $___________
  
      (d)  Facility B Competitive
           Bid Loans* consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___     $___________
           Rate: __% Interest Period: ___     $___________
           Rate: __% Interest Period: ___     $___________
  
  
  Item 3.  Amount of Assigned Commitments:
  
      (a)  Assigned Facility A Revolving
           Credit Commitment                  $___________
  
      (b)  Assigned Facility B Revolving
           Credit Commitment                  $___________
  
  Item 4.  Percentage of Assigned Commitments
           in Facility A as a percentage of
           the Aggregate Commitments
           of Facility A of all Facility
           A Lenders                                    ___%
  
           Percentage of Assigned Commitments
           in Facility B as a percentage of
           the Aggregate Commitments
           of Facility B of all Facility
           A Lenders                                    ___%
    
   Item 5. Amount of Assigned Loans:
  
      (a)  Assignor's Facility A Revolving
           Credit Loans consisting
           of:
           ABR Advances                       $___________
           Eurodollar Advances                $___________
           Letter of Credit Exposure          $___________
  
      (b)  Assignor's Facility A Competitive
           Bid Loans consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
  
      (c)  Assignor's Facility B Revolving
           Credit Loans consisting
           of:
           ABR Advances                       $___________
           Eurodollar Advances                $___________
      (d)  Assignor's Facility B Competitive
           Bid Loans consisting of Loans
           at the interest rates and
           for the Interest Periods
           set forth below:
  
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
           Rate: __% Interest Period: ___      $___________
  
  
  Item 6.  Amount of Fee
           payable to Assignee           $___________
  
  
    
                              SCHEDULE 2
  
                                  TO
  
                  ASSIGNMENT AND ACCEPTANCE AGREEMENT
  
                                between
                  _____________________, as Assignor
                                  and
                  _____________________, as Assignee
  
                              relating to
  
              Revolving Credit Agreement (Facility A) and
               Revolving Credit Agreement (Facility B),
                  each dated as of September 28, 1995
                                 among
                        ATLANTIC ENERGY, INC.,
                 the respective Lenders party thereto,
                                  and
                    The Bank of New York, as Agent,
  
  
  DOMESTIC LENDING OFFICE         EURODOLLAR LENDING OFFICE
  
  ____________________            ____________________
  ____________________            ____________________
  ____________________            ____________________
  Attention: ______________       Attention: ______________
  Telephone: (___) ___-____       Telephone: (___) ___-____
  Telecopy:  (___) ___-____       Telecopy:  (___) ___-____
  
  
  ADDRESS FOR NOTICES
  ____________________
  ____________________
  ____________________
  Attention: ______________
  Telephone: (___) ___-____
  Telecopy:  (___) ___-____
    
  
                       ATLANTIC ENERGY EXHIBIT Q
  
             FORM OF GUARANTY AND SUBORDINATION AGREEMENT
  
      Guaranty and Subordination Agreement (as the same may be
  amended, supplemented or otherwise modified from time to
  time, this "Guaranty"), dated as of _____ __, 199_, made by
  _________, a ______ corporation ("         ") and each Person
  which becomes a party hereto pursuant to Section 10 hereof
  (together with _________, the "Guarantors", each, a
  "Guarantor") and ATLANTIC ENERGY, INC., a New Jersey
  corporation (the "Borrower") to THE BANK OF NEW YORK, as
  Agent (in such capacity, the "Agent") [(i)] for itself and
  for the ratable benefit of the Lenders.
  
      A.   The Borrower has entered into two Revolving Credit
  Agreements (Facility A and Facility B), dated as of
  September 28, 1995, among the Borrower, the signatory Lenders
  thereto and the Agent (as the same may be amended, extended,
  increased, modified, refunded or refinanced from time to
  time, the "Credit Agreements").  Section 8.7 of the Credit
  Agreements provides that the Guarantors and the Borrower
  shall execute and deliver this Guaranty in the event that the
  Borrower shall convert or forgive Intercompany Notes of the
  Guarantors.
  
      B.   The Guarantors have derived and expect to continue
  to derive substantial benefit from the Credit Agreements and
  the making of the Loans and the issuance of the Letters of
  Credit thereunder, including, without limitation, the
  lending, directly or indirectly, by the Borrower of a portion
  of the proceeds of the Loans to the Guarantors.  The
  Guarantors acknowledge that the Agent and the Lenders are
  relying on this Guaranty in agreeing to continue to make the
  Loans subsequent to the conversion or forgiveness of an
  Intercompany Note, and that the Agent and the Lenders would
  not do so without the execution and delivery of this
  Guaranty.
  
      C.   Each of the Guarantors wishes to (i) guarantee the
  obligations of the Borrower under the Loan Documents and (ii)
  subordinate, subject to the terms and conditions contained
  herein, any obligations due it from the Borrower to the prior
  indefeasible cash payment in full of the Borrower Obligations
  (as hereinafter defined).
  
      In consideration of the premises and agreements herein
  contained and other good and valuable consideration, the
  receipt and sufficiency of which are hereby acknowledged, and
  in order to induce the Agent and the Lenders to make the
  Loans and to induce BNY to issue the Letters of Credit and
  the Lenders to participate therein, the Borrower and each of
  the Guarantors covenant and agree as follows:
  
      1.  Definitions
  
           Except as otherwise provided herein, capitalized
  terms that are defined in the Credit Agreements and are not
  defined herein shall have the meanings assigned to such terms
  therein.  For purposes hereof, the following terms shall have
  the following meanings:
  
           "Additional Guarantor": each Guarantor which
  becomes a party hereto pursuant to Section 10 hereof.
  
           "Borrower Obligations": all obligations and
  liabilities, whether now existing or hereafter arising, of
  the Borrower under the Loan Documents, whether direct, 
  indirect or contingent, incurred as primary obligor or
  otherwise, secured or unsecured, and whether or not on open
  account, including all principal and interest thereon
  (whether arising or accruing before or after the occurrence
  of any Event of Default set forth in Section 9.1(i) or (j) of
  the Credit Agreements and whether allowed as a claim), and
  all reasonable costs and expenses of the Agent and the
  Lenders in enforcing, preserving and protecting any thereof,
  whether or not suit is instituted (as the same may be
  amended, increased, modified, renewed, refinanced, refunded
  or extended from time to time).
  
           "Consideration": as of any date of determination
  and with respect to each Guarantor, an amount equal to the
  lesser of (a) the total "value" (within the meaning of
  Section 548 of the Bankruptcy Code as in effect on the date
  hereof) given, directly or indirectly, to such Guarantor
  during the period commencing on the date such Guarantor
  became a party to this Guaranty and ending on such date of
  determination, in exchange for its execution and delivery of
  this Guaranty, and (b) the amount of "fair consideration"
  (within the meaning of Article 10 of the New York Debtor
  Creditor Law as in effect on the date hereof) given, directly
  or indirectly, to such Guarantor during the period commencing
  on the date such Guarantor became a party to this Guaranty
  and ending on such date of determination in exchange for its
  execution and delivery of this Guaranty.
  
           "Guarantor Obligations": with respect to each
  Guarantor, all of the obligations and liabilities of such
  Guarantor hereunder, whether fixed, contingent, now existing
  or hereafter arising, created, assumed, incurred or acquired.
  
           "Net Worth": as of any date and with respect to
  each Guarantor, the lesser of the following:
  
                (a)(i) all of such Guarantor's "property, at a
  fair valuation" (within the meaning of Section 101(32) of the
  Bankruptcy Code as in effect on the date hereof) on such
  date, minus (ii) the sum of such Guarantor's "debts" (within
  the meaning of Section 101(12) of the Bankruptcy Code as in
  effect on the date hereof) on such date, or
  
                (b)(i) the "fair salable value of the assets"
  (within the meaning of Article 10 of the New York Debtor
  Creditor Law as in effect on the date hereof) of such
  Guarantor on such date, minus (ii) "the amount that will be
  required to pay such Guarantor's probable liability on its
  existing debts as they become absolute and matured" (as such
  phrase would be construed under Article 10 of the New York
  Debtor Creditor Law as in effect on the date hereof) on such
  date.
  
           "Subordinated Debt": all indebtedness for borrowed
  money and any other obligations, contingent or otherwise, of
  the Borrower to any Guarantor, including, without limitation,
  all amounts, fees and expenses payable by the Borrower to any
  Guarantor in respect thereof, in each case whether
  outstanding on the date of execution of this Guaranty or
  hereafter arising or created.
  
           "Supplement": a Supplement to this Guaranty, duly
  completed, in the form of Annex 1 hereto.
  
      (e)  Guaranty
  
           (A)  Subject to Section 2(b) hereof, each Guarantor
  hereby absolutely, irrevocably and unconditionally guarantees
  the full and prompt payment when due (whether at stated
  maturity, by acceleration or otherwise) of the Borrower
  Obligations.   This Guaranty constitutes a guaranty of
  payment, and neither the Agent nor any Lender shall have any
  obligation to enforce any Loan Document or exercise any right
  or remedy with respect to any collateral security thereunder
  by any action, including, without limitation, making or
  perfecting any claim against any Person or any collateral
  security for any of the Borrower Obligations prior to being
  entitled to the benefits of this Guaranty.  The Agent may, at
  its option, proceed against the Guarantors, or any one or
  more of them, in the first instance to enforce the Guarantor
  Obligations without first proceeding against the Borrower or
  any other Person, and without first resorting to any other
  rights or remedies, as the Agent may deem advisable.  In
  furtherance hereof, if the Agent or any Lender is prevented
  by law from collecting or otherwise hindered from collecting
  or otherwise enforcing any Borrower Obligation in accordance
  with its terms, the Agent or such Lender, as the case may be,
  shall be entitled to receive hereunder from the Guarantors
  after demand therefor, the sums which would have been
  otherwise due had such collection or enforcement not been
  prevented or hindered.
  
           (B)  Notwithstanding anything to the contrary
  contained in this Guaranty, the maximum liability of each
  Guarantor hereunder shall not, as of any date of
  determination, exceed the lesser of (i) the highest amount
  that is valid and enforceable against such Guarantor under
  principles of New York State contract law, and (ii) the sum
  of (1) all Consideration received by such Guarantor as of
  such date of determination, plus (2) the lesser of (A) 95% of
  the Net Worth of such Guarantor on the date such Guarantor
  became a party to this Guaranty after giving effect to (1)
  this Guaranty and (2) the receipt by such Guarantor of any
  Consideration on the date such Guarantor became a party to
  this Guaranty, and (B) 95% of the Net Worth of such Guarantor
  on such date of determination.
  
           (C)  Each Guarantor agrees that its Guarantor
  Obligations may at any time and from time to time exceed the
  maximum liability of such Guarantor hereunder without
  impairing this Guaranty or affecting the rights and remedies
  of the Agent or any Lenders hereunder.
  
           (D)  Subject to the limitations contained in
  Section 2(b), the obligations hereunder of each Guarantor
  shall be joint and several with the obligations hereunder of
  the other Guarantors from time to time party hereto.
  
      (f)  Absolute Obligation
  
           Subject to Section 9, no Guarantor shall be
  released from liability hereunder unless and until the
  Maturity Date shall have occurred and either (a) the Borrower
  Obligations shall have been indefeasibly paid in full, in
  cash, or (b) the Guarantor Obligations of such Guarantor
  shall have been paid in full, in cash.  Each Guarantor
  acknowledges and agrees that (1) neither the Agent nor any
  Lender has made any representation or warranty to such
  Guarantor with respect to the Borrower, its Subsidiaries, any
  Loan Document or any agreement, instrument or document
  executed or delivered in connection therewith or any other
  matter whatsoever, and (2) such Guarantor shall be liable
  hereunder, and such liability shall not be affected or
  impaired, irrespective of (A) the validity or enforceability
  of any Loan Document or any agreement, instrument or document
  executed or delivered in connection therewith, or the
  collectability of any of the Borrower Obligations, (B) the
  preference or priority ranking with respect to any of the
  Borrower Obligations, (C) the existence, validity,
  enforceability or perfection of any security interest or
  collateral security under any Loan Document or the release,
  exchange, substitution or loss or impairment of any such
  security interest or collateral security, (D)  any failure,
  delay, neglect or omission by the Agent or any Lender to
  realize upon any direct or indirect collateral security,
  indebtedness, liability or obligation, any Loan Document or
  any agreement, instrument or document executed or delivered
  in connection therewith, or any of the Borrower Obligations,
  (E) the existence or exercise of any right of set-off by the
  Agent or any Lender, (F) the existence, validity or
  enforceability of any other guaranty with respect to any of
  the Borrower Obligations, the liability of any other Person
  in respect of any of the Borrower Obligations, or the release
  of any such Person or any other guarantor of any of the
  Borrower Obligations, (G) any act or omission of the Agent or
  any Lender in connection with the administration of any Loan
  Document or any of the Borrower Obligations, (H) the
  bankruptcy, insolvency, reorganization or receivership of, or
  any other proceeding for the relief of debtors commenced by
  or against, any Person, (I) the disaffirmance or rejection,
  or the purported disaffirmance or purported rejection, of any
  of the Borrower Obligations, any Loan Document or any
  agreement, instrument or document executed or delivered in
  connection therewith, in any bankruptcy, insolvency,
  reorganization or receivership, or any other proceeding for
  the relief of debtors, relating to any Person, (J) any law,
  regulation or decree now or hereafter in effect which might
  in any manner affect any of the terms or provisions of any
  Loan Document or any agreement, instrument or document
  executed or delivered in connection therewith or any of the
  Borrower Obligations, or which might cause or permit to be
  invoked any alteration in the time, amount, manner or payment
  or performance of any of the Borrower's obligations and
  liabilities (including, without limitation, the Borrower
  Obligations), (K) the merger or consolidation of the Borrower
  into or with any Person, (L) the sale by the Borrower of all
  or any part of its assets, (M) the fact that at any time and
  from time to time none of the Borrower Obligations may be
  outstanding or owing to the Agent or any Lender, (N) any
  amendment or modification of, or supplement to, any Loan
  Document or (O) any other reason or circumstance which might
  otherwise constitute a defense available to or a discharge of
  the Borrower in respect of its obligations or liabilities
  (including, without limitation, the Borrower Obligations) or
  of such Guarantor in respect of any of the Guarantor
  Obligations (other than by the performance in full thereof).
  
      (g)  Representations and Warranties
  
           Each of the Guarantors hereby makes the following
  representations and warranties to the Agent:
  
                (A)  Existence and Power. It is duly organized
  or formed and validly existing in good standing under the
  laws of the jurisdiction of its incorporation or formation,
  has all requisite power and authority to own its Property and
  to carry on its business as now conducted, and is in good
  standing and authorized to do business as a foreign
  corporation in each jurisdiction in which the nature of the
  business conducted therein or the Property owned therein
  makes such qualification necessary, except where such failure
  to qualify could not reasonably be expected to have a
  Material Adverse Effect.
  
                (B)  Authority. It has full legal power and
  authority to enter into, execute, deliver and perform the
  terms of the Loan Documents to which it is a party and the
  transactions contemplated thereby, all of which have been
  duly authorized by all proper and necessary corporate or
  other applicable action and are in full compliance with its
  Certificate of Incorporation or By-Laws or its other
  organization documents. 
  
                (C)  Binding Agreement. The Loan Documents to
  which its is a party constitute its valid and legally binding
  obligations, enforceable in accordance with its terms, except
  as such enforceability may be limited by applicable
  bankruptcy, insolvency, reorganization or other similar laws
  affecting the enforcement of creditors' rights generally.
  
                (D)  Litigation. Except as disclosed in a
  schedule to the Credit Agreements, there are no actions,
  suits or proceedings at law or in equity or by or before any
  Governmental Authority (whether purportedly on its behalf)
  pending or, to its knowledge, threatened against it or any of
  its Property or rights, which (i) if adversely determined,
  could reasonably be expected to have a Material Adverse
  Effect, (ii) call into question the validity or
  enforceability of any of the Loan Documents, (iii) could
  reasonably be expected to result in the rescission,
  termination or cancellation of any material franchise, right,
  license, permit or similar authorization held by it or (iv)
  might materially and adversely affect any of the
  Transactions.
  
                (E)  Required Consents. No consent,
  authorization or approval of, filing with, notice to, or
  exemption by, stockholders, any Governmental Authority or any
  other Person is required to authorize, or is required in
  connection with the execution, delivery and performance of
  the Loan Documents to which it is a party and the
  transactions contemplated thereby, or is required as a
  condition to the validity or enforceability of such Loan
  Documents.
  
                (F)  No Conflicting Agreements. It is not in
  default under any mortgage, indenture, contract or agreement
  to which it is a party or by which it or any of its Property
  is bound, the effect of which default could reasonably be
  expected to have a Material Adverse Effect.  The execution,
  delivery or carrying out of the terms of the Loan Documents
  to which it is a party and the transactions contemplated
  thereby, will not constitute a default under, or result in
  the creation or imposition of, or obligation to create, any
  Lien upon any of its Property or result in a breach of or
  require the mandatory repayment of or other acceleration of
  payment under or pursuant to the terms of any such mortgage,
  indenture, contract or agreement.
  
                (G) Compliance with Applicable Laws. It is not
  in default with respect to any judgment, order, writ,
  injunction, decree or decision of any Governmental Authority
  which default could reasonably be expected to have a Material
  Adverse Effect.  It is complying in all material respects
  with all statutes, regulations, rules and orders applicable
  to it of all Governmental Authorities a violation of which
  could reasonably be expected to have a Material Adverse
  Effect.
  
                (H) Property. It has good and marketable title
  to all of its Property, title to which is material to such
  Guarantor, subject to no Liens, except for Liens described in
  Section 8.2(i), (ii), (iii), (iv), (v), (vi) or (vii) of the
  Credit Agreements.
  
                (I) Franchises, Intellectual Property, Etc. It
  possesses or has the right to use all franchises,
  Intellectual Property, licenses and other rights as are
  material and necessary for the conduct of its business, and
  with respect to which it is in compliance, with no known
  conflict with the valid rights of others which could
  reasonably be expected to have a Material Adverse Effect.  No
  event has occurred which permits or, to the best of its
  knowledge, after notice or the lapse of time or both, or any
  other condition, could reasonably be expected to permit, the
  revocation or termination of any  such franchise,
  Intellectual Property, license or other right which
  revocation or termination could reasonably be expected to
  have a Material Adverse Effect.
  
                (J) No Misrepresentation. No representation or
  warranty contained in any Loan Document to which it is a
  party and no certificate or report furnished or to be
  furnished by it in connection with the transactions
  contemplated thereby, contains or will contain a misstatement
  of material fact, or, to the best of its knowledge, omits or
  will omit to state a material fact required to be stated in
  order to make the statements therein contained not misleading
  in the light of the circumstances under which made.
  
      (h)  Events of Default
  
           Each of the following shall constitute an "Event of
  Default" hereunder:
  
                (A)  Any of the Guarantors shall fail to
  observe or perform any term, covenant or agreement contained
  in Section 2 of this Guaranty; or
  
                (B)  Any of the Guarantors shall fail to
  perform or observe any other term, covenant or agreement on
  its part to be performed or observed pursuant to this
  Guaranty and such failure shall have continued unremedied for
  a period of 30 days after such Guarantor shall become aware
  of such failure; or
  
                (C)  Any representation of any Guarantor
  contained herein or in any certificate, report or notice
  delivered or to be delivered by such Guarantor pursuant
  hereto shall prove to have been incorrect or misleading in
  any material respect when made; or
  
                (D)  This Guaranty shall cease to be in full
  force and effect or any of the Guarantors shall so assert or
  shall disavow any of its obligations hereunder; or
  
                (E)  The occurrence of an "Event of Default"
  under and as defined in the Credit Agreements.
  
      (i)  Subordination
  
           (A)  No payment of any nature whatsoever due in
  respect of the Subordinated Debt payable to any of the
  Guarantors shall be made unless and until the Borrower
  Obligations have been first indefeasibly paid in full in
  cash.
  
           (B)  Upon any bankruptcy, insolvency, liquidation
  or reorganization of the Borrower, or upon the filing of a
  petition in bankruptcy or commencement of any proceeding in
  bankruptcy against the Borrower or upon any distribution of
  the assets of the Borrower or upon any dissolution, winding
  up, liquidation or reorganization of the Borrower, whether in
  bankruptcy, insolvency, reorganization, arrangement or
  receivership proceedings, or upon any assignment for the
  benefit of creditors, or any other marshalling of the assets
  and liabilities of the Borrower, or in the event any of the
  Subordinated Debt shall for any reason become or be declared
  due and payable or otherwise:
  
                (i)  the Agent shall first be entitled to
  receive indefeasible payment in full in cash of the Borrower
  Obligations (whenever arising) before any Guarantor shall be
  entitled to receive any payment on account of the
  Subordinated Debt;
  
                (ii)  any payment by, or distribution of the
  assets of, the Borrower of any kind or character, whether in
  cash, property or securities, to which any Guarantor would be
  entitled except for the provisions of this Guaranty, in
  connection with the Subordinated Debt, shall be paid or
  delivered by the Person making such payment or distribution
  (whether a trustee in bankruptcy, a receiver, custodian or
  liquidating trustee or otherwise) directly to the Agent to
  the extent necessary to make payment in full in cash of the
  Borrower Obligations remaining unpaid, after giving effect to
  any concurrent payment or distribution (or provision
  therefor) in cash to the Agent; and
  
                (iii) None of the Guarantors shall ask, demand
  by legal proceedings or otherwise, or take or receive from
  the Borrower, by set-off, counterclaim or in any other
  manner, any payment or distribution on account of the
  Subordinated Debt other than as expressly permitted
  hereunder;
  
                (iv) Each of the Guarantors agrees to declare
  the Subordinated Debt to be due and payable and, at least 30
  days before the time required by applicable law or rule, to
  file proof of claim therefor, in default of which the Agent
  is hereby irrevocably authorized so to declare and file in
  order to effectuate the provisions hereof; and
  
                (v)  The Agent shall have the right, and is
  hereby authorized, to vote the interest of each Guarantor
  with respect to the Subordinated Debt, including, without
  limitation, the right to make all acceptances, rejections,
  consents or approvals on its behalf (including the right to
  accept, approve or disapprove of any plan of reorganization)
  in connection with any insolvency or other proceeding, and to
  execute and deliver for and on behalf of the Guarantor any
  instrument, agreement or other document in connection
  therewith, and if for any reason this clause shall not be
  enforceable, each Guarantor agrees to vote and give or make
  such acceptances, rejections, consents or approvals in the
  manner directed by the Agent.  Each of the Guarantors hereby
  irrevocably appoints the Agent its attorney-in-fact for
  purposes of exercising the rights and authority granted to it
  under this clause.
  
           Notwithstanding the foregoing, in the event that
  any payment by, or distribution of the assets of, the
  Borrower of any kind or character prohibited hereby, whether
  in cash, property or securities, shall for any reason be
  received by any of the Guarantors in respect of the
  Subordinated Debt, such payment or distribution shall be held
  in trust for the benefit of the Agent, and shall be
  immediately paid over to the Agent, to the extent necessary
  to make payment in full in cash of the Borrower Obligations
  remaining unpaid, after giving effect to any concurrent
  payment or distribution (or provision therefor) in cash to
  the Agent.
  
           (C)  Without the prior written consent of the
  Agent, the Borrower will not give, and none of the Guarantors
  will receive or accept, any collateral of any nature
  whatsoever for the Subordinated Debt on any Property or
  assets, whether now existing or hereafter acquired, of the
  Borrower.
  
           (D)  Nothing contained in this Guaranty is intended
  to or shall impair, as between and among the Borrower, its
  creditors (other than the holders of the Borrower
  Obligations) and the Guarantors, the obligation of the
  Borrower to pay to the Guarantors any amount due in respect
  of the Subordinated Debt as and when the same shall become
  due and payable in accordance with the terms thereof, or
  affect the relative rights of the Guarantors and the
  creditors of the Borrower (other than the holders of the
  Borrower  Obligations), in each case subject to the rights of
  the holders of the Borrower Obligations under this Guaranty.
  
           (E)  Unless and until the Borrower Obligations have
  been indefeasibly paid in full in cash and the Credit
  Agreements have been terminated, each of the Guarantors
  agrees not to declare any part of the Subordinated Debt to be
  due and payable or exercise any of the rights or remedies
  which it may have, or bring (in its capacity as holder of the
  Subordinated Debt) or join with any other creditor in
  instituting, any proceedings against the Borrower under any
  bankruptcy, insolvency, reorganization, arrangement,
  receivership or other similar law, unless the Borrower
  Obligations shall have been declared immediately due and
  payable or, in the case of the institution of any such
  proceedings, the Agent shall have joined in the institution
  thereof or expressly consented thereto in writing.  In the
  event that the Agent shall have so declared the Borrower
  Obligations immediately due and payable, each of the
  Guarantors agrees to declare the Subordinated Debt then due
  to be due and payable, provided, however, if the Agent shall
  rescind any such declaration, each of the Guarantors shall
  automatically be deemed to have rescinded its declaration.
  
           (F)  No right of the Agent to enforce this Guaranty
  shall at any time or in any way be prejudiced or impaired by
  any act or failure to act on the part of any of the
  Guarantors, or by any noncompliance by the Guarantors with
  the terms, provisions and covenants herein, and the Agent are
  hereby expressly authorized to extend, waive, renew,
  increase, decrease, modify or amend the terms of the Borrower
  Obligations or any collateral security therefor, and to waive
  any default, modify, amend, rescind or waive any provision of
  any document executed and delivered in connection with the
  Borrower Obligations and to release, sell or exchange any
  such collateral security and otherwise deal freely with the
  Borrower, all without notice to or consent of the Guarantors
  and without affecting the liabilities and obligations of the
  parties hereto.
  
           (G)  The Borrower and the Guarantors each waives
  notice of acceptance of this Guaranty by the Agent and the
  Lenders, and each of the Guarantors waives notice of and
  consents to the making, amount and terms of the Borrower
  Obligations which may exist from time to time and any
  renewal, extension, increase, amendment or modification
  thereof and any other action which the Agent or the Lenders
  in its sole and absolute discretion, may take or omit to take
  with respect thereto.  This Section (g) shall constitute a
  continuing offer to the Agent and the Lenders, its provisions
  are made for the benefit of the Agent and the Lenders, and
  the Agent and the Lenders are made obligees hereunder and may
  enforce such provisions.
  
           (H)  Each of the Guarantors agrees that no payment
  or distribution to the Agent pursuant to the provisions of
  this Guaranty shall entitle any of the Guarantors to exercise
  any rights of subrogation in respect thereof until the
  Borrower Obligations shall have been indefeasibly paid in
  full in cash.  Each of the Guarantors agrees that the
  subordination provisions contained herein shall not be
  affected by any action or failure to act by the holders of
  the Borrower Obligations which results, or may result, in
  affecting, impairing or extinguishing any right of
  reimbursement or subrogation or other right or remedy of such
  Guarantor.
  
           (I)  None of the Guarantors shall sell, assign,
  transfer or otherwise dispose of all or any part of the
  Subordinated Debt without having first obtained the prior
  written consent of the Agent which consent may be withheld
  for any reason or for no reason.
  
           (J)  The Borrower agrees that it will not make any
  payment of any of the Subordinated Debt, or take any other
  action, in contravention of the provisions of this Guaranty.
  
           (K)  Each of the Guarantors agrees that the
  provisions of this Guaranty shall be applicable to the
  Borrower Obligations whenever the same may arise and
  notwithstanding the fact that no Borrower Obligations may be
  outstanding from time to time and may have paid down to zero
  at any time or from time to time, it being understood that
  the Credit Agreements permit the Borrower to borrow, repay
  and reborrow from time to time subject to the terms and
  conditions thereof, all or any of which terms and conditions
  may be waived.
  
           (L)  All rights and interests of the Agent
  hereunder, and all agreements and obligations of the Borrower
  and the Guarantors under this Guaranty, shall remain in full
  force and effect irrespective of:
  
                (i)  any lack of validity or enforceability of
  any of the Loan Documents;
  
                (ii) any change in the time, manner or place
  of payment of, or any other term of, all or any of the
  Borrower Obligations, or any other amendment or waiver of or
  any consent to departure from any of the Borrower
  Obligations;
  
                (iii) any exchange, release or non-perfection
  of the Collateral, or any release or amendment or waiver of
  or consent to or departure from any guaranty, for all or any
  of the Borrower Obligations; or
  
                (iv) any other circumstance which might
  otherwise constitute a defense available to, or a discharge
  of, the Borrower in respect of the Borrower Obligations or
  this Guaranty.  This Guaranty shall continue to be effective
  or be reinstated, as the case may be, if at any time any
  payment of any of the Borrower Obligations is rescinded or
  must otherwise be returned by the Agent upon the insolvency,
  bankruptcy or reorganization of the Borrower or otherwise,
  all as though such payment had not been made.
  
           (M)  Each of the Guarantors authorizes the Agent,
  without notice or demand and without affecting or impairing
  the obligations of any of the Guarantors, from time to time
  to (i) renew, compromise, extend, increase, accelerate or
  otherwise change the time for payment of, or otherwise change
  the terms of the Borrower Obligations, or any part thereof,
  including, without limitation, to increase or decrease the
  rate of interest thereon or the principal amount thereof;
  (ii) take or hold security for the payment of the Borrower
  Obligations and exchange, enforce, foreclose upon, waive and
  release any such security; (iii) apply such security and
  direct the order or manner of sale thereof as the Agent, in
  its sole discretion, may determine; (iv) release and
  substitute one or more indorsers, warrantors, borrowers or
  other obligors; and (v) exercise or refrain from exercising
  any rights against the Borrower or any other Person.
  
      (j)  Notices
  
           Except as otherwise specifically provided herein,
  all notices, requests, consents, demands, waivers and other
  communications hereunder shall be given in the manner
  provided in Section 11.2 of the Credit Agreements and, if to
  the Agent or the Borrower, at their respective addresses set
  forth therein or, if to the Guarantor, the address set forth
  below (or if to an Additional Guarantor, to the address set
  forth in the Supplement executed and delivered by such
  Additional Guarantor) or to such other addresses as to which
  the Agent may be hereafter notified by the respective parties
  hereto:
  
                                         
                                         
                                         
                Attention:              ,
                
                Telephone:  (   ) ___-____
                Fax:        (___) ___-____.
  
      (k)  Expenses
  
           The Guarantors will upon demand pay to the Agent
  any and all reasonable sums, costs and expenses which the
  Agent may pay or incur pursuant to the provisions of this
  Guaranty or in negotiating, executing or enforcing this
  Guaranty or in enforcing payment of its Guarantor
  Obligations, including, but not limited to court costs,
  reasonable collection charges, reasonable travel expenses,
  and reasonable attorneys' fees and disbursements.  All sums,
  costs and expenses which are due and payable pursuant to this
  Section shall bear interest, payable on demand, at the
  highest rate then payable on the Borrower Obligations.
  
      (l)  Repayment in Bankruptcy, etc.
  
           If, at any time or times subsequent to the payment
  of all or any part of the Borrower Obligations or the
  Guarantor Obligations, the Agent or any Lender shall be
  required to repay any amounts previously paid by or on behalf
  of the Borrower or any Guarantor in reduction thereof by
  virtue of an order of any court having jurisdiction in the
  premises, including, without limitation, as a result of an
  adjudication that such amounts constituted preferential
  payments or fraudulent conveyances, the Guarantors
  unconditionally agree to pay to the Agent within 10 days
  after demand a sum in cash equal to the amount of such
  repayment, together with interest on such amount from the
  date of such repayment by the Agent or such Lender, as the
  case may be, to the date of payment to the Agent at the
  applicable after-maturity rates set forth in the Credit
  Agreements.
  
      (m)  Additional Guarantors
  
           Upon the execution and delivery to the Agent of a
  Supplement by any Person, such Person shall be a Guarantor.
  
      (n)  Other Provisions
  
           (A)  This Guaranty is the "Guaranty" referred to in
  the Credit Agreements.  Each of the Agent and the Guarantors
  acknowledges that certain provisions of the Credit
  Agreements, including, without limitation, Sections 11.1
  (Amendments and  Waivers), 11.3 (No Waiver; Cumulative
  Remedies), 11.7 (Assignments and Participations), 11.8
  (Counterparts), 11.12 (Governing Law), 11.14 (Severability),
  11.15. (Integration), 11.16 (Consent to Jurisdiction), 11.17
  (Service of Process), 11.18 (No Limitation on Service or
  Suit) and 11.19 (WAIVER OF TRIAL BY JURY) thereof, are made
  applicable to this Guaranty and all such provisions are
  incorporated by reference herein as if fully set forth
  herein.
  
           (B)  All Schedules and Annexes hereto shall be
  deemed to be a part hereof. With respect to an Additional
  Guarantor, all references in this Agreement to (i) a Schedule
  hereof shall refer to the corresponding Schedule to the
  Supplement executed and delivered by such Additional
  Guarantor and (ii) the date hereof, shall refer to the date
  on which the Additional Guarantor became a Grantor hereunder
  by executing and delivering a Supplement.
  
           (C)  No failure by the Agent to exercise, and no
  delay by the Agent in exercising, any right or remedy
  hereunder shall operate as a waiver thereof.
  
           (D)  Each and every right, remedy and power granted
  to the Agent hereunder or allowed at law, in equity or by
  other agreement shall be cumulative and not exclusive, and
  may be exercised by the Agent from time to time.
  
           (E)  Each Guarantor hereby waives presentment,
  demand for payment, notice of default, nonperformance and
  dishonor, protest and notice of protest of or in respect of
  this Guaranty, the Loan Documents and the Borrower
  Obligations, notice of acceptance of this Guaranty and
  reliance hereupon by the Agent and each Lender, and the
  incurrence of any of the Borrower Obligations, notice of any
  sale of collateral security or any default of any sort and
  notice of any amendment, modification, increase or waiver of
  any Loan Document.
  
           (F)  No Guarantor is relying upon the Agent or any
  Lender to provide to such Guarantor any information
  concerning the Borrower or any Subsidiary of the Borrower,
  and each Guarantor has made arrangements satisfactory to such
  Guarantor to obtain from the Borrower on a continuing basis
  such information concerning the Borrower and its Subsidiaries
  as such Guarantor may desire.
  
           (G)  Each Guarantor agrees that any statement of
  account with respect to the Borrower Obligations from the
  Agent or any Lender to the Borrower which binds the Borrower
  shall also be binding upon such Guarantor, and that copies of
  said statements of account maintained in the regular course
  of the Agent's or such Lender's business, as the case may be,
  may be used in evidence against such Guarantor in order to
  establish its Guarantor Obligations.
  
           (H)  Each Guarantor acknowledges that it has
  received a copy of the Loan Documents.  In addition, such
  Guarantor acknowledges having read each Loan Document and
  having had the advice of counsel in connection with all
  matters concerning its execution and delivery of this
  Guaranty, and, accordingly, waives any right it may have to
  have the provisions of this Guaranty strictly construed
  against the Agent and the Lenders.
  
    
 The Guarantors and the Borrower have each caused this
  Guaranty to be duly executed and delivered by its duly
  authorized officer as of the date first above written.
  
                                                             
  
  
  
                               By:                           
                               Name:                         
                               Title:                        
  
  
                                                             
  
  
  
                               By:                           
                               Name:                         
                               Title:                        
  
  
  Accepted and Agreed to:
  
  
  THE BANK OF NEW YORK, as Agent
  
  
  
  By:                        
  Name:                      
  Title:                     
  
  
  
    
                             Annex 1 to the Guaranty and
                               Subordination Agreement
  
  
      FORM OF SUPPLEMENT TO GUARANTY AND SUBORDINATION AGREEMENT
  
  
  SUPPLEMENT, dated as of _____ __, 199_, made by ___________,
  a ______ corporation (the "New Guarantor") to the Guaranty
  (the "Guaranty"), dated as of ____ __, 1994, made by each
  Guarantor party thereto and ATLANTIC ENERGY, INC., a New
  Jersey corporation (the "Borrower") to THE BANK OF NEW YORK,
  as Agent (in such capacity, the "Agent").
  
  Reference is made to the Credit Agreements (Facility A and
  Facility B), dated as of September 28, 1995, by and among the
  Borrower, the Lenders party thereto (the "Lenders") and the
  Agent (as the same may be amended, extended, increased,
  modified, refunded or refinanced from time to time, the
  "Credit Agreements").
  
  Capitalized terms used herein and not otherwise defined
  herein shall have the meanings assigned to such terms in the
  Guaranty or the Credit Agreements, as the case may be.
  
  Accordingly, the Agent and the New Guarantor agree as
  follows:
  
  In accordance with Section 10 of the Guaranty, by signing
  this Supplement, the New Guarantor (a) shall be, and shall be
  deemed to be,  a "Guarantor" under, and as such term is
  defined in, the Guaranty with the same force and effect as if
  originally named therein as a Guarantor, (b) shall have made,
  and shall be deemed to have made, the representations and
  warranties contained in Section 4 of the Guaranty on and as
  of the date hereof, and (c) shall have made, and shall be
  deemed to have made, all of the covenants and agreements of a
  Guarantor set forth in the Guaranty.
  
  Except as expressly supplemented hereby, the Guaranty shall
  remain in full force and effect.
  
  This Supplement shall be governed by and construed in
  accordance with the laws of the State of New York without
  regard to conflicts of laws rules.
  
  Every provision of this Supplement is intended to be
  severable, and if any term or provision hereof shall be
  invalid, illegal or unenforceable for any reason, the
  validity, legality and enforceability of the remaining
  provisions hereof or thereof shall not be affected or
  impaired thereby, and any invalidity, illegality or
  unenforceability in any jurisdiction shall not affect the
  validity, legality or enforceability of any such term or
  provision in any other jurisdiction.
  
  (o)For purposes of Section 7 of the Guaranty, the address of the New
  Grantor is as follows:
  
                                 
                                 
                                 
           Attention:                  ,
  
  
           Telephone:  (___) ___-____
           Fax:        (___) ___-____.
  
  This Supplement may be executed in two or more counterparts,
  each of which shall constitute an original, but all of which,
  when taken together, shall constitute but one instrument. 
  This Supplement shall become effective when the Agent shall
  have received counterparts of this Supplement that, when
  taken together, bear the signatures of the New Grantor and
  the Agent.
  
           The New Grantor and the Agent have duly executed
  this Supplement to the Guaranty as of the day and year first
  above written.
  
