Document:

Exhibit

Exhibit 4.1

Prepared by: Brian J. Buck
Assistant General Counsel
701 Ninth Street, N.W.
Washington, D.C. 20068
Phone (202) 872-3364

Return to: Brian J. Buck
Assistant General Counsel
701 Ninth Street, N.W.
Washington, D.C. 20068
Phone (202) 872-3364

INDENTURE SUPPLEMENTAL
TO
MORTGAGE AND DEED OF TRUST
 (Dated January 15, 1937)
Executed By
ATLANTIC CITY ELECTRIC COMPANY
TO
THE BANK OF NEW YORK MELLON,
Trustee.
______________________________________ 
 
Dated as of October 9, 2018

	
				
	TABLE OF CONTENTS* 

	 
	 

	 
	 

	 
	Page

	 
	 

	PARTIES
	1

	RECITALS
	1

	 
	Execution of Mortgage
	1

	 
	Execution of Supplemental Indentures
	1

	 
	Acquisition of property rights and property
	2

	 
	No Default under Original Indenture
	2

	 
	Provision for issuance of bonds in one or more series
	2

	 
	Right to execute supplemental indenture
	2

	 
	Issue of other series of bonds
	2

	 
	Issue of bonds of the New Series
	2

	 
	Form of bond of the New Series
	2

	 
	Trustee’s Authentication Certificate
	6

	 
	Supplemental Indenture
	6

	 
	Compliance with legal requirements
	6

	GRANT
	6

	DESCRIPTION OF PROPERTY
	7

	APPURTENANCES, ETC
	7

	HABENDUM
	7

	ENCUMBRANCES
	8

	TRUST
	8

	SEC. 1.    Creation of Bonds of the New Series
	8

	 
	 
	Date of Maturity
	8

	 
	 
	Interest Rate
	8

	 
	 
	Redemption
	9

	 
	 
	Global Security
	9

	SEC. 2.    Issuance of Bonds of the New Series
	9

	SEC. 3.    Approval of Supplemental Indenture by Board of Public Utilities, 
	 

	 
	 
	State of New Jersey not to be construed as approval of other acts
	9

	SEC. 4.    Supplemental Indenture and Original Indenture to be construed as one instrument
	10

	 
	 
	Limitation on rights of others
	10

	 
	 
	Trustee assumes no responsibility for correctness of recitals of fact
	10

	 
	 
	Execution in counterparts
	10

	TESTIMONIUM
	11

	SIGNATURES AND SEALS
	11

	ACKNOWLEDGEMENTS
	13

	 
	 
	 
	 

	 
	 
	 
	 

	*The Table of Contents shall not be deemed to be any part of the Indenture Supplemental to Mortgage and Deed of Trust.

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SUPPLEMENTAL INDENTURE, dated as of October 9, 2018 for convenience of reference, and effective from the time of execution and delivery hereof, made and entered into by and between ATLANTIC CITY ELECTRIC COMPANY, a corporation of the State of New Jersey (hereinafter sometimes called the “Company”), party of the first part, and THE BANK OF NEW YORK MELLON (ultimate successor to the Irving Trust Company), a banking corporation of the State of New York, as trustee (hereinafter sometimes called the “Trustee”), party of the second part.
WHEREAS, the Company has heretofore executed and delivered to the Trustee its Mortgage and Deed of Trust, dated January 15, 1937 (hereinafter referred to as the “Mortgage”), for the security of all bonds of the Company outstanding thereunder, and by said Mortgage conveyed to the Trustee, upon certain trusts, terms and conditions, and with and subject to certain provisos and covenants therein contained, all and singular the property, rights and franchises which the Company then owned or should thereafter acquire, excepting any property expressly excepted by the terms of the Mortgage; and
WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture Supplemental to Mortgage and Deed of Trust, dated as of June 1, 1949, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of July 1, 1950, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of November 1, 1950, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 1, 1952, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of January 1, 1953, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 1, 1954, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 1, 1955, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of January 1, 1957, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of April 1, 1958, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of April 1, 1959, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 1, 1961, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of July 1, 1962, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 1, 1963, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of February 1, 1966, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of April 1, 1970, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of September 1, 1970, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of May 1, 1971, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of April 1, 1972, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of June 1, 1973, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of January 1, 1975, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of May 1, 1975, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of December 1, 1976, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of January 1, 1980, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of May 1, 1981, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of November 1, 1983, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of April 15, 1984, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of July 15, 1984, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of October 1, 1985, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of May 1, 1986, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of July 15, 1987, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of October 1, 1989, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 1, 1991, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of May 1, 1992, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of January 1, 1993, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of August 1, 1993, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of September 1, 1993, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of November 1, 1993, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of June 1, 1994, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of October 1, 1994, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of November 1, 1994, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 1, 1997, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of April 1, 2004, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of August 10, 2004, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 8, 2006, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of November 6, 2008, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of March 29, 2011, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of August 14, 2014 and an Indenture Supplemental to Mortgage and Deed of Trust, dated as of December 1, 2015, such instruments amending and supplementing the Mortgage in certain respects (the Mortgage, as so amended and supplemented, being hereinafter called the “Original Indenture”) and conveying to the Trustee, upon certain trusts, terms and conditions, and with and subject to certain provisos and covenants therein contained, certain property rights and property therein described; and

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WHEREAS, in addition to the property described in the Original Indenture, the Company has acquired certain property rights and property hereinafter described and has covenanted in Section 42 of the Original Indenture to execute and deliver such further instruments and do such further acts as may be necessary or proper to make subject to the lien thereof any property thereafter acquired and intended to be subject to such lien; and
WHEREAS, the Company represents that no default has occurred under any of the provisions of the Original Indenture; and
WHEREAS, the Original Indenture provides that bonds issued thereunder may be issued in one or more series and further provides that, with respect to each series, the rate of interest, the date or dates of maturity, the dates for the payment of interest, the terms and rates of optional redemption, and other terms and conditions shall be determined by the Board of Directors of the Company prior to the authentication thereof; and
WHEREAS, Section 121 of the Original Indenture provides that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Original Indenture, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and that the Company may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued under the Original Indenture and provide that a breach thereof shall be equivalent to a default under the Original Indenture, or the Company may cure any ambiguity or correct or supplement any defective or inconsistent provisions contained in the Original Indenture or in any indenture supplemental to the Original Indenture, by an instrument in writing, properly executed and acknowledged, and that the Trustee is authorized to join with the Company in the execution of any such instrument or instruments; and
WHEREAS, the Company has heretofore, from time to time in accordance with the provisions of the Original Indenture, issued bonds of various series and in various amounts and, of the bonds so issued, $1,037,015,000 aggregate principal amount is outstanding at the date of this supplemental indenture; and
WHEREAS, the Company, by appropriate corporate action in conformity with the terms of the Original Indenture, has duly determined to create a series of bonds under the Original Indenture in the aggregate principal amount of $350,000,000, to be entitled and designated as the First Mortgage Bonds, 4.00% Series due October 15, 2028 (herein sometimes referred to as the “bonds of the New Series”); and
WHEREAS, each of the fully registered bonds of the New Series is to be substantially in the following form, to wit:
This bond is a Global Bond within the meaning of the Mortgage hereinafter referred to and is registered in the name of a Depositary or a nominee thereof. This bond may not be transferred to, or registered or exchanged for bonds registered in the name of, any Person other than the Depositary or a nominee thereof, and no such transfer may be registered, except in the limited circumstances described in the Mortgage. Every bond authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, this bond shall be a Global Bond that is subject to the foregoing, except in such limited circumstances.
No. ______                                                       $_________
CUSIP No. ___________
(FORM OF BOND)
(FACE)
ATLANTIC CITY ELECTRIC COMPANY
FIRST MORTGAGE BOND
4.00% Series due October 15, 2028