                 [NAME OF NEW GUARANTOR]
  
  
           By:                          
           Name:                        
           Title:                       
  
           THE BANK OF NEW YORK, AS AGENT
  
  
           By:                          
           Name:                        
           Title:                       
    
                     ATLANTIC ENERGY SCHEDULE 1.1
              TO REVOLVING CREDIT AGREEMENT (FACILITY A)
                    DATED AS OF SEPTEMBER 28, 1995
                                   
  
                        LIST OF LENDING OFFICES
  
  
  DOMESTIC LENDING OFFICES             EURODOLLAR LENDING OFFICES

1.The Bank of New York            The Bank of New York
One Wall Street                   One Wall Street
Agency Function Administration    Agency Function Administration
18th Floor                        18th Floor
New York, NY 10286                New York, NY 10286
Attention:    Patricia Clancy     Attention:Patricia Clancy
Telephone:    (212) 635-4696      Telephone:(212) 635-4696
Telecopy:     (212) 635-6365 or   Telecopy: (212) 635-6365 or
              (212) 635-6366 or             (212) 635-6366 or
              (212) 635-6367                (212) 635-6367


2.The First National Bank         The First National Bank
  of Chicago                        of Chicago
One First National Plaza          One First National Plaza
Chicago, IL 60670                 Chicago, IL 60670
Attention:Peggy Corcoran or       Attention:Peggy Corcoran or
         Rita Bhatia                        Rita Bhatia
         Operating Services Dept.           Operating Services Dept.
Telephone:(312) 732-5957 or       Telephone:(312) 732-5957 or
              (312) 732-5205                (312) 732-5205
Telecopy:      (312) 732-4840                Telecopy: (312) 732-4840


3.Mellon Bank, N.A.               Mellon Bank, N.A.
Three Mellon Bank Center          Three Mellon Bank Center
Room 2302                         Room 2302
Pittsburgh, PA 15259-0003         Pittsburgh, PA 15259-0003
Attention:Sue Cooke               Attention:Sue Cooke
            Loan Administration             Loan Administration
     Telephone:(412) 236-0437 Telephone:(412) 236-0437
   Telecopy:  (412) 236-2027 or             Telecopy: (412) 236-2027 or
              (412) 236-2028                (412) 236-2028

                                                    Facility B


    [Conformed Copy]


                      REVOLVING CREDIT AGREEMENT (FACILITY B)



                                   by and among



                              ATLANTIC ENERGY, INC.,

                             THE LENDERS PARTY HERETO,


                                        AND


                          THE BANK OF NEW YORK, AS AGENT




                                 ________________

                                    $40,000,000
                                 ________________





                          Dated as of September 28, 1995







                                 TABLE OF CONTENTS


1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION                  1

   1.1.  Definitions                                           1
   1.2.  Principles of Construction                           16

2.  AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT           17

   2.1.  Revolving Credit Loans                               17
   2.2.  Revolving Credit Notes                               17
   2.3.  Procedure for Borrowing Revolving Credit Loans       17
   2.4.  Competitive Bid Loans; Procedure                     19
   2.5.  Voluntary Reduction or Termination of Aggregate
         Commitments; Letter of Credit                        21
   2.6.  Prepayments of the Loans                             22
   2.7.  Conversions and Continuations                        22
   2.8.  Interest Rate and Payment Dates                      23
   2.9.  Substituted Interest Rate                            25
   2.10  Taxes                                                25
   2.11  Illegality                                           27
   2.12  Increased Costs                                      28
   2.13  Indemnification for Loss                             29
   2.14  Survival of Certain Obligations                      29
   2.15  Use of Proceeds                                      29
   2.16  Capital Adequacy                                     30
   2.17  Change of Lending Office; Right to Substitute
         Lender                                               30
   2.18. Letter of Credit Sub-Facility                        31
   2.19. Letter of Credit Participation and Funding
         Commitments                                          32
   2.20. Absolute Obligation with respect to Letter of
         Credit Payments                                      33
   2.21. Increased Costs Based on Letters of Credit           33
   2.22. Extension of Maturity Date                           34
   2.23. Change in Control                                    36
   2.24. Agent's Records                                      37

3. FEES; PAYMENTS                                             37

  3.1.   Facility Fee                                         37
  3.2.   Letter of Credit Fees                                37
  3.3.   Agent's Fees                                         37
  3.4.   Pro Rata Treatment and Application of Principal
         Payments                                             38

4.  REPRESENTATIONS AND WARRANTIES                            38

  4.1.  Subsidiaries                                          38
  4.2.  Existence and Power                                   38
  4.3.  Authority; Enforceability                             39
  4.4.  Required Consents                                     39
  4.5.  No Conflicting Agreements, Compliance with
        Laws; Taxes                                           39
  4.6.  Franchises, Licenses, Etc.                            39
  4.7.  Investment Company Act                                39
  4.8.  Public Utility Status                                 40
  4.9.  Federal Reserve Regulations; Use of Loan
        Proceeds                                              40
  4.10. Litigation                                            40
  4.11. Financial Statements                                  40
  4.12. Plans                                                 41
  4.13. Ownership of Property; Liens                          41
  4.14. Security Interests                                    41
  4.15. Environmental Matters                                 41
  4.16. Certain Business Activities                           42

5.  CONDITIONS TO FIRST LOANS OR THE ISSUANCE OF FIRST
    LETTERS OF CREDIT                                        42

  5.1.  Evidence of Action                                   42
  5.2.  This Agreement; Notes                                42
  5.3.  Certificate as to Approvals and Liens                42
  5.4.  Pledge Agreement                                     43
  5.5.  Facility A Loan Documents                            43
  5.6.  Other Credit Facilities                              43
  5.7.  ACE Preferred Stock                                  43
  5.8.  Opinions of Counsel                                  43
  5.9.  Opinion of Special Counsel                           43
  5.10. Fees                                                 44

6.  CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF
    CREDIT                                                   44

  6.1.  Compliance                                           44
  6.2.  Borrowing Request; Competitive Bid Request           44
  6.3.  Letter of Credit Request                             44

7.  AFFIRMATIVE COVENANTS                                    44

  7.1.  Financial Statements                                 45
  7.2.  Certificates; Other Information                      45
  7.3.  Legal Existence                                      46
  7.4.  Taxes                                                46
  7.5.  Insurance                                            46

  7.6.  Condition of Property                                46
  7.7.  Observance of Legal Requirements                     47
  7.8.  Inspection of Property; Books and Records;
        Discussions                                          47
  7.9.  Licenses, Franchises, Intellectual Property,
        Etc.                                                 47
  7.10. Indebtedness Capitalization Ratio                    47
  7.11. Ratio of Indebtedness to Annualized ACE
        Dividends                                            47

8.  NEGATIVE COVENANTS                                       47

  8.1.  Indebtedness                                         47
  8.2.  Liens                                                48
  8.3.  Merger; Consolidation                                48
  8.4.  Restricted Payments                                  49
  8.5.  Investments, Acquisitions, Loans, Etc.               49
  8.6.  Amendments, Etc. of Intercompany Notes               50
  8.7.  Designation of Operating Subsidiaries                51
  8.8.  Certain Business Activities                          51

9.  DEFAULT                                                  51

  9.1.  Events of Default                                    51

10.  THE AGENT                                               54

  10.1. Appointment                                          54
  10.2. Delegation of Duties                                 54
  10.3. Exculpatory Provisions                               54
  10.4. Reliance by Agent                                    55
  10.5. Notice of Default                                    55
  10.6. Non-Reliance on Agent and Other Lenders              56
  10.7. Indemnification                                      56
  10.8. Agent in Its Individual Capacity                     57
  10.9. Successor Agent                                      57

11.  OTHER PROVISIONS                                        58

  11.1. Amendments and Waivers                               58
  11.2. Notices                                              58
  11.3. No Waiver; Cumulative Remedies                       59
  11.4. Survival of Representations and Warranties           60
  11.5. Payment of Expenses and Taxes                        60
  11.6. Lending Offices                                      60
  11.7. Assignments and Participations                       61
  11.8. Counterparts                                         62
  11.9. Adjustments; Set-off                                 63
  11.10 Indemnity                                            64

  11.11. Governing Law                                       64
  11.12. Headings Descriptive                                64
  11.13. Severability                                        64
  11.14. Integration                                         65
  11.15. Consent to Jurisdiction                             65
  11.16. Service of Process                                  65
  11.17. No Limitation on Service or Suit                    65
  11.18. WAIVER OF TRIAL BY JURY                             65

EXHIBITS

Exhibit A    List of Commitments
Exhibit B-1  Form of Revolving Credit Note
Exhibit B-2  Form of Competitive Bid Note
Exhibit C    Form of Borrowing Request
Exhibit D    Form of Competitive Bid Request
Exhibit E    Form of Invitation to Bid
Exhibit F    Form of Competitive Bid
Exhibit G    Form of Competitive Bid Accept/Reject Letter
Exhibit H    Form of Competitive Bid Loan Confirmation
Exhibit I    Form of Notice of Conversion/Continuation
Exhibit J    Form of Letter of Credit Request
Exhibit K    Form of Compliance Certificate
Exhibit L    Form of Pledge Agreement
Exhibit M    Form of Intercompany Note
Exhibit N    Form of Opinion of Counsel to the Borrower
Exhibit O    Form of Opinion of Special Counsel 
Exhibit P    Form of Assignment and Acceptance Agreement
Exhibit Q    Form of Guaranty


SCHEDULES

Schedule 1.1 List of Lending Offices
Schedule 4.1 List of Subsidiaries
Schedule 4.1 List of Existing Pension Plans
Schedule 8.1 List of Existing Indebtedness
Schedule 8.2 List of Existing Liens
Schedule 8.5 List of Existing Investments
   
      REVOLVING CREDIT AGREEMENT (FACILITY B), dated as of September 28,
1995, by and among ATLANTIC ENERGY, INC., a New Jersey corporation (the
"Borrower"), the lenders party hereto (together with their respective
assigns, the "Lenders", each a "Lender") and THE BANK OF NEW YORK, as
agent for the Lenders (in such capacity, the "Agent").


A.       DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

         1.   Definitions

              As used in this Agreement, terms defined in the preamble
have the meanings therein indicated, and the following terms have the
following meanings:

              "ABR Advances": the Revolving Credit Loans (or any
portions thereof) at such time as they (or such portions) are made
and/or being maintained at a rate of interest based upon the Alternate
Base Rate.

              "ACE": Atlantic City Electric Company, a New Jersey
corporation and a wholly owned Subsidiary of the Borrower.

              "ACE Preferred Stock": the Cumulative Preferred Stock,
$100 par value, the No Par Preferred Stock and the Preference Stock, No
Par Value of ACE outstanding from time to time.

              "Accountants": Deloitte & Touche LLP (or any successor
thereto), or such other firm of certified public accountants of
recognized national standing selected by the Borrower.

              "Acquisition": the acquisition of a business by the
Borrower or any of its Subsidiaries through either a merger with another
Person or the purchase of all or substantially all of the capital Stock
of another Person or all or substantially all of the assets of another
Person or of a division of another Person.

              "Accumulated Funding Deficiency": as defined in Section
302 of ERISA.

              "Advance": with respect to a Revolving Credit Loan, an
ABR Advance or a Eurodollar Advance, as the case may be.

              "Affected Advance": as defined in Section 2.9.

              "Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person.  For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (i) to
vote 5% or more of the securities or other interests having ordinary
voting power for the election of directors or other managing Persons
thereof or (ii) to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.

              "Aggregate Commitments": on any date, the sum of all
Commitments on such date.

              "Aggregate Credit Exposure": as of any date of
determination, the sum of (i) the aggregate outstanding principal
balance of all Revolving Credit Loans and Competitive Bid Loans of all
Lenders, plus (ii) an amount equal to Letter of Credit Exposure of all
Lenders.

              "Aggregate Facility A Commitments": the aggregate of the
Facility A Commitments of the Facility A Lenders.

              "Agreement": this Revolving Credit Agreement (Facility
B), as the same may be amended, supplemented or otherwise modified from
time to time.

              "Alternate Base Rate": on any date, a rate of interest
per annum equal to the higher of (i) the Federal Funds Rate in effect on
such date plus 1/2 of 1% or (ii) the BNY Rate in effect on such date.

              "Annualized ACE Dividends": at any date of determination,
an amount equal to (i) the amount of dividends paid to the Borrower by
ACE during the fiscal quarter ending on such date of determination or,
if such date of determination is not a fiscal quarter ending date, the
immediately preceding fiscal quarter, multiplied by (ii) four.

              "Applicable Fee Percentage": with respect to the amount
of the Aggregate Commitments, at all times during which the applicable
Pricing Level set forth below is in effect, the percentage set forth
below next to such Pricing Level, subject to the provisos set forth
below:

                                         Applicable
                Pricing Level            Fee Percentage

                Pricing Level I           0.150%
                Pricing Level II          0.175%
                Pricing Level III         0.200%
                Pricing Level IV          0.250%


provided that (i) changes in the Applicable Fee Percentage resulting
from a change in the Pricing Level shall become effective on the
effective date of any change in the Senior Debt Rating by Moody's or S&P
and (ii) in the event of a split in ratings resulting in the Senior Debt
Rating by S&P and Moody's falling within different Pricing Levels, the
Applicable Fee Percentage shall be the lower percentage.

              "Applicable Lending Office": in respect of any Lender,
(i) in the case of such Lender's ABR Advances and Competitive Bid Loans,
its Domestic Lending Office and (ii) in the case of such Lender's
Eurodollar Advances, its Eurodollar Lending Office.

              "Applicable Margin": with respect to (i) the unpaid
principal amount of Eurodollar Advances, and (ii) the daily amount
available to be drawn under each Letter of Credit in the case of the
Letter of Credit Fees, in each case at all times during which the
applicable Pricing Level set forth below is in effect, the percentage
set forth below next to such Pricing Level, subject to the provisos set
forth below:

                 Pricing Level              Applicable Margin

                 Pricing Level I             0.275%
                 Pricing Level II            0.300%
                 Pricing Level III           0.400%
                 Pricing Level IV            0.500%

provided that (i) changes in the Applicable Margin resulting from a
change in the Pricing Level shall become effective on the effective date
of any change in the Senior Debt Rating by Moody's or S&P and (ii) in
the event of a split in ratings resulting in the Senior Debt Rating by
each of S&P and Moody's falling within different Pricing Levels, the
Applicable Margin shall be the lower percentage.

      "Approved Financial Institutions": collectively, (i) each Lender,
(ii) those major United States and foreign commercial banks with which
the Borrower or its affiliates have formal line-of-credit relationships
as of the Effective Date, (iii) domestic branches of major Canadian
banks and (iv) such other banks as appropriate officers of the Borrower
may deem appropriate and with respect to which the Agent shall have
received advance written notice.

      "Assignment and Acceptance Agreement": an assignment and
acceptance agreement executed by an assignor and an assignee pursuant to
which the assignor assigns to the assignee all or any portion of such
assignor's (i) Notes, (ii) Commitment, (iii) Facility A Notes and (iv)
Facility A Commitment, substantially in the form of Exhibit P.

      "Assignment Fee": as defined in Section 11.7(b).

      "Atlantic Thermal": Atlantic Thermal Systems, Inc., a New Jersey
corporation and a wholly owned Subsidiary of the Borrower.

      "ATE": ATE Investment, Inc., a New Jersey corporation and a
wholly owned Subsidiary of the Borrower.

      "ATE Credit Agreement": the Revolving Credit and Term Loan
Agreement, dated as of May 24, 1988, as amended, between ATE and BNY.

      "Authorized Signatory": as to (i) any Person which is a
corporation, the chairman of the board, the president, any vice
president, the chief financial officer or any other duly authorized
officer (acceptable to the Agent) of such Person and (ii) any Person
which is not a corporation, the general partner or other managing Person
thereof.

      "Benefited Lender": as defined in Section 11.9.

      "Bid Rate": as defined in Section 2.4(b).

           "BNY": The Bank of New York.

      "BNY Rate": a rate of interest per annum equal to the rate of
interest publicly announced in New York City by BNY from time to time as
its prime commercial lending rate, such rate to be adjusted
automatically (without notice) on the effective date of any change in
such publicly announced rate.

      "Borrowing Date": any Business Day on which (i) the Lenders make
Revolving Credit Loans in accordance with a Borrowing Request, (ii) one
or more Lenders make Competitive Bid Loans pursuant to Competitive Bids
which have been accepted by the Borrower or (iii) the Issuing Bank
issues a Letter of Credit.

      "Borrowing Request": a request for Revolving Credit Loans in the
form of Exhibit C.

      "Business Day": any day other than a Saturday, a Sunday or a day
on which commercial banks located in New York City are authorized or
required by law or other governmental action to close.

      "Capital Lease Obligations": with respect to any Person,
obligations of such Person with respect to leases which, in accordance
with GAAP, are required to be capitalized on the financial statements of
such Person.

      "Change in Control": either (i) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becoming
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of shares of capital Stock of the Borrower entitled to exercise more
than 50% of the total voting power of all outstanding shares of capital
Stock, unless such beneficial ownership is approved by the board of
directors of the Borrower prior to the acquisition; or (ii) a majority
of the board of directors of the Borrower are not Continuing Directors. 

      "Code": the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.

      "Collateral": collectively, the collateral under and as defined
in the Pledge Agreement.

      "Commitment": in respect of any Lender, such Lender's undertaking
during the Commitment Period to make Revolving Credit Loans, subject to
the terms and conditions hereof, in an aggregate outstanding principal
amount not exceeding the amount set forth next to the name of such
Lender in Exhibit A under the heading "Commitment", as the same may be
reduced pursuant to Section 2.5.

      "Commitment Period": the period from the Effective Date until the
day before the Maturity Date.

      "Commitment Percentage": as to any Lender, the percentage set
forth opposite the name of such Lender in Exhibit A under the heading
"Commitment Percentage".

           "Competitive Bid": an offer by a Lender, in the form of Exhibit
F, to make a Competitive Bid Loan.

      "Competitive Bid Accept/Reject Letter": a notification given by
the Borrower pursuant to Section 2.4 in the form of Exhibit G.

      "Competitive Bid Loan": each Loan from a Lender to the Borrower
pursuant to Section 2.4.

      "Competitive Bid Loan Confirmation": a confirmation by the Agent
to a Lender of the acceptance by the Borrower of any Competitive Bid (or
Portion thereof) made by such Lender, substantially in the form of
Exhibit H.

      "Competitive Bid Note" and "Competitive Bid Notes": as defined in
Section 2.4(g).

      "Competitive Bid Request": a request by the Borrower, in the form
of Exhibit D, for Competitive Bids.

      "Competitive Interest Period": with respect to any Competitive
Bid Loan, the period commencing on the date of such Competitive Bid Loan
and ending on the date requested in the Competitive Bid Request with
respect to such Competitive Bid Loan, which date shall not be earlier
than 7 days after the date of such Competitive Bid Loan or later than
180 days after the date of such Competitive Bid Loan; provided, however,
that if any Competitive Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless such next succeeding Business Day would
be a date on or after the Maturity Date, in which case such Competitive
Interest Period shall end on the next preceding Business Day, and
provided further that no Competitive Interest Period shall end after the
Maturity Date.  Interest shall accrue from and including the first day
of a Competitive Interest Period to but excluding the last day of such
Competitive Interest Period.

      "Compliance Certificate": a certificate in the form of Exhibit K.

      "Consenting Lenders": as defined in Section 2.22(b).

      "Consolidated": the Borrower and its Subsidiaries which are
consolidated for financial reporting purposes.

      "Consolidated Total Indebtedness": at any date of determination,
total Indebtedness of the Borrower and its Subsidiaries determined on a
Consolidated basis in accordance with GAAP.

      "Consolidated Total Capitalization": at any date of determination
with respect to the Borrower and its Subsidiaries on a Consolidated
basis in accordance with GAAP, the sum of (i) the amount classified as
common shareholders equity for purposes of balance sheet presentation in
accordance with GAAP, plus (ii) the amount classified as preferred stock
for purposes of balance sheet presentation in accordance with GAAP, plus
(iii) all Indebtedness (net of unamortized premium and discount), less
(iv) unamortized capital Stock expense.

           "Contingent Obligation": as to any Person (the "secondary
obligor"), any obligation of such secondary obligor (i) guaranteeing or
in effect guaranteeing any return on any investment made by another
Person, or (ii) guaranteeing or in effect guaranteeing any Indebtedness,
lease, dividend or other monetary obligation ("primary obligation") of
any other Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of such
secondary obligor, whether contingent, (A) to purchase any such primary
obligation or any Property constituting direct or indirect security
therefor, (B) to advance or supply funds (x) for the purchase or payment
of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (C) to purchase Property,
securities or services primarily for the purpose of assuring the
beneficiary of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, (D) otherwise to
assure or hold harmless the beneficiary of such primary obligation
against loss in respect thereof, and (E) in respect of the liabilities
of any partnership in which such secondary obligor is a general partner,
except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate Property,
provided, however, that the term "Contingent Obligation" shall not
include the indorsement of instruments for deposit or collection in the
ordinary course of business.  The amount of any Contingent Obligation of
a Person shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.

      "Continuing Director": at any date of determination, a member of
the board of directors of the Borrower who (i) was a member of such
board for the prior of 24 months prior to such date or (ii) was
nominated for election or elected to such board with the affirmative
vote of at least two-thirds of the Continuing Directors.

      "Control Person": as defined in Section 2.16.

      "Conversion/Continuation Date": the date on which (i) a
Eurodollar Advance is converted to an ABR Advance, (ii) the date on
which an ABR Advance is converted to a Eurodollar Advance or (iii) the
date on which a Eurodollar Advance is continued as a new Eurodollar
Advance.

      "Credit Exposure": with respect to any Lender as of any date, the
sum as of such date of (i) the outstanding principal balance of such
Lender's Revolving Credit Loans, plus (ii) an amount equal to such
Lender's Letter of Credit Exposure.

      "Default": any event or condition which constitutes an Event of
Default or which, with the giving of notice, the lapse of time, or any
other condition, would, unless cured or waived, become an Event of
Default.

      "District Heating and Cooling Project": a proposed centralized
steam and chilled water production facility located in Atlantic City,
New Jersey.

      "Dollars" and "$": lawful currency of the United States of
America.

           "Domestic Lending Office": in respect of any Lender, initially,
the office or offices of such Lender designated as such on Schedule 1.1;
thereafter, such other office of such Lender through which it shall be
making or maintaining ABR Advances or Competitive Bid Loans, as reported
by such Lender to the Agent and the Borrower, provided that any Lender
may so report different Domestic Lending Offices for all of its ABR
Advances and all of its Competitive Bid Loans, whereupon references to
the Domestic Lending Office of such Lender shall mean either or both of
such offices, as applicable.

      "Effective Date": September 28, 1995.

      "Employee Benefit Plan": an employee benefit plan within the
meaning of Section 3(3) of ERISA maintained, sponsored or contributed to
by the Borrower, any of its Subsidiaries or any ERISA Affiliate.

      "Environmental Laws": any and all federal, state and local laws
relating to the environment, the use, storage, transporting,
manufacturing, handling, discharge, disposal or recycling of hazardous
substances, materials or pollutants or industrial hygiene, and
including, without limitation, (i) the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 USCA 9601 et
seq.; (ii) the Resource Conservation and Recovery Act of 1976, as
amended, 42 USCA 6901 et seq.; (iii) the Toxic Substance Control Act,
as amended, 15 USCA 2601 et seq.; (iv) the Water Pollution Control Act,
as amended, 33 USCA 1251 et seq.; (v) the Clean Air Act, as amended, 42
USCA 7401 et seq.; (vi) the Hazardous Material Transportation
Authorization Act of 1994, as amended, 49 USCA 5101 et seq. and (viii)
all rules, regulations, judgments, decrees, injunctions and restrictions
thereunder and any analogous state law.

      "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued
thereunder, as from time to time in effect.

      "ERISA Affiliate": when used with respect to an Employee Benefit
Plan, ERISA, the PBGC or a provision of the Code pertaining to employee
benefit plans, any Person that is a member of any group of organizations
within the meaning of Sections 414(b) or (c) of the Code (or, solely for
purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f)
of ERISA and Section 412(n) of the Code, Sections 414(m) or (o) of the
Code) of which the Borrower or any of its Subsidiaries is a member.

      "Eurodollar Advances": collectively, the Revolving Credit Loans
(or any portions thereof) at such time as they (or such portions) are
made and/or being maintained at a rate of interest based upon the
Eurodollar Rate.

      "Eurodollar Interest Period": with respect to any Eurodollar
Advance requested by the Borrower, the period commencing on, as the case
may be, the Borrowing Date or Conversion/Continuation Date with respect
to such Eurodollar Advance and ending one, two, three or six months
thereafter, as selected by the Borrower in its irrevocable Borrowing
Request or its irrevocable Notice of Conversion/Continuation, provided,
however, that (i) if any Eurodollar Interest Period would otherwise end
on a day  which is not a Business Day, such Eurodollar Interest Period
shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another
calendar month, in which event such Eurodollar Interest Period shall end
on the immediately preceding Business Day, (ii) any Eurodollar Interest
Period that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Eurodollar Interest Period) shall end on the
last Business Day of a calendar month and (iii) the Borrower shall
select Interest Periods so as not to have more than four different
Eurodollar Interest Periods outstanding at any one time for all
Eurodollar Advances.

      "Eurodollar Lending Office": in respect of any Lender, initially,
the office, branch or affiliate of such Lender designated as such on
Schedule 1.1 (or, if no such office branch or affiliate is specified,
its Domestic Lending Office); thereafter, such other office, branch or
affiliate of such Lender through which it shall be making or maintaining
Eurodollar Advances, as reported by such Lender to the Agent and the
Borrower.

      "Eurodollar Rate": with respect to the Eurodollar Interest Period
applicable to any Eurodollar Advance, a rate of interest per annum, as
determined by the Agent, obtained by dividing (and then rounding to the
nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the
next higher 1/16 of 1%):

           (a)  the rate, as reported by BNY to the Agent, quoted by
BNY to leading banks in the interbank eurodollar market as the rate at
which BNY is offering Dollar deposits in an amount equal approximately
to the Eurodollar Advance of BNY to which such Interest Period shall
apply for a period equal to such Interest Period, as quoted at
approximately 11:00 a.m. two Business Days prior to the first day of
such Interest Period, by

           (b)  a number equal to 1.00 minus the aggregate of the then
stated maximum rates during such Interest Period of all reserve
requirements (including, without limitation, marginal, emergency,
supplemental and special reserves), expressed as a decimal, established
by the Board of Governors of the Federal Reserve System and any other
banking authority to which BNY and other major United States money
center banks are subject, in respect of eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of the Board
of Governors of the Federal Reserve System) or in respect of any other
category of liabilities including deposits by reference to which the
interest rate on Eurodollar Advances is determined or any category of
extensions of credit or other assets which includes loans by non-
domestic offices of any Lender to United States Residents.  Such reserve
requirements shall include, without limitation, those imposed under such
Regulation D.  Eurodollar Advances shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed to be subject to
such reserve requirements without benefit of credits for proration,
exceptions or offsets which may be available from time to time to any
Lender under such Regulation D. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in any such
reserve requirement.

      "Event of Default": any of the events specified in Section 9.1,
provided that any requirement for the giving of notice, the lapse of
time, or any other condition has been satisfied.

           "Exchange Act": the Securities and Exchange Act of 1934, as
amended.

      "Existing Pension Plans": as defined in Section 4.12.

      "Extension Consent Period": the period which is less than 35
days, but equal to or greater than 30 days, prior to the then current
Maturity Date (provided, however, that if such 30th prior day falls on a
day that is not a Business Day, such date shall be extended to the next
following Business Day).

      "Extension Consent Required Lenders": Lenders having at least
66 2/3% of the Aggregate Commitments (without giving effect to any Loans
outstanding).

      "Extension Request": as defined in Section 2.22.

      "Facility A": the $35,000,000 senior 364-day revolving credit
facility established pursuant to the Facility A Loan Documents.

      "Facility A Agent": The Bank of New York, in its capacity as
agent for the Facility A Lenders under the Facility A Loan Documents.

      "Facility A Commitment": in respect of any Facility A Lender,
such Facility A Lender's undertaking during the Commitment Period (as
defined in the Facility A Credit Agreement) to make Facility A Loans, in
an amount not in excess, and subject to the terms and conditions, of the
Facility A Credit Agreement.

      "Facility A Commitment Percentage": as to any Facility A Lender,
such Facility A Lender's Commitment Percentage as defined in the
Facility A Credit Agreement.

      "Facility A Credit Agreement": the Revolving Credit Agreement
(Facility A), dated as of the date hereof, among the Borrower, the
Facility A Agent and the Facility A Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
 
      "Facility A Lenders": the Lenders party to the Facility A Loan
Documents.

      "Facility A Loan Documents": collectively, the Facility A Credit
Agreement, the Facility A Notes and the Pledge Agreement.

      "Facility A Maturity Date": the maturity date under the Facility
A Credit Agreement, as from time to time extended pursuant thereto.

      "Facility A Notes": collectively, (i) the Revolving Credit Notes
(Facility A) and (ii) the Competitive Bid Notes (Facility A) made by the
Borrower pursuant to the Facility A Credit Agreement, as indorsed or
modified from time to time.

      "Facility Fee": as defined in Section 3.1.

      "Federal Funds Rate": for any day, a rate per annum (expressed as
a decimal, rounded upwards, if necessary, to the next higher 1/100 of
1%), 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 by the Federal
Reserve Bank of New York on the Business Day next succeeding such day,
provided that (i) if the day for which such rate is to be determined is
not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is
not so published for any day, the Federal Funds Rate for such day shall
be the average of the quotations for such day on such transactions
received by BNY as determined by BNY and reported to the Agent.

      "Financial Statements": as defined in Section 4.11.

      "GAAP": generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and in the statements
and pronouncements of the Financial Accounting Standards Board or in
such other statement by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of the date of determination, consistently
applied.  If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in this Agreement, the
Agent, the Lenders and the Borrower shall negotiate in good faith to
amend such ratio or requirement to reflect such change in GAAP (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 GAAP prior to such change therein and (ii) the Borrower
shall provide to the Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change
in GAAP.

      "Governmental Authority": any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator.

      "Highest Lawful Rate": as to any Lender or the Issuing Bank, the
maximum rate of interest, if any, that at any time or from time to time
may be contracted for, taken, charged or received by such Lender on the
Notes or by the Issuing Bank on the Reimbursement Agreements held
thereby, as the case may be, or which may be owing to such Lender or the
Issuing Bank pursuant the Loan Documents under the laws applicable to
such Lender or the Issuing Bank and this transaction.

      "Indebtedness": as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed
money or the deferred purchase price of Property (other than trade
payables incurred in the ordinary course of business), (ii) indebtedness
evidenced by notes, bonds, debentures or similar instruments, (iii)
obligations with respect to any conditional sale or title retention
agreement, (iv) indebtedness arising under acceptance facilities and the
amount available to be drawn under all letters of credit (other than
trade letters of credit) issued for the account of such Person and,
without duplication, all drafts drawn thereunder to the extent such
Person shall not have reimbursed the issuer in respect of the issuer's
payment of such drafts, (v) all liabilities secured by any Lien on any
Property owned by such Person even though  such Person has not assumed
or otherwise become liable for the payment thereof (other than (1)
carriers', warehousemen's, mechanics', repairmen's or other like non-
consensual statutory Liens arising in the ordinary course of business
and (2) liabilities of Subsidiaries (other than ACE and Operating
Subsidiaries) for which recourse may be had by the creditor only to the
Property secured by the Lien), (vi) Capital Lease Obligations and (vii)
Contingent Obligations.

      "Indebtedness Capitalization Ratio": the ratio of (i)
Consolidated Total Indebtedness to (ii) Consolidated Total
Capitalization.

      "Indemnified Person": as defined in Section 11.10.

      "Intercompany Loans": loans from time to time made by the
Borrower to an Operating Subsidiary.

      "Intercompany Note": a promissory note made by an Operating
Subsidiary to the Borrower evidencing the Intercompany Loans made by the
Borrower to such Operating Subsidiary, substantially in the form of
Exhibit M, as the same may be amended, modified or supplemented.

      "Interest Payment Date": (i) as to any ABR Advance, the last day
of each March, June, September and December commencing on the first of
such days to occur after such ABR Advance is made or any Eurodollar
Advance is converted to an ABR Advance, (ii) as to any Eurodollar
Advance in respect of which the Borrower has selected a Eurodollar
Interest Period of one, two or three months, the last day of such
Interest Period, (iii) as to any Eurodollar Advance in respect of which
the Borrower has selected a Eurodollar Interest Period of six months,
the day which is three months after the first day of such Interest
Period and the last day of such Interest Period, (iv) as to any
Competitive Bid Loan as to which the Borrower has selected an Interest
Period of 90 days or less, the last day of such Competitive Interest
Period, and (v) as to any Competitive Bid Loan as to which the Borrower
has selected a Competitive Interest Period of more than 90 days, the day
which is 90 days after the first day of such Competitive Interest Period
and the last day of such Competitive Interest Period.

      "Interest Period": a Eurodollar Interest Period or a Competitive
Interest Period, as the context may require.

      "Investments": as defined in Section 8.5.

      "Invitation to Bid": an invitation to make Competitive Bids in
the form of Exhibit E.

      "Issuing Bank": The Bank of New York.

      "Letter of Credit": as defined in Section 2.18.

      "Letter of Credit Fees": as defined in Section 3.2.

      "Letter of Credit Commitment": the commitment of the Issuing Bank
to issue Letters of Credit having an aggregate outstanding face amount
up to $10,000,000,  and the commitment of the Lenders to participate in
the Letter of Credit Exposure as set forth in Section 2.19.

      "Letter of Credit Exposure": at any date, (i) in respect of all
the Lenders, the sum, without duplication, of (x) the aggregate undrawn
face amount of the outstanding Letters of Credit at such date, (y) the
aggregate amount of unpaid drafts drawn on all Letters of Credit at such
date, and (z) the aggregate unpaid reimbursement obligations in respect
of the Letters of Credit at such date (after giving effect to any Loans
made on such date to pay any such reimbursement obligations), and (ii)
in respect of any Lender, an amount equal to such Lender's Commitment
Percentage multiplied by the amount determined under clause (i) of this
definition.

      "Letter of Credit Request": a request in the form of Exhibit J.

      "Lien": any mortgage, pledge, hypothecation, assignment, deposit
or preferential arrangement, encumbrance, lien (statutory or other), or
other security agreement or security interest of any kind or nature
whatsoever, including, without limitation, any conditional sale or other
title retention agreement and any capital or financing lease having
substantially the same economic effect as any of the foregoing.

      "Loan Documents": collectively, this Agreement, the Notes, the
Pledge Agreement and the Reimbursement Agreements.

      "Loans": the Revolving Credit Loans and/or the Competitive Bid
Loans, as the case may be.
 
      "Margin Stock": any "margin stock", as defined in Regulation U of
the Board of Governors of the Federal Reserve System, as the same may be
amended or supplemented from time to time.

      "Material Adverse Change": a material adverse change in (i) the
financial condition, operations, business or Property of the Borrower
and its Subsidiaries taken as a whole or (ii) the ability of the
Borrower to perform its obligations under the Loan Documents.

      "Material Adverse Effect": a material adverse effect on (i) the
financial condition, operations, business or Property of the Borrower
and its Subsidiaries taken as a whole or (ii) the ability of the
Borrower to perform its obligations under the Loan Documents.

      "Maturity Date": September 27, 1998, or any date subsequent
thereto resulting from an extension of the Maturity Date pursuant to
Section 2.22, or such earlier date on which the Notes shall become due
and payable, whether by acceleration or otherwise.

      "Maximum Offer": as defined in Section 2.4(b).

      "Maximum Request": as defined in Section 2.4(a).

      "Moody's": Moody's Investors Service, Inc., or any successor
thereto.

           "Multiemployer Plan": a Pension Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.

      "Nonconsenting Lender": as defined in Section 2.22.

      "Note": a Revolving Credit Note or a Competitive Bid Note, as the
case may be.

      "Notes": the Revolving Credit Notes and/or the Competitive Bid
Notes, as the case may be.

      "Notice of Conversion/Continuation": a notice substantially in
the form of Exhibit I.

      "Operating Subsidiaries": collectively (i) Atlantic Generation,
Inc., (ii) ATE, (iii) Atlantic Thermal, (iv) Atlantic Jersey Thermal
Systems, Inc., (v) Atlantic Energy Technologies, Inc. and (vi) and each
other Subsidiary of the Borrower engaged in the conduct of an active
trade or business which is designated as an Operating Subsidiary
pursuant to Section 8.7.

      "PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental
Authority succeeding to the functions thereof.

      "Pension Plan": at any date of determination, any Employee
Benefit Plan (including a Multiemployer Plan), the funding requirements
of which (under Section 302 of ERISA or Section 412 of the Code) are, or
at any time within the six years immediately preceding such date, were
in whole or in part, the responsibility of the Borrower, any of its
Subsidiaries or any ERISA Affiliate.

      "Permitted Investments": Investments permitted under Section 8.5.

      "Permitted Liens": Liens permitted to exist under Section 8.2.

      "Permitted Recipient": a Person in which the Borrower owns 50% or
less of the Stock or voting power.

      "Permitted Recipient Loans": loans from time to time made to a
Permitted Recipient by the Borrower to the extent permitted by Section
8.5.

      "Person": any individual, firm, partnership, joint venture,
corporation, association, business enterprise, limited liability
company, joint stock company, unincorporated association, trust,
Governmental Authority or any other entity, whether acting in an
individual, fiduciary, or other capacity, and for the purpose of the
definition of "ERISA Affiliate", a trade or business.

      "Pledge Agreement": the Pledge Agreement, made by the Borrower in
favor of the Agent, as collateral agent for itself, the Lenders, the
Facility A Agent and the Facility A Lenders, substantially in the form
of Exhibit L, as the same may be amended, supplemented or otherwise
modified from time to time.

           "Portion": as defined in Section 2.4(b).

      "Pricing Level I": any time when the Senior Debt Rating is (i) A-
or higher by S&P or (ii) A3 or higher by Moody's, provided, however,
that in the event that (x) the Senior Debt Rating is not available from
either S&P or Moody's, such rating agency shall be deemed to have
assigned its lowest rating and (y) the Senior Debt Rating is not
available from both S&P and Moody's, Pricing Level IV shall be
applicable.

      "Pricing Level II": any time when (i) the Senior Debt Rating is
(a) BBB or higher by S&P or (b) Baa2 or higher by Moody's and (ii)
Pricing Level I does not apply, provided, however, that in the event
that (x) the Senior Debt Rating is not available from either S&P or
Moody's, such rating agency shall be deemed to have assigned its lowest
rating and (y) the Senior Debt Rating is not available from both S&P and
Moody's, Pricing Level IV shall be applicable.

      "Pricing Level III": any time when (i) the Senior Debt Rating is
(a) BBB- or higher by S&P or (b) Baa3 or higher by Moody's and (ii)
Pricing Levels I and II do not apply, provided, however, that in the
event that (x) the Senior Debt Rating is not available from either S&P
or Moody's, such rating agency shall be deemed to have assigned its
lowest rating and (y) the Senior Debt Rating is not available from both
S&P and Moody's, Pricing Level IV shall be applicable.

      "Pricing Level IV": any time when Pricing Levels I, II and III do
not apply.

      "Prohibited Transaction": a transaction that is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.

      "Property": all types of real, personal, tangible, intangible or
mixed property.

      "Real Property": all real property owned or leased (or previously
owned or leased) by the Borrower or any of its Subsidiaries (or any of
their respective predecessors).

      "Reimbursement Agreement": as defined in Section 2.18(b).

      "Replacement Lender": as defined in Section 2.22.

      "Reportable Event": with respect to any Pension Plan, (i) any
event set forth in Sections 4043(b) (other than a Reportable Event as to
which the 30 day notice requirement is waived by the PBGC under
applicable regulations), 4062(c) or 4063(a) of ERISA or the regulations
thereunder, (ii) an event requiring the Borrower, any of its
Subsidiaries or any ERISA Affiliate to provide security to a Pension
Plan under Section 401(a)(29) of the Code, or (iii) any failure to make
any payment required by Section 412(m) of the Code.

      "Required Lenders": (i) if the Commitments exist and no Revolving
Credit Loans or Letters of Credit are outstanding, Lenders having
Commitments equal to at least  66-2/3% of the sum of the Aggregate
Commitments; (ii) if the Commitments exist and Revolving Credit Loans or
Letters of Credit are outstanding, Lenders holding Revolving Credit
Notes and participation interests in Letters of Credit having an
aggregate unpaid principal balance and Letter of Credit Exposure equal
to at least 66-2/3% of the aggregate of Revolving Credit Loans
outstanding and Letter of Credit Exposure; and (iii) if the Commitments
have been terminated or otherwise no longer exist, Lenders holding Notes
and participation interests in Letters of Credit having an aggregate
unpaid principal balance and Letter of Credit Exposure equal to at least
66-2/3% of the aggregate of Loans outstanding and Letter of Credit Exposure.

      "Restricted Payment": as to any Person (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of Stock or other equity interest in such Person now or hereafter
outstanding (other than a dividend payable solely in shares of such
Stock to the holders of such shares) and (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other
acquisition, direct or indirect, of any shares of any class of Stock or
other equity interest in such Person now or hereafter outstanding.

      "Restricted Subsidiaries": collectively, the Operating
Subsidiaries and ACE. 

      "Revolving Credit Loans": as defined in Section 2.1.

      "Senior Debt Rating": the long-term senior secured debt rating of
ACE as from time to time determined by S&P and/or Moody's.

      "S&P": Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or any successor thereto.

      "SEC": the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions thereof.

      "Special Counsel": Emmet, Marvin & Martin, LLP, special counsel
to the Agent.

      "Stock": any and all shares, rights, interests, participations,
warrants or other equivalents (however designated) of corporate stock.

      "Submission Deadline": as defined in Section 2.4(b).

      "Subsidiary": as to any Person, any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which such Person or any Subsidiary of such Person, directly
or indirectly, either (i) in respect of a corporation, owns or controls
more than 50% of the outstanding Stock having ordinary voting power to
elect a majority of the board of directors or similar managing body,
irrespective of whether a class or classes shall or might have voting
power by reason of the happening of any contingency, or (ii) in respect
of an association, partnership, joint venture or other business entity,
is entitled to share in more than 50% of the profits and losses, however
determined.

           "Tax": any present or future tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature and whatever called, by a
Governmental Authority, on whomsoever and wherever imposed, levied,
collected, withheld or assessed.

      "Tax on the Overall Net Income": as to any Person, a Tax imposed
by the jurisdiction in which that Person's principal office (and/or, in
the case of a Lender, its Domestic Lending Office) is located or by any
political subdivision or taxing authority thereof or in which that
Person is deemed to be doing business on all or part of the net income,
profits or gains of that Person (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to
a particular jurisdiction, or otherwise).

      "Termination Event": with respect to any Pension Plan, (i) a
Reportable Event, (ii) the termination of a Pension Plan, or the filing
of a notice of intent to terminate a Pension Plan, or the treatment of a
Pension Plan amendment as a termination under Section 4041(c) of ERISA,
(iii) the institution of proceedings to terminate a Pension Plan under
Section 4042 of ERISA, or (iv) the appointment of a trustee to
administer any Pension Plan under Section 4042 of ERISA.

      "United States": the United States of America (including the
States thereof and the District of Columbia).

 2.   Principles of Construction

      (a)  All terms defined in a Loan Document shall have the meanings
given such terms therein when used in the other Loan Documents or any
certificate, opinion or other document made or delivered pursuant
thereto, unless otherwise defined therein.

      (b)  As used in the Loan Documents and in any certificate,
opinion or other document made or delivered pursuant thereto, accounting
terms not defined in Section 1.1, and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.

      (c)  The words "hereof", "herein", "hereto" and "hereunder" and
similar words when used in a Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof, and
Section, schedule and exhibit references contained therein shall refer
to Sections thereof or schedules or exhibits thereto unless otherwise
expressly provided therein.

      (d)  The phrase "may not" is prohibitive and not permissive.

      (e)  Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.

      (f)  Unless specifically provided in a Loan Document to the
contrary, references to a time shall refer to New York City time.

      (g)  Unless specifically provided in a Loan Document to the
contrary, in the computation of periods of time from a specified date to
a later specified date, the word  "from" means "from and including" and
the words "to" and "until" each means "to but excluding".

      (h)  References in any Loan Document to a fiscal period shall
refer to that fiscal period of the Borrower.


B.    AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT

 1.   Revolving Credit Loans

      Subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans (each a "Revolving Credit Loan"
and, as the context may require, collectively with all other Revolving
Credit Loans of such Lender and with the Revolving Credit Loans of all
other Lenders, the "Revolving Credit Loans") to the Borrower from time
to time during the Commitment Period, provided, however, that
immediately after giving effect thereto (i) such Lender's Credit
Exposure would not exceed such Lender's Commitment, and (ii) the
Aggregate Credit Exposure would not exceed the Aggregate Commitments. 
During the Commitment Period, the Borrower may borrow, prepay in whole
or in part and reborrow under the Aggregate Commitments, all in
accordance with the terms and conditions of this Agreement.

 2.   Revolving Credit Notes

      The Revolving Credit Loans made by a Lender shall be evidenced by
a promissory note of the Borrower, substantially in the form of Exhibit
B-1, with appropriate insertions therein as to date and principal amount
(each, as indorsed or modified from time to time, a "Revolving Credit
Note" and, collectively with the Revolving Credit Notes of all other
Lenders, the "Revolving Credit Notes"), payable to the order of such
Lender for the account of its Applicable Lending Office and representing
the obligation of the Borrower to pay the lesser of (i) the original
amount of the Commitment of such Lender and (ii) the aggregate unpaid
principal balance of all Revolving Credit Loans made by such Lender,
with interest thereon as prescribed in Section 2.8.  Each Revolving
Credit Note shall (iii) be dated the first Borrowing Date, (iv) be
stated to mature on the Maturity Date and (v) bear interest from the
date thereof on the unpaid principal balance thereof at the applicable
interest rate or rates per annum determined as provided in Section 2.8.
Interest shall be payable as specified in Section 2.8.

 3.   Procedure for Borrowing Revolving Credit Loans

      (a)  The Borrower may borrow Revolving Credit Loans under the
Aggregate Commitments on any Business Day during the Commitment Period,
provided, however, that the Borrower shall notify the Agent in writing
by facsimile transmission no later than (i) 12:00 p.m., three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar
Advances and (ii) 11:30 a.m. on the requested Borrowing Date, in the
case of ABR Advances, in each case specifying (1) the aggregate
principal amount to be borrowed under the Aggregate Commitments, (2) the
requested Borrowing Date, (3) whether such borrowing is to consist of
one or more Eurodollar Advances, ABR Advances, or a combination thereof
and (4) if the borrowing is to consist of one or more  Eurodollar
Advances, the length of the Eurodollar Interest Period for each such
Eurodollar Advance, provided, however, that no Eurodollar Interest
Period selected in respect of any Revolving Credit Loan shall end after
the Maturity Date.  If the Borrower fails to give timely notice in
connection with a request for a Eurodollar Advance, the Borrower shall
be deemed to have elected that such Advance shall be made as an ABR
Advance.  Each such notice shall be irrevocable and confirmed promptly
(and in any event within five Business Days) by delivery to the Agent of
a manually signed Borrowing Request.  Each ABR Advance shall be in an
aggregate principal amount equal to $1,000,000 or an integral multiple
of $1,000,000 in excess thereof (or, if the unused amount of the
Aggregate Commitments is less than such amount, then such lesser amount
of the Aggregate Commitments), and each Eurodollar Advance shall be in
an aggregate principal amount equal to $1,000,000 or an integral
multiple of $1,000,000 in excess thereof.

      (b)  Upon receipt of each notice of borrowing from the Borrower,
the Agent shall promptly notify each Lender thereof.  Subject to its
receipt of the notice referred to in the preceding sentence, each Lender
will make the amount of its Commitment Percentage of each borrowing
available to the Agent for the account of the Borrower at the office of
the Agent set forth in Section 11.2 not later than 2:00 p.m. on the
relevant Borrowing Date requested by the Borrower, in funds immediately
available to the Agent at such office.  The amounts so made available to
the Agent on such Borrowing Date will then, subject to the satisfaction
of the terms and conditions of this Agreement, as determined by the
Agent, be made available on such date to the Borrower by the Agent at
the office of the Agent specified in Section 11.2 by crediting the
account of the Borrower on the books of such office with the aggregate
of said amounts received by the Agent. In the event of any inconsistency
between the provisions of this Section and Sections 2.18 and 2.19 with
respect to Loans made pursuant to Section 2.18 to reimburse the Issuing
Bank for amounts paid by the Issuing Bank under Letters of Credit, the
provisions of Sections 2.18 and 2.19 shall control.

      (c)  Unless the Agent shall have received prior notice from a
Lender (by telephone or otherwise, such notice to be promptly confirmed
by fax or other writing) that such Lender will not make available to the
Agent such Lender's Commitment Percentage of the Revolving Credit Loans
requested by the Borrower, the Agent may assume that such Lender has
made such share available to the Agent on the Borrowing Date in
accordance with this Section, provided that such Lender received notice
of the proposed borrowing from the Agent, and the Agent may, in reliance
upon such assumption, make available to the Borrower on the Borrowing
Date a corresponding amount.  If and to the extent such Lender shall not
have so made its Commitment Percentage of such Loans available to the
Agent, such Lender and the Borrower severally agree to pay to the Agent
forthwith on demand such corresponding amount (to the extent not
previously paid by the other), together with interest thereon for each
day from the date such amount is made available to the Borrower to the
date such amount is paid to the Agent, at a rate per annum equal to, in
the case of the Borrower, the applicable interest rate set forth in
Section 2.8 for such Loans, and, in the case of such Lender, the Federal
Funds Rate in effect on each such day (as determined by the Agent). 
Such payment by the Borrower, however, shall be without prejudice to its
rights against such Lender.  If such Lender shall pay to the Agent such
corresponding amount, such amount so paid shall constitute such Lender's
Revolving Credit Loan as part of the Revolving Credit Loans for purposes
of this Agreement, which Revolving Credit Loan shall be deemed to have
been made by such Lender on the Borrowing Date applicable to such
Revolving Credit Loans.

           (d)  If a Lender makes a new Revolving Credit Loan on a Borrowing
Date on which the Borrower is to repay a Revolving Credit Loan or
Competitive Bid Loan from such Lender, such Lender shall apply the
proceeds of such new Revolving Credit Loan to make such repayment, and
only the excess of the proceeds of such new Revolving Credit Loan over
the Revolving Credit Loan or Competitive Bid Loan being repaid need be
made available to the Agent.

      (e)  Notwithstanding the provisions of Section 2.3(a), the Agent
may act without liability upon the basis of telephonic notice of
borrowing believed by the Agent in good faith to be from an authorized
officer of the Borrower prior to receipt of written notice and
confirmation by facsimile or otherwise.  In each such case, the Borrower
waives the right to dispute the Agent's record of the terms of such
telephone notice of such borrowing.

 4.   Competitive Bid Loans; Procedure

      (a)  The Borrower may make Competitive Bid Requests by 12:00 p.m.
at least one Business Day prior to the proposed Borrowing Date for one
or more Competitive Bid Loans.  Each Competitive Bid Request given to
the Agent (which shall promptly on the same day give notice thereof to
each Lender by facsimile transmission of an Invitation to Bid if the
Competitive Bid Request is not rejected pursuant to this Section), shall
be given in writing by facsimile transmission (confirmed promptly, and
in any event within five Business Days, by the delivery to the Agent of
a Competitive Bid Request manually signed by the Borrower), and shall
specify (i) the proposed Borrowing Date, which shall be a Business Day,
(ii) the aggregate amount of the requested Competitive Bid Loans (the
"Maximum Request") which amount (A) shall not exceed an amount which, on
the proposed Borrowing Date and after giving effect to the requested
Competitive Bid Loans, would cause the Aggregate Credit Exposure to
exceed the Aggregate Commitments and (B) shall be in a principal amount
equal to $1,000,000 or an integral multiple of $1,000,000 in excess
thereof, (iii) the Competitive Interest Period(s) therefor and the last
day of each such Competitive Interest Period, and (iv) if more than one
Competitive Interest Period is so specified, the principal amount
allocable to each such Competitive Interest Period (which amount shall
not be less than $1,000,000 or an integral multiple of $1,000,000 in
excess thereof).  A Competitive Bid Request that does not conform
substantially to the form of Exhibit D shall be rejected, and the Agent
shall promptly notify the Borrower of such rejection.  Notwithstanding
anything contained herein to the contrary, (1) not more than three
Competitive Interest Periods may be requested pursuant to any
Competitive Bid Request and (2) not more than three Competitive Bid
Loans may be outstanding at any one time.

      (b)  Each Lender in its sole discretion may (but is not obligated
to) submit one or more Competitive Bids to the Agent not later than
10:00 a.m. on the proposed Borrowing Date specified in such Competitive
Bid Request (such time being herein called the "Submission Deadline"),
by fax or other writing, and thereby irrevocably offer to make all or
any part (any such part referred to as a "Portion") of any Competitive
Bid Loan described in the relevant Competitive Bid Request at a rate of
interest per annum (each a "Bid Rate") specified therein in an aggregate
principal amount of not less than $1,000,000 or an integral multiple of
$1,000,000 in excess thereof, provided that Competitive Bids submitted
by BNY may only be submitted if BNY notifies the Borrower of the terms
of its Competitive Bid not later than thirty minutes prior to the
Submission  Deadline.  Multiple Competitive Bids may be delivered to the
Agent by a Lender.  The aggregate Portions of Competitive Bid Loans for
any or all Competitive Interest Periods offered by each Lender in its
Competitive Bid may exceed the Maximum Request contained in the relevant
Competitive Bid Request, provided that each Competitive Bid shall set
forth the maximum aggregate amount of the Competitive Bid Loans offered
thereby which the Borrower may accept (the "Maximum Offer"), which
Maximum Offer shall not exceed the Maximum Request.  If the Agent has
not received a Competitive Bid from any Lender by the Submission
Deadline, such Lender shall be deemed not to have made a Competitive Bid
and shall not be permitted or obligated to make a Competitive Bid Loan
on the proposed Borrowing Date.

      (c)  The Agent shall promptly give notice by telephone (promptly
confirmed by fax or other writing) to the Borrower of all Competitive
Bids received by the Agent prior to the Submission Deadline which comply
in all material respects with this Section.  The Borrower shall, in its
sole discretion but subject to Section 2.4(d), irrevocably accept or
reject any such Competitive Bid (or any Portion thereof) not later than
10:30 a.m. on the day of the Submission Deadline by notice to the Agent
by telephone (confirmed by fax or other writing in the form of a
Competitive Bid Accept/Reject Letter promptly the same day).  Promptly
upon receipt by the Agent of such a Competitive Bid Accept/Reject
Letter, the Agent will give notice to each Lender that submitted a
Competitive Bid as to the extent, if any, that such Lender's Competitive
Bid shall have been accepted.  If the Agent fails to receive notice from
the Borrower of its acceptance or rejection of any Competitive Bids at
or prior to 10:30 a.m. on the day of the Submission Deadline, all such
Competitive Bids shall be deemed to have been rejected by the Borrower,
and the Agent will give to each Lender that submitted a Competitive Bid
notice of such rejection by telephone on such day.  In due course
following the acceptance of any Competitive Bid, the Agent shall notify
each Lender which submitted a Competitive Bid, in the form of a
Competitive Bid Loan Confirmation, of the amount, maturity date and Bid
Rate for each Competitive Bid Loan.

      (d)  If the Borrower accepts a Portion of a proposed Competitive
Bid Loan for a single Competitive Interest Period at the Bid Rate
provided therefor in a Lender's Competitive Bid, such Portion shall be
in a principal amount of $1,000,000 or an integral multiple of
$1,000,000 in excess thereof (subject to such lesser allocation as may
be made pursuant to the provisions of this Section 2.4(d)).  The
aggregate principal amount of Competitive Bid Loans accepted by the
Borrower following Competitive Bids responding to a Competitive Bid
Request shall not exceed the Maximum Request.  The aggregate principal
amount of Competitive Bid Loans accepted by the Borrower pursuant to a
Lender's Competitive Bid shall not exceed the Maximum Offer therein
contained.  If the Borrower accepts any Competitive Bid Loans or Portion
offered in any Competitive Bid, the Borrower must accept Competitive
Bids (and Competitive Bid Loans and Portions thereby offered) based
exclusively upon the successively lowest Bid Rates within each
Competitive Interest Period and no other criteria.  If two or more
Lenders submit Competitive Bids with identical Bid Rates for the same
Competitive Interest Period and the Borrower accepts any thereof, the
Borrower shall, subject to the first three sentences of this Section
2.4(d), accept all such Competitive Bids as nearly as possible in
proportion to the amounts of such Lender's respective Competitive Bids
with identical Bid Rates for such Competitive Interest Period, provided,
that if the amount of Competitive Bid Loans to be so allocated is not
sufficient to enable each such Lender to make such Competitive Bid Loan
(or Portions thereof) in an aggregate principal amount of $1,000,000 or
an  integral multiple of $1,000,000 in excess thereof, the Borrower
shall round the Competitive Bid Loans (or Portions thereof) allocated to
such Lender or Lenders as the Borrower shall select as necessary to a
minimum of $1,000,000 or an integral multiple of $500,000 in excess
thereof.

      (e)  Not later than 2:00 p.m. on the relevant Borrowing Date,
each Lender whose Competitive Bid was accepted by the Borrower shall
make available to the Agent at its office set forth in Section 11.2, in
immediately available funds, the proceeds of such Lender's Competitive
Bid Loan(s). The amounts so made available to the Agent on such
Borrowing Date will then, subject to the satisfaction of the terms and
conditions of this Agreement, as determined by the Agent, be made
available on such date to the Borrower by the Agent at the office of the
Agent specified in Section 11.2 by crediting the account of the Borrower
on the books of such office with the aggregate of said amounts received
by the Agent.

      (f)  All notices required by this Section 2.4 shall be given in
accordance with Section 11.2.

      (g)  The Competitive Bid Loans made by each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit B-2 (each, as indorsed or modified from time to time, a
"Competitive Bid Note" and, collectively with the Competitive Bid Notes
of all other Lenders, the "Competitive Bid Notes"), payable to the order
of such Lender for the account of its Applicable Lending Office, and
dated the first Borrowing Date.  Each Competitive Bid Loan shall be due
and payable on the earlier of (i) the last day of the Competitive
Interest Period applicable thereto and (ii) the Maturity Date.

 5.   Voluntary Reduction or Termination of Aggregate Commitments;
Letter of Credit

      The Borrower shall have the right, upon at least three Business
Days' prior written notice to the Agent, at any time to terminate the
Aggregate Commitments or from time to time to permanently reduce the
Aggregate Commitments or the Letter of Credit Commitments, provided,
however, that each such reduction shall be in the amount of $5,000,000
or an integral multiple of $1,000,000 in excess thereof.  Each reduction
of the Aggregate Commitments shall be applied pro rata according to the
Commitment Percentage of each Lender.  Simultaneously with each
reduction of the Aggregate Commitments under this Section, the Borrower
shall (i) pay the Facility Fee accrued on the amount by which the
Aggregate Commitments have been reduced and (ii) prepay the Loans as
required by Section 2.6.  The Aggregate Commitments shall not be reduced
below an amount equal to the Aggregate Credit Exposure (after giving
effect to any prepayment of the Loans made simultaneously with such
reduction of the Aggregate Commitments). The Aggregate Commitments shall
not be reduced to the extent that, immediately after giving effect
thereto, the Commitment of any Lender would exceed the sum of (i) the
aggregate principal amount of all Revolving Credit Loans then
outstanding from such Lender plus (ii) the Letter of Credit Exposure of
such Lender.  The Letter of Credit Commitment shall not be reduced below
an amount equal to the Letter of Credit Exposure.

      6.   Prepayments of the Loans

      (a)  Voluntary Prepayments. The Borrower may, at its option,
prepay the Revolving Credit Loans without premium or penalty, in full at
any time or in part from time to time by notifying the Agent in writing
no later than 11:30 a.m. on the date of the proposed prepayment date, in
the case of Revolving Credit Loans consisting of ABR Advances and no
later than 12:00 p.m. on the third Business Day prior to the proposed
prepayment date, in the case of Revolving Credit Loans consisting of
Eurodollar Advances, specifying the Revolving Credit Loans to be
prepaid, the amount to be prepaid and the date of prepayment. 
Competitive Bid Loans may not be prepaid.  Such notice shall be
irrevocable and the amount specified in such notice shall be due and
payable on the date specified, together with accrued interest to the
date of such payment on the amount prepaid.  Upon receipt of such
notice, the Agent shall promptly notify each Lender thereof.  Each
partial prepayment of Revolving Credit Loans shall be in an aggregate
principal amount of (A) $1,000,000 or an integral multiple of $1,000,000
in excess thereof, or (B) if the outstanding principal balance of the
Revolving Credit Loans is less that the minimum amounts set forth in
clause (A), then such lesser outstanding principal balance.  After
giving effect to any partial prepayment with respect to Eurodollar
Advances which were made (whether as the result of a borrowing or a
conversion) on the same date and which had the same Interest Period, the
outstanding principal amount of such Eurodollar Advances shall exceed
(subject to Section 2.7) $1,000,000 or an integral multiple of
$1,000,000 in excess thereof.  If any prepayment is made in respect of
any Eurodollar Advance or Competitive Bid Loan, in whole or in part,
prior to the last day of the applicable Interest Period, the Borrower
agrees to indemnify the applicable Lenders in accordance with Section
2.13.

      (b)  Mandatory Prepayments Relating to Reductions of the
Aggregate Commitments. Simultaneously with each reduction of the
Aggregate Commitments under Section 2.5, the Borrower shall prepay the
Loans by the amount, if any, by which the aggregate unpaid principal
balance of the Loans exceeds the amount of the Aggregate Commitments as
so reduced.  Such prepayments shall be applied (i) first, to prepay the
Revolving Credit Loans pro rata according to the Commitment of each
Lender, and (ii) then, to the extent of any excess remaining, to prepay
the Competitive Bid Loans, pro rata according to the outstanding amount
of each Competitive Bid Loan.

 7.   Conversions and Continuations

      (a)  The Borrower may elect from time to time to convert
Eurodollar Advances to ABR Advances by giving the Agent at least one
Business Day's prior irrevocable notice in writing by facsimile
transmission of such election (confirmed promptly, and in any event
within five Business Days, by the delivery of a manually signed Notice
of Conversion/Continuation), specifying the amount to be so converted,
provided, that any such conversion of Eurodollar Advances shall only be
made on the last day of the Interest Period applicable thereto.  In
addition, the Borrower may elect from time to time to (i) convert ABR
Advances to Eurodollar Advances and (ii) to continue Eurodollar Advances
by selecting a new Interest Period therefor, in each case by giving the
Agent at least three Business Days' prior irrevocable notice in writing
by facsimile transmission of such election (confirmed promptly, and in
any event within five Business Days, by the delivery of a manually
signed Notice of Conversion/Continuation), in the case of a conversion
to, or continuation of, Eurodollar Advances, specifying the amount to 
be so converted and the initial Interest Period relating thereto,
provided that any such conversion of ABR Advances to Eurodollar Advances
shall only be made on a Business Day and any such continuation of
Eurodollar Advances shall only be made on the last day of the Interest
Period applicable to the Eurodollar Advances which are to be continued
as such new Eurodollar Advances.  The Agent shall promptly provide the
Lenders with a copy of each such Notice of Conversion/Continuation.  ABR
Advances and Eurodollar Advances may be converted or continued pursuant
to this Section in whole or in part, provided that conversions of ABR
Advances to Eurodollar Advances, or continuations of Eurodollar Advances
shall be in an aggregate principal amount of $1,000,000 or such amount
plus a whole multiple of $1,000,000 in excess thereof.

      (b)  Notwithstanding anything in this Section to the contrary, no
ABR Advance may be converted to a Eurodollar Advance and no Eurodollar
Advance may be continued, if the Borrower or the Agent has knowledge
that a Default or Event of Default has occurred and is continuing either
(i) at the time the Borrower shall notify the Agent of its election to
convert or continue or (ii) on the requested Conversion/Continuation
Date.  In such event, such ABR Advance shall be automatically continued
as an ABR Advance, or such Eurodollar Advance shall be automatically
converted to an ABR Advance on the last day of the Interest Period
applicable to such Eurodollar Advance.  If an Event of Default shall
have occurred and be continuing, the Agent shall, at the request of the
Required Lenders, notify the Borrower (by telephone or otherwise) that
all, or such lesser amount as the Required Lenders shall designate, of
the outstanding Eurodollar Advances shall be automatically converted to
ABR Advances, in which event such Eurodollar Advances shall be
automatically converted to ABR Advances on the date such notice is
given.

      (c)  No Interest Period selected in respect of conversion or
continuation of any Eurodollar Advance shall end after the Maturity
Date.

      (d)  Each conversion or continuation shall be effected by each
Lender by applying the proceeds of its new ABR Advance or Eurodollar
Advance, as the case may be, to its Advances (or portion thereof) being
converted (it being understood that such conversion shall not constitute
a borrowing for purposes of Sections 4, 5 or 6).

      (e)  Notwithstanding the provisions of Section 2.7(a), the Agent
may act without liability upon the basis of telephonic notice of such
conversion or continuation believed by the Agent in good faith to be
from an authorized officer of the Borrower prior to receipt of written
notice and confirmation, by facsimile or otherwise.  In each such case,
the Borrower waives the right to dispute the Agent's record of the terms
of such telephone notice of such conversion or continuation.

 8.   Interest Rate and Payment Dates

      (a)  Prior to Maturity. Except as otherwise provided in Section
2.8(b), prior to maturity, the Loans shall bear interest on the
outstanding principal balance thereof at the applicable interest rate or
rates per annum set forth below:

      ADVANCES                        RATE

     Each ABR Advance              Alternate Base Rate.

     Each Eurodollar Advance       Eurodollar Rate for the
                                   applicable Interest Period
                                   plus the Applicable Margin.

     Each Competitive              Bid Rate applicable thereto
                                   for Bid Loan the applicable
                                   Competitive Interest Period.


 (b)  Late Charges. If all or any portion of the principal balance of
or interest payable on any of the Loans or any other amount payable
under the Loan Documents shall not be paid when due (whether at the
stated maturity thereof, by acceleration or otherwise), such overdue
balance or amount shall bear interest at a rate per annum (whether
before or after the entry of a judgment thereon) equal to 2% plus the
rate which would otherwise be applicable pursuant to Section 2.8(a),
from the date of such nonpayment to, but not including, the date such
balance is paid in full.  All such interest shall be payable on demand.

      (c)  In General. Interest on (i) ABR Advances to the extent based
on the BNY Rate shall be calculated on the basis of a 365 or 366-day
year (as the case may be), and (ii) ABR Advances to the extent based on
the Federal Funds Rate, on Eurodollar Advances and on Competitive Bid
Loans shall be calculated on the basis of a 360-day year, in each case,
for the actual number of days elapsed, including the first day but
excluding the last.  Except as otherwise provided in Section 2.8(b),
interest shall be payable in arrears on each Interest Payment Date and
upon each payment (including prepayment) of the Loans.  Any change in
the interest rate on the Loans resulting from a change in the Alternate
Base Rate or reserve requirements shall become effective as of the
opening of business on the day on which such change shall become
effective.  The Agent shall, as soon as practicable, notify the Borrower
and the Lenders of the effective date and the amount of each such change
in the BNY Rate, but any failure to so notify shall not in any manner
affect the obligation of the Borrower to pay interest on the Loans in
the amounts and on the dates required.  Each determination of the
Alternate Base Rate or a Eurodollar Rate by the Agent pursuant to this
Agreement shall be conclusive and binding on all parties hereto absent
manifest error.  At no time shall the interest rate payable on the
Loans, together with the Facility Fee and all other amounts payable
under the Loan Documents, to the extent the same are construed to
constitute interest, exceed the Highest Lawful Rate.  If any amount paid
hereunder would exceed the maximum amount of interest permitted by the
Highest Lawful Rate, then such amount shall automatically be reduced to
such maximum permitted amount, and interest for any subsequent period,
to the extent less than the maximum amount permitted for such period by
the Highest Lawful Rate, shall be increased by the unpaid amount of such
reduction.  Any interest actually received for any period in excess of
such maximum allowable amount for such period shall be deemed to have
been applied as a prepayment of (x) the Loans or, if no Loans are then
outstanding, (y) any unpaid reimbursement obligations in respect of
Letters of Credit.  The Borrower acknowledges that to the extent
interest payable on ABR Advances is based on the BNY Rate, the BNY Rate
is only one of the bases for computing interest on loans made by the
Lenders, and by basing interest payable on ABR Advances on the BNY Rate,
the Lenders have not committed to charge, and the Borrower has not in
any way bargained for, interest based on a lower or the lowest rate at
which the Lenders may now or in the future make loans to other
borrowers.

      9.   Substituted Interest Rate

      In the event that (i) the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that by
reason of circumstances affecting the interbank eurodollar market either
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate or (ii) any Lender shall have notified the Agent that it
has determined (which determination shall be conclusive and binding on
the Borrower) that the applicable Eurodollar Rate will not adequately
and fairly reflect the cost to such Lender of maintaining or funding
loans bearing interest based on such Eurodollar Rate, with respect to
any portion of the Revolving Credit Loans that the Borrower has
requested be made as Eurodollar Advances or Eurodollar Advances that
will result from the requested conversion or continuation of any portion
of the Advances into or as Eurodollar Advances (each, an "Affected
Advance"), the Agent shall promptly notify the Borrower and the Lenders
(by telephone or otherwise, to be promptly confirmed in writing) of such
determination on or, to the extent practicable, prior to the requested
Borrowing Date or Conversion/Continuation Date for such Affected
Advances.  If the Agent shall give such notice, (a) any Affected
Advances shall be made as ABR Advances, (b) the Advances (or any portion
thereof) that were to have been converted to or continued as Affected
Advances shall be converted to or continued as ABR Advances and (c) any
outstanding Affected Advances shall be converted, on the last day of the
then current Interest Period with respect thereto, to ABR Advances. 
Until any notice under clauses (i) or (ii), as the case may be, of this
Section has been withdrawn by the Agent (by notice to the Borrower
promptly upon either (1) the Agent having determined that such
circumstances affecting the interbank eurodollar market no longer exist
and that adequate and reasonable means do exist for determining the
Eurodollar Rate pursuant to Section 2.8 or (2) the Agent having been
notified by such Lender that circumstances no longer render the Advances
(or any portion thereof) Affected Advances, no further Eurodollar
Advances shall be required to be made by the Lenders, nor shall the
Borrower have the right to convert or continue all or any portion of the
Loans to Eurodollar Advances.

 10.  Taxes

      (a)  Payments to Be Free and Clear. Provided that all
documentation, if any, then required to be delivered by any Lender or
the Agent pursuant to subsection (c) has been delivered, all sums
payable by the Borrower under the Loan Documents shall (except to the
extent required by law) be paid free and clear of and without any
deduction or withholding on account of any Tax (other than a Tax on the
Overall Net Income of any Lender (for which payment need not be free and
clear but no deduction or withholding shall be made unless then required
by applicable law)) imposed, levied, collected, withheld or assessed by
or within the United States or any political subdivision in or of the
United States or any other jurisdiction from or to which a payment is
made by or on behalf of the Borrower or by any federation or
organization of which the United States or any such jurisdiction is a
member at the time of payment.

      (b)  Grossing-up of Payments. If the Borrower or any other Person
is required by law to make any deduction or withholding on account of
any such Tax (other than a Tax on the Overall Net Income of a Lender)
from any sum paid or payable by the Borrower to the Agent or any Lender
under any of the Loan Documents:

                (i) the Borrower shall notify the Agent and such Lender of
      any such requirement or any change in any such requirement as soon as
      the Borrower becomes aware of it;
 
           (ii) the Borrower shall pay any such Tax before the date on
 which penalties attach thereto, such payment to be made (if the
 liability to pay is imposed on the Borrower) for its own account or
 (if that liability is imposed on the Agent or such Lender, as the case
 may be) on behalf of and in the name of the Agent or such Lender;
 
           (iii) the sum payable by the Borrower to the Agent or a
 Lender in respect of which the relevant deduction, withholding or
 payment is required shall be increased to the extent necessary to
 ensure that, after the making of that deduction, withholding or
 payment, the Agent or such Lender, as the case may be, receives on the
 due date therefor a net sum equal to what it would have received had
 no such deduction, withholding or payment been required or made; and
 
           (iv) within 30 days after paying any sum from which it is
 required by law to make any deduction or withholding, and within 30
 days after the due date of payment of any Tax which it is required by
 clause (b) above to pay, the Borrower shall deliver to the Agent and
 the applicable Lender evidence satisfactory to the other affected
 parties of such deduction, withholding or payment and of the
 remittance thereof to the relevant Governmental Authority;

provided that no such additional amount shall be required to be paid to
any Lender under clause (iii) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender (in
the case of each other Lender) in any such requirement for a deduction,
withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that
in effect at the date of this Agreement or at the date of such
Assignment and Acceptance, as the case may be, in respect of payments to
such Lender.

      (c)  Refunds and Credits. If the Borrower makes any additional
payment to any Lender pursuant to this Section 2.10 in respect of any
Tax, and such Lender determines that it has received (i) a refund of
such Tax or (ii) a credit against or relief or remission for, or a
reduction in the amount of, any tax or other governmental charge
attributable solely to any deduction or credit for any Tax with respect
to which it has received payments under this Section 2.10, such Lender
shall to the extent that it can do so without prejudice to the retention
of such refund, credit, relief, remission or reduction, pay to the
Borrower such amount as such Lender shall have determined to be
attributable to the deduction or withholding of such Tax.  If, within
one year after the payment of any such amount to the Borrower, such
Lender determines that it was not entitled to such refund, credit,
relief, remission or reduction to the full extent of any payment made
pursuant to the first sentence of this Section 2.10(c), the Borrower
shall upon notice and demand of such Lender promptly repay the amount of
such overpayment.  Any determination made by such Lender pursuant to
this Section 2.10(c) shall in the absence of bad faith or manifest error
be conclusive, and nothing in this Section 2.10(c) shall be construed as
requiring any Lender to conduct its business or to arrange or alter in
any respect its tax or financial affairs (except as required by Section
2.17(a)) so that it is  entitled to receive such a refund, credit or
reduction or as allowing any person to inspect any records, including
tax returns of any Lender.

      (d)  Limitation of Liability. No Lender shall be entitled to
demand any payment under this Section 2.10 more than six months
following the payment to or for the account of such Lender of all other
amounts payable hereunder and under any Note held by such Lender and the
termination of such Lender's Commitment; provided, however, that the
foregoing proviso shall in no way limit the right of any Lender to
demand or receive any payment under this Section 2.10 to the extent that
such payment relates to the retroactive application of any Tax if such
demand is made within six months after the implementation of such Tax.

      (e)  U.S. Tax Certificates. Each Lender that is organized under
the laws of any jurisdiction other than the United States shall deliver
to the Agent for transmission to the Borrower, on or prior to the
Effective Date (in the case of each Lender listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance
Agreement pursuant to which it becomes a Lender (in the case of each
other Lender), and at such other times as may be necessary in the
determination of the Borrower or the Agent (each in the reasonable
exercise of its discretion), such certificates, documents or other
evidence, properly completed and duly executed by such Lender
(including, without limitation, Internal Revenue Service Form W-8, Form
1001 or Form 4224 or any other certificate or statement of exemption
required by Treasury Regulations Section 1.1441-4(a) or Section
1.1441-6(c), or Temporary Treasury Regulations Section 35a9999-4T or
Section 35a9999-5, or any successor thereto) to establish that such
Lender is not subject to deduction or withholding of United States
federal income tax under Section 1441 or 1442 of the Code or otherwise
(or under any comparable provisions of any successor statute) with
respect to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Loan Documents.  The Borrower
shall not be required to pay any additional amount to any such Lender
under subsection (b)(iii) above if such Lender shall have failed to
satisfy the requirements of the immediately preceding sentence; provided
that if such Lender shall have satisfied such requirements on the
Effective Date (in the case of each Lender listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance
Agreement pursuant to which it became a Lender (in the case of each
other Lender), nothing in this subsection shall relieve the Borrower of
its obligation to pay any additional amounts pursuant to subsection
(b)(iii) in the event that, as a result of any change in applicable law,
such Lender is no longer properly entitled to deliver certificates,
documents or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described in the
immediately preceding sentence.

 11.  Illegality

      Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any
Lender to make or maintain its Eurodollar Advances as contemplated by
this Agreement, (i) the commitment of such Lender hereunder to make
Eurodollar Advances or convert ABR Advances to Eurodollar Advances shall
forthwith be suspended and (ii) such Lender's Loans then outstanding as
Eurodollar Advances affected hereby, if any, shall be converted
automatically to ABR Advances on the last day of the then current
Interest Period applicable thereto or within such earlier period as
required by  law.  If the commitment of any Lender with respect to
Eurodollar Advances is suspended pursuant to this Section and such
Lender shall notify the Agent and the Borrower that it is once again
legal for such Lender to make or maintain Eurodollar Advances, such
Lender's commitment to make or maintain Eurodollar Advances shall be
reinstated.

 12.  Increased Costs

      In the event that any law, regulation, treaty or directive
hereafter enacted, promulgated, approved or issued or any change in any
presently existing law, regulation, treaty or directive therein or in
the interpretation or application thereof by any Governmental Authority
charged with the administration thereof or compliance by any Lender (or
any corporation directly or indirectly owning or controlling such
Lender) with any request or directive from any Governmental Authority:

      (a)  does or shall subject any Lender to any Taxes of any kind
 whatsoever with respect to any Eurodollar Advances or its obligations
 under this Agreement to make Eurodollar Advances, or change the basis
 of taxation of payments to any Lender of principal, interest or any
 other amount payable hereunder in respect of its Eurodollar Advances,
 including any Taxes required to be withheld from any amounts payable
 under the Loan Documents (except for imposition of, or change in the
 rate of, Tax on the Overall Net Income of such Lender or its
 Applicable Lending Office for any of such Advances by the jurisdiction
 in which such Lender is incorporated or has its principal office or
 such Applicable Lending Office, including, in the case of Lenders
 incorporated in any State of the United States, such tax imposed by
 the United States); or
 
      (b)  does or shall impose, modify or make applicable any reserve,
 special deposit, compulsory loan, assessment, increased cost or
 similar requirement against assets held by, or deposits of, or
 advances or loans by, or other credit extended by, or any other
 acquisition of funds by, any office of such Lender in respect of its
 Eurodollar Advances which is not otherwise included in the
 determination of a Eurodollar Rate;

and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing, converting, continuing or maintaining its
Eurodollar Advances or its commitment to make such Eurodollar Advances,
or to reduce any amount receivable hereunder in respect of its
Eurodollar Advances, then, in any such case, the Borrower shall pay such
Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such additional cost or reduction in such amount
receivable which such Lender deems to be material as determined by such
Lender; provided, however, that (i) nothing in this Section shall
require the Borrower to indemnify the Lenders with respect to
withholding Taxes for which the Borrower has no obligation under Section
2.10, and (ii) no Lender shall be entitled to demand any payment under
this Section 2.12 more than six months following the payment to or for
the account of such Lender of all other amounts payable hereunder and
under any Note held by such Lender and the termination of such Lender's
Commitment; provided, however, that the foregoing proviso shall in no
way limit the right of any Lender to demand or receive any payment under
this Section 2.12 to the extent that such payment relates to the
retroactive application of any law, regulation, treaty or directive if
such demand is made within six months after the implementation of such
retroactive application.  A statement setting forth the calculations of
any additional  amounts payable pursuant to the foregoing sentence
submitted by a Lender to the Borrower shall be conclusive absent
manifest error.

 13.  Indemnification for Loss

      Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow, convert or continue an Advance after it
shall have given notice to do so in which it shall have requested a
Eurodollar Advance pursuant to Section 2.3 or 2.7, as the case may be,
or if the Borrower shall fail to borrow a Competitive Bid Loan after it
shall have accepted one or more offers therefor pursuant to Section 2.4,
or if a Eurodollar Advance or a Competitive Bid Loan shall be terminated
for any reason prior to the last day of the Interest Period applicable
thereto, or if any repayment or prepayment of the principal amount of a
Eurodollar Advance or a Competitive Bid Loan is made for any reason on a
date which is prior to the last day of the Interest Period applicable
thereto, the Borrower agrees to indemnify each Lender against, and to
pay on written demand directly to such Lender the amount (calculated by
such Lender using any method chosen by such Lender which is reasonable
and customarily used by such Lender for such purpose) equal to any loss
or out-of-pocket expense suffered by such Lender as a result of such
failure to borrow, convert or continue, or such termination, repayment
or prepayment, including any loss, cost or expense suffered by such
Lender in liquidating or employing deposits acquired to fund or maintain
the funding of such Eurodollar Advance or Competitive Bid Loan, as the
case may be, or redeploying funds prepaid or repaid, in amounts which
correspond to such Eurodollar Advance or Competitive Bid Loan, as the
case may be, and any internal processing charge customarily charged by
such Lender in connection therewith.  Calculations of all amounts
payable under this Section shall be made on the assumption that each
Lender has funded each of its relevant Eurodollar Advances and
Competitive Bid Loans through the purchase of deposits bearing interest
at the applicable rate of interest for, in an amount equal to the
principal amount of, and with a maturity equivalent to the Interest
Period applicable to, such Eurodollar Advance or Competitive Bid Loan,
as the case may be.