ATLANTIC CITY ELECTRIC COMPANY, a corporation of the State of New Jersey (hereinafter called the “Company”), for value received, hereby promises to pay to ___________, or registered assigns, the principal sum of __________ Dollars on ____________________, at the office or agency of the Company in the Borough of Manhattan, 

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The City of New York in lawful money of the United States of America, and to pay interest thereon at the rate of 4.00% per centum per year in like money, at said office or agency on April 15 and October 15 in each year, commencing April 15, 2019, until the Company’s obligation with respect to the payment of such principal shall have been discharged. Interest on this bond will accrue from the date of original issuance of Bonds of 2028 Series (as hereinafter defined) to the first interest payment date, and thereafter will accrue from the last interest payment date to which interest on the Bonds of 4.00% Series has been paid or duly provided for. In the event that any interest payment date is not a business day, then payment of interest payable on such date will be made on the next succeeding day which is a business day with the same force and effect as if made on the interest payment date (and without any interest or other payment in respect of such delay). “Business day” means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in the Borough of Manhattan, The City of New York are generally authorized or required by law, regulation or executive order to remain closed. Interest on this bond payable prior to maturity shall be paid by check mailed to the address of the person or persons entitled thereto, as such address shall appear on the bond registration books maintained by the trustee or by wire transfer to an account designated by the person entitled thereto. So long as this bond is registered in the name of The Depository Trust Company (“DTC”) or a nominee thereof, all payments of principal, premium, if any, and interest in respect of this bond shall be made in immediately available funds in accordance with DTC’s applicable procedures.
Subject to certain exceptions provided in the Mortgage referred to on the reverse hereof, the interest payable on any interest payment date shall be paid to the person in whose name this bond is registered at the close of business on the fifteenth calendar day of the month preceding the month in which such interest payment date occurs; provided, however, that interest payable at maturity will be paid to the person to whom principal is paid.
This bond shall not become valid or obligatory for any purpose until The Bank of New York Mellon, the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of authentication certificate endorsed hereon.
Reference is made to the further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, ATLANTIC CITY ELECTRIC COMPANY has caused this bond to be executed in its name by the signature or a facsimile thereof of its President or one of its Vice Presidents and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and attested by the signature, or a facsimile thereof, of its Secretary or one of its Assistant Secretaries.
Dated,                        ATLANTIC CITY ELECTRIC COMPANY

By:  _______________________________
      [Vice] President

Attest:

______________________________
[Assistant] Secretary

(FORM OF BOND)
(REVERSE)

This bond is one of an issue of bonds of the Company, issuable in series, and is one of a series known as its “First Mortgage Bonds, 4.00% Series due October 15, 2028” (hereinafter called “Bonds of 2028 Series”), all bonds of all series issued and to be issued under and equally secured (except insofar as any sinking fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series) by a Mortgage and Deed of Trust (herein, together with any indentures supplemental thereto, called the Mortgage), 

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dated January 15, 1937, executed by the Company to THE BANK OF NEW YORK MELLON (ultimate successor to the Irving Trust Company), as Trustee, to which Mortgage reference is made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds in respect thereof, the duties and immunities of the Trustee, and the terms and conditions upon which the bonds are secured. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage and/or of any instruments supplemental thereto may be modified or altered by affirmative vote of the holders of at least seventy-five per centum (75%) in principal amount of the bonds affected by such modification or alteration then outstanding under the Mortgage (excluding bonds disqualified from voting by reason of the Company’s interest therein as provided in the Mortgage); provided that no such modification or alteration shall permit the extension of the maturity of the principal of this bond or the reduction in the rate of interest hereon or any other modification in the terms of payment of such principal or interest without the consent of the holder hereof.
The principal hereof may be declared or may become due prior to the express date of the maturity hereof on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a completed default as in the Mortgage provided.
The Bonds of 2028 Series are issuable only as registered bonds without coupons in denominations of $2,000 or integral multiples of $1,000 in excess thereof. This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, upon surrender and cancellation of this bond, and upon payment, if the Company shall require it, of the transfer charges prescribed in the Mortgage, and thereupon, a new fully registered bond of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage.
The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of principal or (subject to the provisions of the Mortgage) interest hereon and for all other purposes and the Company and the Trustee shall not be affected by any notice to the contrary.
The Bonds of 2028 Series shall be redeemable at the option of the Company at any time prior to the express date of the maturity hereof, in whole or in part. The Company shall give notice of its intent to redeem such Bonds at least 30 days but no more than 60 days prior to the date fixed for such redemption (the “Redemption Date”). 
If the Company redeems all or any part of the Bonds of 2028 Series pursuant to the provisions of this paragraph prior to July 15, 2028, it shall pay a redemption price equal to the greater of: (1) 100% of the principal amount of the Bonds of 2028 Series to be redeemed, plus accrued interest to the redemption date, or (2) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Bonds of 2028 Series to be redeemed (not including any portion of payments of interest accrued as of the Redemption Date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 15 basis points, plus accrued interest to the Redemption Date.  At any time on or after April 15, 2028, the redemption price shall be equal to 100% of the principal amount of the Bonds of 2028 Series to be redeemed, plus accrued interest to the Redemption Date.  Unless the Company defaults in payment of the redemption price, on and after the Redemption Date, interest will cease to accrue on the Bonds of 2028 Series or portions of the Bonds of 2028 Series called for redemption.
“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the redemption date.
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the bonds of this series that would be used, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the bonds of this series.

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“Comparable Treasury Price” means, with respect to any redemption date:
•the average of the Reference Treasury Dealer Quotations for that redemption date, after excluding the highest and lowest of the Reference Treasury Dealer Quotations; or
•if the Quotation Agent obtains fewer than three Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations so received.
“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.
“Reference Treasury Dealer” means (1) each of Goldman Sachs & Co. LLC, Mizuho Securities USA LLC and Wells Fargo Securities, LLC, and their respective successors and affiliates, in each case, unless such entity ceases to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), in which case the Company shall substitute another Primary Treasury Dealer, and (2) any other Primary Treasury Dealer selected by the Company.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by that Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding that redemption date.
The Company shall deliver to the Trustee before any Redemption Date for the Bonds of 2028 Series its calculation of the amount applicable to such redemption. The Trustee shall be under no duty to inquire into, may presume the correctness of, and shall be fully protected in acting upon, the Company’s calculation of any redemption price of the Bonds of 2028 Series.