 14.  Survival of Certain Obligations

      The obligations of the Borrower under Sections 2.10, 2.12, 2.13,
2.16, 2.21, 11.5 and 11.10 shall survive the termination of the
Aggregate Commitments and the Letter of Credit Commitment, the payment
of the Loans, the reimbursement obligations in respect of the Letters of
Credit and all other amounts payable under the Loan Documents.

 15.  Use of Proceeds

      The proceeds of the Loans shall be used solely to (i) pay all of
the fees due hereunder, (ii) pay the reasonable out-of-pocket fees and
expenses incurred by the Borrower in connection with the Loan Documents,
(iii) for the general corporate purposes of the Borrower, including,
without limitation, the making of Intercompany Loans to Operating
Subsidiaries of the Borrower and Permitted Recipient Loans to Permitted
Recipients to the extent permitted by Section 8.5 and (iv) to make
repurchases of its stock to the extent permitted by Section 8.4.
Notwithstanding anything to the contrary contained in any Loan Document,
the Borrower agrees that no part of the proceeds of any Loan will be
used, directly or indirectly, for a purpose which violates any law,
including, without  limitation, the provisions of Regulations G, U or X
of the Board of Governors of the Federal Reserve System, as amended.

 16.  Capital Adequacy

      If the amount of capital required or expected to be maintained by
any Lender or any Person directly or indirectly owning or controlling
such Lender (each a "Control Person"), shall be affected by (i) the
introduction or phasing in of any law, rule or regulation after the
Effective Date, (ii) any change after the Effective Date in the
interpretation of any existing law, rule or regulation by any
Governmental Authority charged with the administration thereof, or (iii)
compliance by such Lender or such Control Person with any directive,
guideline or request from any Governmental Authority (whether or not
having the force of law) promulgated or made after the Effective Date,
and such Lender shall have determined that such introduction, phasing
in, change or compliance shall have had or will thereafter have the
effect of reducing (1) the rate of return on such Lender's or such
Control Person's capital, or (2) the asset value to such Lender or such
Control Person of the Loans made or maintained by such Lender, in either
case to a level below that which such Lender or such Control Person
could have achieved or would thereafter be able to achieve but for such
introduction, phasing in, change or compliance (after taking into
account such Lender's or such Control Person's policies regarding
capital adequacy) by an amount deemed by such Lender to be material to
such Lender or Control Person, then, within ten days after demand by
such Lender, the Borrower shall pay to such Lender or such Control
Person such additional amount or amounts as shall be sufficient to
compensate such Lender or such Control Person, as the case may be, for
such reduction.

 17.  Change of Lending Office; Right to Substitute Lender

      (a)  Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.12, 2.13 or 2.21 or to a
requirement under Section 2.10 to withhold and deduct taxes, it will, if
requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another Applicable
Lending Office for any Loans affected by such event, provided that such
designation is made on such terms that such Lender and its Applicable
Lending Office suffer no economic, legal or regulatory disadvantage,
with the object of avoiding the consequence of the event giving rise to
the operation of any such Section.  Except in the case of a change of
Applicable Lending Office made at the request of the Borrower, no change
in Applicable Lending Office will be made if greater costs and expenses
would result under Section 2.12, 2.13 or 2.21 or if the aforementioned
requirement under Section 2.10 would result from any such change in
designation.  Nothing in this Section shall affect or postpone any of
the obligations of the Borrower or the rights of any Lender provided in
Section 2.10, 2.12, 2.16 or 2.21.

      (b)  In addition to the Borrower's rights under subsection (a) of
this Section, upon the occurrence of any event giving rise to the
operation of Section 2.10, 2.12, 2.13 or 2.21, the Borrower may, within
a period of 60 days following the Borrower's obtaining knowledge of the
occurrence of the event giving rise to the operation of such provisions,
at its own expense, make arrangements for another bank or financial
institution reasonably acceptable to the Agent to purchase and accept
the rights and obligations under this Agreement of any Lender entitled
to payment under Section 2.10,  2.12, 2.13 or 2.21, whereupon such
Lender shall assign to the bank or financial institution designated by
the Borrower its rights and obligations hereunder pursuant to the
provisions of Section 11.7 of this Agreement.

 18.  Letter of Credit Sub-Facility

      (a)  Subject to the terms and conditions of this Agreement, the
Issuing Bank agrees, in reliance on the agreement of the other Lenders
set forth in Section 2.19, to issue standby letters of credit (the
"Letters of Credit"; each, individually, a "Letter of Credit") during
the Commitment Period for the account of the Borrower.  The aggregate
amount of Letter of Credit Exposure at any one time outstanding shall
not exceed the lesser of (i) the amount of the Letter of Credit
Commitment and (ii) the excess, if any, of the sum of the Aggregate
Commitments over the sum of the aggregate outstanding Loans.  Each
Letter of Credit issued pursuant to this Section shall have a
termination date which shall be not later than one Business Day before
the Maturity Date.  No Letter of Credit shall be issued if the Agent, or
any Lender by notice to the Agent no later than 1:00 p.m. one Business
Day prior to the requested date of issuance of such Letter of Credit,
shall have determined that the conditions set forth in Section 6 have
not been satisfied.

      (b)  Each Letter of Credit shall be issued for the account of the
Borrower in support of an obligation of the Borrower in favor of a
beneficiary who has requested the issuance of such Letter of Credit as a
condition to a transaction entered into in connection with the business
of an Operating Subsidiary of the Borrower, which transaction does not
include obligations for the borrowing of money or Contingent Obligations
with respect thereto.  The Borrower shall give the Agent a Letter of
Credit Request for the issuance of each Letter of Credit by 11:00 a.m.,
three Business Days prior to the requested date of issuance.  Such
Letter of Credit Request shall be accompanied by the Issuing Bank's
standard Application and Agreement for Standby Letter of Credit (each, a
"Reimbursement Agreement") executed by an Authorized Signatory of the
Borrower, and shall specify (i) the beneficiary of such Letter of Credit
and the obligations of the Borrower in respect of which such Letter of
Credit is to be issued, (ii) the conditions under which a drawing may be
made under such Letter of Credit and the documentation to be required in
respect thereof, (iii) the maximum amount to be available under such
Letter of Credit, and (iv) the requested date of issuance.  In the event
of any conflict between the provisions of a Reimbursement Agreement and
this Section 2.18, the provisions of this Section 2.18 shall control. 
Upon receipt of such Letter of Credit Request from the Borrower, the
Agent shall promptly notify the Issuing Bank and each other Lender
thereof.  The Issuing Bank shall, on the proposed date of issuance and
subject to the other terms and conditions of this Agreement, issue the
requested Letter of Credit.  Each Letter of Credit shall be in form and
substance reasonably satisfactory to the Issuing Bank, with such
provisions with respect to the conditions under which a drawing may be
made thereunder and the documentation required in respect of such
drawing as the Issuing Bank shall reasonably require.  Each Letter of
Credit shall be used solely for the purposes described therein.

      (c)  Each payment by the Issuing Bank of a draft drawn under a
Letter of Credit shall give rise to an obligation on the part of the
Borrower to reimburse the Issuing Bank immediately for the amount
thereof.  If the Borrower shall have failed to reimburse the Issuing
Bank in full on or before 12:00 p.m., on the date the Issuing Bank shall
make payment on a draft drawn under a Letter of Credit, the Borrower's
obligations  to make such reimbursement may be satisfied by the
automatic making of an ABR Advance by each Lender under its Revolving
Credit Note in the principal amount equal to its Commitment Percentage
of the amount of such draft paid by the Issuing Bank (it being
understood that such reimbursement by means of an ABR Advance shall not
constitute a borrowing for purposes of Sections 4, 5 or 6).

 19.  Letter of Credit Participation and Funding Commitments

      (a)  Each Lender hereby unconditionally and irrevocably,
severally for itself only and without any notice to or the taking of any
action by such Lender, takes an undivided participating interest in the
obligations of the Issuing Bank under and in connection with each Letter
of Credit in an amount equal to such Lender's Commitment Percentage of
the amount of such Letter of Credit.  Each Lender shall be liable to the
Issuing Bank for its Commitment Percentage of the unreimbursed amount of
any draft drawn and honored under each Letter of Credit.  Each Lender
shall also be liable for an amount equal to the product of its
Commitment Percentage and any amounts paid by the Borrower pursuant to
Section 2.20 that are subsequently rescinded or avoided, or must
otherwise be restored or returned.  Such liabilities shall be
unconditional and without regard to the occurrence of any Default or
Event of Default or the compliance by the Borrower with any of its
obligations under the Loan Documents.  Each payment by a Lender of such
Commitment Percentage of the amount of such Letter of Credit or of any
amounts so rescinded, avoided, restored or returned shall be treated as
the making by such Lender of an automatic ABR Advance.

      (b)  The Agent will promptly notify each Lender (which notice
shall be promptly confirmed in writing) of the date and the amount of
any draft presented under any Letter of Credit with respect to which
full reimbursement of payment is not made by the Borrower as provided in
Section 2.18(c), and forthwith upon receipt of such notice, such Lender
(other than the Issuing Bank) shall make available to the Agent for the
account of the Issuing Bank its Commitment Percentage of the amount of
such unreimbursed draft (which shall constitute such Lender's automatic
ABR Advance) at the office of the Agent specified in Section 11.2, in
lawful money of the United States and in immediately available funds,
before 4:00 p.m., on the day such notice was given by the Agent, if the
relevant notice was given by the Agent at or prior to 1:00 p.m., on such
day, and before 12:00 p.m., on the next Business Day, if the relevant
notice was given by the Agent after 1:00 p.m., on such day.  The Agent
shall distribute the payments made by each Lender pursuant to the
immediately preceding sentence to the Issuing Bank promptly upon receipt
thereof in like funds as received.  Each Lender shall indemnify and hold
harmless the Agent and the Issuing Bank from and against any and all
losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses and an
administration fee of not less than $100 payable to the Issuing Bank as
the issuer of the relevant Letter of Credit) resulting from any failure
on the part of such Lender to provide, or from any delay in providing,
the Agent with such Lender's Commitment Percentage of the amount of any
payment made by the Issuing Bank under a Letter of Credit in accordance
with this clause (b) above (except in respect of losses, liabilities or
other obligations suffered by the Issuing Bank resulting from the gross
negligence or willful misconduct of the Issuing Bank).  If a Lender does
not make available to the Agent when due such Lender's Commitment
Percentage of any unreimbursed payment made by the Issuing Bank under a
Letter of Credit (other than payments made by the Issuing Bank by 
reason of its gross negligence or willful misconduct), such Lender shall
be required to pay interest to the Agent for the account of the Issuing
Bank on such Lender's Commitment Percentage of such payment at a rate of
interest per annum equal to the Federal Funds Rate plus 1% from the date
such Lender's payment is due until the date such payment is received by
the Agent.  The Agent shall distribute such interest payments to the
Issuing Bank upon receipt thereof in like funds as received.  If the
Agent receives a Lender's Commitment Percentage of any unreimbursed
payment under a Letter of Credit after the date when due and the Agent
receives interest on any late payment from such Lender in accordance
with the provisions of the preceding sentence, such Lender's automatic
ABR Advance shall be deemed to have been made to the Borrower on the
date the Issuing Bank made payment under such Letter of Credit.

      (c)  Whenever the Agent is reimbursed by the Borrower, for the
account of the Issuing Bank, for any payment under a Letter of Credit
and such payment relates to an amount previously paid by a Lender in
respect of its Commitment Percentage of the amount of such payment under
such Letter of Credit, the Agent will pay over such payment to such
Lender (i) before 4:00 p.m. on the day such payment from the Borrower is
received, if such payment is received at or prior to 1:00 p.m. on such
day, or (ii) before 12:00 p.m. on the next succeeding Business Day, if
such payment from the Borrower is received after 1:00 p.m. on such day.

 20.  Absolute Obligation with respect to Letter of Credit Payments

      The Borrower's obligation to reimburse the Agent for the account
of the Issuing Bank in respect of a Letter of Credit for each payment
under or in respect of such Letter of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may have
or have had against the beneficiary of such Letter of Credit, the Agent,
the Issuing Bank, as issuer of such Letter of Credit, any Lender or any
other Person, including, without limitation, any defense based on the
failure of any drawing to conform to the terms of such Letter of Credit,
any drawing document proving to be forged, fraudulent or invalid, or the
legality, validity, regularity or enforceability of such Letter of
Credit; provided, however, that the Borrower shall not be obligated to
reimburse the Agent for the account of the Issuing Bank, as issuer of a
Letter of Credit, for any wrongful payment under such Letter of Credit
made as a result of the Issuing Bank's gross negligence or willful
misconduct.

 21.  Increased Costs Based on Letters of Credit

      Without limiting the provisions of Section 2.12 but without
duplication of any amounts payable thereunder, if any law or regulation
or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof or GAAP
shall either (i) impose, modify or make applicable any reserve, special
deposit, assessment or similar requirement against letters of credit
issued or participated in by any Lender, or (ii) impose on the Agent or
such Lender any other condition regarding the Letters of Credit (except
for imposition of, or changes in the rate of, Tax on the Overall Net
Income of the Agent or such Lender) and the result of any event referred
to in clause (i) or (ii) above shall be to increase the cost to the
Issuing Bank (or any successor thereto as issuer of Letters of Credit)
of issuing or maintaining the Letters of Credit or the cost to any
Lender of making or maintaining any Loan pursuant to  Section 2.18(c) or
its obligations pursuant to Section 2.19, or the cost to the Agent of
performing its functions hereunder with respect to the Letters of
Credit, in any case by an amount which the Agent, the Issuing Bank, or
any Lender, as the case may be, deems material, then, upon demand by the
Agent, the Issuing Bank or such Lender, as the case may be, the Borrower
shall immediately pay to the Agent, the Issuing Bank or such Lender, as
the case may be, from time to time as specified by the Agent, the
Issuing Bank or such Lender, additional amounts which shall be
sufficient to compensate the Agent, the Issuing Bank or such Lender, as
the case may be, for such increased cost, provided, however, that no
Lender shall be entitled to demand any payment under this Section 2.21
more than six months following the payment to or for the account of such
Lender of all other amounts payable hereunder and under any Note held by
such Lender and the termination of such Lender's Commitment; provided,
however, that the foregoing proviso shall in no way limit the right of
any Lender to demand or receive any payment under this Section 2.21 to
the extent that such payment relates to the retroactive application of
any law or regulation or any change in the interpretation or application
thereof if such demand is made within six months after the
implementation of such retroactive application.  A statement in
reasonable detail as to such increased cost incurred by the Agent, the
Issuing Bank or such Lender, as the case may be, as a result of any
event mentioned in clauses (i) or (ii) above, submitted by the Agent,
the Issuing Bank or such Lender, as the case may be, to the Borrower
shall be conclusive, absent manifest error, as to the amount thereof.

 22.  Extension of Maturity Date

      (a)  Provided that no Default or Event of Default exists during
the periods set forth below, the Borrower may request that the Maturity
Date be extended for additional periods of one year each by giving
written notice of such request (each, an "Extension Request") to the
Agent during the period not more than 90 days but not less than 60 days
prior to the then Maturity Date and, upon the receipt of such notice,
the Agent shall promptly notify each Lender of such Extension Request.

           (i)  If all Lenders consent to an Extension Request during
the Extension Consent Period by giving written notice thereof to the
Borrower and the Agent, then, effective on the then current Maturity
Date, such Maturity Date shall be extended to the corresponding day of
the next following calendar year, provided, however, that if such day
falls on a day that is not a Business Day, such Maturity Date shall be
the next following Business Day.

           (ii) If at least Extension Consent Required Lenders (but not
all Lenders) consent to an Extension Request during the Extension
Consent Period (by giving written notice thereof to the Borrower and the
Agent) the Maturity Date shall be extended to the corresponding day of
the next following calendar year (subject to the proviso in subsection
(a)(i) above) from and including the then current Maturity Date, with
respect to the Commitments of the Lenders consenting to such Extension
Request.

           (iii) If Lenders (each a "Nonconsenting Lender") having
Commitments equal to less than 33 1/3% of the Aggregate Commitments
(without giving effect to any Loans outstanding) do not consent to an
Extension Request during the Extension Consent Period, the Borrower may
elect to (1) withdraw such Extension Request, (2) terminate the
Commitment of each Nonconsenting Lender effective on the then current
Maturity Date (with the Commitments of each other Consenting Lender 
continuing in full force and effect) and, on such Maturity Date, pay to
the Agent for distribution to each such Nonconsenting Lender the
outstanding principal balance, if any, of the Notes of each such
Nonconsenting Lender, together with any accrued and unpaid interest
thereon to the date of such payment, any accrued and unpaid Facility
Fees due to such Lender, and any other amount due to such Lender
whereupon (A) effective on such then current Maturity Date, such
Maturity Date shall be extended to the corresponding day of the next
following calendar year (subject to the proviso in subsection (a)(i)
above), and (B) each Nonconsenting Lender shall cease to be a "Lender"
for all purposes of this Agreement (except with respect to its rights
hereunder to be reimbursed for costs and expenses in connection with,
and to indemnification with respect to, matters attributable to events,
acts or conditions occurring prior to such payment) and shall no longer
have any obligations hereunder, (3) request one or more of the
Consenting Lenders (each, a "Replacement Lender") to elect to increase
its Commitment by an amount up to the amount of the Commitment of such
Nonconsenting Lenders, or (4) designate another bank or banks (any such
bank, also a "Replacement Lender") acceptable to the Agent and the
Issuing Bank and willing to assume the Commitments of any such
Nonconsenting Lender or Lenders.  Upon the Commitment of a Nonconsenting
Lender being assumed by a Replacement Lender under clauses (C) or (D)
above, effective on the then current Maturity Date or such earlier date
as shall be determined by the Borrower and the Agent, each such
Replacement Lender shall assume the Commitment of each such
Nonconsenting Lender by executing and delivering an Assignment and
Acceptance Agreement and, if such Nonconsenting Lender is the holder of
Notes, by purchasing such Notes of such Nonconsenting Lender, which
shall sell the same without recourse or warranty (except as to the
amount due thereon, its title to such Notes and its right to sell the
same) to such Replacement Lender at a price in immediately available
funds equal to the amount payable under clause (B) above, whereupon (x)
effective on the then current Maturity Date, such Maturity Date shall be
extended to the corresponding day of the next following calendar year
(subject to the proviso in subsection (a)(i) above), (y) each
Replacement Lender, if applicable, shall be deemed to be a "Lender" for
all purposes of this Agreement, and (z) each Nonconsenting Lender shall
cease to be a "Lender" for all purposes of this Agreement (except with
respect to its rights hereunder to be reimbursed for costs and expenses
in connection with, and to indemnification with respect to, matters
attributable to events, acts or conditions occurring prior to such
assumption and purchase) and shall no longer have any obligations
hereunder.

           (iv) If Extension Consent Required Lenders do not consent to
an Extension Request during the Extension Consent Period, the Maturity
Date shall not be extended.

           (v)  Each Lender will use its best efforts to respond during
the Extension Consent Period to any Extension Request, provided that no
Lender's failure to so respond shall create any claim against it or have
the effect of extending the Maturity Date or such Lender's Commitment
beyond the Maturity Date.

      (b)  In the event the Borrower elects to terminate the Commitment
of a Nonconsenting Lender under Section 2.22(a)(iii)(B) above, the Agent
is authorized to amend Exhibit A, effective on the then current Maturity
Date, and promptly distribute a copy thereof to the Borrower and the
remaining Lenders (the "Consenting Lenders") reflecting the names of all
Consenting Lenders and Replacement Lenders and the new Commitment
Percentage of each such Consenting Lender and Replacement Lender (after 
giving effect to the termination of each Nonconsenting Lender's
Commitment and the assumption by any Replacement Lender of such
Commitment).

      (c)  Notwithstanding anything to the contrary set forth herein,
in the event that at the time of an Extension Request, the Facility A
Credit Agreement is then in effect and the Borrower has requested an
extension of the Facility A Maturity Date pursuant thereto, then (i)
each Consenting Lender must consent to an extension of both this
Agreement and the Facility A Credit Agreement, (ii) each Nonconsenting
Lender whose Commitment is terminated shall also have its Facility A
Commitment terminated and (iii) each Replacement Lender which assumes
all or a portion of the Commitment of a Nonconsenting Lender shall
assume all or a like portion of such Nonconsenting Lender's Facility A
Commitment, it being the intention of the parties that at all times
during which this Agreement and the Facility A Credit Agreement are both
in effect, each Lender shall also be a Facility A Lender and its
Commitment Percentage shall equal its Facility A Commitment Percentage.

 23.  Change in Control

      (a)  The Borrower will notify the Agent and the Lenders in
writing within one Business Day after the occurrence of a Change in
Control. Upon receipt of such notice, each Lender shall have the right
to terminate its Commitment and Facility A Commitment within five
Business Days of the receipt of such notice.  If a Lender so elects to
terminate its Commitment and Facility A Commitment, the Borrower shall,
not later than five Business Days after such Lender has given such
notice, repay such Lender's Loans and Facility A Loans together with any
accrued interest and fees and other amounts due such Lender under the
Loan Documents and the Facility A Loan Documents.

      (b)  Notwithstanding the foregoing, in lieu of terminating the
Commitments and Facility A Commitments of the Lenders and Facility A
Lenders as provided in subsection (a) hereof, the Borrower may request
one or more of the Lenders not terminating its Commitment and Facility A
Commitment (also, a "Replacement Lender") to elect to increase its
Commitment and Facility A Commitment by an amount up to the amount of
the Commitment and Facility A Commitment of such terminating Lender, or
may designate another bank or banks (any such bank, also a "Replacement
Lender") reasonably acceptable to the Agent and the Issuing Bank and
willing to assume the Commitments and Facility A Commitments of any such
terminating Lender or Lenders.  Upon the Commitment and Facility A
Commitment of a terminating Lender being assumed by a Replacement
Lender, each such Replacement Lender shall assume the Commitment and
Facility A Commitment of each such terminating Lender by executing and
delivering an Assignment and Acceptance Agreement and, if such
terminating Lender is the holder of Notes or Facility A Notes, by
purchasing such Notes or Facility A Notes, as the case may be, of such
terminating Lender, which shall sell the same without recourse or
warranty (except as to the amount due thereon, its title to such Notes
or Facility A Notes, as the case may be, and its right to sell the same)
to such Replacement Lender at a price in immediately available funds
equal to the outstanding principal balance, if any, of the Notes and
Facility A notes, as the case may be, of each such terminating Lender,
together with any accrued and unpaid interest thereon to the date of
such payment, any accrued and unpaid fees due to such Lender hereunder
and under the Facility A Loan Documents, whereupon each Replacement
Lender shall be deemed to be a "Lender" for all purposes of this
Agreement, and (z) each terminating Lender shall cease to be a "Lender" 
for all purposes of this Agreement (except with respect to its rights
hereunder and under the Facility A Loan Documents to be reimbursed for
costs and expenses in connection with, and to indemnification with
respect to, matters attributable to events, acts or conditions occurring
prior to such assumption and purchase) and shall no longer have any
obligations hereunder.

 24.  Agent's Records

      The Agent's records regarding the amount of each Loan and Letter
of Credit, each payment by the Borrower of principal and interest on the
Loans and reimbursement obligations in respect of Letters of Credit and
other information relating to the Loans and the Letters of Credit shall
be presumptively correct absent manifest error.


C.    FEES; PAYMENTS

 1.   Facility Fee

      The Borrower agrees to pay to the Agent, for the account of the
Lenders in accordance with each Lender's Commitment Percentage, during
the period from and including the Effective Date through but excluding
the Maturity Date, a fee (the "Facility Fee") equal to the Applicable
Fee Percentage per annum of the average daily sum of the Aggregate
Commitments, regardless of usage, during such period. The Facility Fee
shall be payable (i) quarterly in arrears on the last day of each March,
June, September and December during such period, (ii) on the date of any
reduction in the Aggregate Commitments (to the extent of such reduction)
and (iii) on the Maturity Date. The Facility Fee shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.

 2.   Letter of Credit Fees

      The Borrower agrees to pay to the Agent, for the account of the
Lenders in accordance with each Lender's Commitment Percentage, a fee
(the "Letter of Credit Fee") with respect to each Letter of Credit for
the period from and including the date of issuance thereof to and
including the expiration date thereof, at a rate per annum equal to the
Applicable Margin on the average daily amount available to be drawn
under such Letter of Credit.  The Letter of Credit Fee shall be (i)
calculated on the basis of a 360-day year for the actual number of days
elapsed, (ii) payable quarterly in arrears on the last day of each
March, June, September and December of each year and on the date that
the Aggregate Commitments shall expire and (iii) nonrefundable.  In
addition to the Letter of Credit Fee, the Borrower agrees to pay to the
Issuing Bank, for its own account, its standard fees and charges
customarily charged to customers similar to the Borrower with respect to
any Letter of Credit.

 3.   Agent's Fees

      The Borrower agrees to pay to the Agent, for its own account,
such other fees as have been agreed to in writing by the Borrower and
the Agent.

      4.   Pro Rata Treatment and Application of Principal Payments

      Each payment, including each prepayment, of principal and
interest on the Loans, of the Facility Fee and the Letter of Credit Fees
shall be made by the Borrower to the Agent at its office set forth in
Section 11.2 in funds immediately available to the Agent at such office
by 12:00 p.m. on the due date for such payment, and, promptly upon
receipt thereof by the Agent, shall be remitted by the Agent in like
funds as received, to the Lenders according to the Commitment Percentage
of each Lender, in the case of the Facility Fee and the Letter of Credit
Fees and pro rata according to the aggregate outstanding principal
balance of the Loans, in the case of principal and interest due thereon. 
The failure of the Borrower to make any such payment by such time shall
not constitute a default hereunder, provided that such payment is made
on such due date, but any such payment made after 12:00 p.m. on such due
date shall be deemed to have been made on the next Business Day for the
purpose of calculating interest on amounts outstanding on the Loans.  If
any payment hereunder or under the Notes shall be due and payable on a
day which is not a Business Day, the due date thereof (except as
otherwise provided in the definition of Interest Period) shall be
extended to the next Business Day and (except with respect to payments
in respect of the Facility Fee and the Letter of Credit Fees) interest
shall be payable at the applicable rate specified herein during such
extension.  If any payment is made with respect to any Eurodollar
Advance prior to the last day of the applicable Interest Period, the
Borrower shall indemnify each Lender in accordance with Section 2.13.


D.    REPRESENTATIONS AND WARRANTIES

 In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and the Issuing Bank to issue the
Letters of Credit and the Lenders to participate therein, the Borrower
makes the following representations and warranties to the Agent and each
Lender:

 1.   Subsidiaries

      On the Effective Date, the Borrower has only the Subsidiaries set
forth on Schedule 4.1.  The shares of each Subsidiary are duly
authorized, validly issued, fully paid and nonassessable and are owned
free and clear of any Liens.

 2.   Existence and Power

      Each of the Borrower and its Subsidiaries is duly organized or
formed and validly existing in good standing under the laws of the
jurisdiction of its incorporation or formation, has all requisite power
and authority to own its Property and to carry on its business as now
conducted, and is in good standing and authorized to do business as a
foreign corporation in each jurisdiction in which the nature of the
business conducted therein or the Property owned therein makes such
qualification necessary, except where such failure to qualify, singly or
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.

      3.   Authority; Enforceability

      The Borrower has full legal power and authority and has taken all
necessary actions, including, without limitation, any necessary
stockholder action, to enter into, execute, deliver and perform the
terms of the Loan Documents and to make the borrowings contemplated
hereby and by the Notes and to incur the obligations provided for herein
and therein, all of which have are in full compliance with its articles
of incorporation and by-laws or its other organization documents.  The
Loan Documents (other than the Notes) constitute, and the Notes, when
issued and delivered pursuant hereto for value received, will
constitute, the valid and legally binding obligations of the Borrower,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally.

 4.   Required Consents

      Except for information filings required to be made in the
ordinary course of business which are not a condition to the Borrower's
performance under the Loan Documents, no consent, authorization or
approval of, filing with, notice to, or exemption by, stockholders, any
Governmental Authority or any other Person is required to authorize, or
is required in connection with the execution, delivery and performance
by the Borrower of the Loan Documents or is required as a condition to
the validity or enforceability of the Loan Documents against the
Borrower.

 5.   No Conflicting Agreements, Compliance with Laws; Taxes

      On the initial Borrowing Date, (i) neither the Borrower nor any
of its Subsidiaries will be in default, (1) under any mortgage,
indenture, contract or agreement to which it is a party or by which it
or any of its Property is bound or (2) with respect to any judgment,
order, writ, injunction, decree or decision of any Governmental
Authority, the effect of which default could reasonably be expected to
have a Material Adverse Effect, and (ii) the execution, delivery or
carrying out of the terms of the Loan Documents will not constitute a
default under, or require the mandatory repayment of, or result in the
creation or imposition of, or obligation to create, any Lien upon any
Property of the Borrower or any of its Subsidiaries pursuant to the
terms of, any such mortgage, indenture, contract or agreement.

 6.   Franchises, Licenses, Etc.

      Each of the Borrower and ACE possesses or has the right to use
all franchises, licenses, privileges and other rights that are material
and necessary for the conduct of its business, and with respect to which
it is in compliance, with no known conflict with the valid rights of
others which could reasonably be expected to have a Material Adverse
Effect.

 7.   Investment Company Act

      The Borrower is not an "investment company" or a company
"controlled" by an "investment company" as defined in, or is otherwise
subject to regulation under, the Investment Company Act of 1940, as
amended.

      8.   Public Utility Status

      The Borrower and each of its Subsidiaries are exempt from the
provisions of the Public Utility Holding Company Act of 1935, as
amended, except Section 9(a)(2) thereof, pursuant to Rule 2 of the
General Rules and Regulations of the SEC under said Act.

 9.   Federal Reserve Regulations; Use of Loan Proceeds

      Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin
Stock.  No part of the proceeds of the Loans will be used, directly or
indirectly, for a purpose which violates any law, rule or regulation of
any Governmental Authority, including, without limitation, the
provisions of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System, as amended.  No part of the proceeds of the
Loans will be used, directly or indirectly, to purchase or carry Margin
Stock or to extend credit to others for the purpose of purchasing or
carrying Margin Stock.

 10.  Litigation

      Except as set forth in the Financial Statements or as disclosed
after the date of the Financial Statements in the most recent annual
report filed by the Borrower with the SEC pursuant to Section 13 or
15(d) of the Exchange Act, or in a quarterly or periodic report filed
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act with
respect to a period or date subsequent to the end of the fiscal year
covered by such annual report, there are no actions, suits or
proceedings at law or in equity or by or before any Governmental
Authority (whether purportedly on behalf of the Borrower or any of its
Subsidiaries) pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries or any of their
respective Properties or rights, which (i) reasonably may be expected to
have a Material Adverse Effect or (ii) call into question the validity
or enforceability of any of the Loan Documents.

 11.  Financial Statements

      The Borrower has heretofore delivered to the Agent and the
Lenders copies of its Form 10-K for the fiscal year ending December 31,
1994, containing the audited Consolidated Balance Sheets of the Borrower
and its Subsidiaries and the related Consolidated Statements of
Operations, Stockholder's Equity and Cash Flows for the period then
ended, and its Form 10-Q for the fiscal quarter ended March 31, 1995,
containing the unaudited Consolidated Balance Sheet of the Borrower and
its Subsidiaries for such fiscal quarter, together with the related
Consolidated Statements of Operations and Cash Flows for the fiscal
quarter then ended (with the applicable related notes and schedules, the
"Financial Statements").  The Financial Statements have been prepared in
accordance with GAAP and fairly present the Consolidated financial
condition and results of the operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated therein. 
Except as reflected in the Financial Statements or in the notes thereto,
neither the Borrower nor any of its Subsidiaries has any obligation or
liability of any kind (whether fixed, accrued, Contingent, unmatured or
otherwise) which, in accordance with  GAAP, should have been shown on
the Financial Statements and was not.  Since December 31, 1994, there
has been no Material Adverse Change.

 12.  Plans

      The only Pension Plans in effect as of the Effective Date (the
"Existing Pension Plans") are listed on Schedule 4.12.  Each Employee
Benefit Plan of the Borrower, its Subsidiaries and their respective
ERISA Affiliates is in compliance with ERISA and the Code, where
applicable, in all material respects and there is no event or condition
existing or anticipated under or with respect to any Existing Pension
Plan that could have a Material Adverse Effect.

 13.  Ownership of Property; Liens

      The Borrower has good and marketable title to, or a valid
leasehold interest in, all of its Property, subject to no Liens, except
Permitted Liens, and each Subsidiary has good and marketable title to,
or a valid leasehold interest in, all of its Property, except to the
extent that the failure to have such title or leasehold interest could
not reasonably be expected to have a Material Adverse Effect.

 14.  Security Interests

      The Pledge Agreement is effective to create in favor of the
Agent, for (i) the benefit of the Agent and the Facility A Agent and for
the ratable benefit of the Lenders and the Facility A Lenders, a legal,
valid and enforceable security interest in the Collateral, and, on and
after the taking of possession of the Intercompany Notes by the Agent as
collateral agent, and assuming the continued possession thereof by the
Agent as collateral agent, the security interest granted by the Pledge
Agreement shall at all times constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Borrower in
such Collateral, in each case prior and superior in right to any other
Person.

 15.  Environmental Matters

      Except as disclosed in the most recent report filed by the
Borrower with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, or in a quarterly or periodic report filed with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act with respect to a period or date
subsequent to the end of the fiscal year covered by such annual report,
(i) the Borrower and each of its Subsidiaries is in compliance with the
requirements of all applicable Environmental Laws, noncompliance with
which reasonably may be expected to have a Material Adverse Effect, (ii)
there have been no releases or disposals of hazardous wastes, hazardous
substances or other substances in quantities or locations which might
result in the Borrower or any of its Subsidiaries incurring any remedial
obligations under applicable law which could, either singly or in the
aggregate, reasonably be expected to have Material Adverse Effect, and
(iii) neither the Borrower nor any of its Subsidiaries has received
notice or order advising it that it has or may have any remedial
obligation with respect to any such releases or disposals or that it is
or may be responsible for the costs of any remedial action taken or to
be taken by any other Persons with respect to any such releases or
disposals, which obligation or cost, if fully payable  could, either
singly or in the aggregate, reasonably may be expected to have Material
Adverse Effect.

 16.  Certain Business Activities

      The Borrower does not engage in any business other than the
holding of Permitted Investments.


E.    CONDITIONS TO FIRST LOANS OR THE ISSUANCE OF FIRST LETTERS OF
      CREDIT

      In addition to the conditions precedent set forth in Section 6,
the obligation of each Lender to make its first Revolving Credit Loan,
any Lender to make the first Competitive Bid Loan or the Issuing Bank to
issue the first Letter of Credit, in each case on the first Borrowing
Date, and the Lenders to participate therein, shall be subject to the
fulfillment of the following conditions precedent:

 1.   Evidence of Action

      The Agent shall have received a certificate, dated the Effective
Date, of the Secretary or Assistant Secretary of the Borrower (i)
attaching a true and complete copy of the resolutions of its Board of
Directors and of all documents evidencing other necessary corporate
action (in form and substance satisfactory to the Agent) taken by it to
authorize the Loan Documents and the transactions contemplated thereby,
(ii) attaching a true and complete copy of its articles of incorporation
and by-laws, (iii) setting forth the incumbency of its officer or
officers who may sign the Loan Documents, including therein a signature
specimen of such officer or officers and (iv) attaching a certificate of
good standing of the Secretary of State of the jurisdiction of its
incorporation and of each other jurisdiction in which it is qualified to
do business.

 2.   This Agreement; Notes

      The Agent shall have received (i) counterparts of this Agreement
signed by each of the parties hereto (or receipt by the Agent from a
party hereto of a fax signature page signed by such party which shall
have agreed to promptly provide the Agent with originally executed
counterparts hereof) and (ii) for each Lender, a Revolving Credit Note
and a Competitive Bid Note, duly executed by an Authorized Signatory of
the Borrower.

 3.   Certificate as to Approvals and Liens

      The Agent shall have received a certificate of an Authorized
Signatory of the Borrower certifying that (i) all approvals and consents
of all Persons required to be obtained in connection with the
consummation of the transactions contemplated by the Loan Documents and
the Facility A Loan Documents have been duly obtained and are in full
force and effect, and that all required notices have been given and all
required waiting periods have expired and (ii) upon the making of the
first Loans under the Agreement and under the Facility A Loan Documents
there will exist no Liens on the Collateral other than Liens in favor of
the Facility A Agent, the Facility A Lenders, the Agent and the Lenders
under the Pledge Agreement.

      4.   Pledge Agreement

      The Agent shall have received the Pledge Agreement, duly executed
by an Authorized Signatory of the Borrower, together with Intercompany
Notes duly executed by each Operating Subsidiary, duly indorsed by the
Borrower to the order of the Agent, as collateral agent for itself, the
Lenders, the Facility A Agent and the Facility A Lenders.

 5.   Facility A Loan Documents

      Each of the Facility A Credit Agreement and the Facility A Notes
shall have been duly executed and delivered by the parties thereto.

 6.   Other Credit Facilities

      (a)  The Revolving Credit Commitment under the ATE Credit
Agreement shall have been permanently reduced to an amount not in excess
of $25,000,000, and the Agent shall have received satisfactory evidence
thereof; and

      (b)  The Borrower shall have paid, or made arrangements
satisfactory to the Agent to pay on the Borrowing Date, with the
proceeds of a Loan under this Agreement or a borrowing under the
Facility B Credit Agreement, or both, all principal and accrued interest
due to BNY under the Borrower's $20,000,000 unsecured line of credit
with BNY.

 7.   ACE Preferred Stock

      The Agent shall have received a copy of the relevant portions of
the charter of ACE, and of each certificate of designation filed
pursuant to such charter, setting forth the terms applicable to each
class and series of the ACE Preferred Stock outstanding on the Effective
Date, certified by an Authorized Signatory of the Borrower to be a true
and complete copy thereof, and such terms shall be satisfactory to the
Agent.

 8.   Opinions of Counsel

      The Agent shall have received (i) an opinion of Ballard Spahr
Andrews & Ingersoll, counsel to the Borrower, and (ii) an opinion of
James E. Franklin II, Esq., general counsel of the Borrower, in each
case addressed to the Facility A Agent, the Facility A Lenders, the
Agent, the Lenders and Special Counsel and dated the Effective Date,
covering the matters set forth in Exhibit N and satisfactory in form and
substance to the Agent.

 9.   Opinion of Special Counsel

      The Agent shall have received an opinion of Special Counsel,
addressed to the Facility A Agent, the Facility A Lenders, the Agent,
the Lenders and Special Counsel, substantially in the form of Exhibit O.

      10.  Fees

      All fees payable to the Agent on the first Borrowing Date, and
the fees and expenses of Special Counsel incurred and recorded to date
in connection with the preparation, negotiation and closing of the Loan
Documents, shall have been paid.