In lieu of stating the amount applicable to such redemption, notices of redemption of the Bonds of 2028 Series for a Redemption Date prior to July 15, 2028 shall state substantially the following: “The amount applicable to the Bonds to be redeemed shall equal the sum of (a) the greater of (i) 100% of the principal amount of such Bonds, and (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest (not including the portion of any scheduled payment of interest which accrued prior to the Redemption Date) on the Bonds being redeemed, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Bonds) plus 15 basis points, plus, in each case, and (b) accrued and unpaid interest on the principal amount hereof to, but not including, the Redemption Date.”
If at the time notice of redemption is given the redemption moneys are not on deposit with the Trustee, then the redemption shall be subject to the receipt of such moneys on or before the Redemption Date, and such notice shall be of no effect unless such moneys are received.
No recourse shall be had for the payment of the principal of or interest on this bond against any incorporator or any past, present or future subscriber to the capital stock, shareholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, shareholders, officers and directors, as such, being released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage.
(END OF FORM)
AND WHEREAS each of the bonds of the New Series (whether in temporary or definitive form) is to bear a certificate of the Trustee substantially in the following form, to wit:
TRUSTEE’S AUTHENTICATION CERTIFICATE

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This bond is one of the bonds, of the series herein designated, described in the within-mentioned Mortgage.
Dated,                        THE BANK OF NEW YORK MELLON,  
Trustee

By: ________________________________
      Authorized Officer

AND WHEREAS, the Company, in the exercise of the powers and authorities conferred upon and reserved to it under and by virtue of the provisions of the Original Indenture, and pursuant to resolutions of its Board of Directors, has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture, in the form hereof, for the purposes herein provided; and
WHEREAS, the Company represents that all conditions and requirements necessary to make this supplemental indenture (hereinafter sometimes referred to as the “2018 Supplemental Indenture”) a valid, binding and legal instrument in accordance with its terms, have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That Atlantic City Electric Company, in consideration of the premises and the sum of One Dollar ($1.00) and other good and valuable consideration paid to it by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in order to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under and secured by the Original Indenture and this 2018 Supplemental Indenture, according to their tenor and effect, and the performance of all the provisions of the Original Indenture and this 2018 Supplemental Indenture (including any further indenture or indentures supplemental to the Original Indenture and any modification or alteration made as in the Original Indenture provided) and of said bonds, has granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, and by these presents doth grant, bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over and confirm unto The Bank of New York Mellon, as Trustee, and to its successor or successors in said trust, and to it and its and their assigns forever, all of the following described properties of the Company, that is to say: all property, real, personal and mixed, tangible and intangible, owned by the Company on the date of the execution hereof and acquired since the execution and delivery of the Indenture Supplemental to Mortgage and Deed of Trust, dated as of December 1, 2015 (except such property as is hereinafter expressly excepted from the lien and operation of this 2018 Supplemental Indenture).
The property covered by the lien of the Original Indenture and this 2018 Supplemental Indenture shall include particularly, among other property, without prejudice to the generality of the language hereinbefore or hereinafter contained, the property described on Exhibit A to this 2015 Supplemental Indenture which is annexed hereto and made a part hereof, and all property, whether real, personal or mixed (except any hereinafter expressly excepted), and wheresoever situated, now owned by the Company and acquired since the execution and delivery of the Indenture Supplemental to Mortgage and Deed of Trust, dated as of December 1, 2015, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing or of any general description contained in this 2018 Supplemental Indenture) all lands, rights of way and roads; all plants for the generation of electricity, power houses, steam heat plants, hot water plants, substations, transmission lines, distributing systems, bridges, culverts, tracks, rolling stock, vehicles, automobiles; all offices, buildings and structures, and the equipment thereof; all machinery, engines, boilers, turbines, dynamos, machines, regulators, meters, transformers, generators and motors; all appliances whether electrical or mechanical, conduits, cables and lines; all pipes, whether for water, steam heat, or other purposes; all mains and pipes, service pipes, fittings, valves and connections, poles, wires, tools, implements, apparatus, furniture, chattels, and choses in action; all municipal franchises and other franchises; all lines for the transmission and/or distribution of electric current, steam heat or water for any purpose, including towers, poles, wires, 

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cables, pipes, conduits and all apparatus for use in connection therewith; all real estate, lands, leases, leaseholds (excepting the last day of the term of each lease and leasehold); all contracts, whether heat, light, power or street lighting contracts; all easements, servitudes, licenses, permits, rights, powers, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same and (except as hereinafter expressly excepted) all the right, title, and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore described.
TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in any wise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Original Indenture) the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof.
Provided that, in addition to the reservations and exceptions herein elsewhere contained, the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the lien and operation of the Original Indenture and of this 2018 Supplemental Indenture, viz.: (1) cash, shares of stock and obligations (including bonds, notes and other securities) not hereafter specifically pledged, paid or deposited or delivered hereunder or under the Original Indenture or hereinafter or therein covenanted so to be; and (2) any goods, wares, merchandise, equipment, materials or supplies acquired for the purpose of sale or resale in the usual course of business or for consumption in the operation of any properties of the Company; materials, supplies and construction equipment; and all judgments, accounts and choses in action, the proceeds of which the Company is not obligated as provided in the Original Indenture or as hereinafter provided to deposit with the Trustee hereunder or thereunder; provided, however, that the property and rights expressly excepted from the lien and operation of the Original Indenture and this 2018 Supplemental Indenture in the above subdivision (2) shall (to the extent permitted by law) cease to be so excepted, in the event that the Trustee or a receiver or trustee shall enter upon and take possession of the mortgaged and pledged property in the manner provided in Article XII of the Original Indenture, by reason of the occurrence of a completed default, as defined in said Article XII.
TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over, or confirmed by the Company as aforesaid, or intended so to be unto the Trustee and its successors and assigns forever.
SUBJECT, HOWEVER, as to all property embraced herein to all of the reservations, exceptions, limitations and restrictions contained in the several deeds, leases, servitudes, franchises and contracts or other instruments through which the Company acquired and/or claims title to and/or enjoys the use of the aforesaid properties; and subject also to the encumbrances of the character defined in Section 6 of the Original Indenture as “excepted encumbrances”, insofar as the same may attach to any of the property embraced herein.
IN TRUST NEVERTHELESS, upon the terms and trusts in the Original Indenture and in this 2018 Supplemental Indenture set forth for the benefit and security of those who shall hold the bonds and coupons issued and to be issued hereunder and under the Original Indenture, or any of them, in accordance with the terms of the Original Indenture and of this 2018 Supplemental Indenture, without preference, priority or distinction as to lien of any of said bonds or coupons over any others thereof by reason of priority in the time of the issue or negotiation thereof, or otherwise howsoever, subject, however, to the conditions, provisions and covenants set forth in the Original Indenture and in this 2018 Supplemental Indenture.
AND THIS INDENTURE FURTHER WITNESSETH:
That in further consideration of the premises and for the considerations aforesaid, the Company, for itself and its successors and assigns, hereby covenants and agrees to and with the Trustee, and its successor or successors in such trust, as follows:

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Section 1.  (a)     The Company hereby creates a fifty-seventh series of bonds to be issued under and secured by the Original Indenture and this 2018 Supplemental Indenture, to be designated and to be distinguished from the bonds of all other series by the title “First Mortgage Bonds, 4.00% Series due October 15, 2028.”
(b)     The bonds of the New Series shall mature on October 15, 2028 and shall be issued in temporary or definitive form, only as fully registered bonds, without coupons, in denominations of $2,000 and any multiple or multiples of $1,000 authorized by the Company; they shall bear interest at the rate of 4.00 per centum per year, payable semiannually on April 15 and October 15 each year, commencing April 15, 2019; and the principal of, premium, if any, and interest on each said bond shall be payable at the office or agency of the Company, in the Borough of Manhattan, The City of New York, in lawful money of the United States of America. Interest shall be payable on the basis of a 360-day year consisting of twelve 30-day months. In the event that any interest payment date is not a business day, then payment of interest payable on such date will be made on the next succeeding day which is a business day with the same force and effect as if made on the interest payment date (and without any interest or other payment in respect of such delay). “Business day” means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in the Borough of Manhattan, The City of New York are generally authorized or required by law, regulation or executive order to remain closed. Interest on the bonds of the New Series payable prior to maturity shall be paid by check mailed to the address of the person or persons entitled thereto, as such address shall appear on the bond registration books maintained by the Trustee or by wire transfer to an account designated by the person entitled thereto. So long as the bonds of the New Series are registered in the name of The Depository Trust Company (“DTC”) or a nominee thereof, as discussed below, all payments of principal, premium, if any, and interest in respect of the bonds of the New Series shall be made in immediately available funds in accordance with DTC’s applicable procedures.
Subject to the preceding paragraph, the person in whose name any bond of the New Series is registered at the close of business on any record date (as hereinbelow defined) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such bond of the New Series upon any transfer or exchange thereof (including any exchange effected as an incident to a partial redemption thereof) subsequent to the record date and prior to such interest payment date, except that, if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then the registered holders of bonds of the New Series on such record date shall have no further right to or claim in respect of such defaulted interest as such registered holders on such record date, and the persons entitled to receive payment of any defaulted interest thereafter payable or paid on any bonds of the New Series shall be the registered holders of such bonds of the New Series on the date of payment of such defaulted interest; and except that interest payable at maturity will be paid to the person to whom principal is paid. The term “record date” as used in this Section 1, and in the form of the bonds of the New Series, shall mean the fifteenth calendar day of the month preceding the month in which an interest payment date occurs.
(c)     Except as provided in this Section 1, every bond of the New Series shall be dated as provided in Section 10 of the Original Indenture. However, so long as there is no existing default in the payment of interest on the bonds of the New Series, all bonds of the New Series authenticated by the Trustee between the record date for any interest payment date and such interest payment date shall be dated as of the day following such interest payment date and shall bear interest from such interest payment date; provided, however that if and to the extent that the Company shall default in the interest due on such interest payment date, then any such bond of the New Series shall bear interest from the interest payment date next preceding the date of such bond to which interest has been paid, unless such interest payment date is April 15, 2019, in which case from the date of original issuance of the bonds of the New Series.
(d)     All of the bonds of the New Series shall be redeemable as set forth in the form of bond of the New Series set forth in this 2018 Supplemental Indenture.
(e)     Registered bonds of the New Series shall be transferable upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, by the registered holders thereof, in person or by duly authorized attorney, in the manner and upon payment of the charges prescribed in the Original Indenture. In the manner and upon payment of the charges prescribed in the Original Indenture, registered bonds of the New Series may be exchanged for a like aggregate principal amount of registered bonds without 

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coupons of the New Series of other authenticated denominations, upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York. 
(f)    The bonds of the New Series initially shall be represented by one or more securities in registered, global form without interest coupons (a “Global Bond”). The Company initially appoints DTC to act as depositary with respect to the Global Bonds (together with any successor, the “Depositary”). The bonds of the New Series initially shall be registered in the name of Cede & Co. as nominee for DTC.
(g)    So long as the bonds of the New Series are held by the Depositary, such bonds of the New Series shall bear the following legend: 

“This bond is a Global Bond within the meaning of the Mortgage hereinafter referred to and is registered in the name of a Depositary or a nominee thereof. This bond may not be transferred to, or registered or exchanged for bonds registered in the name of, any Person other than the Depositary or a nominee thereof, and no such transfer may be registered, except in the limited circumstances described in the Mortgage. Every bond authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, this bond shall be a Global Bond that is subject to the foregoing, except in such limited circumstances.”
Any bonds of the New Series authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, any Global Bond shall also be a Global Bond and shall bear the legend specified in this Section 1(g), except for any bonds of the New Series authenticated and delivered in exchange for, or upon registration of transfer of, a Global Bond pursuant to Section 1(h). 
 
 (h)    Notwithstanding anything herein to the contrary, a Global Bond shall not be exchangeable for bonds of the New Series registered in the name of, and no transfer of a Global Bond may be registered to, any person other than the Depositary or its nominee, unless (i) such Depositary (A) notifies the Company that it is unwilling or unable to continue as Depositary for the bonds of the New Series or (B) ceases to be a “clearing agency” registered under the Securities Exchange Act of 1934, as amended, and the Company within 90 days after it receives such notice or becomes aware of such ineligibility does not appoint a successor Depositary, (ii) the Company executes and delivers to the Trustee a notice that the bonds of the New Series shall be so exchangeable and the transfer thereof so registerable, or (iii) there shall have occurred a completed default as in the Mortgage provided with respect to the bonds of the New Series evidenced by such Global Bond. Upon the occurrence in respect of the bonds of the New Series of any one or more of the conditions specified in clause (i), (ii) or (iii) of the preceding sentence, the Bonds of the New Series shall be exchangeable for bonds registered in the names of, and the transfer of such bond shall be registered to, the beneficial owners of the bonds of the New Series, or their designees, as the Depositary shall direct. Bonds of the New Series issued to beneficial owners, or their designees shall be substantially in the form set forth in this 2018 Supplemental Indenture, but shall not include the provision related to the Global Bonds. 
(i)    The Company and the Trustee may rely conclusively upon (a) a certificate of the Depositary as to the identity of a participant in the book-entry system; (b) a certificate of any participant as to the identity of any indirect participant and (c) a certificate of any participant or any indirect participant as to the identity of, and the respective principal amount of bonds of the New Series owned by, beneficial owners. 

SECTION 2.  In accordance with and in compliance with the provisions of Article VI of the Original Indenture, Three Hundred Fifty Million Dollars ($350,000,000) principal amount of bonds of the New Series may be executed by the Company and delivered to the Trustee, and shall be authenticated by the Trustee and delivered (without awaiting the filing or recording of this 2018 Supplemental Indenture) from time to time in accordance with the order or orders of the Company, evidenced by a writing or writings signed in the name of the Company by its President or one of its Vice Presidents and its Treasurer or one of its Assistant Treasurers.
SECTION 3.  The approval by the State of New Jersey Board of Public Utilities of the execution and delivery of this 2018 Supplemental Indenture shall not in any way be construed as approval by said Board of any other act, matter or thing which requires the approval of said Board under the laws of the State of New Jersey; nor shall said approval bind said Board or any other public body or authority of the State of New Jersey having jurisdiction in the 

- 9 -

premises in any future application for the issue of bonds under the Original Indenture or any indenture supplemental thereto or otherwise.
SECTION 4.  As supplemented by this 2018 Supplemental Indenture, the Original Indenture is in all respects ratified and confirmed and the Original Indenture and this 2018 Supplemental Indenture shall be read, taken and construed as one and the same instrument.
Nothing in this 2018 Supplemental Indenture contained shall, or shall be construed to, confer upon any person other than the holders of bonds issued under the Original Indenture and this 2018 Supplemental Indenture, the Company and the Trustee, any right to avail themselves of any benefit of any provision of the Original Indenture or of this 2018 Supplemental Indenture.
The Trustee assumes no responsibility for the correctness of the recitals of facts contained herein and makes no representations as to the validity of this 2018 Supplemental Indenture.
This 2018 Supplemental Indenture may be simultaneously executed in any number of counterparts, each of which so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument.
(Signature Pages Follow)

- 10 -

IN WITNESS WHEREOF, ATLANTIC CITY ELECTRIC COMPANY, party hereto of the first part, has caused this instrument to be signed in its name and behalf by its Senior Vice President, Chief Financial Officer and Treasurer, and its corporate seal to be hereunto affixed and attested by its Secretary, and THE BANK OF NEW YORK MELLON, party hereto of the second part, has caused this instrument to be signed in its name and behalf by a Vice President and its corporate seal to be hereunto affixed and attested by a Vice President. Executed and delivered by Atlantic City Electric Company in the City of Washington, D.C., the 9th day of October, 2018.