F.    CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT

 The obligation of each Lender to make any Loan or the Issuing Bank to
issue any Letter of Credit on a Borrowing Date and each Lender to
participate therein is subject to the satisfaction of the following
conditions precedent as of the date of such Loan or the issuance of such
Letter of Credit, as the case may be:

 1.   Compliance

      On each Borrowing Date and after giving effect to the Loans to be
made, or the Letters of Credit to be issued, thereon, (i) the Borrower
shall have complied with all of the terms, covenants and conditions of
this Agreement relating to such Loans or Letters of Credit, (ii) there
shall exist no Event of Default, (iii) the representations and
warranties contained in the Loan Documents shall be true and correct
with the same effect as though such representations and warranties had
been made on such Borrowing Date except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date, and
(iv) the Aggregate Credit Exposure will not exceed the Aggregate
Commitments.  Each borrowing by the Borrower and each request by the
Borrower for the issuance of a Letter of Credit shall constitute a
certification by the Borrower as of such Borrowing Date that each of the
foregoing matters is true and correct in all respects.

 2.   Borrowing Request; Competitive Bid Request

      In the case of the borrowing of Revolving Credit Loans, the Agent
shall have received a Borrowing Request, and in the case of a borrowing
of a Competitive Bid Loan, the Agent shall have received a Competitive
Bid Request and such other documents required to be delivered by the
Borrower pursuant to Section 2.4, in each case duly executed by an
Authorized Signatory of the Borrower.

 3.   Letter of Credit Request

      With respect to the issuance of each Letter of Credit, the Agent
shall have received a Letter of Credit Request duly executed by an
Authorized Signatory of the Borrower.


G.    AFFIRMATIVE COVENANTS

 The Borrower agrees that, so long as this Agreement is in effect, any
Loan or reimbursement obligations (contingent or otherwise) in respect
of any Letter of Credit  remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender or the Agent, the
Borrower shall:

 1.   Financial Statements

      Maintain a standard system of accounting in accordance with GAAP,
and furnish or cause to be furnished to the Agent and each Lender:

           (a)  As soon as available, but in any event not later than 5
 days after the due date thereof, or if an extension of time to file
 has been obtained by the Borrower pursuant to Rule 12b-25 under the
 Exchange Act, not later than 5 days after the expiration of such
 extension, (i) a complete copy of the Borrower's Annual Report on Form
 10-K in respect of each fiscal year as filed by the Borrower with the
 SEC, together with a copy all financial statements and financial
 statement schedules incorporated therein by reference, and (ii) a
 complete copy of the Borrower's Quarterly Report on Form 10-Q in
 respect of each fiscal quarter as filed by the Borrower with the SEC,
 together with a copy of any financial statements incorporated therein
 by reference.
 
           (b)  Within 45 days after the end of each of the first three
 fiscal quarters (90 days after the end of the last fiscal quarter), a
 Compliance Certificate, duly executed by the chief financial officer
 of the Borrower (or such other officer as may be reasonably acceptable
 to the Agent).
 
           (c)  Such other information as the Agent or any Lender may
 reasonably request from time to time.

 2.   Certificates; Other Information

      Furnish to the Agent and each Lender:

           (a)  Prompt written notice if any Default or Event of
 Default shall have occurred and be continuing;
 
           (b)  Promptly upon becoming available, copies of all (i)
 annual reports to shareholders, proxy statements and other materials
 (other than reports specified in Section 7.1) which the Borrower or
 any of its Subsidiaries may now or hereafter be required to file with
 or deliver to any securities exchange or the SEC, or any other
 Governmental Authority succeeding to the functions thereof and (ii)
 material news releases and annual reports relating to the Borrower or
 any of its Subsidiaries;
 
           (c)  Prompt written notice of any change by either Moody's
 or S&P in the Senior Debt Rating;
 
           (d)  Prompt written notice of any agreement, indenture or
 other document or instrument entered into by, or which becomes binding
 upon, ACE which restricts or has the effect of restricting the payment
 by ACE of dividends with respect to its Stock;
 
                (e)  Prompt written notice of the forgiveness of any
      Intercompany Note or the conversion thereof to Stock or other
      instruments, in each case to the extent permitted by Section 8.6,
      together with a total of all such forgiveness or conversions
      since the Effective Date; and
 
           (f)  Such other information as the Agent or any Lender shall
 reasonably request from time to time.

 3.   Legal Existence

      Maintain, and cause each of its Restricted Subsidiaries so to
maintain, its legal existence in good standing in the jurisdiction of
its incorporation or formation and in each other jurisdiction in which
the failure so to do could reasonably be expected to have a Material
Adverse Effect.

 4.   Taxes

      Pay and discharge when due, and cause each of its Restricted
Subsidiaries so to do, all Taxes, assessments and governmental charges,
license fees and levies upon, or with respect to the Borrower, such
Restricted Subsidiary and all Taxes upon the income, profits and
Property of the Borrower and its Restricted Subsidiaries which if
unpaid, could reasonably be expected to have a Material Adverse Effect
or become a Lien on the Property of the Borrower or such Restricted
Subsidiary (other than a Lien described in Section 8.2(i)), unless and
to the extent only that such Taxes, assessments, charges, license fees
and levies shall be contested in good faith and by appropriate
proceedings diligently conducted by the Borrower or such Restricted
Subsidiary and provided that any such contested Tax, assessment, charge,
license fee or levy shall not constitute, or create, a Lien on any
Property of the Borrower or such Restricted Subsidiary senior to the
Liens granted to the Agent and the Lenders under the Pledge Agreement on
such Property, and, provided further, that the Borrower shall give the
Agent prompt notice of such contest and that such reserve or other
appropriate provision as shall be required by the Accountants in
accordance with GAAP shall have been made therefor.

 5.   Insurance

      Maintain, and cause each of its Restricted Subsidiaries to
maintain insurance on all its Property in at least such amounts and
against at least such risks (but including in any event public
liability, product liability and business interruption coverage) as is
consistent with industry standards followed by companies engaged in the
same business; and furnish to the Agent, upon written request, full
information as to insurance policies and reserves for self insurance.

 6.   Condition of Property

      At all times, maintain, protect and keep in good repair, working
order and condition (ordinary wear and tear excepted), and cause each of
its Restricted Subsidiaries so to do, all Property necessary to the
operation of the Borrower's or such Restricted Subsidiary's business.

      7.   Observance of Legal Requirements

      Observe and comply, and cause each of its Restricted Subsidiaries
so to do, with all laws, ordinances, orders, judgments, rules,
regulations, certifications, franchises, permits, licenses, directions
and requirements of all Governmental Authorities, which now or at any
time hereafter may be applicable to it, including, without limitation,
ERISA and all Environmental Laws, noncompliance with which could
reasonably be expected to have a Material Adverse Effect.

 8.   Inspection of Property; Books and Records; Discussions

      Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law
shall be made of all dealings and transactions in relation to its
business and activities and permit representatives of the Agent and any
Lender to visit its offices, to inspect any of its Property and examine
and make copies or abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired, and to
discuss the business, operations, prospects, licenses, Property and
financial condition of the Borrower and its Restricted Subsidiaries with
the officers thereof and the Accountants.

 9.   Licenses, Franchises, Intellectual Property, Etc.

      Obtain or maintain, as applicable, and cause ACE to obtain or
maintain, as applicable, in full force and effect, all licenses,
franchises, Intellectual Property, permits, authorizations and other
rights as are necessary for the conduct of its business and the failure
of which to obtain or maintain could reasonably be expected to have a
Material Adverse Effect.

 10.  Indebtedness Capitalization Ratio

      Maintain as of the last day of each fiscal quarter of the
Borrower, an Indebtedness Capitalization Ratio of less than or equal to
0.65:1.00.

 11.  Ratio of Indebtedness to Annualized ACE Dividends

      Maintain at all times, a ratio of (i) Indebtedness of the
Borrower to (ii) Annualized ACE Dividends of less than or equal to
2.50:1.00.


H.    NEGATIVE COVENANTS

 The Borrower agrees that, so long as this Agreement is in effect, any
Loan or reimbursement obligations (contingent or otherwise) in respect
of any Letter of Credit remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender or the Agent, the
Borrower shall not:

 1.   Indebtedness

      Create, incur, assume or suffer to exist any liability for
Indebtedness except (i) Indebtedness due under the Loan Documents and
the Facility A Loan Documents, (ii)  Indebtedness of the Borrower
existing on the date hereof as set forth on Schedule 8.1, excluding
increases and refinancings thereof, (iii) provided that no Default or
Event of Default would exist before and after giving effect thereto,
Contingent Obligations of the Borrower not in excess of $70,000,000 in
respect of Indebtedness for borrowed money of Atlantic Thermal or any of
its Subsidiaries in connection with its District Heating and Cooling
Project, provided that any Contingent Obligation of the Borrower with
respect to such Indebtedness is unsecured and (iv) provided no Default
or Event of Default would exist before and after giving effect thereto
other Indebtedness and Contingent Obligations of the Borrower in an
aggregate amount not in excess of $10,000,000 provided that any such
Indebtedness constituting a Contingent Obligation shall be unsecured.

 2.   Liens

      Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired except (i) Liens for
Taxes, assessments or similar charges incurred in the ordinary course of
business which are not delinquent or which are being contested in
accordance with Section 7.4, provided that enforcement of such Liens is
stayed pending such contest, (ii) Liens in connection with workers'
compensation, unemployment insurance or other social security
obligations (but not ERISA), (iii) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of business,
(iv) zoning ordinances, easements, rights of way, minor defects,
irregularities, and other similar restrictions affecting real Property
which do not adversely affect the value of such real Property or the
financial condition of the Borrower or impair its use for the operation
of the business of the Borrower, (v) Liens arising by operation of law
such as mechanics', materialmen's, carriers', warehousemen's liens
incurred in the ordinary course of business which are not delinquent or
which are being contested in good faith and by appropriate proceedings
diligently conducted by it, provided that enforcement of such Liens is
stayed pending such contest, (vi) Liens arising out of judgments or
decrees which are being contested in good faith and by appropriate
proceedings diligently conducted by it, provided that enforcement of
such Liens is stayed pending such contest, (vii) Liens in favor of the
Agent and the Lenders under the Loan Documents and the Facility A Agent
and the Facility A Lenders under the Facility A Loan Documents, (viii)
Liens on Property of the Borrower existing on the Effective Date as set
forth on Schedule 8.2 as renewed from time to time, but not any
increases in the amounts secured thereby, (ix) Liens on Property of the
Borrower acquired after the Effective Date provided that such Liens are
limited to the Property so acquired and were not created in
contemplation of such acquisition and (x) Liens securing Indebtedness
for borrowed money (or Contingent Obligations in connection therewith)
of the Borrower provided that the Agent, the Lenders, the Facility A
Agent and the Facility A Lenders are ratably secured pursuant to
documentation in form and substance satisfactory to the Agent and the
Facility A Agent.

 3.   Merger; Consolidation

      (a)  Consolidate with, be acquired by, or merge into or with any
Person, or permit any of its Restricted Subsidiaries so to do, except
that if no Default or Event of Default would exist before and after
giving effect thereto, (i) the Borrower or any Restricted Subsidiary may
merge with another entity provided that the resulting corporation shall
have a net worth not less than the net worth of the Borrower or 
Restricted Subsidiary involved in such merger, (ii) the entity to be
merged with is in the same business as a Restricted Subsidiary of the
Borrower or in a related business (including other types of utilities),
(iii) in the case of a merger involving the Borrower, the Borrower is
the survivor and (iv) in the case of a merger involving an Operating
Subsidiary, the survivor (if not such Operating Subsidiary) shall assume
the obligations of such Operating Subsidiary under the Intercompany Note
theretofore delivered by such Operating Subsidiary to the Borrower by an
instrument in form and substance satisfactory to the Agent.

      (b)  Sell, lease or otherwise dispose of all or any part of its
Property, or enter into any sale-leaseback transaction except:

           (i)  Sales or other dispositions of inventory in the
 ordinary course of business;
 
           (ii) Sales or other dispositions of equipment and materials
 in the ordinary course of business which, in the reasonable opinion of
 the Borrower, is obsolete or no longer useful in the conduct of its
 business; and
 
           (iii)     Sales or other dispositions of other Property for
 consideration not in excess of $25,000,000 per sale or other
 disposition provided that no Default or Event of Default shall exist
 immediately before or after giving effect thereto.

 4.   Restricted Payments

      Declare or pay any Restricted Payments payable in cash or
otherwise or apply any of its Property thereto or set apart any sum
therefor, or permit any of its Restricted Subsidiaries so to do, except
that (i) a Restricted Subsidiary may declare and pay Restricted Payments
to its parent or to the Borrower, (ii) provided that no Default or Event
of Default has occurred and is then continuing or would occur giving
effect thereto, (1) the Borrower may (1) declare and pay cash dividends
on its common Stock in any fiscal year and (2) repurchase its Stock, and
(2) ACE may declare and pay cash dividends on, and make mandatory and
optional sinking fund payments with respect to, the ACE Preferred Stock.

 5.   Investments, Acquisitions, Loans, Etc.

      At any time, purchase or otherwise acquire, hold or invest in the
Stock of, or any other interest in, any Person, or make any loan or
advance to, or enter into any arrangement for the purpose of providing
funds or credit to, or make any other investment, whether by way of
capital contribution, time deposit or otherwise, in or with any Person,
or make any Acquisition (all of which are sometimes referred to herein
as "Investments") except:

           (a)  Investments in (i) obligations issued or guaranteed by
the United States Government, (ii) obligations of Federal agencies;
(iii) State general obligation or revenue bonds having a rating category
not less than Aa or AA by Moody's or S&P, respectively; (iv) State bond
anticipation, tax anticipation or revenue anticipation notes having a
rating category not less than MIG-2 or AA by Moody's or S&P, 
respectively; (v) any of the following which, by their terms, mature
within twelve months from the date of issuance: (1) commercial paper
rated not less than Prime-1 or A-1 by Moody's or S&P, respectively; (2)
bankers' acceptance drawn on and accepted by Approved Financial
Institutions; (3) certificates of deposit issued by Approved Financial
Institutions and (4) money market mutual funds investing in securities
rated as "First Tier Eligible Securities" by Moody's or S&P.

           (b)  Investments existing on the Effective Date as set forth
on Schedule 8.5.

           (c)  Investments consisting of Intercompany Loans to
Operating Subsidiaries, provided that (i) no Default or Event of Default
shall exist before and after giving effect thereto and (ii) such
Operating Subsidiary shall have executed and delivered to the Borrower
an Intercompany Note, which Intercompany Note shall be in form and
substance satisfactory to the Agent, shall have been duly indorsed by
the Borrower to the order of the Agent, as collateral agent for itself,
the Lenders, the Facility A Agent and the Facility A Lenders and shall
have been delivered to the Agent, as such collateral agent.

           (d)  Investments consisting of loans to Permitted
Recipients, provided that (i) no Default or Event of Default shall exist
before and after giving effect thereto, and (ii) the aggregate amount of
all such Investments shall not exceed $10,000,000.

           (e)  Acquisitions provided that (i) no Default or Event of
Default shall exist before and after giving effect thereto, (ii) the
Person or business to be acquired is in the same or a related business
to a Subsidiary of the Borrower (including other types of utilities) or
the assets or to be acquired are devoted to or usable in such a business
and (iii) no more than $25,000,000 of proceeds of Loans are used
therefor.

           (f)  Equity Investments in Operating Subsidiaries, provided
(i) that no Default or Event of Default would exist before or after
giving effect thereto and (ii) not more than $20,000,000 of such
Investments in the aggregate shall be made with the proceeds of Loans or
the forgiveness of Indebtedness or the conversion to equity of any such
Indebtedness, in each case to the extent permitted by Section 8.6.

 6.   Amendments, Etc. of Intercompany Notes

      Enter into or agree to any amendment, modification or waiver of
any term or condition of any Intercompany Note or forgive all or any
portion of any amount due thereunder or convert all or any portion
thereof into Stock or other interests or instruments, provided, however,
that if no Default or Event of Default exists before and after giving
effect thereto, the Borrower may so convert or forgive such Intercompany
Note or Intercompany Notes not in excess of $20,000,000 in the
aggregate, provided further that any such conversion or forgiveness in
excess thereof may only be made if the Agent shall have received 30 days
prior written notice thereof and the Operating Subsidiary whose
Intercompany Note is to be forgiven or converted shall have executed and
delivered to the Agent a guaranty substantially in the form of Exhibit Q
hereto, together with such legal opinions, certificates and other
documents as the Agent reasonably may request, each in form and
substance satisfactory to the Agent.

      7.   Designation of Operating Subsidiaries

      Designate any Subsidiary as an additional Operating Subsidiary to
whom proceeds of Loans may be loaned by the Borrower unless (i) no
Default or Event of Default shall exist before or after giving effect
thereto, (ii) the prospective Operating Subsidiary is a Subsidiary of
the Borrower, (iii) the prospective Operating Subsidiary is engaged in
the conduct of an active trade or business, (iv) the prospective
Operating Subsidiary executes an Intercompany Note, in favor of the
Borrower and in form and substance satisfactory to the Agent, evidencing
its obligation to repay Intercompany Loans made to it by the Borrower
from time to time, which Intercompany Note has been duly indorsed by the
Borrower to the order of the Agent, as collateral agent for itself, the
Lenders, the Facility A Agent and the Facility A Lenders, and (v) the
Agent shall have received a written certificate signed by an Authorized
Signatory of the Borrower designating such Operating Subsidiary and
certifying as to its status as described in clauses (ii) and (iii)
above.

 8.   Certain Business Activities

      Engage in any business other than the holding of Permitted
Investments.


I.    DEFAULT

 1.   Events of Default

      The following shall each constitute an "Event of Default"
hereunder:

           (a)  The failure of the Borrower to pay any installment of
principal on any Note or reimbursement obligations in respect of any
Letter of Credit on the date when due and payable; or

           (b)  The failure of the Borrower to pay any installment of
interest or any other fees or expenses payable under any Loan Document
or otherwise to the Agent with respect to the loan facilities
established hereunder within three Business Days of the date when due
and payable; or

           (c)  The use of the proceeds of any Loan in a manner
inconsistent with or in violation of Section 2.15; or

           (d)  The failure of the Borrower to observe or perform any
covenant or agreement contained in Sections 7.3, 7.10, 7.11 or Section
8; or

           (e)  The failure of the Borrower to observe or perform any
other term, covenant, or agreement contained in any Loan Document and
such failure shall have continued unremedied for a period of 30 days
after the Borrower shall have obtained knowledge thereof; or

           (f)  Any representation or warranty made in any Loan
Document or in any certificate delivered or to be delivered pursuant
thereto shall prove to have been  incorrect or misleading (whether
because of misstatement or omission) in any material respect when made;
or

           (g)  Obligations of the Borrower (other than its obligations
under the Notes), ACE or any of any Operating Subsidiary, whether as
principal, guarantor, surety or other obligor, for the payment of any
Indebtedness or operating leases in excess of $10,000,000 in the
aggregate (i) shall become or shall be declared to be due and payable
prior to the expressed maturity thereof, or (ii) shall not be paid when
due or within any grace period for the payment thereof, or (iii) the
holders of any such obligations shall have the right to declare such
obligation due and payable prior to the expressed maturity thereof;

           (h)  The Borrower, ACE or any Operating Subsidiary shall (i)
suspend or discontinue its business, (ii) make an assignment for the
benefit of creditors, (iii) generally not be paying its debts as such
debts become due, (iv) admit in writing its inability to pay its debts
as they become due, (v) file a voluntary petition in bankruptcy, (vi)
become insolvent (however such insolvency shall be evidenced), (vii)
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute, law
or regulation of any jurisdiction, (viii) petition or apply to any
tribunal for any receiver, custodian or any trustee for any substantial
part of its Property, (ix) be the subject of any such proceeding filed
against it which remains undismissed for a period of 60 days, (x) file
any answer admitting or not contesting the material allegations of any
such petition filed against it or any order, judgment or decree
approving such petition in any such proceeding, (xi) seek, approve,
consent to, or acquiesce in any such proceeding, or in the appointment
of any trustee, receiver, sequestrator, custodian, liquidator, or fiscal
agent for it, or any substantial part of its Property, or an order is
entered appointing any such trustee, receiver, custodian, liquidator or
fiscal agent and such order remains in effect for 60 days, or (xii) take
any formal action for the purpose of effecting any of the foregoing or
looking to the liquidation or dissolution of the Borrower or such
Subsidiary; or

           (i)  An order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court
having jurisdiction (i) adjudging the Borrower, ACE or any Operating
Subsidiary bankrupt or insolvent, (ii) approving as properly filed a
petition seeking reorganization, liquidation, arrangement, adjustment or
composition of or in respect of the Borrower or any of its Subsidiaries
under the United States bankruptcy laws or any other applicable Federal
or state law, (iii) appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the
Borrower or any of its Subsidiaries or of any substantial part of the
Property thereof, or (iv) ordering the winding up or liquidation of the
affairs of the Borrower or any of its Subsidiaries, and any such decree
or order continues unstayed and in effect for a period of 60 days; or

           (j)  Judgments or decrees against the Borrower or any of its
Subsidiaries aggregating in excess of $10,000,000 shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period
of 30 consecutive days from the entry thereof; or

                (k)  Any Loan Document shall cease, for any reason, to be in
full force and effect or the Borrower shall so assert in writing or
shall disavow any of its obligations thereunder; or

           (l)  The occurrence of an Event of Default under and as
defined in the Pledge Agreement; or

           (m)  The occurrence of an Event of Default under and as
defined in any Facility A Loan Document; or

           (n)  The Borrower shall own less than 100% of the issued and
outstanding common Stock of ACE; or

           (o)  (i) any Termination Event shall occur; (ii) any
Accumulated Funding Deficiency, whether waived, shall exist with respect
to any Pension Plan; (iii) any Person shall engage in any Prohibited
Transaction involving any Employee Benefit Plan; (iv) the Borrower, any
of its Subsidiaries or any ERISA Affiliate shall fail to pay when due an
amount which is payable by it to the PBGC or to a Pension Plan under
Title IV of ERISA; or (v) any other event or condition shall occur or
exist with respect to an Employee Benefit Plan; and the occurrence of
any of such events would have a Material Adverse Effect.

      Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, (a) if such event is an Event
of Default specified in clause (h) or (i) above, the Aggregate
Commitments and the Letter of Credit Commitment shall immediately and
automatically terminate and the Loans, all accrued and unpaid interest
thereon, any reimbursement obligations owing or contingently owing in
respect of all outstanding Letters of Credit and all other amounts owing
under the Loan Documents shall immediately become due and payable, and
the Borrower shall forthwith deposit an amount equal to the Letter of
Credit Exposure in a cash collateral account with and under the
exclusive control of the Agent, and the Agent may, and, upon the
direction of the Required Lenders shall, exercise any and all remedies
and other rights provided in the Loan Documents, and (b) if such event
is any other Event of Default, any or all of the following actions may
be taken: (i) with the consent of the Required Lenders, the Agent may,
and upon the direction of the Required Lenders shall, by notice to the
Borrower, declare the Aggregate Commitments and the Letter of Credit
Commitment to be terminated forthwith, whereupon the Aggregate
Commitments and the Letter of Credit Commitment shall immediately
terminate, and (ii) with the consent of the Required Lenders, the Agent
may, and upon the direction of the Required Lenders shall, by notice of
default to the Borrower, declare the Loans, all accrued and unpaid
interest thereon, any reimbursement obligations owing or contingently
owing in respect of all outstanding Letters of Credit and all other
amounts owing under the Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable, and the
Borrower shall forthwith deposit an amount equal to the Letter of Credit
Exposure in a cash collateral account with and under the exclusive
control of the Agent, and the Agent may, and upon the direction of the
Required Lenders shall, exercise any and all remedies and other rights
provided pursuant to the Loan Documents.  Except as otherwise provided
in this Section, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.  The Borrower hereby further
expressly waives and covenants not to assert any appraisement,
valuation, stay, extension, redemption or similar laws, now or at  any
time hereafter in force which might delay, prevent or otherwise impede
the performance or enforcement of any Loan Document.

      In the event that the Aggregate Commitments and the Letter of
Credit Commitment shall have been terminated or the Notes shall have
been declared due and payable pursuant to the provisions of this
Section, any funds received by the Agent and the Lenders from or on
behalf of the Borrower shall be applied by the Agent and the Lenders in
liquidation of the Loans and the obligations of the Borrower under the
Loan Documents in the following manner and order, in each case pro rata
in proportion to the amounts due to each Person entitled to payment: (i)
first, to the payment of interest on, and then the principal portion of,
any Loans which the Agent may have advanced on behalf of any Lender for
which the Agent has not then been reimbursed by such Lender or the
Borrower; (ii) second, to the payment of any fees or expenses due the
Agent from the Borrower, (iii) third, to reimburse the Agent and the
Lenders for any expenses (to the extent not paid pursuant to clause (ii)
above due from the Borrower pursuant to the provisions of Section 11.5;
(iv) fourth, to the payment of accrued Facility Fees, Letter of Credit
Fees and all other fees, expenses and amounts due under the Loan
Documents (other than principal and interest on the Notes); (v) fifth,
to the payment of interest due on the Notes; (vi) sixth, to the payment
of principal outstanding on the Revolving Credit Notes and under the
Reimbursement Agreements; (vii) seventh, to the payment of principal
outstanding on the Competitive Bid Notes; and (viii) eighth, to the
payment of any other amounts owing to the Agent and the Lenders under
any Loan Document.


J.    THE AGENT

 1.   Appointment

      Each Lender hereby irrevocably designates and appoints BNY as the
Agent of such Lender under the Loan Documents and each such Lender
hereby irrevocably authorizes BNY, as the Agent for such Lender, to take
such action on its behalf under the provisions of the Loan Documents and
to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of the Loan Documents, together with
such other powers as are reasonably incidental thereto.  Notwithstanding
any provision to the contrary elsewhere in any Loan Document, the Agent
shall not have any duties or responsibilities other than those expressly
set forth therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist
against the Agent.

 2.   Delegation of Duties

      The Agent may execute any of its duties under the Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to rely
upon the advice of counsel concerning all matters pertaining to such
duties.

 3.   Exculpatory Provisions

      Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under
or in connection with the Loan Documents (except the  Agent for its own
gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer
thereof contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received
by the Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, perfection, enforceability
or sufficiency of any of the Loan Documents or for any failure of the
Borrower or any other Person to perform its obligations thereunder.  The
Agent shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, the Loan Documents, or to inspect the
properties, books or records of the Borrower.  The Agent shall not be
under any liability or responsibility whatsoever, as Agent, to the
Borrower or any other Person as a consequence of any failure or delay in
performance, or any breach, by any Lender of any of its obligations
under any of the Loan Documents.

 4.   Reliance by Agent

      The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, opinion, letter, cablegram, telegram, fax, telex or teletype
message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Agent.  The
Agent may treat each Lender, or the Person designated in the last notice
filed with it under this Section, as the holder of all of the interests
of such Lender in its Loans and in its Notes until written notice of
transfer, signed by such Lender (or the Person designated in the last
notice filed with the Agent) and by the Person designated in such
written notice of transfer, in form and substance satisfactory to the
Agent, shall have been filed with the Agent.  The Agent shall not be
under any duty to examine or pass upon the validity, effectiveness,
enforceability, perfection or genuineness of the Loan Documents or any
instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Agent shall be entitled to assume that the
same are valid, effective and genuine, have been signed or sent by the
proper parties and are what they purport to be.  The Agent shall be
fully justified in failing or refusing to take any action under the Loan
Documents unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate.  The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under
the Loan Documents in accordance with a request or direction of the
Required Lenders, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.

 5.   Notice of Default

      The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Agent has
received written notice thereof from a Lender or the Borrower.  In the
event that the Agent receives such a notice, the Agent shall promptly
give notice thereof to the Lenders and the Borrower.  The Agent shall
take such action with respect to such Default or Event of Default as
shall be directed by the Required Lenders, provided, however, that
unless and until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such  action, or refrain
from taking such action, with respect to such Default or Event of
Default as it shall deem to be in the best interests of the Lenders.

 6.   Non-Reliance on Agent and Other Lenders

      Each Lender expressly acknowledges that neither the Agent nor any
of its respective officers, directors, employees, agents, attorneys-
in-fact or affiliates has made any representations or warranties to it
and that no act by the Agent hereinafter, including any review of the
affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender.  Each Lender
represents to the Agent that 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 evaluation of and
investigation into the business, operations, Property, financial and
other condition and creditworthiness of the Borrower and made its own
decision to enter into this Agreement.  Each Lender also represents that
it will, independently and without reliance upon the Agent 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 analyses,
evaluations and decisions in taking or not taking action under any Loan
Document, and to make such investigation as it deems necessary to inform
itself as to the business, operations, Property, financial and other
condition and creditworthiness of the Borrower.  Except for notices,
reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, Property, financial and
other condition or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.

 7.   Indemnification

      Each Lender agrees to indemnify and reimburse the Agent in its
capacity as such (to the extent not promptly reimbursed by the Borrower
and without limiting the obligation of the Borrower to do so), pro rata
according to the outstanding principal balance of the Loans (or at any
time when no Loans are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind whatsoever including, without limitation,
any amounts paid to the Lenders (through the Agent) by the Borrower
pursuant to the terms of the Loan Documents, that are subsequently
rescinded or avoided, or must otherwise be restored or returned) which
may at any time (including, without limitation, at any time following
the payment of the Notes) be imposed on, incurred by or asserted against
the Agent in any way relating to or arising out of the Loan Documents or
any other documents contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted to be
taken by the Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the
extent resulting solely from the finally adjudicated gross negligence or
willful misconduct of the Agent.  Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its
pro rata share of any unpaid fees owing to the Agent, and any costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) payable by the Borrower under Section 11.5, to the extent  that
the Agent has not been paid such fees or has not be reimbursed for such
costs and expenses by the Borrower.  The failure of any Lender to
reimburse the Agent promptly upon demand for its pro rata share of any
amount required to be by the Lenders to the Agent as provided in this
Section shall not relieve any other Lender of its obligation hereunder
to reimburse the Agent for its pro rata share of such amount, but no
Lender shall be responsible for the failure of other Lender to reimburse
the Agent for such other Lender's pro rata share of such amount.  The
agreements in this Section shall survive the payment of all amounts
payable under the Loan Documents.

 8.   Agent in Its Individual Capacity

      BNY and its respective affiliates may make loans to, accept
deposits from, issue letters of credit for the account of, and generally
engage in any kind of business with, the Borrower as though BNY were not
Agent hereunder.  With respect to the Commitment made or renewed by BNY
and the Notes issued to BNY, BNY shall have the same rights and powers
under the Loan Documents as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall
in each case include BNY.

 9.   Successor Agent

      If at any time the Agent deems it advisable, in its sole
discretion, it may submit to each of the Lenders a written notice of its
resignation as Agent under the Loan Documents, such resignation to be
effective upon the earlier of (i) the written acceptance of the duties
of the Agent under the Loan Documents by a successor Agent and (ii) on
the 30th day after the date of such notice.  Upon any such resignation,
the Required Lenders shall have the right, with the prior written
consent of the Borrower (which consent shall not be unreasonably
withheld or delayed and which consent of the Borrower shall not be
required upon the occurrence and during the continuance of a Default or
an Event of Default), to appoint from among the Lenders a successor
Agent.  If no successor Agent shall have been so appointed by the
Required Lenders and accepted such appointment in writing within 30 days
after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which successor Agent shall be a commercial bank organized under the
laws of the United States of America or any State thereof and having a
combined capital, surplus, and undivided profits 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 retiring Agent, and the retiring Agent's rights, powers, privileges
and duties as Agent under the Loan Documents shall be terminated.  The
Borrower and the Lenders shall execute such documents as shall be
necessary to effect such appointment.  After any retiring Agent's
resignation as Agent, the provisions of the Loan Documents shall inure
to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Loan Documents.  If at any time there shall
not be a duly appointed and acting Agent, the Borrower agrees to make
each payment due under the Loan Documents directly to the Lenders
entitled thereto during such time.


 K.   OTHER PROVISIONS

 1.   Amendments and Waivers

      With the written consent of the Required Lenders, the Agent and
the Borrower may, from time to time, enter into written amendments,
supplements or modifications of the Loan Documents and, with the consent
of the Required Lenders, the Agent on behalf of the Lenders may execute
and deliver to any such parties a written instrument waiving or a
consent to a departure from, on such terms and conditions as the Agent
may specify in such instrument, any of the requirements of the Loan
Documents or any Default or Event of Default and its consequences;
provided, however, that:

      (a)  no such amendment, supplement, modification, waiver or
consent shall, without the written consent of all of the Lenders, (i)
increase the Commitment of any Lender or the Aggregate Commitments, (ii)
extend the Maturity Date (except as provided in Section 2.22); (iii)
decrease the rate, or extend the time of payment, of interest of, or
change or forgive the principal amount of, or change the pro rata
allocation of payments under, any Note; (iv) release all or any part of
the Collateral; (v) change the provisions of Sections 3.4, 11.1 or
11.7(a) or (vi) change the definition of Required Lenders;

      (b)  without the written consent of the Issuing Bank, no such
amendment, supplement, modification or waiver shall change the Letter of
Credit Commitment, change the amount or the time of payment of the
Letter of Credit Fees or change any other term or provision which
relates to the Letter of Credit Commitment or the Letters of Credit; and

      (c)  without the written consent of BNY, no such amendment,
supplement, modification or waiver shall amend, modify or waive any
provision of Section 10 or otherwise change any of the rights or
obligations of the Agent hereunder or under the Loan Documents.

      Any such amendment, supplement, modification or waiver shall
apply equally to each of the Lenders and shall be binding upon the
parties to the applicable Loan Document, the Lenders, the Agent and all
future holders of the Notes.  In the case of any waiver, the parties to
the applicable Loan Document, the Lenders and the Agent shall be
restored to their former position and rights hereunder and under the
outstanding Notes and other Loan Documents to the extent provided for in
such waiver, and any Default or Event of Default waived shall not extend
to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.  The Loan Documents may not be amended orally
or by any course of conduct.

 2.   Notices

      All notices, requests and demands to or upon the respective
parties to the Loan Documents to be effective shall be in writing and,
unless otherwise expressly provided therein, shall be deemed to have
been duly given or made when delivered by hand, or when deposited in the
mail, first-class postage prepaid, or, in the case of notice by fax,
when sent, addressed as follows in the case of the Borrower or the
Agent, at the Domestic Lending Office, in the case of each Lender, or to
such other addresses as to  which the Agent may be hereafter notified by
the respective parties thereto or any future holders of the Notes:

      The Borrower:

      Atlantic Energy, Inc.
      6801 Black Horse Pike
      Pleasantville, New Jersey 08232-4130
      Attention:  Louis M. Walters,
                    Treasurer
      Telephone:  (609) 645-4441
      Fax:        (609) 645-4550

      The Agent:

      The Bank of New York
      One Wall Street
      Agency Function Administration
      18th Floor
      New York, New York 10286
      Attention:  Patricia Clancy
      Telephone: (212) 635-4696
      Fax:       (212) 635-6365 or 6366 or 6367

      with a copy to:

      The Bank of New York
      Energy Industries Division
      One Wall Street
      19th Floor
      New York, New York 10286
      Attention:  Mary Lou Bradley,
                    Vice President
      Telephone:  (212) 635-7533
      Fax:        (212) 635-7923

except that any notice, request or demand by the Borrower to or upon the
Agent or the Lenders pursuant to Sections 2.3, 2.4 or 2.7 shall not be
effective until received.  Any party to a Loan Document may rely on
signatures of the parties thereto which are transmitted by fax or other
electronic means as fully as if originally signed.

 3.   No Waiver; Cumulative Remedies

      No failure to exercise and no delay in exercising, on the part of
the Agent or any Lender, any right, remedy, power or privilege under any
Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege.  The rights, remedies,
powers and privileges under the Loan Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by
law.

      4.   Survival of Representations and Warranties

      All representations and warranties made under the Loan Documents
and in any document, certificate or statement delivered pursuant thereto
or in connection therewith shall survive the execution and delivery of
the Loan Documents.

 5.   Payment of Expenses and Taxes

      The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Loan is made (i) to pay or reimburse
the Agent for all its out-of-pocket costs and expenses reasonably
incurred in connection with the development, preparation, execution and
syndication of, the Loan Documents and any amendment, supplement or
modification thereto (whether or not executed), any documents prepared
in connection therewith and the consummation of the transactions
contemplated thereby, including, without limitation, the reasonable fees
and disbursements of Special Counsel, (ii) to pay or reimburse the Agent
and the Lenders for all of their respective costs and expenses,
including, without limitation, reasonable fees and disbursements of
counsel, incurred in connection with (1) any Default or Event of Default
and any enforcement or collection proceedings resulting therefrom or in
connection with the negotiation of any restructuring or "work-out"
(whether consummated or not) of the obligations of the Borrower under
any of the Loan Documents and (2) the enforcement of this Section, (iii)
to pay, indemnify, and hold each Lender and the Agent harmless from and
against, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery
of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under
or in respect of, the Loan Documents and any such other documents, and
(iv) to pay, indemnify and hold each Lender and the Agent and each of
their respective officers, directors and employees harmless from and
against any and all other liabilities, obligations, claims, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without
limitation, reasonable counsel fees and disbursements) with respect to
the enforcement and performance of the Loan Documents and the
enforcement and performance of the provisions of any subordination
agreement in favor of the Agent and the Lenders (all the foregoing,
collectively, the "indemnified liabilities") and, if and to the extent
that the foregoing indemnity may be unenforceable for any reason, the
Borrower agrees to make the maximum payment permitted or not prohibited
under applicable law; provided, however, that the Borrower shall have no
obligation hereunder to pay indemnified liabilities to the Agent or any
Lender arising from the finally adjudicated gross negligence or willful
misconduct of the Agent or such Lender or claims between one indemnified
party and another indemnified party.  The agreements in this Section
shall survive the termination of the Aggregate Commitments and the
payment of all amounts payable under the Loan Documents.

 6.   Lending Offices

      Each Lender shall have the right at any time and from time to
time to transfer its Loans to a different office, provided that such
Lender shall promptly notify the Agent and the Borrower of any such
change of office.  Such office shall thereupon become such Lender's
Domestic Lending Office or Eurodollar Lending Office, as the case  may
be, provided, however, that no such Lender shall be entitled to receive
any greater amount under Sections 2.10, 2.12, 2.13 and 2.21 as a result
of a transfer of any such Loans to a different office of such Lender
than it would be entitled to immediately prior thereto unless such claim
would have arisen even if such transfer had not occurred.

 7.   Assignments and Participations

      (a)  The Loan Documents shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agent, all future holders of
the Notes and their respective successors and assigns, except that the
Borrower may not assign, delegate or transfer any of its rights or
obligations under the Loan Documents without the prior written consent
of the Agent, the Issuing Bank and each Lender.