ATLANTIC CITY ELECTRIC COMPANY

(SEAL)
	
		
	By:
	       /s/    Phillip S. Barnett

	 
	Phillip S. Barnett

	 
	Senior Vice President, Chief Financial Officer and Treasurer

ATTEST:

	
		
	           /s/    Brian J. Buck
	 

	Brian J. Buck
	 

	Assistant Secretary
	 

Signed, sealed and delivered by ATLANTIC CITY ELECTRIC COMPANY in the presence of:
	
		
	 
	/s/    Lauren Wooley

COMPANY SIGNATURE PAGE

INDENTURE SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST, DATED AS OF OCTOBER 9, 2018
TO THE ATLANTIC CITY ELECTRIC COMPANY MORTGAGE AND DEED OF TRUST, DATED JANUARY 15, 1937

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THE BANK OF NEW YORK MELLON,
      as Trustee

(SEAL)
	
		
	By:
	           /s/    Laurence J. O’Brien

	 
	Name:  Laurence J. O’Brien

	 
	Title:    Vice President

ATTEST:

	
		
	           /s/    Latoya S. Elvin
	 

	Name:  Latoya S. Elvin
	 

	Title:    Vice President
	 

Signed, sealed and delivered by THE BANK OF NEW YORK MELLON in the presence of:
	
		
	 
	/s/   John D. Bowman

	 
	John D. Bowman

	
		
	 
	/s/   Filippo Triolo

	 
	Filippo Triolo

TRUSTEE SIGNATURE PAGE

INDENTURE SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST, DATED AS OF OCTOBER 9, 2018
TO THE ATLANTIC CITY ELECTRIC COMPANY MORTGAGE AND DEED OF TRUST, DATED JANUARY 15, 1937

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DISTRICT OF COLUMBIA: SS.

BE IT REMEMBERED that on this 9th day of October, in the year of our Lord two thousand eighteen before me, a Notary Public in and for the District aforesaid, personally appeared Brian J. Buck, who being by me duly sworn on his oath says that he is Assistant Secretary of Atlantic City Electric Company, the grantor in the foregoing Indenture Supplemental to Mortgage and Deed of Trust, and that Phillip S. Barnett is the Senior Vice President, Chief Financial Officer and Treasurer; that deponent knows the common or corporate seal of said grantor, and the seal annexed to the said Indenture Supplemental to Mortgage and Deed of Trust is such common or corporate seal; that the said Indenture Supplemental to Mortgage and Deed of Trust was signed by the said Senior Vice President, Chief Financial Officer, and Treasurer and the seal of said grantor affixed thereto in the presence of deponent; that said Indenture Supplemental to Mortgage and Deed of Trust was signed, sealed and delivered as and for the voluntary act and deed of said grantor for the uses and purposes therein expressed, pursuant to a resolution of the Board of Directors of said grantor; and at the execution thereof this deponent subscribed her name thereto as witness.

Sworn and subscribed the day and year aforesaid.

	
		
	 
	/s/    Denise J. Wajcek

	 
	NOTARY PUBLIC OF THE DISTRICT OF COLUMBIA

	 
	My Commission Expires     1/14/2023                

( SEAL )

- 13 -

STATE OF NEW JERSEY )
                                             )SS.
COUNTY OF PASSAIC     )

BE IT REMEMBERED that on this 9th day of October, in the year of our Lord two thousand eighteen before me, a Notary Public in and for the State aforesaid, personally appeared Laurence J. O’Brien, who being by me duly sworn on his oath says that he is an authorized Vice President of THE BANK OF NEW YORK MELLON, the Trustee named in the foregoing Indenture Supplemental to Mortgage and Deed of Trust, and that Latoya S. Elvin is a Vice President; that deponent knows the common or corporate seal of said Trustee, and that the seal annexed to the said Indenture Supplemental to Mortgage and Deed of Trust is such common or corporate seal; that the said Indenture Supplemental to Mortgage and Deed of Trust was signed by the said Vice President and the seal of said Trustee affixed thereto in the presence of deponent; that said Indenture Supplemental to Mortgage and Deed of Trust was signed, sealed and delivered as and for the voluntary act and deed of said Trustee for the uses and purposes therein expressed, pursuant to authority of the Board of Directors of said Trustee; and at the execution thereof this deponent subscribed his name thereto as witness.

Sworn and subscribed the day and year aforesaid.

	
		
	 
	/s/     Rick J. Fierro

	 
	Rick J. Fierro

	 
	Notary Public

	 
	State of New Jersey

	 
	My Commission Expires Nov 24, 2019

( SEAL )

- 14 -

CERTIFICATE OF RESIDENCE
THE BANK OF NEW YORK MELLON, Mortgagee and Trustee within named, hereby certifies that its precise residence is 240 Greenwich Street, in the Borough of Manhattan, in The City of New York, in the State of New York.

THE BANK OF NEW YORK MELLON, as Trustee

	
		
	By:
	/s/    Laurence J. O’Brien

	 
	Name:  Laurence J. O’Brien

	 
	Title:    Vice President

- 15 -Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

This Employment Agreement,
dated as of October 15, 2018 (this “Agreement”), is by and between OTELCO INC., a Delaware corporation (“Otelco”
or the “Company”), and RICHARD CLARK (the “Employee”).

 

WHEREAS, the
Company and the Employee desire to enter into this Agreement.

 

NOW THEREFORE,
in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

Section
1.      Effective
Date.

 

This Agreement shall
become effective on October 15, 2018 (the “Effective Date”).

 

Section
2.      Employment
Period.

 

Subject to Section
4, the Company hereby agrees to employ the Employee, and the Employee hereby agrees to be employed by the Company, in accordance
with the terms and provisions of this Agreement, for the period from the Effective Date through the Termination Date (the “Employment
Period”).

 

Section
3.      Terms
of Employment.

 

(a)  
Duties and Position. During the Employment Period, the Employee shall serve as the Chief Operating Officer of the
Company. As such, the Employee shall have duties and responsibilities commensurate with such position and such other duties and
responsibilities as may from time to time be assigned to or vested in the Employee by the Company’s board of directors (the
 “Board”) or the Company’s Chief Executive Officer. The Employee shall report to the Company’s Chief
Executive Officer.

 

(b)  
Full Time. During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee
may be entitled, the Employee agrees to devote his full business time and efforts, to the best of his ability, experience and talent,
to the business and affairs of the Company. During the Employment Period, it shall not be a violation of this Agreement for the
Employee to serve on corporate, civic or charitable boards or committees or manage personal investments (including serving as a
member of boards of directors or similar bodies of entities not engaged in competition with the Company (as determined by the Board
in its reasonable discretion)), in each case, so long as such activities do not interfere with the performance of the Employee’s
responsibilities as an employee of the Company in accordance with this Agreement.

 

(c)  
Compensation.

 

(i)            
Base Salary. During the Employment Period, the Employee shall receive an annual base salary of $275,000, subject
to increase by the Company (as so increased, the “Annual Base Salary”). The Annual Base Salary shall be paid
in accordance with the customary payroll practices of the Company, subject to withholding and other payroll taxes.

 

     

     

    

 

(ii)             
Bonus. In fiscal year 2019 and each fiscal year during the Employment Period thereafter, the Employee shall be eligible
for a discretionary incentive bonus of up to 45% of the Annual Base Salary (the “Bonus”). The Bonus shall be
based upon the Company achieving operating and/or financial goals to be established by the Board or any duly appointed committee
thereof in good faith, in its sole discretion. The Bonus will be paid either in cash, Class A common stock, par value $0.01 per
share, of the Company (“Stock”) or a combination of cash and Stock, as determined by the Board and the Company’s
Chief Executive Officer; provided, however, that at least 33% of any Bonus earned will be paid in cash. For the Company’s
2018 fiscal year, the Company shall pay the Employee a guaranteed minimum Bonus, in cash, in 2019, in an amount equal to $26,106.
Any Bonus paid pursuant to this Section 3(c)(ii) shall be subject to withholding and other payroll taxes and will be paid
at a time and in a manner consistent with the Company’s payment of bonus compensation to the Company’s executives,
generally.