      (b)  Each Lender shall have the right at any time, upon written
notice to the Agent of its intent to do so, to sell, assign, transfer or
negotiate all or any part of such Lender's rights under the Loan
Documents and the Facility A Loan Documents to one or more of its
affiliates, to one or more of the other Lenders (or to affiliates of
such other Lenders) or, with the prior written consent of the Borrower,
the Agent and the Issuing Bank (which consent shall not be unreasonably
withheld or delayed and which consent of the Borrower shall not be
required upon the occurrence and during the continuance of an Event of
Default), to sell, assign, transfer or negotiate all or any part of such
Lender's rights and obligations under the Loan Documents and the
Facility A Loan Documents to any other bank, insurance company, pension
fund, mutual fund or other financial institution, provided that (i) each
such sale, assignment, transfer or negotiation (other than sales,
assignments, transfers or negotiations (x) to affiliates of such Lender
or (y) of a Lender's entire interest) shall be in a minimum amount of
$5,000,000, (ii) each such sale, assignment, transfer or negotiation
shall be of an equal percentage of such Lenders interest under the Loan
Documents and the Facility A Loan Documents (it being the intention of
the parties that at all times during which the Loan Documents and the
Facility A Loan Documents are both in effect, each Lender shall also be
a Facility A Lender and its Commitment Percentage shall equal its
Facility A Commitment Percentage) and (iii) there shall be paid to the
Agent by the assigning Lender a fee (the "Assignment Fee") of $3,000 for
the assignment of both the Loan Documents and the Facility A Loan
Documents.  For each assignment, the parties to such assignment shall
execute and deliver to the Agent for its acceptance and recording an
Assignment and Acceptance Agreement.  Upon such execution, delivery,
acceptance and recording by the Agent, from and after the effective date
specified in such Assignment and Acceptance Agreement, the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance Agreement, the assignor Lender thereunder
shall be released from its obligations under the Loan Documents.  The
Borrower agrees upon written request of the Agent and at the Borrower's
expense to execute and deliver (1) to such assignee, a Revolving Credit
Note, dated the effective date of such Assignment and Acceptance
Agreement, in an aggregate principal amount equal to the Loans assigned
to, and Commitments assumed by, such assignee, (2) to such assignee, a
Competitive Bid Note, dated the effective date of such Assignment and
Acceptance Agreement and (3) to such assignee, a Revolving Credit Note,
dated the effective date of such Assignment and Acceptance Agreement, in
an aggregate principal amount equal to the balance of such assignor
Lender's Revolving Credit Loans and Commitments, if any, and each
assignor Lender shall cancel and return to the Borrower its existing
Revolving Credit Note.  Upon any such sale, assignment or  other
transfer, the Commitments and the Commitment Percentages set forth in
Exhibit A shall be adjusted accordingly by the Agent.

      (c)  Each Lender may grant participations in all or any part of
its Loans, its Notes and its Commitment to one or more banks, insurance
companies, financial institutions, pension funds or mutual funds,
provided that (i) such Lender's obligations under the Loan Documents
shall remain unchanged, (ii) such Lender shall remain solely responsible
to the other parties to the Loan Documents for the performance of such
obligations, (iii) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents, (iv) no
sub-participations shall be permitted and (v) the voting rights of any
holder of any participation shall be limited to decisions that only do
any of the following: (1) subject the participant to any additional
obligation, (2) reduce the principal of, or interest on the Notes or any
fees or other amounts payable hereunder, (3) postpone any date fixed for
the payment of principal of, or interest on the Notes or any fees or
other amounts payable hereunder, (4) release any security interest or
Collateral except to the extent that such release is specifically
provided for in any Loan Document or (5) release any guarantor under any
guarantee.  The Borrower acknowledges and agrees that any such
participant shall for purposes of Sections 2.10, 2.12, 2.13, 2.16 and
2.21 be deemed to be a "Lender"; provided, however, the Borrower shall
not, at any time, be obligated to pay any participant in any interest of
any Lender hereunder any sum in excess of the sum which the Borrower
would have been obligated to pay to such Lender in respect of such
interest had such Lender not sold such participation.

      (d)  If any (i) assignment is made pursuant to subsection (b)
above or (ii) any participation is granted pursuant to subsection (c)
above, shall be made to any Person that is not a U.S. Person, such
Person shall furnish such certificates, documents or other evidence to
the Borrower and the Agent, in the case of clause (i) and to the
Borrower and the Lender which sold such participation in the case of
clause (ii), as shall be required by Section 2.10(e).

      (e)  No Lender shall, as between and among the Borrower, the
Agent and such Lender, be relieved of any of its obligations under the
Loan Documents as a result of any sale, assignment, transfer or
negotiation of, or granting of participations in, all or any part of its
Loans, its Commitment or its Note, except that a Lender shall be
relieved of its obligations to the extent of any such sale, assignment,
transfer, or negotiation of all or any part of its Loans, its Commitment
or its Notes pursuant to subsection (b) above.

      (f)  Notwithstanding anything to the contrary contained in this
Section, any Lender may at any time or from time to time assign all or
any portion of its rights under the Loan Documents to a Federal Reserve
Bank, provided that any such assignment shall not release such assignor
from its obligations thereunder.

 8.   Counterparts

      Each Loan Document (other than the Notes) may be executed by one
or more of the parties thereto on any number of separate counterparts
and all of said counterparts taken together shall be deemed to
constitute one and the same document.  It shall not be necessary in
making proof of any Loan Document to produce or account for  more than
one counterpart signed by the party to be charged.  A counterpart of any
Loan Document or to any document evidencing, and of any an amendment,
modification, consent or waiver to or of any Loan Document transmitted
by fax shall be deemed to be an originally executed counterpart.  A set
of the copies of the Loan Documents signed by all the parties thereto
shall be deposited with each of the Borrower and the Agent.  Any party
to a Loan Document may rely upon the signatures of any other party
thereto which are transmitted by fax or other electronic means to the
same extent as if originally signed.

 9.   Adjustments; Set-off

      (a)  If any Lender (a "Benefited Lender") shall at any time
receive any payment of all or any part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 9.1 (h) or (i), or
otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender in respect of such other
Lender's Loans, or interest thereon, such Benefited Lender shall
purchase for cash from each of the other Lenders such portion of each
such other Lender's Loans, and shall provide each of such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of
the Lenders, provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. 
The Borrower agrees that each Lender so purchasing a portion of another
Lender's Loans may exercise all rights of payment (including, without
limitation, rights of set-off, to the extent not prohibited by law) with
respect to such portion as fully as if such Lender were the direct
holder of such portion.

      (b)  In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence of an Event of Default and the
acceleration of the obligations owing in connection with the Loan
Documents, or at any time upon the occurrence and during the continuance
of an Event of Default, under Section 9.1(a) or (b), each Lender shall
have the right, without prior notice to the Borrower, any such notice
being expressly waived by the Borrower to the extent not prohibited by
applicable law, to set-off and apply against any indebtedness, whether
matured or unmatured, of the Borrower to such Lender, any amount owing
from such Lender to the Borrower, at, or at any time after, the
happening of any of the above-mentioned events.  To the extent not
prohibited by applicable law, the aforesaid right of set-off may be
exercised by such Lender against the Borrower or against any trustee in
bankruptcy, custodian, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of
the Borrower, or against anyone else claiming through or against the
Borrower or such trustee in bankruptcy, custodian, debtor in possession,
assignee for the benefit of creditors, receiver, or execution, judgment
or attachment creditor, notwithstanding the fact that such right of set-
off shall not have been exercised by such Lender prior to the making,
filing or issuance, or service upon such Lender of, or of notice of, any
such petition, assignment for the benefit of creditors, appointment or
application for the appointment of a receiver, or issuance of execution,
subpoena, order or warrant.  Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application made by
such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.

      10.  Indemnity

      The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and their respective affiliates, directors, officers,
employees, attorneys and agents (each an "Indemnified Person") from and
against any loss, cost, liability, damage or expense (including the
reasonable fees and disbursements of counsel of such Indemnified Person,
including all local counsel hired by any such counsel) incurred by such
Indemnified Person in investigating, preparing for, defending against,
or providing evidence, producing documents or taking any other action in
respect of, any commenced or threatened litigation, administrative
proceeding or investigation under any federal securities law or any
other statute of any jurisdiction, or any regulation, or at common law
or otherwise, which is alleged to arise out of or is based upon (i) any
untrue statement or alleged untrue statement of any material fact by the
Borrower in any document or schedule executed or filed with any
Governmental Authority by or on behalf of the Borrower; (ii) any
omission or alleged omission to state any material fact required to be
stated in such document or schedule, or necessary to make the statements
made therein, in light of the circumstances under which made, not
misleading; (iii) any acts, practices or omissions or alleged acts,
practices or omissions of the Borrower or its agents relating to the use
of the proceeds of any or all borrowings made by the Borrower which are
alleged to be in violation of Section 2.15, or in violation of any
federal securities law or of any other statute, regulation or other law
of any jurisdiction applicable thereto; or (iv) any acquisition or
proposed acquisition by the Borrower of all or a portion of the Stock,
or all or a portion of the assets, of any Person whether such
Indemnified Person is a party thereto.  The indemnity set forth herein
shall be in addition to any other obligations or liabilities of the
Borrower to each Indemnified Person under the Loan Documents or at
common law or otherwise, and shall survive any termination of the Loan
Documents, the expiration of the Aggregate Commitments and the payment
of all indebtedness of the Borrower under the Loan Documents, provided
that the Borrower shall have no obligation under this Section to an
Indemnified Person with respect to any of the foregoing to the extent
found in a final judgment of a court having jurisdiction to have
resulted primarily out of the gross negligence or wilful misconduct of
such Indemnified Person or arising solely from claims between one such
Indemnified Person and another such Indemnified Person.

 11.  Governing Law

      The Loan Documents and the rights and obligations of the parties
thereunder shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York, without
regard to principles of conflict of laws.

 12.  Headings Descriptive

      Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.

 13.  Severability

      Every provision of the Loan Documents is intended to be
severable, and if any term or provision thereof shall be invalid,
illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions thereof shall not be 
affected or impaired thereby, and any invalidity, illegality or
unenforceability in any jurisdiction shall not affect the validity,
legality or enforceability of any such term or provision in any other
jurisdiction.

 14.  Integration

      All exhibits to a Loan Document shall be deemed to be a part
thereof.  Except for agreements between the Agent and the Borrower with
respect to certain fees, the Loan Documents embody the entire agreement
and understanding among the Borrower, the Agent and the Lenders with
respect to the subject matter thereof and supersede all prior agreements
and understandings among the Borrower, the Agent and the Lenders with
respect to the subject matter thereof.

 15.  Consent to Jurisdiction

      The Borrower hereby irrevocably submits to the jurisdiction of
any New York State or Federal court sitting in the City of New York over
any suit, action or proceeding arising out of or relating to the Loan
Documents.  The Borrower hereby irrevocably waives, to the fullest
extent permitted or not prohibited by law, any objection which it may
now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such
suit, action or proceeding brought in such a court has been brought in
an inconvenient forum.  The Borrower hereby agrees that a final judgment
in any such suit, action or proceeding brought in such a court, after
all appropriate appeals, shall be conclusive and binding upon it.

 16.  Service of Process

      The Borrower hereby irrevocably consents to the service of
process in any suit, action or proceeding by sending the same by first
class mail, return receipt requested or by overnight courier service, to
the address of the Borrower set forth in Section 11.2.  The Borrower
hereby agrees that any such service (i) shall be deemed in every respect
effective service of process upon it in any such suit, action, or
proceeding, and (ii) shall to the fullest extent enforceable by law, be
taken and held to be valid personal service upon and personal delivery
to it.

 17.  No Limitation on Service or Suit

      Nothing in the Loan Documents or any modification, waiver,
consent or amendment thereto shall affect the right of the Agent or any
Lender to serve process in any manner permitted by law or limit the
right of the Agent or any Lender to bring proceedings against the
Borrower in the courts of any jurisdiction or jurisdictions in which the
Borrower may be served.

 18.  WAIVER OF TRIAL BY JURY

      THE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION
WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. 
FURTHER, THE BORROWER 
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE
AGENT, OR THE
  LENDERS, OR COUNSEL TO THE AGENT OR THE LENDERS, HAS REPRESENTED,
  EXPRESSLY OR OTHERWISE, THAT THE AGENT OR THE LENDERS WOULD NOT, IN THE
  EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY
  TRIAL PROVISION.  THE BORROWER ACKNOWLEDGES THAT THE AGENT AND THE
  LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA,
  THE PROVISIONS OF THIS SECTION.
  
  
             [Remainder of page intentionally left blank]
      IN WITNESS WHEREOF, the parties hereto have caused this Revolving
  Credit Agreement (Facility B) to be duly executed and delivered by their
  proper and duly authorized officers as of the day and year first above
  written.
  
  
                                      ATLANTIC ENERGY, INC.
  
  
  
                                     By:    /s/ Jerrold L. Jacobs
                                     Name:  Jerrold L. Jacobs
                                     Title: President & Chief
                                            Executive Officer
  
  
                                     THE BANK OF NEW YORK,  
                                     Individually and as Agent
  
  
  
                                     By:    /s/ Mary Lou Bradley
                                     Name:  Mary Lou Bradley
                                     Title: Vice President
  
  
  
                                     THE FIRST NATIONAL BANK
                                       OF CHICAGO
  
  
  
                                     By     /s/ Kenneth J. Bauer
                                     Name:  Kenneth J. Bauer
                                     Title: Authorized Agent
  
  
  
                                     MELLON BANK, N.A.
  
  
  
                                    By:    /s/ A. Gary Chace
                                    Name:  A. Gary Chace
                                    Title: Senior Vice President
    
                       ATLANTIC ENERGY EXHIBIT A
  
                          LIST OF COMMITMENTS
  
                             (Facility B)
                         Commitment
Lender                   Commitment             Percentage

The Bank of New York    $21,334,000                 53.3350%

The First National Bank $13,333,000                 33.3325%
  of Chicago

Mellon Bank, N.A.       $ 5,333,000                 13.3325%

Total                   $40,000,000                100.0000%

                       ATLANTIC ENERGY EXHIBIT B-1

                      FORM OF REVOLVING CREDIT NOTE

                               (Facility B)

$______________                                          , 1995
                                             New York, New York


FOR VALUE RECEIVED, on the Maturity Date, ATLANTIC ENERGY, INC.,
a New Jersey corporation (the "Borrower"), hereby promises to pay
to the order of ________________ (the "Lender"), at the office of
THE BANK OF NEW YORK, as Agent (the "Agent"), located at One Wall
Street, New York, New York or at such other place as the Agent may
specify from time to time, in lawful money of the United States of
America, the principal sum of $_____, or such lesser unpaid
principal balance as shall be outstanding hereunder, together with
interest from the date hereof, on the unpaid principal balance
hereof, payable at the rate or rates and at the time or times
provided for in the Revolving Credit Agreement (Facility B), dated
as of September 28, 1995, among the Borrower, the Lenders party
thereto and the Agent (as the same may be amended, modified or
supplemented from time to time, the "Agreement").  Capitalized
terms used herein that are defined in the Agreement shall have the
meanings therein defined.  In no event shall interest payable
hereon exceed the Highest Lawful Rate.

This Note is one of the Revolving Credit Notes referred to in the
Agreement and is entitled to the benefits of, and is subject to
the terms set forth in, the Agreement.  The principal of this Note
is payable in the amounts and under the circumstances, and its ma-
turity is subject to acceleration upon the terms, set forth in the
Agreement.  Except as otherwise provided in the Agreement, if any
payment on this Note becomes due and payable on a day which is not
a Business Day, the maturity thereof shall be extended to the next
Business Day and interest shall be payable at the applicable rate
or rates specified in the Agreement during such extension period.

The (i) date and amount of each Revolving Credit Loan made by the
Lender, (ii) its character as an ABR Advance or a Eurodollar
Advance, (iii) the Eurodollar Rate and Eurodollar Interest Period
applicable to any Eurodollar Advances, and (iv) each payment and
prepayment of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, may
be indorsed by the Lender on the schedule attached hereto or any
continuation thereof, provided that the failure of the Lender to
make any such recordation or indorsement shall not affect the
obligations of the Borrower to make payment when due of any amount
owing hereunder.

Presentment for payment, demand, protest, notice of protest and
notice of dishonor and all other demands and notices in connection
with the delivery, performance and enforcement of this Note are
hereby waived, except as specifically otherwise provided in the
Agreement.

This Note is being delivered in, is intended to be performed in,
and shall be construed and interpreted in accordance with and be
governed by the internal laws of, the State of New York, without
regard to principles of conflicts of law.

This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 11.1 of the Agreement.


                                         ATLANTIC ENERGY, INC.


                                       By:                   
                                       Name:                 
                                       Title:                
     


                               SCHEDULE TO
                            REVOLVING CREDIT NOTE



                                                    Interest
                                                    Rate on
                                                    Eurodollar
                                                    Advances
         Type of                       Amount of    (without
         Advance(ABR                   principal     regard to
         or Eurodollar    Amount of    paid or       Applicable
Date     Rate)            Advance      prepaid       Margin    

                               SCHEDULE TO
                      REVOLVING CREDIT NOTE - continued








Interest
Period (if
Eurodollar                      Notation 
Advance)                        Made By  



                       ATLANTIC ENERGY EXHIBIT B-2

                       FORM OF COMPETITIVE BID NOTE

                               (Facility B)

                                              ______ __, 1995
                                              New York, New York


FOR VALUE RECEIVED, ATLANTIC ENERGY, INC., a New Jersey corpora-
tion (the "Borrower"), hereby promises to pay to the order of
____________________ (the "Lender"), at the office of THE BANK
OF NEW YORK, as Agent (the "Agent"), located at One Wall Street,
New York, New York or at such other place as the Agent may
specify from time to time, in lawful money of the United States
of America, the outstanding principal balance of the Lender's
Competitive Bid Loans, together with interest thereon payable at
the rate or rates and at the time or times provided for in the
Revolving Credit Agreement (Facility B), dated as of
September 28, 1995, among the Borrower, the Lenders party
thereto and the Agent (as the same may be amended, modified or
supplemented from time to time, the "Agreement").  Capitalized
terms used herein that are defined in the Agreement shall have
the meanings therein defined.  In no event shall interest
payable hereon exceed the Highest Lawful Rate.

This Note is one of the Competitive Bid Notes referred to in the
Agreement and is entitled to the benefits of, and is subject to
the terms set forth in, the Agreement.  The principal of this
Note is payable in the amounts and under the circumstances, and
its maturity is subject to acceleration upon the terms, set
forth in the Agreement.  Except as otherwise provided in the
Agreement, if any payment on this Note becomes due and payable
on a day which is not a Business Day, the maturity thereof shall
be extended to the next Business Day and interest shall be pay-
able at the applicable rate or rates specified in the Agreement
during such extension period.

The (i) date and amount of each Competitive Bid Loan made by the
Lender, (ii) the interest rate and Interest Period applicable
thereto and (iii) each payment and prepayment of the principal
thereof, shall be recorded by the Lender on its books and, prior
to any transfer of this Note, may be indorsed by the Lender on
the schedule attached hereto or any continuation thereof,
provided that the failure of the Lender to make any such
recordation or indorsement shall not affect the obligations of
the Borrower to make payment when due of any amount owing
hereunder.

Presentment for payment, demand, protest, notice of protest and
notice of dishonor and all other demands and notices in
connection with the delivery, performance and enforcement of
this Note are hereby waived, except as specifically otherwise
provided in the Agreement.

This Note is being delivered in, is intended to be performed in,
and shall be construed and interpreted in accordance with and be
governed by the internal laws of, the State of New York, without
regard to principles of conflicts of law.

This Note may only be amended by an instrument in writing
executed pursuant to the provisions of Section 11.1 of the
Agreement.


                                    ATLANTIC ENERGY, INC.


                                   By:                     
                                   Name:               
                                   Title:              


                               SCHEDULE TO
                           COMPETITIVE BID NOTE


                                  Amount of
 Amount of                                     Principal
 Competitive          Interest     Bid         Payment or        Notation
Date   Loan           Period       Rate        Prepayment        Made by 

                           ATLANTIC ENERGY EXHIBIT C

                           FORM OF BORROWING REQUEST

                                  (Facility B)

                                                     _______ __, 99_


The Bank of New York, as Agent
Agency Function Administration
One Wall Street
18th Floor
New York, New York 10286
Attention:  Patricia Clancy

The Bank of New York, as Agent
Energy Industries Division
One Wall Street
19th Floor
New York, New York 10286
Attention:  Mary Lou Bradley,
            Vice President

       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and among
                  ATLANTIC ENERGY, INC. (the "Borrower"), the
                  Lenders party thereto, and THE BANK OF NEW
                  YORK, as Agent (the "Agreement")    
           
           
           
           Capitalized terms used herein that are defined in the
  Agreement shall have the meanings therein defined.
  
      (a)  Pursuant to Section 2.3 of the Agreement, the Bor-
  rower hereby gives notice of its intention to borrow Revolving
  Credit Loans in an aggregate principal amount of $_______ on
  ______ __, 19__, which borrowing(s) shall consist of the
  following Advances:
                                          Initial Interest
  Type of Advance                         Period for Eurodollar
  (Eurodollar or ABR)       Amount        Advances              
  
  (a)
  (b)
  
      (b)  The Borrower hereby certifies that on the date hereof
  and, after giving effect to the Loans requested hereby on the
  Borrowing Date set forth above:
  
           (a)  The Borrower is and shall be in compliance with
  all of the terms, covenants and conditions of the Agreement
  relating to such Loan.
  
           (b)  There exists and there shall exist no Event of
  Default under the Agreement.
  
           (c)  Each of the representations and warranties con-
  tained in the Agreement shall be true and correct with the same
  effect as though such representations and warranties had been
  made on such Borrowing Date, except to the extent such
  representations and warranties specifically relate to an
  earlier date, in which case such representations and warranties
  are true and correct in all material respects on and as of such
  earlier date.
  
           (d)  After giving effect to the Revolving Credit
  Loans requested to be made hereby, the Aggregate Credit
  Exposure will not exceed the Aggregate Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
                                   ATLANTIC ENERGY, INC.
  
  
  
                                  By: 
                                  Name: 
                                  Title:
  
    
                       ATLANTIC ENERGY EXHIBIT D
  
                    FORM OF COMPETITIVE BID REQUEST
  
                             (Facility B)
  
                                         [Date]
  
  The Bank of New York, as Agent
  Agency Function Administration
  One Wall Street
  18th Floor
  New York, New York 10286
  Attention:  Patricia Clancy
  
  The Bank of New York, as Agent
  Energy Industries Division
  One Wall Street
  19th Floor
  New York, New York 10286
  Attention:  Mary Lou Bradley
              Vice President
  
  Re: Revolving Credit Agreement (Facility B),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
           
                Capitalized terms used herein which defined in the
  Agreement shall have the meanings therein defined.
  
           Pursuant to Section 2.4 of the Agreement, the Bor-
  rower hereby gives notice of its request to borrow
  Competitive Bid Loans in the aggregate sum of $____________
  on ____________, which borrowing shall consist of the
  following Competitive Interest Periods and amounts
  corresponding thereto:
  
  Competitive
  Interest Period                      Amount 
  (1)
  (2)
  (3)
  
      The Borrower hereby certifies that on the date hereof
  and, after giving effect to the Competitive Bid Loans
  requested hereby, on the Borrowing Date set forth above:
  
      The Borrower is and shall be in compliance with all of the
  terms, covenants and conditions of the Agreement relating to
  such Loans.
  
      There exists and there shall exist no Event of Default
  under the Agreement.
  
      (c)  Each of the representations and warranties contained
  in the Agreement shall be true and correct with the same effect
  as though such representations and warranties had been made on
  such Borrowing Date, except to the extent such representations
  and warranties specifically relate to an earlier date, in which
  case such representations and warranties are true and correct
  in all material respects on and as of such earlier date.
  
           (d)  After giving effect to the Competitive Bid Loans
  requested to be made hereby, the Aggregate Credit Exposure will
  not exceed the Aggregate  Commitments.
  
  
      IN WITNESS WHEREOF, the Borrower has caused this request
  and certificate to be executed by its Authorized Signatory as
  of the date and year first written above.
  
  
                             ATLANTIC ENERGY, INC.
  
  
  
                                By: 
                                Name: 
                                Title:
    
                       ATLANTIC ENERGY EXHIBIT E
  
                       FORM OF INVITATION TO BID
  
                             (Facility B)
  
  
                                          _____ __, 199_
  
  To the Lenders under the Credit
  Agreement referred to below
  
  Re: Revolving Credit Agreement (Facility B),
             dated as of September 28, 1995, by and
             among ATLANTIC ENERGY, INC. (the "Bor-
             rower"), the Lenders party thereto, and THE
             BANK OF NEW YORK, as Agent (the "Agree-
             ment")                      
       
       
                Capitalized terms used herein which
       are defined in the Agreement shall have the
       meanings therein defined.
       
                Pursuant to a Competitive Bid Request,
       a copy of which is appended hereto or enclosed
       herewith, the Borrower has given notice of its
       request to borrow Competitive Bid Loans in the
       aggregate sum of $____________ on ____________
       
                The Lenders are hereby invited to bid
       to make such Competitive Bid Loans by 10:00 a.m.
       on the proposed Borrowing Date, pursuant to the
       terms and conditions of the Agreement.
       
                                Very truly yours,
       
                                 THE BANK OF NEW YORK,
                                 as Agent
       
       
                                 By: 
                                 Name: 
                                 Title: 
              
                ATLANTIC ENERGY EXHIBIT F
       
                 FORM OF COMPETITIVE BID
       
                       (Facility B)
       
                                         _____ __, 199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:  Mary Lou Bradley,
                   Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
       
       
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           In response to a Competitive Bid Request,
       the undersigned Lender hereby offers to lend
       Competitive Bid Loans in the aggregate sum of
       $____________ on ____________, which borrowing
       shall consist of the following Competitive
       Interest Periods and the amounts and Bid Rates
       corresponding thereto:
       
       
       Competitive
       Interest Period      Amount            Bid Rate 
       (1)
       (2)
       (3)
        
                                   Very truly yours,
       
                                   [LENDER]
                                   By: 
                                   Name: 
                                   Title: 
              
                             
                ATLANTIC ENERGY EXHIBIT G
       
       FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
       
                       (Facility B)
       
                                        _______ __, 199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:  Mary Lou Bradley,
                   Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
           
           
           
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           Pursuant to Section 2.4(c) of the
       Agreement, the Borrower hereby gives notice of
       its [rejection/acceptance] of [Lender's]
       Competitive Bid, dated _____ __, 199_, in the
       aggregate sum of $_________ on ________, which
       borrowing shall consist of the following
       Competitive Interest Periods and the amounts and
       Bid Rates corresponding thereto:
       
       Competitive
       Interest Period      Amount             Bid Rate 
       (1)
       (2)
       (3)             
                             Very truly yours,
       
                             ATLANTIC ENERGY, INC.
       
       
                             By: 
                             Name: 
                             Title: 
              
                ATLANTIC ENERGY EXHIBIT H
       
        FORM OF COMPETITIVE BID LOAN CONFIRMATION
       
                       (Facility B)
       
                                      _____ __, 199_
       To [Lender]
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")
       
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           In accordance with Section 2.4(c) of the
       Agreement we hereby notify you that pursuant to
       a Competitive Bid Accept Letter, the Borrower
       gave notice of its acceptance of [Lender's]
       Competitive Bid, dated _____________, in the
       aggregate sum of $____________ on ____________,
       which borrowing shall consist of the following
       Competitive Interest Periods and the following
       amounts and Bid Rates corresponding thereto:
       
       Competitive
       Interest Period      Amount         Bid Rate
       (1)
       (2)
       (3)
       
           Pursuant to Section 2.4(e) of the
       Agreement, [Lender] is required to make avail-
       able to the Agent at its office the proceeds of
       Lender's Competitive Bid Loan(s) set forth in
       Section 11.2 of the Agreement, in immediately
       available funds, not later than 2:00 p.m. on the
       Borrowing Date specified above.
       
                        Very truly yours,
       
                         THE BANK OF NEW YORK, as Agent
                         By: 
                         Name: 
                         Title: 
                ATLANTIC ENERGY EXHIBIT I
       
        FORM OF NOTICE OF CONVERSION/CONTINUATION
       
                       (Facility B)
       
                                      _______ __, 199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:Mary Lou Bradley,
                 Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
           
           
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           Pursuant to Section 2.7 of the Agreement,
       the Borrower requests to convert or continue
       Advances as set forth below:
       
            on ____ __, 199_, to convert $_______ in
       principal amount of presently outstanding
       Eurodollar Advances having an Interest Period
       that expires on ____ __, 199_ to ABR Advances.
       
            on ____ __, 199_, to continue as
       Eurodollar Advances, $_______ in principal
       amount of presently outstanding Eurodollar
       Advances having an Interest Period that expires
       on ____ __, 199_ for an additional Interest
       Period of __ months;
       
            on ____ __, 199_, to convert $_______ in
       principal amount of presently outstanding ABR
       Advances to Eurodollar Advances that have an
       initial Interest Period of __ months.
       
           (c)  The Borrower hereby certifies that on
       the date hereof and on the requested
       Conversion/Continuation Date set forth above,
       there exists and there shall exist no Default or
       Event of Default under the Agreement.
       
           IN WITNESS WHEREOF, the Borrower has caused
       this request and certificate to be executed by
       its Authorized Signatory as of the date and year
       first written above.
       
       
                              ATLANTIC ENERGY, INC.
       
       
       
                              By: 
                              Name: 
                              Title: 
              
                ATLANTIC ENERGY EXHIBIT J
       
             FORM OF LETTER OF CREDIT REQUEST
       
                       (Facility B)
       
                                        _______ __,
       199_
       
       
       The Bank of New York, as Agent
       Agency Function Administration
       One Wall Street
       18th Floor
       New York, New York 10286
       Attention:  Patricia Clancy
       
       The Bank of New York, as Agent
       Energy Industries Division
       One Wall Street
       19th Floor
       New York, New York 10286
       Attention:Mary Lou Bradley,
                 Vice President
       
       Re: Revolving Credit Agreement (Facility B),
                  dated as of September 28, 1995, by and
                  among ATLANTIC ENERGY, INC. (the "Bor-
                  rower"), the Lenders party thereto, and THE
                  BANK OF NEW YORK, as Agent (the "Agree-
                  ment")                 
       
           Capitalized terms used herein that are
       defined in the Agreement shall have the meanings
       therein defined.
       
           (d)  Pursuant to Sections 2.18 of the
       Agreement, the Borrower hereby requests that the
       Issuing Bank issue the Letter(s) of Credit in
       accordance with the information annexed hereto
       (attach additional sheets if necessary). 
       
           (e)  The Borrower hereby certifies that on
       the date hereof and on the Borrowing Date set
       forth above, and after giving effect to the
       Letter(s) of Credit requested hereby:
           (a)The Borrower is and shall be in
       compliance with all of the terms, covenants and
       conditions of the Agreement relating to such
       Letter of Credit.
       
           (b)There exists and there shall exist no
       Event of Default under the Agreement.
       
           (c)  Each of the representations and
       warranties contained in the Agreement shall be
       true and correct with the same effect as though
       such representations and warranties had been
       made on such Borrowing Date, except to the
       extent such representations and warranties
       specifically relate to an earlier date, in which
       case such representations and warranties are
       true and correct in all material respects on and
       as of such earlier date.
       
           (d)  After giving effect to the Letters of
       Credit requested to be made hereby, the
       Aggregate Credit Exposure does not exceed the
       Aggregate Commitments.
       
           IN WITNESS WHEREOF, the Borrower has caused
       this request and certificate to be executed by
       its Authorized Signatory as of the date and year
       first written above.
       
                            ATLANTIC ENERGY, INC.
       
       
       
                            By: 
                            Name: 
                            Title:
              
       LETTER OF CREDIT INFORMATION
       
       
       1.  Name of
       Beneficiary:__________________________________.
       
       2.  Address of Beneficiary to which Letter of
       Credit will be sent:
       _________________________________________
       ________________________________________________
       ______________.
       
       3.  Conditions under which a drawing may be made 
          (specify any required documentation):
       _____________________________________
       ________________________________________________
       ______________
       ________________________________________________
       ______________.
       
       4.  Maximum amount to be available under such
       Letter of Credit: $___________.
       
       5.  Requested date of issuance: _____ __, 199_.
       
       6.Requested date of expiration: _____ __, 199_.
              
                ATLANTIC ENERGY EXHIBIT K
       
              FORM OF COMPLIANCE CERTIFICATE
       
                       (Facility B)
       
           I, ______________, do hereby certify that I
       am the ___________ of ATLANTIC ENERGY, INC., a
       New Jersey corporation (the "Borrower"), and
       that, as such, I am duly authorized to execute
       and deliver this Compliance Certificate on the
       Borrower's behalf pursuant to Section 7.1(c) of
       each of (i) the Revolving Credit Agreement
       (Facility A), dated as of September 28, 1995,
       among the Borrower, the Lenders party thereto
       and The Bank of New York, as Agent (as the same
       may be amended, supplemented or otherwise modi-
       fied from time to time, the "Facility A
       Agreement") and (ii) the Revolving Credit
       Agreement (Facility B), dated as of
       September 28, 1995, among the Borrower, the
       Lenders party thereto and The Bank of New York,
       as Agent (as the same may be amended,
       supplemented or otherwise modified from time to
       time, the "Facility B Agreement" and, together
       with the Facility A Agreement, the
       "Agreements").  Capitalized terms used herein
       that are defined in the Agreements shall have
       the meanings therein defined.
       
           I hereby certify that:
       
       1.  The Indebtedness Capitalization Ratio as of
       ______ __, 199_ , is _.__:1.00, calculated as
       set forth on Schedule 1.
       
       2.  The Ratio of Indebtedness of the Borrower
       to Annualized ACE Dividends as of ______ __,
       199_, is _.__:1.00, calculated as set forth on
       Schedule 2.
       
       3.  There exists no Event of Default under the
       Agreement.
       
           IN WITNESS WHEREOF, I have executed this
       Compliance Certificate on this ___ day of
       ______________, 19__.
       
       
       Schedule 1 to Compliance Certificate
       dated __/__/__
       
       COMPUTATION OF INDEBTEDNESS CAPITALIZATION RATIO
       
       1.  Total Indebtedness of the Borrower
       and its Subsidiaries determined
       on a Consolidated basis
       in accordance with GAAP               $_________
       
       2.  Preferred Stock and any premium
       thereon of the Borrower and its
       Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       3.  Common Stock and any premium
       thereon of the Borrower and its
       Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       4.  Retained earnings of the Borrower
       and its Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       5.  All Indebtedness (net of unamortized
       premium and discount) of the Borrower
       and its Subsidiaries determined on a
       Consolidated basis in accordance
       with GAAP                             $_________
       
       6.  Sum of Items 2 through 5          $_________
       
       7.  Unamortized capital Stock expense
       of the Borrower and its Subsidiaries
       determined on a Consolidated basis
       in accordance with GAAP               $_________
       
       8.  Items 6 minus Item 7              $_________
       
       9.  Indebtedness Capitalization Ratio
       Item 1:Item 8                          _.__:1.00
              
       
       10.  Maximum permitted ratio
       pursuant to Section 7.10 of
       each of the Agreements                 0.65:1.00
       
              
Schedule 2 to Compliance Certificate
       dated __/__/__
       
       
       
       
       
       CALCULATION OF RATIO OF TOTAL INDEBTEDNESS OF THE BORROWER
       
               TO ANNUALIZED ACE DIVIDENDS
       
       
       1.  Indebtedness of the Borrower     $_________
       
       2.  The amount of dividends paid
       to the Borrower by ACE during
       the fiscal quarter ending on
       the date of determination or,
       if such date of determination
       is not a fiscal quarter ending
       date, the immediately preceding
       fiscal quarter                        $_________
       
       3.  Annualized ACE Dividends
       (Item 2 multiplied by 4)              $_________
       
       4.  Ratio of Indebtedness to
         Annualized ACE Dividends
        (Item 1:Item 3)                       _.__:1.00
       
       Maximum permitted ratio
       pursuant to Section 7.11 of
       each of the Agreements                2.50:1.00.
              
                ATLANTIC ENERGY EXHIBIT L
       
                 FORM OF PLEDGE AGREEMENT
       
                       (Facility B)
       
       
       PLEDGE AGREEMENT (as amended, modified or
       supplemented from time to time, this
       "Agreement"), dated as of ______ __, 1995, made
       by ATLANTIC ENERGY, INC., a New Jersey
       corporation (the "Borrower"), to THE BANK OF NEW
       YORK, in its capacity as collateral agent (in
       such capacity, the "Secured Party") for itself
       in its capacity as Agent and for the Lenders
       under and as defined in each of the Facility A
       Credit Agreement as defined below (in such
       capacity, the "Facility A Agent") and the
       Facility B Credit Agreement as defined below (in
       such capacity, the "Facility B Agent" and,
       together with the Facility A Agent, the
       "Agents").
       
                         RECITALS
       
           1.   The Borrower has entered into (i) the
       Revolving Credit Agreement (Facility A), dated
       as of the date hereof, among the Borrower, the
       Lenders party thereto (each, a "Facility A
       Lender", and collectively, the "Facility A
       Lenders") and the Facility A Agent (as the same
       may be amended, supplemented or otherwise
       modified from time to time, the "Facility A
       Credit Agreement") and (ii) the Revolving Credit
       Agreement (Facility B), dated as of the date
       hereof among the Borrower, the Lenders party
       thereto (each, a "Facility B Lender",
       collectively, the "Facility B Lenders" and
       together with the Facility A Lenders, the
       "Lenders") and the Facility B Agent (as the same
       may be amended, supplemented or otherwise
       modified from time to time, the "Facility B
       Credit Agreement" and, together with the
       Facility B Credit Agreement, the "Credit
       Agreements").  Capitalized terms used herein
       that are not defined herein and are defined in
       the Credit Agreements shall have the meanings
       defined therein.
       
           2.   The Lenders have agreed (i) to make
       loans to the Borrower pursuant to, and upon the
       terms and subject to the conditions specified
       in, the Facility A Credit Agreement and (ii) to
       make loans to the Borrower and to participate in
       Letters of Credit issued by Issuing Bank (as
       defined in the Facility B Credit Agreement)
       pursuant to, and upon the terms and subject to
       the conditions specified in, the Facility B
       Credit Agreement.  The Borrower desires to
       secure the prompt and complete payment,
       observance and performance of all of its
       obligations of every kind and nature now or
       hereafter incurred, existing or created under or
       in respect of the Loan Documents (as defined in
       the Facility A Credit Agreement which Loan
       Documents are herein referred to as the
       "Facility A Loan Documents") and the Loan
       Documents (as defined in the Facility B Credit
       Agreement which Loan Documents are herein
       referred to as the "Facility B Loan Documents"
       and, together with the "Facility A Loan
       Documents", the "Loan Documents"), as such
       obligations may be amended, increased, modified,
       renewed, refinanced, refunded or extended from
       time to time, (collectively, the "Obligations").
       
           3.   The obligations of the Lenders to make
       loans under the Credit Agreements and the
       Issuing Bank to issue Letters of Credit under
       the Facility B Credit Agreement and the Facility
       B Lenders to participate therein are conditioned
       upon, among other things, the execution and
       delivery by the Borrower of this Agreement.
       
           In consideration of the premises and in
       order to induce the Secured Party and the
       Lenders to enter into the Credit Agreements and
       make the loans under the Credit Agreements and
       the Issuing Bank to issue the Letters of Credit
       under the Facility B Credit Agreement and the
       Facility B Lenders to participate therein, the
       Borrower hereby agrees with the Secured Party
       for its benefit and for the ratable benefit of
       the Lenders as follows:
              
      3.1. Grant of Security
       
                To secure the prompt and complete
       payment, observance and performance of all of
       the Obligations, the Borrower hereby assigns and
       pledges to the Secured Party, for its benefit,
       for the benefit of the Agents, for the benefit
       of the Issuing Bank and for the ratable benefit
       of the Lenders, and hereby grants to the Secured
       Party, for its benefit, for the benefit of the
       Agents, for the benefit of the Issuing Bank and
       for the ratable benefit of the Lenders, a
       continuing first priority security interest in
       all of the Borrower's right, title and interest
       in and to all promissory notes and other debt
       instruments evidencing Indebtedness owed by any
       of the Borrower's Operating Subsidiaries to the
       Borrower (each, an "Intercompany Note"), in each
       case whether now owned or hereafter acquired,
       including, without limitation, the Intercompany
       Notes owned on the date hereof as set forth on
       Schedule 1, and all interest and other payments
       thereunder and instruments and other Property
       from time to time delivered in respect thereof
       or in exchange therefor, and all additions
       thereto, substitutions and replacements
       therefor, and the products and Proceeds thereof
       (the "Collateral").
       