 

(iii)           
Equity Participation. Upon the Effective Date, the Employee shall receive options to purchase 50,000 shares of Stock,
subject to the terms and conditions of the 2018 Stock Incentive Plan of the Company, which will vest in equal annual installments
over a five-year period following the Effective Date. In the event that the Employee is named the Chief Executive Officer of the
Company, the Employee shall receive upon his appointment to such position options to purchase an additional 50,000 shares of Stock,
subject to the terms and conditions of the 2018 Stock Incentive Plan of the Company, which will vest in equal annual installments
over a five-year period thereafter.

 

(iv)          
Benefits. During the Employment Period, the Employee shall be eligible to participate in all employee benefit plans or
programs offered generally to other executives of the Company, to the extent that the Employee’s position, tenure, salary,
health and other qualifications make the Employee eligible to participate. Without limiting the foregoing, the Employee shall
be eligible to participate in any incentive, savings and retirement plans, and any group life, health, dental or accident insurance
or any such other plan or policy that may be in effect or that may hereafter be adopted by the Company for the benefit of its
employees generally. The Employee’s participation in such benefits shall be subject to the terms of the applicable plans,
as the same may be amended from time to time. The Company does not guarantee the adoption or continuance of any particular employee
benefit during the Employee’s employment, and nothing in this Agreement is intended to, or shall in any way restrict the
right of the Company to, amend, modify or terminate any of its benefits.

 

(v)           
Automobile. During the Employment Period, the Company shall provide the Employee with the use of a Company automobile
(or, at the Company’s option, shall lease an automobile for the Employee’s use) and shall reimburse the Employee for
all reasonable expenses incurred by the Employee in connection with the use and maintenance of such automobile.

 

    2 

     

    

 

(vi)          
Expenses. The Employee shall be entitled to receive reimbursement for all reasonable expenses incurred by the Employee
during the Employment Period in connection with the performance of his duties hereunder, in accordance with the policies, practices
and procedures of the Company as in effect from time to time.

 

(vii)         
Vacation and Holidays. During the Employment Period, the Employee shall be entitled to paid holidays and up to five
weeks’ vacation per year, in each case, in accordance with the policies of the Company generally applicable to other executives
of the Company.

 

Section
4.      Termination
of Employment.

 

(a)  
Death or Disability. The Employee’s employment shall terminate automatically upon the Employee’s death.
If the Company intends to terminate the Employee’s employment due to Disability, the Company shall give to the Employee written
notice of its intention to terminate the Employee’s employment. In such event, the Employee’s employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the Employee if, within the 30 days after such receipt,
the Employee shall not have returned to full-time performance of the Employee’s duties. For purposes of this Agreement, “Disability”
shall mean the Employee’s inability to perform the essential functions of his position, with or without accommodation, for
any 90 days during a period of 180 consecutive days due to mental or physical incapacity as determined by a physician selected
by the Company or its insurers.

 

(b)  
Termination by the Employee. The Employee may terminate his employment with the Company at any time, without prior
written notice (other than a Notice of Termination (as defined below)), for Good Reason or Without Good Reason. “Good
Reason” shall mean that any of the following shall have occurred: (i) the Company relocates its corporate headquarters
and asks the Employee to relocate to an area greater than 35 miles from the location of the Company’s corporate headquarters
as of the date hereof; or (ii) the Employee has not become the Company’s Chief Executive Officer by January 1, 2020 (or such
other date that is mutually agreed in writing between the Company and the Employee). “Without Good Reason” shall
mean a termination by the Employee of his employment during the Employment Period for any reason other than a termination based
upon Good Reason.

 

(c)  
Termination by the Company. The Company may terminate the Employee’s employment with the Company at any time,
for Cause or Without Cause. “Cause” will mean that any of the following will have occurred: (i) the Employee
has failed to competently perform his duties and responsibilities; (ii) the Employee has violated any of the rules, policies, regulations,
guidelines, directions or restrictions of the Company; (iii) the Employee has breached his other duties or obligations to the Company
and has not cured or remedied such breach to the Company’s satisfaction within 10 days after the Employee receives written
notice from the Company of such breach; (iv) the Employee has engaged in any theft, embezzlement or misappropriation of the Company’s
property; or (v) the Employee has breached the terms of this Agreement. “Without Cause” shall mean a termination
by the Company of the Employee’s employment during the Employment Period for any reason other than a termination based upon
Cause, death or Disability.

 

    3 

     

    

 

(d)  
Notice of Termination. Any termination by the Company for Cause or Without Cause or by the Employee for Good Reason
or Without Good Reason shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement,
a “Notice of Termination” means a written notice which (i) indicates the specific termination provision(s) in
this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee’s employment under the provision(s) so indicated and (iii) if the date
of termination is other than the date of receipt of such notice, specifies the termination date (the “Termination Date”).

 

(e)  
Separation from Service. The term “termination” or “termination of employment” when used
in this Agreement shall mean a “Separation from Service” as such term is defined using the default rules in
Treasury Regulation Section 1.409A-1(h).

 

Section
5.      Obligations
of the Company upon Termination.

 

(a)  
Without Cause; Death or Disability; by the Employee for Good Reason. If, during the Employment Period, the Company
terminates the Employee’s employment Without Cause or due to death or Disability, or if the Employee terminates his employment
with the Company for Good Reason, then the Company will provide the Employee with the following severance payments and/or benefits:

 

(i)             The Company shall pay to the Employee a lump sum in the amount of the Employee’s accrued but unpaid Annual Base Salary
through the Termination Date (“Accrued Obligations”);

 

(ii)           
To the extent the Employee and, if applicable, members of his family participate in any medical, prescription drug, dental,
vision or other “group health plan” of the Company immediately prior to the Termination Date, the Company shall pay
to the Employee a lump sum in the amount equal to the premium cost to the Employee of continued coverage for the Employee and,
if applicable, members of his family that would be incurred for continuation coverage under such plans in accordance with Section
4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title 1 of the Employee Retirement Income Security Act of
1974, as amended, through the end of the fiscal year in which the Termination Date occurs;

 

(iii)          
The Company shall pay to the Employee a lump sum in a gross amount equal to his Annual Base Salary within six (6) months
following termination but not later than March 14 of the calendar year following termination; and

 

(iv)         
The Company shall pay to the Employee a lump sum amount equal to the Bonus the Employee would have received had he remained
employed by the Company through the end of the fiscal year in which the termination occurred, pro rated for the number of days
the Employee was employed by the Company during such fiscal year, to be paid at the same time that similar bonuses are paid to
the Company’s other employees.

 

(b)  
Cause; by the Employee Without Good Reason. If the Employee’s employment shall be terminated by the Company
for Cause or by the Employee Without Good Reason, then the Company shall have no further payment obligations to the Employee (or
his heirs or legal representatives) other than for (i) payment of Accrued Obligations and (ii) the continuance of the Employee’s
and, if applicable, members of his family’s participation in the Company’s welfare and benefit plans through the Termination
Date.

 

    4 

     

    

 

(c)  
Condition; Release. The Employee acknowledges and agrees that the Company’s obligations to make payments under
Section 5(a) will be conditioned on the Employee executing and delivering a customary general release in form and substance
reasonably satisfactory to the Company. The Company shall provide to the Employee a form of release of claims no later than three
days following the Employee’s date of Separation from Service. The Employee must execute and deliver the release of claims
within 20 days after the Employee’s date of Separation from Service. If the Employee does not timely execute and deliver
to the Company such release, or if the Employee does so, but then revokes it if permitted by and within the time required by applicable
law, the Company will have no obligation to pay severance compensation to the Employee.