                As used herein, the term "Proceeds"
       shall have the meaning as set forth in Article 9
       of the New York Uniform Commercial Code (as the
       same is amended from time to time, the "UCC")
       and, to the extent not otherwise included, shall
       include, but not be limited to, (i)
       distributions payable in Property; (ii) any and
       all proceeds of causes and rights of action or
       settlements thereof, escrowed amounts or
       Property, judicial and arbitration judgments and
       awards, payable to the Borrower from or in
       respect of any Person from time to time; (iii)
       all claims of the Borrower for losses or damages
       arising out of or relating to or for any breach
       of any agreements, covenants, representations or
       warranties or any default whether or not with
       respect to or under any of the foregoing
       Collateral (without limiting any direct or
       independent rights of the Secured Party or any
       Lender with respect to the Collateral); and (iv)
       any and all other amounts from time to time paid
       or payable under or in connection with the
       Collateral.
       
           3.2. Delivery of Collateral
       
                All notes and other instruments
       representing or evidencing the Collateral at any
       time owned or acquired by the Borrower shall be
       delivered to and held by or on behalf of the
       Secured Party pursuant hereto and shall be in
       suitable form for transfer by delivery, and
       shall bear appropriate indorsements or shall be
       accompanied by duly executed instruments of
       transfer or assignments in blank, all in form
       and substance satisfactory to the Secured Party. 
       Upon the occurrence and during the continuance
       of an Event of Default, the Secured Party shall
       have the right, at any time in its discretion
       and without notice to the Borrower, to transfer
       to or to register in the name of the Secured
       Party or any of its nominees any or all of the
       Collateral.  In addition, upon the occurrence
       and during the continuance of an Event of
       Default, the Secured Party shall have the right
       at any time to exchange certificates or
       instruments representing or evidencing
       Collateral for certificates or instruments of
       smaller or larger denominations.
       
        3.3.    Representations and Warranties
       
       The Borrower represents and warrants as follows:
       
       (a)  The Borrower is the legal and beneficial
       owner of the Collateral, free and clear of all
       Liens other than the Lien created by this
       Agreement.
       
       (b) This Agreement creates a valid security
       interest in the Collateral, securing the payment
       of the Obligations. The delivery and pledge of
       the Collateral pursuant to this Agreement create
       a valid and perfected first priority security
       interest in the Collateral securing the payment
       of the Obligations.
       
       (c)  The Intercompany Notes listed on Schedule
       1 constitute all of the Intercompany Notes held
       by the Borrower on the date of this Agreement. 
       To the best of the Borrower's knowledge, each of
       such Intercompany Notes has been duly
       authorized, issued and delivered, and
       constitutes the legal, valid, binding and
       enforceable obligations of the respective makers
       thereof.
       
       3.4.     Further Assurances
       
       (a) The Borrower agrees that from time to time,
       at its expense, the Borrower shall promptly
       execute and deliver all further instruments and
       documents, and take all further action, that the
       Secured Party may reasonably request, in order
       to perfect and protect any security interests
       granted hereby or to enable the Secured Party to
       exercise and enforce its rights and remedies
       hereunder with respect to any Collateral. 
       Without limiting the generality of the
       foregoing, the Borrower shall promptly execute
       and file such financing or continuation
       statements, or amendments thereto, and such
       other instruments or notices, and promptly take
       such other action as the Secured Party may
       reasonably request, in order to perfect and
       preserve the security interests granted hereby.
       
       (b) The Borrower hereby authorizes the Secured
       Party to file one or more financing or
       continuation statements, and amendments thereto,
       relative to all or any part of the Collateral
       without the signature of the Borrower where
       permitted by law.  The Secured Party shall
       provide the Borrower with a copy of any such
       statement or amendment, provided that no failure
       to do so shall affect the rights of the Secured
       Party hereunder, result in any liability of the
       Secured Party or the Lenders to the Borrower or
       in any way affect the validity of such filing. 
       A photographic or other reproduction of this
       Agreement or any financing statement covering
       the Collateral or any part thereof shall be
       sufficient as a financing statement where
       permitted by law.
       
       (c) The Borrower shall furnish to the Secured
       Party from time to time statements and schedules
       further identifying and describing the
       Collateral and such other reports in connection
       with the Collateral as the Secured Party may
       reasonably request, all in reasonable detail.
       
       3.5.     Certain Rights as to the Collateral
       
       (a) So long as no Event of Default shall have
       occurred and be continuing:
       
        The Borrower shall be entitled to exercise any
       and all consensual rights pertaining to the
       Collateral or any part thereof for any purpose
       not inconsistent with the terms of this
       Agreement and the Credit Agreements, provided,
       however, that the Borrower shall not exercise or
       refrain from exercising any such right without
       the consent of the Secured Party if such action
       or inaction would have a material adverse effect
       on the fair market value of any part of the
       Collateral or the validity, priority or
       perfection of the security interests granted
       hereby or the remedies of the Secured Party
       hereunder.
       
       (i) The Borrower shall be entitled to receive
       and retain any and all principal, interest and
       other distributions paid in respect of the
       Collateral to the extent not prohibited by this
       Agreement, provided, however, that any and all
       principal, interest and other distributions paid
       or payable other than in cash in respect of, and
       instruments and other Property received,
       receivable or otherwise distributed in respect
       of, or in exchange for, Collateral, shall
       forthwith be delivered to the Secured Party to
       be held as Collateral and shall, if received by
       the Borrower, be received in trust for the
       benefit of the Secured Party, be segregated from
       the other Property of the Borrower, and be
       forthwith delivered to the Secured Party, as
       Collateral in the same form as so received (with
       any necessary indorsement).
       
       (ii)     The Secured Party shall execute and deliver
       (or cause to be executed and delivered) to the
       Borrower all instruments as the Borrower may
       reasonably request for the purpose of enabling
       the Borrower to exercise the rights which it is
       entitled to exercise pursuant to clause (i)
       above and to receive the principal or interest
       payments, or other distributions which it is
       authorized to receive and retain pursuant to
       clause (ii) above.
       
           (b)  Upon the occurrence and during the
       continuance of an Event of Default and at the
       Secured Party's option and following written
       notice by the Secured Party to the relevant
       Borrower:
       
       (i) All rights of the Borrower to exercise the
       consensual rights which it would otherwise be
       entitled to exercise pursuant to Section 5(a)(i)
       and to receive the principal, and interest
       payments and other distributions which it would
       otherwise be authorized to receive and retain
       pursuant to Section 5(a)(ii) shall cease, and
       all such rights shall thereupon become vested in
       the Secured Party, who shall thereupon have the
       sole right to exercise such consensual rights
       and to receive and hold as Collateral such
       principal or interest payments and
       distributions.
       
       (ii)     All principal and interest payments and
       other distributions which are received by the
       Borrower contrary to the provisions of Section
       5(b)(i) shall be received in trust for the
       benefit of the Secured Party, shall be
       segregated from other funds of the Borrower and
       shall be forthwith paid over to the Secured
       Party as Collateral in the same form as so
       received (with any necessary indorsement).
       
       (c) In the event that all or any part of the
       instruments constituting the Collateral are
       lost, destroyed or wrongfully taken while such
       instruments are in the possession of the Secured
       Party, the Borrower agrees that it will cause
       the delivery of new instruments in place of the
       lost, destroyed or wrongfully taken securities
       or instruments upon request therefor by the
       Secured Party without the necessity of any
       indemnity bond or  other security other than the
       Secured Party's agreement or indemnity therefor
       customary for security agreements similar to
       this Agreement.
       
       3.6.     Other Covenants and Agreements of the
       Borrower
       
           The Borrower covenants and agrees that on
       and after the date hereof until the indefeasible
       cash payment in full of the Obligations, unless
       the Secured Party shall otherwise consent in
       writing:
       
       (a) Defense of Collateral. It will defend the
       Collateral against all claims and demands of all
       Persons at any time claiming the same or any
       interest therein adverse to the interests of the
       Secured Party.
       
       (b) Security Interest. The security interest
       granted hereby constitutes and will at all times
       constitute a continuing (and so long as the
       Secured Party has possession of the Collateral)
       perfected first priority security interests in
       the Collateral.
       
       (c) Encumbrances; Filings. It will not (i)
       further hypothecate, pledge, encumber, transfer,
       sell or otherwise suffer to exist a security
       interest in, or a Lien on, the Collateral or any
       portion thereof in favor of any Person other
       than the Secured Party as provided herein,
       except for transfers or sales to the extent
       permitted under the Credit Agreements or (ii)
       sign or file or authorize the signing or filing
       of any document or instrument perfecting any
       Lien on the Collateral. The inclusion of
       "Proceeds" of the Collateral under the security
       interest granted herein shall not be deemed a
       consent by the Secured Party to any sale or
       other disposition of any Collateral.
       
       3.7.     Secured Party Appointed Attorney-in-Fact
       
           Effective upon the occurrence and during
       the continuance of an Event of Default, the
       Borrower hereby irrevocably appoints the Secured
       Party the Borrower's attorney-in-fact, with full
       authority in the place and stead of the Borrower
       and in the name of the Borrower or otherwise,
       from time to time in the Secured Party's
       discretion, to take any action and to execute
       any instrument which the Secured Party may deem
       necessary or advisable to accomplish the
       purposes of this Agreement, including, without
       limitation:
       
       (a) to ask, demand, collect, sue for, recover,
       compromise, receive and give acquittance and
       receipts for moneys due and to become due under
       or in respect of any of the Collateral,
       
       (b) to file any claims or take any action or
       institute any proceedings which the Secured
       Party may deem necessary or desirable for the
       collection of any of the Collateral or otherwise
       to enforce the rights of the Secured Party with
       respect to any of the Collateral, and
       
       (c) to receive, indorse and collect all
       instruments made payable to the Borrower
       representing any principal payment, interest
       payment or other distribution in respect of the
       Collateral or any part thereof and to give full
       discharge for the same. The powers granted to
       the Secured Party under this Section constitute
       a power coupled with an interest which shall
       survive until all of the Obligations have been
       indefeasibly paid in full in cash.
       
       3.8.     The Secured Party May Perform
       
           If the Borrower fails to perform any
       agreement contained herein, the Secured Party
       may itself perform, or cause performance of,
       such agreement, and the reasonable expenses of
       the Secured Party incurred in connection
       therewith shall be payable by the Borrower under
       Section 12.
       
           3.9. The Secured Party's Duties
       
           The powers conferred on the Secured Party
       hereunder are solely to protect its interest in
       the Collateral and shall not impose any duty
       upon it to exercise any such powers.  Except for
       the safe custody of any Collateral in its
       possession and the accounting for moneys
       actually received by it hereunder, the Secured
       Party shall have no duty as to any Collateral. 
       The Secured Party shall be deemed to have
       exercised reasonable care in the custody and
       preservation of the Collateral in its possession
       if the Collateral is accorded treatment
       substantially equal to that which the Secured
       Party accords its own property, it being
       understood that the Secured Party shall not be
       under any obligation to (i) ascertain or take
       action with respect to exchanges, maturities,
       tenders or other matters relative to any
       Collateral, whether the Secured Party or any
       Lender has or is deemed to have knowledge of
       such matters, or (ii) take any necessary steps
       to preserve rights against prior parties or any
       other rights pertaining to any Collateral, but
       may do so at its option, and all reasonable
       expenses incurred in connection therewith shall
       be for the sole account of the Borrower and
       shall be added to the Obligations.
       
       3.10.Events of Default
       
       The following shall each constitute an "Event of
       Default" hereunder:
       
       (a) If any representation or warranty made
       herein or in any certificate furnished by the
       Borrower in connection with this Agreement shall
       prove to have been incorrect or misleading
       (whether because of misstatement or omission) in
       any material respect when made; or
       
       (b) If the Borrower shall fail to observe or
       perform any term, covenant or agreement
       contained in Section 6(c) of this Agreement; or
       
       (c) If the Borrower shall fail to perform or
       observe any other covenant or agreement on its
       part to be performed or observed pursuant to
       this Agreement and such failure shall have
       continued unremedied for a period of thirty days
       after the Borrower shall become aware of such
       failure; or
       
       (d) The occurrence of an Event of Default under
       and as defined in either of the Credit
       Agreements; or
       (e) If the Borrower shall contest or disavow
       its obligations under this Agreement or this
       Agreement shall not remain in full force and
       effect.
       
       3.11.Remedies
       
           Upon the occurrence of an Event of Default
       or at any time thereafter during the continuance
       thereof, the Secured Party may, and upon
       direction of the Required Lenders shall,
       exercise any and all remedies and other rights
       provided under this Agreement, including,
       without limitation, the following:
       
       (a) The Secured Party may exercise in respect
       of the Collateral, in addition to other rights
       and remedies provided for herein or otherwise
       available to it, all the rights and remedies of
       a secured party upon default under the UCC
       (whether or not the UCC applies to the
       Collateral) and also may without notice, except
       as specified below, sell, assign, grant an
       option or options to purchase or otherwise
       dispose of the Collateral or any part thereof at
       public or private sale, at any exchange,
       broker's board or at any of the Secured Party's
       offices or elsewhere, for cash, on credit or for
       future delivery, and upon such other terms as
       may be commercially reasonable.  The Borrower
       agrees that, to the extent notice of sale shall
       be required by law, at least five Business Days'
       notice to the Borrower of the time and place of
       any public sale or the time after which any
       private sale is to be made shall constitute
       reasonable notification.  The Secured Party
       shall not be obligated to make any sale of
       Collateral regardless of notice of sale having
       been given.  The Secured Party may adjourn any
       public or private sale from time to time by
       announcement at the time and place fixed
       therefor, and such sale may, without further
       notice, be made at the time and place to which
       it was so adjourned.
       
           Any cash held by the Secured Party as
       Collateral and all cash proceeds received by the
       Secured Party in respect of any sale of,
       collection from, or other realization upon all
       or any part of the Collateral may, in the
       discretion of the Secured Party, be held by the
       Secured Party as Collateral for, and/or then or
       at any time thereafter applied (after payment of
       any amounts payable to the Secured Party
       pursuant to Section 12) in whole or in part by
       the Secured Party, for the ratable benefit of
       the Lenders, against all or any part of the
       Obligations in accordance with Section 9.1 of
       each Credit Agreement.  Any surplus of such cash
       or cash proceeds held by the Secured Party and
       remaining after payment in full of all the
       Obligations shall be promptly paid over to the
       Borrower or to whomsoever may be lawfully
       entitled to receive such surplus.
       
       (b) The Borrower hereby expressly waives and
       covenants not to assert any appraisement,
       valuation, stay, extension, redemption or
       similar laws, now or at any time hereafter in
       force, which might delay, prevent or otherwise
       impede the performance or enforcement of this
       Agreement.
       
       3.12.  No Segregation of Moneys; No Interest
       
           No moneys or any other Property received by
       the Secured Party hereunder need be segregated
       in any manner except to the extent required by
       law, and any such moneys or other Property may
       be deposited under such general conditions as
       may be prescribed by law applicable to the
       Secured Party, and neither the Secured Party nor
       any Lender shall be liable for any interest
       thereon.
       
       3.13.Notices
       
           All notices and other communications
       provided for hereunder shall be given in the
       manner and to the addresses set forth in Section
       11.2 of the Facility A Credit Agreement.  Any
       notice given to the Secured Party as Secured
       Party thereunder shall be deemed to have been
       given to The Bank of New York as Agent under the
       Facility B Credit Agreement.
       
              
3.14. Continuing Security Interest;
             Transfer of Notes
       
           This Agreement shall create a continuing
       security interest in the Collateral and shall
       (i) remain in full force and effect until the
       indefeasible cash payment in full of the
       Obligations and the termination of the Credit
       Agreement, (ii) be binding upon the Borrower,
       its successors and assigns and (iii) inure,
       together with the rights and remedies of the
       Secured Party hereunder, to the benefit of the
       Secured Party, any successor to Secured Party as
       agent and the ratable benefit of the Lenders. 
       Except to the extent not permitted by Section
       11.7 of the Credit Agreements, any Lender may
       assign or otherwise transfer the notes held by
       it under the Credit Agreements to any other
       Person, and such other Person shall thereupon
       become vested with all the benefits in respect
       thereof granted to such Lender herein or
       otherwise.  Nothing set forth herein or in any
       other Loan Document is intended or shall be
       construed to give any other Person any right,
       remedy or claim under, to or in respect of this
       Agreement, any other Loan Document, or any
       Collateral.  The Borrower's successors and
       assigns shall include, without limitation, a
       receiver, trustee or debtor-in-possession
       thereof or therefor.
       
       3.15.  Other Provisions
       
       (a) This Agreement is the "Pledge Agreement"
       referred to in each of the Credit Agreements. 
       Each of the Secured Party and the Borrower
       acknowledges that certain provisions of each of
       the Credit Agreements, including, without
       limitation, Sections 1.2 (Other Definitional
       Provisions), 11.1 (Amendments and Waivers), 11.3
       (No Waiver; Cumulative Remedies), 11.4 (Survival
       of Representations and Warranties), 11.7
       (Assignments and Participations), 11.8
       (Counterparts), 11.12 (Headings Descriptive),
       11.13 (Severability), 11.14 (Integration), 11.15
       (Consent to Jurisdiction), 11.16 (Service of
       Process), 11.17 (No Limitation on Service or
       Suit) and 11.18 (WAIVER OF TRIAL BY JURY)
       thereof, are made applicable to this Agreement
       and all such provisions are incorporated by
       reference herein as if fully set forth herein.
       
           (b)  All Schedules hereto shall be deemed
       to be a part hereof. 
       
           (c)  Each and every right, remedy and power
       granted to the Secured Party hereunder or
       allowed at law or by any other agreement shall
       be cumulative and not exclusive, and may be
       exercised by the Secured Party from time to
       time.
       
           (d)  This Agreement shall be governed by
       and construed in accordance with the laws of the
       State of New York without regard to conflict of
       laws rules, except to the extent that the
       validity or perfection of the security interest
       hereunder, or remedies hereunder, in respect of
       any particular Collateral are governed by the
       laws of a jurisdiction other than the State of
       New York.  Unless otherwise defined herein,
       terms used in Articles 8 and 9 of the UCC are
       used herein as therein defined.
       
           The parties hereto have caused this Pledge
       Agreement to be duly executed and delivered by
       its officer thereunto duly authorized as of the
       date first above written.
          
                           ATLANTIC ENERGY, INC.
       
       
                           By: 
                           Name: 
                           Title: 
       
       
                           THE BANK OF NEW YORK,
                           as Collateral Agent for the
                           Facility A Lenders under the
                           Facility A Credit Agreement
                           and the Facility B Lenders
                           under the Facility B Credit
                           Agreement
       
                           By: 
                           Name: 
                           Title: 
                             
                        Schedule 1
                 to the Pledge Agreement,
                Dated as of _____ __, 1995
       
       
       
                        LIST OF INTERCOMPANY NOTES


Maker                                           Date 

Atlantic Generation, Inc.                           ,1995

ATE Investment, Inc.                       ____ __, 1995

Atlantic Thermal Systems, Inc.             ____ __, 1995

Atlantic Jersey Thermal Systems, Inc.     _____ __, 1995

Atlantic Energy Technologies, Inc.        _____ __, 1995

                         ATLANTIC ENERGY EXHIBIT M

                         FORM OF INTERCOMPANY NOTE

                               (Facility B)

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR
QUALIFIED UNDER ANY SECURITIES OR BLUE SKY LAWS.  IT MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN A
TRANSACTION COMPLYING WITH OR EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE.


                                          ____________ __, 199_


      FOR VALUE RECEIVED, the undersigned, _________________, a
__________ corporation (the "Borrower"), hereby promises to pay
to the order of ATLANTIC ENERGY, INC. (the "Company"), at the
office of the Company, upon demand by the Company, the aggregate
unpaid principal amount of all loans made by the Company to the
Borrower from time to time as reflected on the attached Schedule
hereto, pursuant to an intercompany account or otherwise, in
lawful money of the United States of America in same day funds,
and to pay interest from the date set forth on the attached
Schedule on which principal is advanced hereunder on the unpaid
principal amount from time to time outstanding, in like funds, at
said office, with each repayment of principal hereunder, at a
rate per annum equal to 1/4% above the borrowing rate of the
Company for amounts advanced hereunder and provided to the
Borrower by the Company on the date of any such advance.  All
interest hereunder shall be calculated on the basis of the actual
number of days that principal is outstanding over a year of 365
or 366 days, as appropriate.

      The unpaid principal amount hereof may be declared due and
payable by the Company, whereupon the same shall immediately
become due and payable, upon the occurrence or at any time during
the continuance of an Event of Default under, and as defined in,
either of the Revolving Credit Agreements (Facility A or Facility
B) among the Company, the Lenders parties thereto, and The Bank
of New York, as Agent.

      The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever.  The nonexercise by
the holder of any of its rights hereunder in any particular
instance shall not constitute a waiver thereof in that or any
subsequent instance.

      All borrowings evidenced by this Intercompany Note and all
payments and prepayments of the principal hereof and interest
hereon and the respective dates thereof shall be endorsed by the
holder hereof on the schedule attached hereto and made a part
hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such
holder in its internal records; provided, however, that any
failure of the holder hereof to make such a notation or any error
in such notation shall not in any manner affect the obligation of
the Borrower to make payments of principal and interest in
accordance with the terms of this Intercompany Note.

      NEITHER THE BORROWER NOR ANY OTHER PERSONS LIABLE FOR THE
INDEBTEDNESS TO THE COMPANY, NOR ANY ASSIGNEE, SURVIVOR, HEIR OR
PERSONAL REPRESENTATIVE OF THE BORROWER OR ANY SUCH OTHER PERSON
OR ENTITY SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR
ARISING OUT OF THIS INTERCOMPANY NOTE, ANY RELATED INSTRUMENT OR
AGREEMENT, ANY COLLATERAL FOR THE PAYMENT HEREOF OR THE DEALINGS
OR THE RELATIONSHIP BETWEEN THE COMPANY AND SUCH PERSONS OR
ENTITIES, OR ANY OF THEM.  NEITHER THE BORROWER NOR ANY SUCH
PERSON OR ENTITY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN
WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
BORROWER AND THE COMPANY AND THE PROVISIONS HEREOF SHALL BE
SUBJECT TO NO EXCEPTIONS.  THE BORROWER HAS NOT IN ANY WAY AGREED
WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

      THIS INTERCOMPANY NOTE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.


                                            [BORROWER]



                                            By: 
                                            Name: 
                                            Title: 

                       SCHEDULE TO INTERCOMPANY NOTE

                                [BORROWER]

                         LOANS BALANCE OUTSTANDING
                           INTERCOMPANY ACCOUNT

                                               Loan Balance
Date           Advance      Repayment          Outstanding


                                ENDORSEMENT


      The undersigned, ATLANTIC ENERGY, INC. a New Jersey
corporation (the "Company"), hereby assigns, transfers and
endorses to and makes payable to the order of The Bank of New
York, as collateral agent for itself in its capacity as Agent and
the Lenders under and as defined in each of the (i) Revolving
Credit Agreement (Facility A), dated as of September 28, 1995,
among the Borrower, the Lenders party thereto and the Agent (as
the same may be amended, supplemented or otherwise modified from
time to time) and (ii) Revolving Credit Agreement (Facility B),
dated as of September 28, 1995, among the Borrower, the Lenders
party thereto and the Agent (as the same may be amended,
supplemented or otherwise modified from time to time), that
certain Intercompany Note, dated ___________ __, ____, made by
___________________ to the order of the Company.  This endorse-
ment is made with recourse to the undersigned for payment or
collection.

DATED:  __________ __, 199_


                               ATLANTIC ENERGY, INC.



                               By: 
                               Name: 
                               Title:

                         ATLANTIC ENERGY EXHIBIT N

                    MEMORANDUM OF OPINIONS TO BE GIVEN
                        BY COUNSEL TO THE BORROWER



      In connection with the (i) Revolving Credit Agreement
(Facility A) (the "Facility A Agreement"), dated as of
September 28, 1995, by and among Atlantic Energy, Inc.  (the
"Borrower"), the Lenders party thereto (the "Facility A Lenders")
and The Bank of New York, as Agent (the "Facility A Agent") and
(ii) Revolving Credit Agreement (Facility B) (the "Facility B
Agreement" and, together with the Facility A Agreement, the
"Agreements"), dated as of September 28, 1995, by and among the
Borrower, the Lenders party thereto (the "Facility B Lenders"),
The Bank of New York, as Issuing Bank and The Bank of New York,
as Agent (the "Facility B Agent"), set forth below is the
substance of the opinions to be included in the opinion letters
referred to in Section 5.8 of the Facility B Agreement and the
corresponding provision of the Facility A Agreement
(collectively, the "Opinions"). 

           The opinion letters should be addressed to "The Bank
of New York, as Agent and as Issuing Bank and the Lenders under
the Credit Agreements referred to below".  It should specifically
authorize Special Counsel's reliance thereon.

           Capitalized terms used in the Opinions and which are
not otherwise defined therein shall have the respective meanings
ascribed thereto in the Agreements.  For purposes of the
opinions set forth below,  the term "Transaction Documents"
means, collectively, the "Loan Documents" under and as defined in
each of the Agreements and the term "Notes" means, collectively,
the "Notes" under and as defined in each of the Agreements.

Opinions:

      (e)  The Borrower has only the Subsidiaries set forth
on Schedule 4.1 to each Agreement.  The shares of each Subsidiary
are duly authorized, validly issued, fully paid and nonassessable
and are owned free and clear of any Liens.

      (f)  Each of the Borrower and its Subsidiaries is
duly organized or formed and validly existing in good standing
under the laws of the jurisdiction of its incorporation or for-
mation, has all requisite power and authority to own its Property
and to carry on its business as now conducted, and is in good
standing and authorized to do business as a foreign corporation
in each jurisdiction in which the nature of the business con-
ducted therein or the Property owned therein makes such
qualification necessary, except where such failure to qualify,
singly or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

           (g)  The Borrower has full legal power and authority
and has taken all necessary actions, including, without
limitation, any necessary stockholder action, to enter into,
execute, deliver and perform the terms of the Transaction
Documents and to make the borrowings contemplated thereby and by
the Notes, to execute, deliver and carry out the terms of the
Notes and to incur the obligations provided for therein, all of
which have been duly authorized by all proper and necessary
corporate or other applicable action and are in full compliance
with its charter and by-laws or its other organization documents.


      (h)  Each of the Transaction Documents (other than
the Notes) constitutes, and the Notes, when issued and delivered
pursuant to the applicable Agreement for value received, will
constitute, the valid and legally binding obligations of the
Borrower, enforceable in accordance with its respective terms.

      (i)  To the best of counsel's knowledge after due
inquiry, except as set forth in the Financial Statements, there
are no actions, suits or proceedings at law or in equity or by or
before any Governmental Authority (whether or not purportedly on
behalf of the Borrower or any of its Subsidiaries) pending or
threatened against the Borrower or any of its Subsidiaries or any
of their respective Properties or rights, which (i) reasonably
may be expected to have a Material Adverse Effect, or (ii) call
into question the validity or enforceability of any of the
Transaction Documents.

      (j)  Except for information filings required to be
made in the ordinary course of business which are not a condition
to the Borrower's performance under the Transaction Documents, no
consent, authorization or approval of, filing with, notice to, or
exemption by, stockholders, any Governmental Authority or any
other Person is required to authorize, or is required in con-
nection with the execution, delivery and performance of the
Transaction Documents or is required as a condition to the
validity or enforceability of the Transaction Documents.

      (k)  To the best of counsel's knowledge after due
inquiry, neither the Borrower nor any of its Subsidiaries is in
default (x) under any mortgage, indenture, contract or agreement
to which it is a party or by which it or any of its Property is
bound or (y) with respect to any judgment, order, writ, injunc-
tion, decree or decision of any Governmental Authority, the
effect of which default could reasonably be expected to have a
Material Adverse Effect.

      (l)  The execution, delivery or carrying out of the
terms of the Transaction Documents will not constitute a default
under, or require the mandatory repayment of, or result in the
creation or imposition of, or obligation to create, any Lien upon
any Property of the Borrower or any of its Subsidiaries pursuant
to the terms of, any such mortgage, indenture, contract or
agreement. 

      (m)  To the best of counsel's knowledge after due
inquiry, each of the Borrower and ACE possesses or has the right
to use all franchises, licenses, privileges and other rights as
are material and necessary for the conduct of its business, and
with respect to which it is in compliance, with no known conflict
with the valid rights of others which could reasonably be ex-
pected to have a Material Adverse Effect.

      (n)  The Borrower is not an "investment company" or a
company "controlled" by an "investment company" as defined in, or
is otherwise subject to regulation under, the Investment Company
Act of 1940, as amended.

           (o)  The Borrower and each of its Subsidiaries are
exempt from the provisions of the Public Utility Holding Company
Act of 1935, as amended, except Section 9(a)(2) thereof, pursuant
to Rule 2 of the General Rules and Regulations of the SEC under
said Act.

      (p)  To the best of counsel's knowledge after due
inquiry, neither the Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.  If used in accordance with Section
2.15 of each Agreement, no part of the proceeds of the Loans will
be used, directly or indirectly, for a purpose which violates any
law, rule or regulation of any Governmental Authority, including
without limitation the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System, as amended. 
If used in accordance with Section 2.15 of each Agreement, no
part of the proceeds of the Loans will be used, directly or indi-
rectly, to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock.

      (q)  The Pledge Agreement is effective to create in
favor of The Bank of New York, as collateral agent for each of
The Bank of New York, as Agent under the Facility A Agreement,
The Bank of New York, as Agent under the Facility B Agreement,
The Bank of New York, Issuing Bank under the Facility B Agreement
and each of the Lenders under the Agreements in all of the
Borrower's right, title and interest in and to all Intercompany
Notes (as defined in the Pledge Agreement) when issued and
delivered, provided that such Intercompany Notes remain in the
continued possession of such collateral agent.

 (r)  To the best of counsel's knowledge after due inquiry,
no indenture, certificate of designation for preferred Stock,
agreement or instrument to which the Borrower or ACE is a party,
prohibits or restrains, directly or indirectly, the payment of
dividends or other payments by ACE to the Borrower except for the
terms of the ACE Preferred Stock as in existence on the Effective
Date.

 


                         ATLANTIC ENERGY EXHIBIT O

                    FORM OF OPINION OF SPECIAL COUNSEL


                                      _____ __, 1995


The Bank of New York,
as Agent and the other
Lenders under the Credit
Agreements referred to below


Ladies and Gentlemen:


 We have acted as Special Counsel to (A) The Bank of New
York, as Agent (in such capacity, the "Facility A Agent") in
connection with the Revolving Credit Agreement (Facility A),
dated as of September 28, 1995, by and among Atlantic Energy,
Inc. (the "Borrower"), the Lenders party thereto and the Facility
A Agent (the "Facility A Agreement") and (B) The Bank of New
York, as Agent (in such capacity, the "Facility B Agent") in
connection with the Revolving Credit Agreement (Facility B),
dated as of September 28, 1995, by and among the Borrower, the
Lenders party thereto and the Facility B Agent (the "Facility B
Agreement" and, together with the Facility A Agreement, the
"Agreements").  Capitalized terms used herein which are defined
in the Facility A Agreement shall have the meanings therein
defined, unless the context hereof otherwise requires.
 
 We have examined originals or copies certified to our
satisfaction of the documents required to be delivered pursuant
to the provisions of Sections 5 and 6 of each of the Agreements. 
In conducting such examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to
us as originals, and the conformity to originals of all documents
submitted to us as copies.

 Based upon the foregoing examination, and relying with
your permission upon the opinions of Ballard Spahr Andrews &
Ingersoll, special counsel to the Borrower, and James E. Franklin
II, Esq., General Counsel of the Borrower, we are of the opinion
that all legal preconditions to the making of the first Loans
under and as defined in each of the Agreements and the issuance
of the first Letter of Credit under and as defined in the
Facility B Agreement have been satisfactorily met.

 This opinion is rendered solely for your benefit in
connection with the transactions referred to herein and may not
be relied upon by any other Person.

 In rendering the foregoing opinion, we express no opinion
as to laws other than the laws of the State of New York and the
federal laws of the United States of America.


                                  Very truly yours,


                                  EMMET, MARVIN & MARTIN, LLP

                         ATLANTIC ENERGY EXHIBIT P

                FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
                                     

 This Assignment and Acceptance Agreement is made and en-
tered into as of _____ __, 19__, by and between ____________ (the
"Assignor") and ____________ (the "Assignee").

R E C I T A L S

 4.   All capitalized terms not otherwise defined herein
which are used herein shall have the meanings set forth in the
Facility A Credit Agreement (as defined below).

 5.   The Assignor, certain other lenders (together with
any prior assignees, the "Facility A Lenders") and The Bank of
New York, as agent (in such capacity the "Facility A Agent"), are
parties to that certain Revolving Credit Agreement (Facility A),
dated as of September 28, 1995 (the "Facility A Credit
Agreement") with ATLANTIC ENERGY, INC., a New Jersey corporation
(the "Borrower").  Pursuant to the Facility A Credit Agreement,
the Facility A Lenders (i) agreed to make Revolving Credit Loans
(the "Facility A Revolving Credit Loans") under the Aggregate
Commitments (as defined in the Facility A Credit Agreement, which
Aggregate Commitments are hereinafter referred to as the
"Aggregate Facility A Commitments") in the aggregate amount of
$35,000,000 and (ii) may, in their sole discretion and upon the
Borrower's request, make Competitive Bid Loans to the Borrower
from time to time (the "Facility A Competitive Bid Loans" and,
together with the Facility A Revolving Credit Loans, the
"Facility A Loans").

 6.   The amount of the Assignor's Facility A Commitment
(without giving effect to the assignment effected hereby or to
other assignments thereof which have not yet become effective) is
specified in Item 1 of Schedule 1 hereto.  The outstanding
principal amount of the Assignor's Facility A Loans (without giv-
ing effect to the assignment effected hereby or to other as-
signments thereof which have not yet become effective) is
specified in Item 2 of Schedule 1 hereto. 

 7.   The Assignor, certain other lenders (together with
any prior assignees, the "Facility B Lenders") and The Bank of
New York, as agent (in such capacity the "Facility B Agent" and,
together with it in its capacity as Facility A Agent, the
"Agent"), are parties to that certain Revolving Credit Agreement
(Facility B), dated as of September 28, 1995 (the "Facility B
Credit Agreement") with the Borrower.  Pursuant to the Facility B
Credit Agreement, the Facility B Lenders (i) agreed to make
Revolving Credit Loans (the "Facility B Revolving Credit Loans")
under the Aggregate Commitments (as defined in the Facility B
Credit Agreement, which Commitments are hereinafter referred to
as the "Aggregate Facility B Commitments" and, together with the
Aggregate Facility A Commitments, the "Aggregate Commitments") in
the aggregate amount of $40,000,000 and to participate in Letters
of Credit issued by the Issuing Bank (under and as defined in the
Facility B Credit Agreement) and (ii) may, in their sole
discretion and upon the Borrowers' request make Competitive Bid
Loans to the Borrower from time to time (the "Facility B Competi-
tive Bid Loans" and, together with the Facility B Revolving
Credit Loans, the "Facility B Loans").

      8.   The amount of the Assignor's Facility B Commitment,
including its Letter of Credit Commitment (as defined in the
Facility B Credit Agreement and without giving effect to the
assignment effected hereby or to other assignments thereof which
have not yet become effective), is specified in Item 1 of
Schedule 1 hereto.  The outstanding principal amount of the
Assignor's Facility B Loans, including its Letter of Credit
Exposure (as defined in the Facility B Credit Agreement and with-
out giving effect to the assignment effected hereby or to other
assignments thereof which have not yet become effective), is
specified in Item 2 of Schedule 1 hereto. 

 9.   The Assignor wishes to sell and assign to the As-
signee, and the Assignee wishes to purchase and assume from the
Assignor, (i) the portion of the Assignor's Facility A Commitment
and Facility B Commitment specified in Item 3 of Schedule 1
hereto (the "Assigned Commitment") and (ii) the portion of the
Assignor's Facility A Revolving Credit Loans, Facility B
Revolving Credit Loans and/or the portion of the Assignor's
Facility A Competitive Bid Loans or Facility B Competitive Bid
Loans specified in Item 5 of Schedule 1 hereto (the "Assigned
Loans").

 The parties agree as follows:

 9.1. Assignment

      Subject to the terms and conditions set forth herein
and in the Credit Agreements, the Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, without recourse, on the date set
forth above (the "Assignment Date") (i) all right, title and
interest of the Assignor to the Assigned Loans and (ii) all
obligations of the Assignor under the Credit Agreements with
respect to the Assigned Commitment.  As full consideration for
the sale of the Assigned Loans and the Assigned Commitment, the
Assignee shall pay to the Assignor on the Assignment Date the
principal amount of the Assigned Loans (the "Purchase Price")
[and the Assignor shall pay to the Assignee on the Assignment
Date the fee specified in Item 6 of Schedule 1 hereto].  It is
understood by the parties hereto that each sale, assignment,
transfer or negotiation of rights under the Credit Agreements
shall be of an equal percentage of such Lenders interest under in
each of the Credit Agreements, it being the intention that at all
times during which the Facility A Credit Agreement and Facility B
Credit Agreement are both in effect, each Facility A Lender shall
be a Facility B Lender and its Commitment Percentage in each
thereof shall be identical.

 9.2. Representation and Warranties

      Each of the Assignor and the Assignee represents and
warrants to the other that (i) it has full power and legal right
to execute and deliver this Agreement and to perform the
provisions of this Agreement; (ii) the execution, delivery and
performance of this Agreement have been authorized by all action,
corporate or otherwise, and do not violate any provisions of its
charter or by-laws or any contractual obligations or requirement
of law binding on it; and (iii) this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms.  The Assignor further represents that
it is the legal and beneficial owner of the interest being
assigned by it  hereunder and that such interest is free and
clear of any adverse claim created by the Assignor.

 9.3. Condition Precedent

      The obligations of the Assignor and the Assignee
hereunder shall be subject to the fulfillment of the conditions
that the Assignor shall have (i) received payment in full of the
Purchase Price and (ii) complied with the other applicable
provisions of Section 11.7 of each Credit Agreement.

 9.4. Notice of Assignment

      The Assignor agrees to give notice of the assignment
and assumption of the Assigned Loans and the Assigned Commitment
to the Agent and the Borrower and hereby instructs the Agent and
the Borrower to make all payments with respect to the Assigned
Loans and the Assigned Commitment directly to the Assignee at the
applicable Lending Offices specified on Schedule 2 hereto;
provided, however, that the Borrower and the Agent shall be
entitled to continue to deal solely and directly with the
Assignor in connection with the interests so assigned until the
Agent, the Issuing Bank and the Borrower, to the extent required
by Section 11.7 of each Credit Agreements, shall have received
notice of the assignment and  shall have consented in writing
thereto by signing this Agreement and the Agent shall have
recorded and accepted this Agreement and received the Assignment
Fee required to be paid pursuant to Section 11.7 of each Credit
Agreement.  From and after the date (the "Assignment Effective
Date") on which the Agent shall notify the Borrower and the
Assignor that the requirements set forth in the foregoing
sentence shall have occurred and all consents (if any) required
shall have been given, (i) the Assignee shall be deemed to be a
party to the Credit Agreements and, to the extent that rights and
obligations thereunder shall have been assigned to the Assignee
as provided in such notice of assignment to the Agent, shall have
the rights and obligations of a Lender under the Credit
Agreements, and (ii) the Assignee shall be deemed to have
appointed 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.  After the
Assignment Effective Date, the Agent shall make all payments in
respect of the interest assigned hereby (including payments of
principal, interest, fees and other amounts) to the Assignee. 
The Assignor and Assignee shall make all appropriate adjustment
in payments under the Assigned Loans and the Assigned Commitment
for periods prior to the Assignment Effective Date hereof
directly between themselves.  If the Assignee is not a United
States Person as defined in Section 7701(a)(30) of the Code, the
Assignee shall deliver herewith the forms required by Section
2.10(c) of the Credit Agreements to evidence the Assignee's
complete exemption from United States withholding taxes with
respect to payments under the Loan Documents.