 

(d)  
Delay for Specified Employees. If the Employee is a “Specified Employee”
within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and determined
pursuant to procedures adopted by the Company at the time of the Employee’s Separation from Service and any amount that would
be paid to the Employee during the six-month period following Separation from Service constitutes deferred compensation (within
the meaning of Section 409A), such amount shall not be paid to the Employee until six months following the Employee’s Separation
from Service. On the first regular payroll date following the expiration of such six-month period (or if the Employee dies
during the six-month period, the first payroll date following death), all payments that were delayed pursuant to the preceding
sentence shall be paid to the Employee in a single lump sum and thereafter all payments shall be made as if there had been no such
delay. In addition, if the Employee becomes entitled to severance compensation, such payments shall be considered, and are
hereby designated as, a series of separate payments for purposes of Section 409A. Further, all severance compensation payable
under this Agreement shall be paid by, and no further severance compensation shall be paid or payable after, December 31 of the
second calendar year following the year in which the Employee’s Separation from Service occurs.

 

(e)  
Section 409A Compliance. To the extent applicable, it is intended that
the compensation arrangements under this Agreement be in full compliance with Section 409A. This Agreement shall be construed
in a manner to give effect to such intention. In no event whatsoever shall the Company or any of its Affiliates be liable
for any tax, interest or penalties that may be imposed on the Employee under Section 409A. Neither the Company nor any of
its Affiliates have any obligation to indemnify or otherwise hold the Employee harmless from any or all such taxes, interest or
penalties, or liability for any damages related thereto.

 

Section
6.      Nondisclosure
and Nonuse of Confidential Information.

 

(a)  
The Employee shall not disclose or use at any time, either during the Employment Period or thereafter, any Confidential
Information (as hereinafter defined) of which the Employee is or becomes aware as a consequence of or in connection with his employment
with the Company, whether or not such information is developed by him, except (i) to the extent that such disclosure or use is
in furtherance of the Employee’s performance in good faith of his duties as the Company’s Chief Operating Officer,
or (ii) to the extent required by law or legal process; provided that (A) the Employee agrees to provide the Company with
prompt written notice of any such law or legal process and to assist the Company, at the Company’s expense, in asserting
any legal challenges to or appeals of such law or legal process that the Company in its sole discretion pursues, and (B) in complying
with any such law or legal process, the Employee shall limit his disclosure only to the Confidential Information that is expressly
required to be disclosed by such law or legal process. The Employee will take all commercially reasonable steps to safeguard Confidential
Information and to protect it against disclosure, misuse, espionage, loss and theft. The Employee shall deliver to the Company
on the Termination Date, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes
and software and other documents and data (and copies thereof) relating to the Confidential Information or the Work Product (as
hereinafter defined) of the Company which the Employee may then possess or have under his control.

 

    5 

     

    

 

(b)  
The Employee agrees that all Work Product belongs in all instances to the Company. The Employee will promptly disclose such
Work Product to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period)
to establish and confirm the Company’s ownership of the Work Product (including, without limitation, the execution and delivery
of assignments, consents, powers of attorney and other instruments) and to provide reasonable assistance to the Company (whether
during or after the Employment Period), at the Company’s sole expense, in connection with the prosecution of any applications
for patents, trademarks, trade names, service marks or reissues thereof or in the prosecution or defense of interferences relating
to any Work Product. The Employee recognizes and agrees that the Work Product, to the extent copyrightable, constitutes works for
hire under the copyright laws of the United States.

 

(c)  
“Confidential Information” means information that is not generally known to the public and that is used,
developed or obtained by the Company or its Affiliates in connection with their business, including, but not limited to, information,
observations and data obtained by the Employee while employed by the Company or any predecessors thereof (including those obtained
prior to the date of this Agreement) concerning (i) the business or affairs of Otelco or its Affiliates and (ii) products, services,
fees, costs, pricing structures, analyses, drawings, photographs and reports, computer software (including operating systems, applications
and program listings), data bases, accounting and business methods, inventions, devices, new developments, methods and processes
(whether patentable or unpatentable and whether or not reduced to practice), customers and clients and customer and client lists,
all technology and trade secrets, and all similar and related information in whatever form. Confidential Information will not include
any information that (A) is or becomes generally available to the public other than through disclosure by the Employee in violation
of this Section 6, (B) was provided to the Employee prior to the date hereof on a non-confidential basis from a Person who
was not otherwise bound by a confidentiality agreement or duty to Otelco or its Affiliates or (C) becomes available to the Employee
on a non-confidential basis from a Person who is not otherwise bound by a confidentiality agreement with or duty to Otelco or its
Affiliates or is not otherwise prohibited from transmitting the information to the Employee.

 

(d)  
“Work Product” means all inventions, innovations, improvements, technical information, systems, software
developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, trade dress, logos and all
similar or related information (whether patentable or unpatentable) which relates to the Company’s or any of its Affiliate’s
actual or anticipated business, research and development or existing or future products or services and which are conceived, developed
or made by the Employee (whether or not during usual business hours and whether or not alone or in conjunction with any other Person)
during the Employment Period together with all patent applications, letters patent, trademark, trade name and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

 

    6 

     

    

 

(e)    Notwithstanding any other provision of this Agreement, the Company hereby notifies the Employee, pursuant to the Defend
Trade Secrets Act, that he will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure
of a trade secret that: (i) is made (x) in confidence to a federal, state or local government official, either directly or indirectly,
or to an attorney; and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in
a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Company further notifies the Employee
that if he files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Employee may disclose
the Company’s trade secrets to his attorney and use the trade secret information in the court proceeding if he: (i) files
any document containing the trade secret under seal; and (ii) does not disclose the trade secret, except pursuant to court order.
The Employee further understands that certain whistleblower laws permit him to communicate directly with governmental or regulatory
authorities about possible violations of law. The Employee acknowledges that he is not required to seek the Company’s permission
or notify the Company of any communications made in compliance with applicable whistleblower laws, and that the Company will not
consider such communications to violate this Agreement or any prior agreements between the Employee and the Company.

 

Section
7.      Non-Compete
and Non-Solicit.

 

(a)  
The Employee acknowledges that, in the course of the Employee’s employment with the Company, the Employee has become
familiar, or will become familiar, with Otelco’s and its Affiliates’ trade secrets and with other Confidential Information
concerning Otelco and its Affiliates and that his services have been and will be of special, unique and extraordinary value to
Otelco and its Affiliates. Therefore, the Employee agrees that, during the Employment Period and for 12 months thereafter (the
 “Restricted Period”), the Employee shall not directly or indirectly (i) engage, within the Restricted Territory,
in any telephone or communications business, including, but not limited to, incumbent local exchange carrier, competitive local
exchange carrier, broadband, long distance telephone business, cable television, Internet access, wireless or other business that
Otelco or any of its Affiliates is engaged in during the Employee’s employment by the Company (the “Company Business”),
(ii) compete or participate as agent, employee, consultant, advisor, representative or otherwise in any enterprise engaged in a
business which has any operations engaged in the Company Business within the Restricted Territory or (iii) compete or participate
as a stockholder, partner, member or joint venturer, or have any direct or indirect financial interest, in any enterprise which
has any material operations engaged in the Company Business within the Restricted Territory; provided, however, that
nothing contained herein will prohibit the Employee from (A) owning, operating or managing any business, or acting upon any business
opportunity, after obtaining approval of a majority of the Board or (B) owning no more than five percent (5%) of the equity of
any publicly traded entity with respect to which the Employee does not serve as an officer, director, employee, consultant or in
any other capacity other than as an investor. The term “Restricted Territory” means all states within the United
States in which Otelco or any of its Affiliates conducts or is pursuing or analyzing plans to conduct Company Business as of the
Termination Date.

 

    7 

     

    

 

(b)  
As a means reasonably designed to protect Confidential Information and the Company’s good will, the Employee agrees
that, during the period commencing on the Effective Date and ending on the expiration of the Restricted Period, the Employee will
not (i) solicit or make any other contact with, directly or indirectly, any customer of Otelco or any of its Affiliates as of the
date that the Employee ceases to be employed by the Company with respect to the provision of any service to any such customer that
is the same or substantially similar to any service provided to such customer by Otelco or any of its Affiliates or (ii) solicit
or make any other contact with, directly or indirectly, any employee of Otelco or any of its Affiliates on the date that the Employee
ceases to be employed by the Company (or any Person who was employed by Otelco or any of its Affiliates at any time during the
three-month period prior to the Termination Date) with respect to any employment, services or other business relationship.

 

Section
8.      Remedies.

 

The Employee acknowledges
that irreparable damage to the Company would occur in the event of a breach of the provisions of Section 6 or Section
7 by the Employee. Therefore, the Employee agrees that, in addition to any other remedy to which it is entitled at law or in
equity, the Company shall have the right to enforce the provisions of Sections 6 and 7 by applying for and obtaining
temporary and permanent restraining orders or injunctions from a court of competent jurisdiction, without the necessity of filing
a bond, in order to prevent breaches of such Sections of this Agreement and to enforce specifically the terms and provisions thereof.

 

Section
9.      Definitions.

 

“Accrued
Obligations” has the meaning set forth in Section 5(a)(i).

 

“Affiliate”
means, with respect to any Person, any other Person that is controlled by, controlling or under common control with, such Person.
Notwithstanding anything to the contrary contained herein, with respect to Otelco, the term “Affiliate” will include,
without limitation, each Person with an ownership interest in Otelco (and each member, stockholder or partner of each such Person)
and each Person in which any stockholder of Otelco (and each member, stockholder or partner of each such Person) holds or has the
right to acquire, collectively, more than 10% of the voting equity interests.

 

“Agreement”
has the meaning set forth in the Caption.

 

“Annual Base
Salary” has the meaning set forth in Section 3(c)(i).

 

“Board”
has the meaning set forth in Section 3(a).

 

“Bonus”
has the meaning set forth in Section 3(c)(ii).

 

“Business
Day” means any day that is not a Saturday, Sunday, legal holiday or other day on which banks are required to be closed
in New York, New York.

 

    8 

     

    

 

“Cause”
has the meaning set forth in Section 4(c).

 

“Company”
has the meaning set forth in the Caption.

 

“Company
Business” has the meaning set forth in Section 7(a).

 

“Confidential
Information” has the meaning set forth in Section 6(c).

 

“Disability”
has the meaning set forth in Section 4(a).

 

“Effective
Date” has the meaning set forth in Section 1.

 

“Employee”
has the meaning set forth in the Caption.

 

“Employment
Period” has the meaning set forth in Section 2.

 

“Good Reason”
has the meaning set forth in Section 4(b).

 

“Otelco”
has the meaning set forth in the Caption.

 

“Notice of
Termination” has the meaning set forth in Section 4(d).

 

“Person”
means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government
or agency or political subdivision thereof.

 

“Restricted
Period” has the meaning set forth in Section 7(a).

 

“Restricted
Territory” has the meaning set forth in Section 7(a).

 

“Section
409A” has the meaning set forth in Section 5(d).

 

“Separation
from Service” has the meaning set forth in Section 4(e).

 

“Stock”
has the meaning set forth in Section 3(c)(iii).

 

“Termination
Date” has the meaning set forth in Section 4(d).

 

“Without
Cause” has the meaning set forth in Section 4(c).

 

“Without
Good Reason” has the meaning set forth in Section 4(b).

 

“Work Product”
has the meaning set forth in Section 6(d).

 

Section
10.  General Provisions.

 

(a)  
Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced
to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable
in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

    9 

     

    

 

(b)  
Entire Agreement. This Agreement embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof. This Agreement supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

(c)  
Survival. Notwithstanding anything to the contrary contained herein, the provisions of Section 6, Section
7 and Section 8 shall survive the termination of this Agreement.

 

(d)  
Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original
and all of which taken together constitute one and the same agreement.

 

(e)  
Successors and Assigns; Beneficiaries. This Agreement is personal to the Employee and without the prior written consent
of the Company shall not be assignable by the Employee other than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee’s heirs and legal representatives and the successors and
assigns of the Company. The Company reserves the right to assign this Agreement in whole or in part to any of its Affiliates and
upon any such assignment, the term “Company” will be deemed to be such Affiliate.

 

(f)   
Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING,
THE INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH
JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY.

 

(g)  
Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER
HEREOF.

 

(h)  
Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent
of the Employee and the Company and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall
be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision
hereof.

 

    10 

     

    

 

(i)    
Notices. All notices, requests, demands, claims, consents and other communications which are required or otherwise
delivered hereunder shall be in writing and shall be deemed to have been duly given if (i) personally delivered or transmitted
by electronic mail, (ii) sent by nationally recognized overnight courier, (iii) mailed by registered or certified mail with postage
prepaid, return receipt requested, or (iv) transmitted by facsimile (with a copy of such transmission concurrently transmitted
by registered or certified mail with postage prepaid, return receipt requested), to the parties hereto at the following addresses
(or at such other address for a party as shall be specified by like notice):

 

If to the Board or the
Company, to:

 

Otelco Inc.

56 Campus Drive

New Gloucester, Maine 04260

Attention: Robert J. Souza

Telephone No: (207) 688-8241

Facsimile No: (207) 688-8833

Electronic Mail: rob.souza@otelco.com

 

with a copy to:

 

Dorsey & Whitney LLP

51 West 52nd Street

New York, New York 10019

Attention: Steven Khadavi, Esq.

Telephone No: (212) 415-9376

Facsimile No: (646) 390-6549

Electronic Mail: khadavi.steven@dorsey.com

 

If to the Employee to:

 

Richard Clark

45 Fiddlehead Lane

Freeport, Maine 04032

Telephone No: (540) 520-4481

Electronic Mail: rclarkme@gmail.com

or to such other address as the party to
whom such notice or other communication is to be given may have furnished to each other party in writing in accordance herewith.
Any such notice or communication shall be deemed to have been received (i) when delivered, if personally delivered or transmitted
by electronic mail, with receipt acknowledgment by the recipient by return electronic mail, (ii) when sent, if sent by facsimile
on a Business Day during normal business hours (or, if not sent on a Business Day during normal business hours, on the next Business
Day after the date sent by facsimile), (iii) on the next Business Day after dispatch, if sent by nationally recognized, overnight
courier guaranteeing next Business Day delivery and (iv) on the fifth Business Day following the date on which the piece of mail
containing such communication is posted, if sent by mail.

 

    11 

     

    

 

(j)    
Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute
a part of this Agreement.

 

(k)  
Construction. Where specific language is used to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.
The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and
no rule of strict construction shall be applied against any party.

 

(l)   
Nouns and Pronouns. Whenever the context may require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice-versa.

 

[Signature page follows]

 

 

    12 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Employment Agreement as of the date first written above.

 

	 	OTELCO inc.
	 	 
	 	 
	 	 
	 	By:	
        /s/ Robert J. Souza

	 	 	
        Name:Robert J. Souza

        Title:Chief Executive Officer

	 	 	 
	 	 	 
	 	employee
	 	 
	 	 
	 	 
	 	 	
        /s/ Richard Clark

	 	 	Richard Clark

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