 9.5. Independent Investigation

      The Assignee acknowledges that it is purchasing the
Assigned Loans and the Assigned Commitments from the Assignor
totally without recourse and, except as provided in Section 2
hereof, without representation or warranty.  The Assignee further
acknowledges that it has made its own independent investigation
and credit evaluation of the Borrower in connection with its
purchase of the Assigned Loans and the Assigned  Commitments. 
Except for the representations or warranties set forth in Section
2, the Assignee acknowledges that it is not relying on any
representation or warranty of the Assignor, expressed or implied,
including, without limitation, any representation or warranty
relating to the legality, validity, genuineness, enforceability,
collectibility, interest rate, repayment schedule or accrual
status of the Assigned Loans or the Assigned Commitment, the
legality, validity, genuineness or enforceability of any  Loan
Document, or financial condition or creditworthiness of the
Borrower or any other Person.  The Assignor has not and will not
be acting as either the representative, agent or trustee of the
Assignee with respect to matters arising out of or relating to
the Credit Agreements or this Agreement.  From and after the
Assignment Effective Date, except as set forth in Section 4
above, the Assignor shall have no rights or obligations with
respect to the Assigned Loans or the Assigned Commitments.

 9.6. Consent of the Borrower; Issuance of Notes.

      (a)  Pursuant to the provisions of Section 11.7 of
each  Credit Agreement, and to the extent required thereby, the
Borrower, by signing below, consents to this Agreement and to the
assignment contemplated herein.  The Borrower further agrees to
execute and deliver:

           (i)  to the Assignee, (1) a
Facility A Revolving Credit Note, in an aggregate principal
amount of $____, (2) a Facility B Revolving Credit Note, in an
aggregate principal amount of $____, (3) a Facility A Competitive
Bid Note and (4) a Facility B Competitive Bid Note; and

           (ii) to the Assignor, (1) a
Facility A Revolving Credit Note, in an aggregate principal
amount of $____, and (2) a Facility B Revolving Credit Note, in
an aggregate principal amount of $____.

      (b)  Upon receipt of its new Notes as set forth in
subsection (a)(ii) above, the Assignor shall deliver its replaced
Facility A Revolving Credit Note and Facility B Revolving Credit
Note to the Borrower.

 9.7. Method of Payment

      All payments to be made by either party hereunder
shall be in funds available at the place of payment on the same
day and shall be made by wire transfer to the account designated
by the party to receive payment.

 9.8. Integration

      This Agreement shall supersede any prior agreement or
understanding between the parties (other than the Credit
Agreements) as to the subject matter hereof.

 9.9. Counterparts

      This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
shall be binding upon both parties, their successors and assigns.

      9.10.     Headings

      Section headings have been inserted herein for
convenience only and shall not be construed to be a part hereof.

 9.11.     Amendments; Waivers

      This Agreement may not be amended, changed, waived or
modified except by a writing executed by the parties hereto, and
may not be amended, changed, waived or modified in any manner
inconsistent with Section 11.7 of each  Credit Agreement without
the prior written consent of the Agent.

 9.12.     Governing Law.

      This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of the
State of New York, without regard to principles of conflict of
laws.


 IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the
day and year first above written.
  
                                             , as Assignor

                                  By: 
                                  Name: 
                                  Title: 

                                            , as Assignee


                                   By:
                                   Name:
                                   Title:


Consented to:

ATLANTIC ENERGY, INC.


By: 
Name: 
Title: 


Accepted:

THE BANK OF NEW YORK, as Agent


By: 
Name:
Title: 


THE BANK OF NEW YORK, as Issuing Bank


By: 
Name: 
Title: 

                                SCHEDULE 1

                                    TO

                    ASSIGNMENT AND ACCEPTANCE AGREEMENT

                                  between
                    _____________________, as Assignor
                                    and
                    _____________________, as Assignee

                                relating to

                Revolving Credit Agreement (Facility A) and
                 Revolving Credit Agreement (Facility B),
                    each dated as of September 28, 1995
                                   among
                          ATLANTIC ENERGY, INC.,
                   the respective Lenders party thereto,
                                    and
                      The Bank of New York, as Agent,


Item 9.13. Assignor's Commitments

 (a)  Facility A Commitment            $
 (b)  Facility B Commitment            $


Item 9.14. Assignor's Loans:                  

 (a)  Facility A Revolving
Credit Loans* consisting
of:
ABR Advances                                   $
Eurodollar Advances                            $
Letter of Credit Exposure                      $

(b)   Facility A Competitive
 Bid Loans* consisting of Loans
 at the interest rates and
 for the Interest Periods
 set forth below:

 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________

(c)   Facility B Revolving
 Credit Loans* consisting
 of:
      ABR Advances                    $___________
      Eurodollar Advances             $___________

(d)   Facility B Competitive
 Bid Loans* consisting of Loans
 at the interest rates and
 for the Interest Periods
 set forth below:

 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________
 Rate: __% Interest Period: ___       $___________


Item 9.15. Amount of Assigned Commitments:

 (a)  Assigned Facility A Revolving
      Credit Commitment                $___________

 (b)  Assigned Facility B Revolving
      Credit Commitment                $___________

Item 9.16. Percentage of Assigned Commitments
      in Facility A as a percentage of
      the Aggregate Commitments
      of Facility A of all Facility
      A Lenders                             ___%

      Percentage of Assigned Commitments
      in Facility B as a percentage of
      the Aggregate Commitments
      of Facility B of all Facility
      A Lenders                             ___%

 Item 9.17.     Amount of Assigned Loans:

 (a)  Assignor's Facility A Revolving
      Credit Loans consisting
      of:
      ABR Advances                         $___________
      Eurodollar Advances                  $___________
      Letter of Credit Exposure            $___________

 (b)  Assignor's Facility A Competitive
      Bid Loans consisting of Loans
      at the interest rates and
      for the Interest Periods
      set forth below:

      Rate: __%  Interest Period: ___       $___________
      Rate: __%  Interest Period: ___       $___________
      Rate: __%  Interest Period: ___       $___________

 (c)  Assignor's Facility B Revolving
      Credit Loans consisting
      of:
      ABR Advances                         $___________
      Eurodollar Advances                  $___________

 (d)  Assignor's Facility B Competitive
      Bid Loans consisting of Loans
      at the interest rates and
      for the Interest Periods
      set forth below:

      Rate: __%  Interest Period: ___      $___________
      Rate: __%  Interest Period: ___      $___________
      Rate: __%  Interest Period: ___      $___________


Item 6.    Amount of Fee
      payable to Assignee                 $___________



                                SCHEDULE 2

                                    TO

                    ASSIGNMENT AND ACCEPTANCE AGREEMENT

                                  between
                    _____________________, as Assignor
                                    and
                    _____________________, as Assignee

                                relating to

                Revolving Credit Agreement (Facility A) and
                 Revolving Credit Agreement (Facility B),
                    each dated as of September 28, 1995
                                   among
                          ATLANTIC ENERGY, INC.,
                   the respective Lenders party thereto,
                                    and
                      The Bank of New York, as Agent,


DOMESTIC LENDING OFFICE             EURODOLLAR LENDING OFFICE

____________________                ____________________
____________________                ____________________
____________________                ____________________
Attention: ______________           Attention: ______________
Telephone: (___) ___-____           Telephone: (___) ___-____
Telecopy:  (___) ___-____           Telecopy:  (___) ___-____


ADDRESS FOR NOTICES

____________________
____________________
____________________
Attention: ______________
Telephone: (___) ___-____
Telecopy:  (___) ___-____


                             ATLANTIC ENERGY EXHIBIT Q

                   FORM OF GUARANTY AND SUBORDINATION AGREEMENT

         Guaranty and Subordination Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, this "Guaranty"),
dated as of _____ __, 199_, made by _________, a ______ corporation ("   
     ") and each Person which becomes a party hereto pursuant to Section
10 hereof (together with _________, the "Guarantors", each, a
"Guarantor") and ATLANTIC ENERGY, INC., a New Jersey corporation (the
"Borrower") to THE BANK OF NEW YORK, as Agent (in such capacity, the
"Agent") [(i)] for itself and for the ratable benefit of the Lenders.

         9.18.     The Borrower has entered into two Revolving Credit
Agreements (Facility A and Facility B), dated as of September 28, 1995,
among the Borrower, the signatory Lenders thereto and the Agent (as the
same may be amended, extended, increased, modified, refunded or
refinanced from time to time, the "Credit Agreements").  Section 8.7 of
the Credit Agreements provides that the Guarantors and the Borrower
shall execute and deliver this Guaranty in the event that the Borrower
shall convert or forgive Intercompany Notes of the Guarantors.

         9.19.     The Guarantors have derived and expect to continue to
derive substantial benefit from the Credit Agreements and the making of
the Loans and the issuance of the Letters of Credit thereunder,
including, without limitation, the lending, directly or indirectly, by
the Borrower of a portion of the proceeds of the Loans to the
Guarantors.  The Guarantors acknowledge that the Agent and the Lenders
are relying on this Guaranty in agreeing to continue to make the Loans
subsequent to the conversion or forgiveness of an Intercompany Note, and
that the Agent and the Lenders would not do so without the execution and
delivery of this Guaranty.

         9.20.     Each of the Guarantors wishes to (i) guarantee the
obligations of the Borrower under the Loan Documents and (ii)
subordinate, subject to the terms and conditions contained herein, any
obligations due it from the Borrower to the prior indefeasible cash
payment in full of the Borrower Obligations (as hereinafter defined).

         In consideration of the premises and agreements herein contained
and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to induce the Agent and
the Lenders to make the Loans and to induce BNY to issue the Letters of
Credit and the Lenders to participate therein, the Borrower and each of
the Guarantors covenant and agree as follows:

         (a)  Definitions

              Except as otherwise provided herein, capitalized terms that
are defined in the Credit Agreements and are not defined herein shall
have the meanings assigned to such terms therein.  For purposes hereof,
the following terms shall have the following meanings:

              "Additional Guarantor": each Guarantor which becomes a party
hereto pursuant to Section 10 hereof.

              "Borrower Obligations": all obligations and liabilities,
whether now existing or hereafter arising, of the Borrower under the
Loan Documents, whether direct,  indirect or contingent, incurred as
primary obligor or otherwise, secured or unsecured, and whether or not
on open account, including all principal and interest thereon (whether
arising or accruing before or after the occurrence of any Event of
Default set forth in Section 9.1(i) or (j) of the Credit Agreements and
whether allowed as a claim), and all reasonable costs and expenses of
the Agent and the Lenders in enforcing, preserving and protecting any
thereof, whether or not suit is instituted (as the same may be amended,
increased, modified, renewed, refinanced, refunded or extended from time
to time).

              "Consideration": as of any date of determination and with
respect to each Guarantor, an amount equal to the lesser of (a) the
total "value" (within the meaning of Section 548 of the Bankruptcy Code
as in effect on the date hereof) given, directly or indirectly, to such
Guarantor during the period commencing on the date such Guarantor became
a party to this Guaranty and ending on such date of determination, in
exchange for its execution and delivery of this Guaranty, and (b) the
amount of "fair consideration" (within the meaning of Article 10 of the
New York Debtor Creditor Law as in effect on the date hereof) given,
directly or indirectly, to such Guarantor during the period commencing
on the date such Guarantor became a party to this Guaranty and ending on
such date of determination in exchange for its execution and delivery of
this Guaranty.

              "Guarantor Obligations": with respect to each Guarantor, all
of the obligations and liabilities of such Guarantor hereunder, whether
fixed, contingent, now existing or hereafter arising, created, assumed,
incurred or acquired.

              "Net Worth": as of any date and with respect to each
Guarantor, the lesser of the following:

                   (a)(i) all of such Guarantor's "property, at a fair
valuation" (within the meaning of Section 101(32) of the Bankruptcy Code
as in effect on the date hereof) on such date, minus (ii) the sum of
such Guarantor's "debts" (within the meaning of Section 101(12) of the
Bankruptcy Code as in effect on the date hereof) on such date, or

                   (b)(i) the "fair salable value of the assets" (within the
meaning of Article 10 of the New York Debtor Creditor Law as in effect
on the date hereof) of such Guarantor on such date, minus (ii) "the
amount that will be required to pay such Guarantor's probable liability
on its existing debts as they become absolute and matured" (as such
phrase would be construed under Article 10 of the New York Debtor
Creditor Law as in effect on the date hereof) on such date.

              "Subordinated Debt": all indebtedness for borrowed money and
any other obligations, contingent or otherwise, of the Borrower to any
Guarantor, including, without limitation, all amounts, fees and expenses
payable by the Borrower to any Guarantor in respect thereof, in each
case whether outstanding on the date of execution of this Guaranty or
hereafter arising or created.

              "Supplement": a Supplement to this Guaranty, duly completed,
in the form of Annex 1 hereto.

         (b)  Guaranty

              (1)  Subject to Section 2(b) hereof, each Guarantor hereby
absolutely, irrevocably and unconditionally guarantees the full and
prompt payment when due (whether at stated maturity, by acceleration or
otherwise) of the Borrower Obligations.   This Guaranty constitutes a
guaranty of payment, and neither the Agent nor any Lender shall have any
obligation to enforce any Loan Document or exercise any right or remedy
with respect to any collateral security thereunder by any action,
including, without limitation, making or perfecting any claim against
any Person or any collateral security for any of the Borrower
Obligations prior to being entitled to the benefits of this Guaranty. 
The Agent may, at its option, proceed against the Guarantors, or any one
or more of them, in the first instance to enforce the Guarantor
Obligations without first proceeding against the Borrower or any other
Person, and without first resorting to any other rights or remedies, as
the Agent may deem advisable.  In furtherance hereof, if the Agent or
any Lender is prevented by law from collecting or otherwise hindered
from collecting or otherwise enforcing any Borrower Obligation in
accordance with its terms, the Agent or such Lender, as the case may be,
shall be entitled to receive hereunder from the Guarantors after demand
therefor, the sums which would have been otherwise due had such
collection or enforcement not been prevented or hindered.

              (2)  Notwithstanding anything to the contrary contained in
this Guaranty, the maximum liability of each Guarantor hereunder shall
not, as of any date of determination, exceed the lesser of (i) the
highest amount that is valid and enforceable against such Guarantor
under principles of New York State contract law, and (ii) the sum of (1)
all Consideration received by such Guarantor as of such date of
determination, plus (2) the lesser of (A) 95% of the Net Worth of such
Guarantor on the date such Guarantor became a party to this Guaranty
after giving effect to (1) this Guaranty and (2) the receipt by such
Guarantor of any Consideration on the date such Guarantor became a party
to this Guaranty, and (B) 95% of the Net Worth of such Guarantor on such
date of determination.

              (3)  Each Guarantor agrees that its Guarantor Obligations may
at any time and from time to time exceed the maximum liability of such
Guarantor hereunder without impairing this Guaranty or affecting the
rights and remedies of the Agent or any Lenders hereunder.

              (4)  Subject to the limitations contained in Section 2(b), the
obligations hereunder of each Guarantor shall be joint and several with
the obligations hereunder of the other Guarantors from time to time
party hereto.

         (c)  Absolute Obligation

              Subject to Section 9, no Guarantor shall be released from
liability hereunder unless and until the Maturity Date shall have
occurred and either (a) the Borrower Obligations shall have been
indefeasibly paid in full, in cash, or (b) the Guarantor Obligations of
such Guarantor shall have been paid in full, in cash.  Each Guarantor
acknowledges and agrees that (1) neither the Agent nor any Lender has
made any representation or warranty to such Guarantor with respect to
the Borrower, its Subsidiaries, any Loan Document or any agreement,
instrument or document executed or delivered in connection therewith or
any other matter whatsoever, and (2) such Guarantor shall be liable
hereunder, and such liability shall not be affected or impaired,
irrespective of (A) the validity or enforceability of any Loan Document
or any agreement, instrument or document executed or delivered in
connection therewith, or the collectability of any of the Borrower
Obligations, (B) the preference or priority ranking with respect to any
of the Borrower Obligations, (C) the existence, validity, enforceability
or perfection of any security interest or collateral security under any
Loan Document or the release, exchange, substitution or loss or
impairment of any such security interest or collateral security, (D) 
any failure, delay, neglect or omission by the Agent or any Lender to
realize upon any direct or indirect collateral security, indebtedness,
liability or obligation, any Loan Document or any agreement, instrument
or document executed or delivered in connection therewith, or any of the
Borrower Obligations, (E) the existence or exercise of any right of
set-off by the Agent or any Lender, (F) the existence, validity or
enforceability of any other guaranty with respect to any of the Borrower
Obligations, the liability of any other Person in respect of any of the
Borrower Obligations, or the release of any such Person or any other
guarantor of any of the Borrower Obligations, (G) any act or omission of
the Agent or any Lender in connection with the administration of any
Loan Document or any of the Borrower Obligations, (H) the bankruptcy,
insolvency, reorganization or receivership of, or any other proceeding
for the relief of debtors commenced by or against, any Person, (I) the
disaffirmance or rejection, or the purported disaffirmance or purported
rejection, of any of the Borrower Obligations, any Loan Document or any
agreement, instrument or document executed or delivered in connection
therewith, in any bankruptcy, insolvency, reorganization or
receivership, or any other proceeding for the relief of debtors,
relating to any Person, (J) any law, regulation or decree now or
hereafter in effect which might in any manner affect any of the terms or
provisions of any Loan Document or any agreement, instrument or document
executed or delivered in connection therewith or any of the Borrower
Obligations, or which might cause or permit to be invoked any alteration
in the time, amount, manner or payment or performance of any of the
Borrower's obligations and liabilities (including, without limitation,
the Borrower Obligations), (K) the merger or consolidation of the
Borrower into or with any Person, (L) the sale by the Borrower of all or
any part of its assets, (M) the fact that at any time and from time to
time none of the Borrower Obligations may be outstanding or owing to the
Agent or any Lender, (N) any amendment or modification of, or supplement
to, any Loan Document or (O) any other reason or circumstance which
might otherwise constitute a defense available to or a discharge of the
Borrower in respect of its obligations or liabilities (including,
without limitation, the Borrower Obligations) or of such Guarantor in
respect of any of the Guarantor Obligations (other than by the
performance in full thereof).

         (d)  Representations and Warranties

              Each of the Guarantors hereby makes the following
representations and warranties to the Agent:

                   (1)  Existence and Power. It is duly organized or formed
and validly existing in good standing under the laws of the jurisdiction
of its incorporation or formation, has all requisite power and authority
to own its Property and to carry on its business as now conducted, and
is in good standing and authorized to do business as a foreign
corporation in each jurisdiction in which the nature of the business
conducted therein or the Property owned therein makes such qualification
necessary, except where such failure to qualify could not reasonably be
expected to have a Material Adverse Effect.

                   (2)  Authority. It has full legal power and authority to
enter into, execute, deliver and perform the terms of the Loan Documents
to which it is a party and the transactions contemplated thereby, all of
which have been duly authorized by all proper and necessary corporate or
other applicable action and are in full compliance with its Certificate
of Incorporation or By-Laws or its other organization documents. 

                   (3)  Binding Agreement. The Loan Documents to which its
is a party constitute its valid and legally binding obligations,
enforceable in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally.

                   (4)  Litigation. Except as disclosed in a schedule to the
Credit Agreements, there are no actions, suits or proceedings at law or
in equity or by or before any Governmental Authority (whether
purportedly on its behalf) pending or, to its knowledge, threatened
against it or any of its Property or rights, which (i) if adversely
determined, could reasonably be expected to have a Material Adverse
Effect, (ii) call into question the validity or enforceability of any of
the Loan Documents, (iii) could reasonably be expected to result in the
rescission, termination or cancellation of any material franchise,
right, license, permit or similar authorization held by it or (iv) might
materially and adversely affect any of the Transactions.

                   (5)  Required Consents. No consent, authorization or
approval of, filing with, notice to, or exemption by, stockholders, any
Governmental Authority or any other Person is required to authorize, or
is required in connection with the execution, delivery and performance
of the Loan Documents to which it is a party and the transactions
contemplated thereby, or is required as a condition to the validity or
enforceability of such Loan Documents.

                   (6)  No Conflicting Agreements. It is not in default
under any mortgage, indenture, contract or agreement to which it is a
party or by which it or any of its Property is bound, the effect of
which default could reasonably be expected to have a Material Adverse
Effect.  The execution, delivery or carrying out of the terms of the
Loan Documents to which it is a party and the transactions contemplated
thereby, will not constitute a default under, or result in the creation
or imposition of, or obligation to create, any Lien upon any of its
Property or result in a breach of or require the mandatory repayment of
or other acceleration of payment under or pursuant to the terms of any
such mortgage, indenture, contract or agreement.

                   (7) Compliance with Applicable Laws. It is not in default
with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Authority which default could reasonably be
expected to have a Material Adverse Effect.  It is complying in all
material respects with all statutes, regulations, rules and orders
applicable to it of all Governmental Authorities a violation of which
could reasonably be expected to have a Material Adverse Effect.

                   (8) Property. It has good and marketable title to all of
its Property, title to which is material to such Guarantor, subject to
no Liens, except for Liens described in Section 8.2(i), (ii), (iii),
(iv), (v), (vi) or (vii) of the Credit Agreements.

                   (9) Franchises, Intellectual Property, Etc. It possesses
or has the right to use all franchises, Intellectual Property, licenses
and other rights as are material and necessary for the conduct of its
business, and with respect to which it is in compliance, with no known
conflict with the valid rights of others which could reasonably be
expected to have a Material Adverse Effect.  No event has occurred which
permits or, to the best of its knowledge, after notice or the lapse of
time or both, or any other condition, could reasonably be expected to
permit, the revocation or termination of any  such franchise,
Intellectual Property, license or other right which revocation or
termination could reasonably be expected to have a Material Adverse
Effect.

                   (10) No Misrepresentation. No representation or warranty
contained in any Loan Document to which it is a party and no certificate
or report furnished or to be furnished by it in connection with the
transactions contemplated thereby, contains or will contain a
misstatement of material fact, or, to the best of its knowledge, omits
or will omit to state a material fact required to be stated in order to
make the statements therein contained not misleading in the light of the
circumstances under which made.

         (e)  Events of Default

              Each of the following shall constitute an "Event of Default"
hereunder:

                   (1)  Any of the Guarantors shall fail to observe or
perform any term, covenant or agreement contained in Section 2 of this
Guaranty; or

                   (2)  Any of the Guarantors shall fail to perform or
observe any other term, covenant or agreement on its part to be
performed or observed pursuant to this Guaranty and such failure shall
have continued unremedied for a period of 30 days after such Guarantor
shall become aware of such failure; or

                   (3)  Any representation of any Guarantor contained herein
or in any certificate, report or notice delivered or to be delivered by
such Guarantor pursuant hereto shall prove to have been incorrect or
misleading in any material respect when made; or

                   (4)  This Guaranty shall cease to be in full force and
effect or any of the Guarantors shall so assert or shall disavow any of
its obligations hereunder; or

                   (5)  The occurrence of an "Event of Default" under and as
defined in the Credit Agreements.

         (f)  Subordination

              (1)  No payment of any nature whatsoever due in respect of the
Subordinated Debt payable to any of the Guarantors shall be made unless
and until the Borrower Obligations have been first indefeasibly paid in
full in cash.

              (2)  Upon any bankruptcy, insolvency, liquidation or
reorganization of the Borrower, or upon the filing of a petition in
bankruptcy or commencement of any proceeding in bankruptcy against the
Borrower or upon any distribution of the assets of the Borrower or upon
any dissolution, winding up, liquidation or reorganization of the
Borrower, whether in bankruptcy, insolvency, reorganization, arrangement
or receivership proceedings, or upon any assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of the
Borrower, or in the event any of the Subordinated Debt shall for any
reason become or be declared due and payable or otherwise:

                   (i)  the Agent shall first be entitled to receive
indefeasible payment in full in cash of the Borrower Obligations
(whenever arising) before any Guarantor shall be entitled to receive any
payment on account of the Subordinated Debt;

                   (ii)  any payment by, or distribution of the assets of,
the Borrower of any kind or character, whether in cash, property or
securities, to which any Guarantor would be entitled except for the
provisions of this Guaranty, in connection with the Subordinated Debt,
shall be paid or delivered by the Person making such payment or
distribution (whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the Agent to the extent
necessary to make payment in full in cash of the Borrower Obligations
remaining unpaid, after giving effect to any concurrent payment or
distribution (or provision therefor) in cash to the Agent; and

                   (iii) None of the Guarantors shall ask, demand by legal
proceedings or otherwise, or take or receive from the Borrower, by set-
off, counterclaim or in any other manner, any payment or distribution on
account of the Subordinated Debt other than as expressly permitted
hereunder;

                   (iv) Each of the Guarantors agrees to declare the
Subordinated Debt to be due and payable and, at least 30 days before the
time required by applicable law or rule, to file proof of claim
therefor, in default of which the Agent is hereby irrevocably authorized
so to declare and file in order to effectuate the provisions hereof; and

                   (v)  The Agent shall have the right, and is hereby
authorized, to vote the interest of each Guarantor with respect to the
Subordinated Debt, including, without limitation, the right to make all
acceptances, rejections, consents or approvals on its behalf (including
the right to accept, approve or disapprove of any plan of
reorganization) in connection with any insolvency or other proceeding,
and to execute and deliver for and on behalf of the Guarantor any
instrument, agreement or other document in connection therewith, and if
for any reason this clause shall not be enforceable, each Guarantor
agrees to vote and give or make such acceptances, rejections, consents
or approvals in the manner directed by the Agent.  Each of the
Guarantors hereby irrevocably appoints the Agent its attorney-in-fact
for purposes of exercising the rights and authority granted to it under
this clause.

              Notwithstanding the foregoing, in the event that any payment
by, or distribution of the assets of, the Borrower of any kind or
character prohibited hereby, whether in cash, property or securities,
shall for any reason be received by any of the Guarantors in respect of
the Subordinated Debt, such payment or distribution shall be held in
trust for the benefit of the Agent, and shall be immediately paid over
to the Agent, to the extent necessary to make payment in full in cash of
the Borrower Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution (or provision therefor) in cash to
the Agent.

              (3)  Without the prior written consent of the Agent, the
Borrower will not give, and none of the Guarantors will receive or
accept, any collateral of any nature whatsoever for the Subordinated
Debt on any Property or assets, whether now existing or hereafter
acquired, of the Borrower.

              (4)  Nothing contained in this Guaranty is intended to or
shall impair, as between and among the Borrower, its creditors (other
than the holders of the Borrower Obligations) and the Guarantors, the
obligation of the Borrower to pay to the Guarantors any amount due in
respect of the Subordinated Debt as and when the same shall become due
and payable in accordance with the terms thereof, or affect the relative
rights of the Guarantors and the creditors of the Borrower (other than
the holders of the Borrower  Obligations), in each case subject to the
rights of the holders of the Borrower Obligations under this Guaranty.

              (5)  Unless and until the Borrower Obligations have been
indefeasibly paid in full in cash and the Credit Agreements have been
terminated, each of the Guarantors agrees not to declare any part of the
Subordinated Debt to be due and payable or exercise any of the rights or
remedies which it may have, or bring (in its capacity as holder of the
Subordinated Debt) or join with any other creditor in instituting, any
proceedings against the Borrower under any bankruptcy, insolvency,
reorganization, arrangement, receivership or other similar law, unless
the Borrower Obligations shall have been declared immediately due and
payable or, in the case of the institution of any such proceedings, the
Agent shall have joined in the institution thereof or expressly
consented thereto in writing.  In the event that the Agent shall have so
declared the Borrower Obligations immediately due and payable, each of
the Guarantors agrees to declare the Subordinated Debt then due to be
due and payable, provided, however, if the Agent shall rescind any such
declaration, each of the Guarantors shall automatically be deemed to
have rescinded its declaration.

              (6)  No right of the Agent to enforce this Guaranty shall at
any time or in any way be prejudiced or impaired by any act or failure
to act on the part of any of the Guarantors, or by any noncompliance by
the Guarantors with the terms, provisions and covenants herein, and the
Agent are hereby expressly authorized to extend, waive, renew, increase,
decrease, modify or amend the terms of the Borrower Obligations or any
collateral security therefor, and to waive any default, modify, amend,
rescind or waive any provision of any document executed and delivered in
connection with the Borrower Obligations and to release, sell or
exchange any such collateral security and otherwise deal freely with the
Borrower, all without notice to or consent of the Guarantors and without
affecting the liabilities and obligations of the parties hereto.

              (7)  The Borrower and the Guarantors each waives notice of
acceptance of this Guaranty by the Agent and the Lenders, and each of
the Guarantors waives notice of and consents to the making, amount and
terms of the Borrower Obligations which may exist from time to time and
any renewal, extension, increase, amendment or modification thereof and
any other action which the Agent or the Lenders in its sole and absolute
discretion, may take or omit to take with respect thereto.  This Section
(g) shall constitute a continuing offer to the Agent and the Lenders,
its provisions are made for the benefit of the Agent and the Lenders,
and the Agent and the Lenders are made obligees hereunder and may
enforce such provisions.

              (8)  Each of the Guarantors agrees that no payment or
distribution to the Agent pursuant to the provisions of this Guaranty
shall entitle any of the Guarantors to exercise any rights of
subrogation in respect thereof until the Borrower Obligations shall have
been indefeasibly paid in full in cash.  Each of the Guarantors agrees
that the subordination provisions contained herein shall not be affected
by any action or failure to act by the holders of the Borrower
Obligations which results, or may result, in affecting, impairing or
extinguishing any right of reimbursement or subrogation or other right
or remedy of such Guarantor.

              (9)  None of the Guarantors shall sell, assign, transfer or
otherwise dispose of all or any part of the Subordinated Debt without
having first obtained the prior written consent of the Agent which
consent may be withheld for any reason or for no reason.

              (10) The Borrower agrees that it will not make any payment of
any of the Subordinated Debt, or take any other action, in contravention
of the provisions of this Guaranty.

              (11) Each of the Guarantors agrees that the provisions of this
Guaranty shall be applicable to the Borrower Obligations whenever the
same may arise and notwithstanding the fact that no Borrower Obligations
may be outstanding from time to time and may have paid down to zero at
any time or from time to time, it being understood that the Credit
Agreements permit the Borrower to borrow, repay and reborrow from time
to time subject to the terms and conditions thereof, all or any of which
terms and conditions may be waived.

              (12) All rights and interests of the Agent hereunder, and all
agreements and obligations of the Borrower and the Guarantors under this
Guaranty, shall remain in full force and effect irrespective of:

                   (i)  any lack of validity or enforceability of any of the
Loan Documents;

                   (ii) any change in the time, manner or place of payment
of, or any other term of, all or any of the Borrower Obligations, or any
other amendment or waiver of or any consent to departure from any of the
Borrower Obligations;

                   (iii) any exchange, release or non-perfection of the
Collateral, or any release or amendment or waiver of or consent to or
departure from any guaranty, for all or any of the Borrower Obligations;
or

                   (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower in
respect of the Borrower Obligations or this Guaranty.  This Guaranty
shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Borrower Obligations is rescinded
or must otherwise be returned by the Agent upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, all as though
such payment had not been made.

              (13) Each of the Guarantors authorizes the Agent, without
notice or demand and without affecting or impairing the obligations of
any of the Guarantors, from time to time to (i) renew, compromise,
extend, increase, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Borrower Obligations, or any
part thereof, including, without limitation, to increase or decrease the
rate of interest thereon or the principal amount thereof; (ii) take or
hold security for the payment of the Borrower Obligations and exchange,
enforce, foreclose upon, waive and release any such security; (iii)
apply such security and direct the order or manner of sale thereof as
the Agent, in its sole discretion, may determine; (iv) release and
substitute one or more indorsers, warrantors, borrowers or other
obligors; and (v) exercise or refrain from exercising any rights against
the Borrower or any other Person.

         (g)  Notices

              Except as otherwise specifically provided herein, all notices,
requests, consents, demands, waivers and other communications hereunder
shall be given in the manner provided in Section 11.2 of the Credit
Agreements and, if to the Agent or the Borrower, at their respective
addresses set forth therein or, if to the Guarantor, the address set
forth below (or if to an Additional Guarantor, to the address set forth
in the Supplement executed and delivered by such Additional Guarantor)
or to such other addresses as to which the Agent may be hereafter
notified by the respective parties hereto:




         Attention:     ,

         Telephone: (___) ___-____
         Fax:       (___) ___-____.

(h)      Expenses

              The Guarantors will upon demand pay to the Agent any and all
reasonable sums, costs and expenses which the Agent may pay or incur
pursuant to the provisions of this Guaranty or in negotiating, executing
or enforcing this Guaranty or in enforcing payment of its Guarantor
Obligations, including, but not limited to court costs, reasonable
collection charges, reasonable travel expenses, and reasonable
attorneys' fees and disbursements.  All sums, costs and expenses which
are due and payable pursuant to this Section shall bear interest,
payable on demand, at the highest rate then payable on the Borrower
Obligations.

         (i)  Repayment in Bankruptcy, etc.

              If, at any time or times subsequent to the payment of all or
any part of the Borrower Obligations or the Guarantor Obligations, the
Agent or any Lender shall be required to repay any amounts previously
paid by or on behalf of the Borrower or any Guarantor in reduction
thereof by virtue of an order of any court having jurisdiction in the
premises, including, without limitation, as a result of an adjudication
that such amounts constituted preferential payments or fraudulent
conveyances, the Guarantors unconditionally agree to pay to the Agent
within 10 days after demand a sum in cash equal to the amount of such
repayment, together with interest on such amount from the date of such
repayment by the Agent or such Lender, as the case may be, to the date
of payment to the Agent at the applicable after-maturity rates set forth
in the Credit Agreements.

         (j)  Additional Guarantors

              Upon the execution and delivery to the Agent of a Supplement
by any Person, such Person shall be a Guarantor.

         (k)  Other Provisions

              (1)  This Guaranty is the "Guaranty" referred to in the Credit
Agreements.  Each of the Agent and the Guarantors acknowledges that
certain provisions of the Credit Agreements, including, without
limitation, Sections 11.1 (Amendments and  Waivers), 11.3 (No Waiver;
Cumulative Remedies), 11.7 (Assignments and Participations), 11.8
(Counterparts), 11.12 (Governing Law), 11.14 (Severability), 11.15.
(Integration), 11.16 (Consent to Jurisdiction), 11.17 (Service of
Process), 11.18 (No Limitation on Service or Suit) and 11.19 (WAIVER OF
TRIAL BY JURY) thereof, are made applicable to this Guaranty and all
such provisions are incorporated by reference herein as if fully set
forth herein.

              (2)  All Schedules and Annexes hereto shall be deemed to be a
part hereof. With respect to an Additional Guarantor, all references in
this Agreement to (i) a Schedule hereof shall refer to the corresponding
Schedule to the Supplement executed and delivered by such Additional
Guarantor and (ii) the date hereof, shall refer to the date on which the
Additional Guarantor became a Grantor hereunder by executing and
delivering a Supplement.

              (3)  No failure by the Agent to exercise, and no delay by the
Agent in exercising, any right or remedy hereunder shall operate as a
waiver thereof.

              (4)  Each and every right, remedy and power granted to the
Agent hereunder or allowed at law, in equity or by other agreement shall
be cumulative and not exclusive, and may be exercised by the Agent from
time to time.

              (5)  Each Guarantor hereby waives presentment, demand for
payment, notice of default, nonperformance and dishonor, protest and
notice of protest of or in respect of this Guaranty, the Loan Documents
and the Borrower Obligations, notice of acceptance of this Guaranty and
reliance hereupon by the Agent and each Lender, and the incurrence of
any of the Borrower Obligations, notice of any sale of collateral
security or any default of any sort and notice of any amendment,
modification, increase or waiver of any Loan Document.

              (6)  No Guarantor is relying upon the Agent or any Lender to
provide to such Guarantor any information concerning the Borrower or any
Subsidiary of the Borrower, and each Guarantor has made arrangements
satisfactory to such Guarantor to obtain from the Borrower on a
continuing basis such information concerning the Borrower and its
Subsidiaries as such Guarantor may desire.

              (7)  Each Guarantor agrees that any statement of account with
respect to the Borrower Obligations from the Agent or any Lender to the
Borrower which binds the Borrower shall also be binding upon such
Guarantor, and that copies of said statements of account maintained in
the regular course of the Agent's or such Lender's business, as the case
may be, may be used in evidence against such Guarantor in order to
establish its Guarantor Obligations.

              (8)  Each Guarantor acknowledges that it has received a copy
of the Loan Documents.  In addition, such Guarantor acknowledges having
read each Loan Document and having had the advice of counsel in
connection with all matters concerning its execution and delivery of
this Guaranty, and, accordingly, waives any right it may have to have
the provisions of this Guaranty strictly construed against the Agent and
the Lenders.


         The Guarantors and the Borrower have each caused this Guaranty to
be duly executed and delivered by its duly authorized officer as of the
date first above written.

                                                      



                                    By:                 
                                    Name:                
                                    Title:              






                                    By:                   
                                    Name:                
                                    Title:               


Accepted and Agreed to:


THE BANK OF NEW YORK, as Agent



By:                         
Name:                        
Title:                       




Annex 1 to the Guaranty and
Subordination Agreement


FORM OF SUPPLEMENT TO GUARANTY AND SUBORDINATION AGREEMENT


SUPPLEMENT, dated as of _____ __, 199_, made by ___________, a ______
corporation (the "New Guarantor") to the Guaranty (the "Guaranty"),
dated as of ____ __, 1994, made by each Guarantor party thereto and
ATLANTIC ENERGY, INC., a New Jersey corporation (the "Borrower") to THE
BANK OF NEW YORK, as Agent (in such capacity, the "Agent").

Reference is made to the Credit Agreements (Facility A and Facility B),
dated as of September 28, 1995, by and among the Borrower, the Lenders
party thereto (the "Lenders") and the Agent (as the same may be amended,
extended, increased, modified, refunded or refinanced from time to time,
the "Credit Agreements").

Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Guaranty or the Credit
Agreements, as the case may be.

Accordingly, the Agent and the New Guarantor agree as follows:

In accordance with Section 10 of the Guaranty, by signing this
Supplement, the New Guarantor (a) shall be, and shall be deemed to be, 
a "Guarantor" under, and as such term is defined in, the Guaranty with
the same force and effect as if originally named therein as a Guarantor,
(b) shall have made, and shall be deemed to have made, the
representations and warranties contained in Section 4 of the Guaranty on
and as of the date hereof, and (c) shall have made, and shall be deemed
to have made, all of the covenants and agreements of a Guarantor set
forth in the Guaranty.

Except as expressly supplemented hereby, the Guaranty shall remain in
full force and effect.

This Supplement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws
rules.

Every provision of this Supplement is intended to be severable, and if
any term or provision hereof shall be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the
remaining provisions hereof or thereof shall not be affected or impaired
thereby, and any invalidity, illegality or unenforceability in any
jurisdiction shall not affect the validity, legality or enforceability
of any such term or provision in any other jurisdiction.

         For purposes of Section 7 of the Guaranty, the address of the New
Grantor is as follows:
                                   
                                   
                                   

             Attention: 


             Telephone:  (___) ___-____
             Fax:        (___) ___-____.

         This Supplement may be executed in two or more counterparts, each
of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.  This Supplement shall
become effective when the Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New
Grantor and the Agent.

              The New Grantor and the Agent have duly executed this
Supplement to the Guaranty as of the day and year first above written.

                               [NAME OF NEW GUARANTOR]



                               By:                     
                               Name:                   
                               Title:                  


                              THE BANK OF NEW YORK, AS AGENT



                              By:                         
                              Name:                    
                              Title: