Document:

Blueprint

  Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is dated as of the 15th day of May, 2019,
by and between Rekor Systems, Inc. (the “Company”), a
Delaware corporation, and Riaz Latifullah (the
“Executive”). The Executive is presently the Executive
Vice President of Corporate Development and Principal Financial and
Accounting Officer. This Agreement supersedes the Executive’s
current employment agreement, which expires on December 22,
2019.

 

WITNESSETH THAT:

 

The
Company desires to employ the Executive, and the Executive wishes
to accept such employment with the Company, upon the terms and
conditions set forth in this Agreement.

 

NOW THEREFORE, in consideration of the
mutual promises and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:

 

1.
Employment and Effective
Date.

 

a) The
Effective Date of this Agreement (the “Effective Date”)
is the date of execution and delivery by the Company and the
Executive.

 

b) The
Executive’s title as of the Effective Date shall be Executive
Vice President of Corporate Development of the Company. The
Executive shall report to the Company’s President and Chief
Executive Officer (the “CEO”). The position is
considered “exempt” and the Executive is not entitled
to overtime pay. The Executive hereby accepts such employment by
the Company on the terms and conditions hereinafter set
forth.

 

c)
The Executive’s employment
hereunder shall be effective as of the Effective Date of this
Agreement and shall continue until April 7, 2022, unless terminated
earlier pursuant to Section 8 of this Agreement; provided that, on
April 7, 2022 and each annual anniversary thereafter (such date and
each annual anniversary thereof, a “Renewal Date”), the
Agreement shall be deemed to be automatically extended, upon the
same terms and conditions, for successive periods of one year,
unless either party provides written notice of its intention not to
extend the term of the Agreement at least ninety (90) days prior to
the applicable Renewal Date. The period during which the Executive
is employed by the Company hereunder is hereinafter referred to as
the “Employment Term.”

 

2.
Compensation.

 

a) In
salary compensation for the Executive’s employment, the
Company shall pay the Executive a base salary at an annualized rate
of $305,000 (the “Base Salary”) in installments payable
in accordance with the Company’s customary payroll practices
and the law. The Executive shall be eligible for potential
discretionary increases to base salary on a regular
basis.

 

 

1

 

 

b) The
executive shall be considered for periodic performance bonuses as
determined by the Board in its sole discretion. The Executive
understands that nothing herein should be interpreted as a
guarantee of any discretionary performance bonus or pro-rata bonus
upon termination of employment.

 

c) The
Executive shall be granted stock options (the
“Options”) to purchase shares of common stock of the
Company pursuant to the terms of the Company’s most Equity
Award Plan. The Options will allow the Executive to purchase 20,000
shares of common stock of the Company with an exercise price per
share equal to the closing price of the stock on May 8,
2019.

 

3.
Duties. The
Executive shall have such executive-level duties as are assigned or
delegated to him by the CEO, consistent with his then-current
title. As of the Effective Date, the Executive’s title shall
be as indicated above. The Executive recognizes, however, that this
title can change, as can the executive duties associated therewith.
The Executive shall devote substantially all his working time and
attention to the business of the Company, and shall cooperate fully
in the advancement of the best interests of the Company. Subject to
approval from the Company in writing in advance, the Executive,
during the term of this Agreement or any extensions or renewals
thereof agrees not to engage in any activities outside of the scope
of the Executive’s employment that would detract from, or
interfere with, the fulfillment of his responsibilities or duties
under this Agreement.

 

4.
Expenses. Subject
to Section 8 and subject to compliance by the Executive with such
policies regarding expenses and expense reimbursement as may be
adopted from time to time by the Company, the Executive is
authorized to incur reasonable expenses in the performance of his
duties hereunder in furtherance of the business and affairs of the
Company, provided that the Company will reimburse the Executive for
all such reasonable expenses upon the presentation by the Executive
of an itemized account satisfactory to the Company in
substantiation of such expenses when claiming
reimbursement.

 

5.
Employee Benefits;
Vacations. As of the first day of the month following the
first full month of employment, the Executive shall be eligible to
participate in such 401 (K), medical and other employee benefit
plans of the Company that may be in effect or modified from time to
time, to the extent eligible under the terms of those plans, on the
same basis as other similarly situated executive officers of the
Company. The Executive shall be entitled to paid vacation in
accordance with the policies of the Company in effect from time to
time, as determined by the Board.

 

6.
Indemnification and
Liability Insurance. 

 

a) The Executive shall be indemnified
and held harmless consistent with the provisions of the by-laws of
the Company in effect at that time but in no event shall the
Executive receive diminished rights or rights less than those
rights provided by applicable law.

 

b)
During the Employment Term and for a period of three (3) years
thereafter, the Company shall purchase and maintain, at its own
expense, directors’ and officers’ liability insurance
providing coverage to the Executive on terms that are no less
favorable than the coverage provided to other directors and
similarly situated executives of the Company.

 

 

2

 

 

7.
Taxation of Payments and
Benefits. The Company shall make deductions, withholdings
and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith
believes that it is required to make such deductions, withholdings
and tax reports. Payments under this Agreement shall be in amounts
net of any such deductions or withholdings. Nothing in this
Agreement shall be construed to require the Company to make any
payments to compensate the Executive for any adverse tax effect
associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.

 

8.
Termination. Either
the Executive or the Company may terminate the employment
relationship at any time, with or without Cause (as such term is
defined in Section 12) on advance notice as provided herein or
with immediate effect if the termination is for Cause. The
Executive agrees to give the Company at least fourteen
(14) days prior written notice if he decides to terminate his
employment. Except in the case of a termination for Cause, the
Company agrees that it will provide identical notice. Upon
termination of the Executive’s employment for any reason, the
Executive will be entitled to any earned but unpaid Base Salary,
any bonus approved prior to termination, reimbursement for unreimbursed expenses properly
incurred by the Executive prior the termination, his vested stock
grants and stock options. In addition, if terminated for reasons
other than Cause or if the Executive resigns for Good Reason, the
executive shall be entitled to such employee benefits, if any, to
which the Executive may be entitled under the Company’s
employee benefit plan(s) as of the termination.
Additionally:

 

a) In
the event the Executive dies during the term of this Agreement,
Executive’s employment hereunder shall automatically
terminate as of the date of death.

 

b) In
the event the Executive becomes totally disabled during the term of
this Agreement, this Agreement may be terminated by the Company as
of the date of total disability in its sole discretion. For
purposes of this Agreement, the Executive shall be deemed totally
disabled if the Executive becomes so physically or mentally
disabled as to be incapable, even with a reasonable accommodation
by the Company to the extent required by applicable law, of
performing the Executive’s duties for a period of ninety (90)
days in any twelve (12) month period. Any question as to the
existence of the Executive’s total disability as to which the
Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to
the Executive or his representative(s) and the Company. Such
determination shall be final and conclusive for app purposes under
this Agreement.

 

c)
Subject to compliance with Sections 8(f) and (g), in the event
that the Executive’s employment is terminated by the Company
for reasons other than death, Disability (as defined above) or
Cause (as defined in Section 12) or in the event the Executive
resigns his employment for Good Reason (as defined in
Section 12), the Executive will be provided a severance
package equal to four (4) months of the Base Salary for each full
(1) year of employment, up to a maximum of 12 months (the
“Separation Payment”). The Separation Payment shall be
paid in twelve (12) equal monthly installments and shall begin
within fifteen (15) business days of the effective date of the
release noted in Section 8(g).

 

 

3

 

 

d) In
the event that the Executive’s employment is terminated for
Cause or the Executive resigns without Good Reason, the Executive
will not be entitled to any Separation Payment or any other
severance remuneration.

 

e) Upon
a Change in Control during the Executive’s employment, the
Company shall be entitled to terminate the Executive’s
employment within one hundred and twenty (120) days of the Change
in Control. In such event, the Company shall pay to the Executive,
within forty-five (45) days of the termination (or otherwise in
accordance with applicable law, if the law requires earlier or
later payment), an amount equal to two (2) times the
Executive’s Base Salary then in effect. For purposes of this
Agreement, a Change in Control shall mean (i) a merger,
consolidation or statutory share exchange in which (x) the Company
is a constituent party and the Company issues capital shares
pursuant to such merger or consolidation, pursuant to which the
equity holders of the Company as constituted immediately prior to
such transaction will not own a majority, by voting power, of the
capital shares of (A) the surviving or resulting entity, or
(B) if the surviving or resulting entities a wholly-owned
subsidiary of another entity immediately following such merger or
consolidation, the parent corporation of such surviving or
resulting entity; (ii) the sale, exchange, lease, transfer,
exclusive license or other disposition of all or substantially all
of the assets of the Company and its subsidiaries, taken as a
whole, whether occurring as part of a single transaction or series
of related transactions, or the disposition (and whether by merger
or otherwise) of one or more of the subsidiaries if substantially
all of the assets of the Company and its Subsidiaries, taken as a
whole, are held by such subsidiary or subsidiaries, except where
such sale, exchange, lease, transfer, exclusive license or other
disposition is to a wholly-owned subsidiary of such person; or
(iii) a transaction or series of transactions pursuant to
which any person(s) acting together become(s) the “beneficial
owner”(as defined in federal securities law), directly or
indirectly, of more than fifty percent (50%) of the Company’s
equity securities.

 

f)
Notwithstanding any termination of the Executive’s employment
for any reason, the Executive will continue to be bound by the
provisions of the Proprietary Rights Agreement (as defined
below).

 

g) All
payments and benefits provided pursuant to Section 8(c) shall
be conditioned upon the Executive’s execution and
non-revocation of a general release of liabilities favoring the
Company which is prepared and provided by the Company,
substantially in the form of Exhibit A to this Agreement. The
Executive’s refusal to execute such general release shall
constitute a waiver by the Executive of any and all benefits
referenced in Section 8(c). The Company will not be obligated
to commence or continue any such payments to the Executive under
Section 8(c) in the event the Executive breaches the terms of
this Agreement or the Proprietary Rights Agreement and fails to
cure such breach within thirty (30) days of written notice
thereof detailing such breach, if such breach is deemed curable by
the Company in its reasonable discretion.

 

h) The
Company shall have the right to offset against any Separation
Payment (i) any undisputed amount owed by the Executive to the
Company, provided that the Company possesses, or obtains from the
Executive, written confirmation of such undisputed amount, and (ii)
the amount of any claims it has against the Executive by reason of
any breach of this Agreement.

 

 

4

 

 

i)
Immediately upon termination for any reason, the Executive will
return any documents, records, data, apparatus, equipment and other
physical property that have been furnished to the Executive by the
Company or produced by the Executive in connection with
Executive’s employment, which will remain the sole property
of the Company.

 

9.
Confidentiality,
Non–Solicitation and Invention Assignment Agreement.
The Company considers the protection of its confidential
information and proprietary materials to be very important.
Therefore, as a condition of the Executive’s employment, the
Executive has been required to execute a confidentiality,
non-solicitation and invention assignment agreement in the form
attached hereto as Attachment A (the “Proprietary Rights
Agreement”) on the date hereof.

 

10.
Documents, Records,
etc. Subject to the terms and provisions of the Proprietary
Rights Agreement: (a) all documents, records, data, apparatus,
equipment and other physical property, whether or not pertaining to
Confidential Information (as defined in the Proprietary Rights
Agreement), which are furnished to the Executive by the Company or
are produced by the Executive in connection with the
Executive’s employment will be and remain the sole property
of the Company; (b) the Executive will return to the Company all
such materials and property as and when requested by the Company;
and (c) the Executive will return all such materials and property
within ten (10) days upon termination of the Executive’s
employment for any reason.

 

11.
No Conflict. Each
party hereby represents and warrants to the other that
(a) this Agreement constitutes that party’s legal and
binding obligation, enforceable against it or him in accordance
with its terms, (b) it or his execution and performance of
this Agreement does not and will not breach any other agreement,
arrangements, understanding, obligation of confidentiality or
employment relationship to which it or he is a party or by which it
he is bound, and (c) while the Executive is employed by the
Company, it or he will not enter into any agreement, either written
or oral, in conflict with this Agreement or its or his obligations
hereunder.

 

12.
Definitions.

 

a) The
term “Cause” shall mean
(i) discovery by the Company that any of the material
information provided to the Company concerning the
Executive’s qualifications, employment history and
experience, certifications or licenses was untrue or that the
Executive concealed a physical or mental condition that could
materially impair the Executive’s ability to perform his
responsibilities properly without reasonable accommodation as
required by applicable law, if any, (ii) the Executive’s
intentional, willful or knowing failure or refusal to follow,
support or enforce any legal or regulatory requirement applicable
to the Company or the Company’s lawful policies, as adopted
by the Board from time to time, or perform the Executive’s
duties (other than as a result of physical or mental illness,
accident or injury); (iii) the Executive’s intentional,
willful or knowing failure or unreasonable refusal to perform the
Executive’s duties (other than as a result of physical or
mental illness, accident or injury) provided the Executive is given
written notice describing such failure and fails to cure the same
within fifteen (15) days after receipt of such notice;
(iv) dishonesty, willful or gross misconduct, gross
ineptitude, or willful violation of any law, rule, or regulation
(other than minor traffic violations or similar offenses) or other
illegal conduct by the Executive in connection with the
Executive’s employment with the Company or breach of
fiduciary duty that involves personal profit; (v) the
Executive’s conviction of, or plea of guilty or nolo
contendere to, a charge of commission of a felony (exclusive of any
felony relating to negligent operation of a motor vehicle) or a
crime of moral turpitude; (vi) competition with the Company or
unauthorized use of any trade secret or other confidential
information; and (vii) a material breach by the Executive of this
Agreement, the Proprietary Rights Agreement or any other written
agreement between the Executive and the Company or any of its
affiliates; provided,
however, that the Company shall be required to give the
Executive fifteen (15) calendar days prior written notice of
its intention to terminate the Executive for Cause and to provide
the specific grounds thereof in the event the Company invokes
clause (ii) of this Section or a finding of “gross
ineptitude” as set forth in clause (iv) of this Section, and
the Executive shall have the opportunity during such fifteen
(15) day period to meet with a Company representative
designated by the Board and cure such event if such event is
capable of being cured; provided, further, that in the event that
the Executive terminates his employment with the Company during
such fifteen (15) day period for any reason, such termination
shall be considered a termination for Cause. For purposes of this
Section, (x) no act or failure to act on the part of the Executive
shall be considered “willful” unless it is
intentionally done, or intentionally omitted to be done, by the
Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company; and (y) any willful or grossly negligent conduct
of the Executive that results in the failure of the Company to
comply with a significant financial statutory or regulatory
requirement shall be considered grounds for termination for
Cause.

 

 

5

 

 

b) The
term “Good
Reason” shall mean (i) any material reduction of
the Executive’s Base Salary, unless similar reductions are
imposed on all similarly situated executive officers of the
Company; (ii) any material breach by the Company of its
obligations under this Agreement including, but not limited to, its obligation to
assign Executive duties consistent with Section 3 of this
Agreement; (iii) a change without the Executive’s
consent in the principal location of the Company’s office to
an office that is more than fifteen (15) driving miles by the
shortest reasonable driving route from the Company’s
Columbia, MD offices at 7172 Columbia Gateway Drive, Columbia, MD
20146 (if such move materially increases the Executive’s
commute); and (iv) the Company’s
failure to obtain an agreement from any successor to the Company to
assume and agree to perform this Agreement in generally the same
manner and to the same extent that the Company would be required to
perform if no succession had taken place, except where such
assumption occurs by operation of law; provided, however, that in any
case the Executive seeks to invoke “Good Reason” under
this Agreement, the Executive (x) must provide the Company
with written notice of the Executive’s intention to terminate
the Executive’s employment and the specific grounds thereof
within fifteen (15) days after the Executive’s discovery of
the event that the Executive believes constitutes Good Reason; (y)
must give the Company an opportunity to cure for fifteen
(15) days following receipt of such notice from the Executive,
if the event is capable of being cured, or, if not capable of being
cured, to have the Company’s representatives meet with the
Executive and the Executive’s counsel to be heard regarding
whether Good Reason exists; and (z) must terminate employment
within fifteen (15) days after the end of the cure period if the
Good Reason condition is not cured.

 

c) The
term “person” shall mean any
individual, corporation, firm, association, partnership, other
legal entity or other form of business organization.

 

13.
Section 409A of Internal Revenue Code.

 

a)
Anything in this Agreement to the contrary notwithstanding, if at
the time of the Executive’s separation from service within
the meaning of Section 409A of the Internal Revenue Code
(“Code”), the Company determines that the Executive is
a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, then to the extent any
payment or benefit that the Executive becomes entitled to under
this Agreement on account of the Executive’s separation from
service would be considered deferred compensation subject to the 20
percent additional tax imposed pursuant to Section 409A(a) of
the Code as a result of the application of
Section 409A(a)(2)(B)(i) of the Code, such payment shall not
be payable and such benefit shall not be provided until the date
that is the earlier of (A) six months and one day after the
Executive’s separation from service, or (B) the
Executive’s death. If any such delayed cash payment is
otherwise payable on an installment basis, the first payment shall
include a catch-up payment covering amounts that would otherwise
have been paid during the six-month period but for the application
of this provision, and the balance of the installments shall be
payable in accordance with their original schedule.

 

 

6

 

 

b) The
parties intend that this Agreement will be administered in
accordance with Section 409A of the Code. To the extent that
any provision of this Agreement is ambiguous as to its compliance
with Section 409A of the Code, the provision shall be read in
such a manner so that all payments hereunder comply with
Section 409A of the Code. The parties agree that this
Agreement may be amended, as reasonably requested by either party,
and as may be necessary to fully comply with Section 409A of
the Code and all related rules and regulations in order to preserve
the payments and benefits provided hereunder without additional
cost to either party.

 

c) The
determination of whether and when a separation from service has
occurred shall be made by the Company in accordance with the
presumptions set forth in Treasury Regulation
Section 1.409A-1(h).

 

d) The
Company makes no representation or warranty and shall have no
liability to the Executive or any other person if any provisions of
this Agreement are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an
exemption from, or the conditions of, such Section.

 

14.
Successors and Assigns;
Entire Agreement; No Assignment. This Agreement shall be
binding upon, and shall inure to the
benefit of the parties and their respective successors, heirs,
distributes and personal representatives including, with respect to
the Company, any successor of
Company through merger, acquisition, corporate reorganization, or
any other business combination.
This Agreement and the Proprietary Rights Agreement contain the
entire agreement between the parties with respect to the subject
matter hereof and supersede other prior and/or contemporaneous
arrangements or understandings with respect
thereto. The Executive
may not assign this Agreement without
the prior written consent of the Company. The Company may assign this Agreement,
without the consent of the Executive, to any successor (whether
direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of
the part of the Company
in which the Executive works. In the event of such an assignment,
the term “Company” as used herein shall be deemed to
refer to such assignee or successor.

 

15.
Notices. All
notices and other communications required or permitted hereunder or
necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand-delivered, mailed
by registered or certified mail (three days after deposited), or
sent by a nationally recognized courier service, to the following
address (provided that notice of change of address shall be deemed
given only when received):

 

 

If to
the
Company:             
Rekor Systems, Inc.

7172
Gateway Drive

Columbia, Maryland
21046

Attn:
General Counsel

 

If to
Executive:                  
Riaz Latifullah

4920
30th
Street, N.W.

Washington, DC
20008

 

 

7

 

 

or to
such other names and addresses as the Company or the Executive, as
the case may be, shall designate by notice to each other person
entitled to receive notices in the manner specified in this
Section 15. A copy of any such
notice or communication under this Section 15 shall be transmitted
via electronic mail to the party’s corresponding email address on the same
day as the notice’s or communication’s hand-delivery,
mailing, or transmission by courier service.

 

16.
Changes; No Waiver;
Remedies Cumulative. The terms and provisions of this
Agreement may not be modified or amended, or any of the provisions
hereof waived, temporarily or permanently, without the prior
written consent of each of the parties hereto. Either party’s
waiver or failure to enforce the terms of this Agreement or any
similar agreement in one instance shall not constitute a waiver of
any rights hereunder with respect to other violations of this or
any other agreement. No remedy conferred upon the Company or the
Executive by this Agreement is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative
and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity.

 

17.
Construction.
Neither this Agreement nor any uncertainty or ambiguity in this
Agreement shall be construed against any party hereto, whether
under any rule of construction or otherwise, because the parties
acknowledge that each party has cooperated in the drafting,
negotiation and preparation of this Agreement.

 

18.
Governing Law. This
Agreement and (unless otherwise provided) all amendments hereof and
waivers and consents hereunder shall be governed by the law of the
State of Maryland, without regard to conflicts of law
principles.

 

19.
Severability. The
Executive and the Company agree that should any provision of this
Agreement or the Proprietary Rights Agreement be declared illegal,
invalid or unenforceable by a Court of competent jurisdiction,
the validity of the
remaining parts, terms or provisions shall not be affected thereby,
and said illegal or invalid part, term or provision shall be deemed
not to be a part of this Agreement.

 

20.
Headings;
Counterparts. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of
which is an original, and may be transmitted electronically, with
such electronic copy serving as an original.

 

21.
Entire Agreement.
This Agreement and the Proprietary Rights Agreement contain the
entire agreement between the parties with respect to the subject
matter hereof and supersede other prior and contemporaneous
arrangements, agreements, promises, warranties and understandings
with respect thereto. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this
Agreement or the Proprietary Rights Agreement will affect, or be
used to interpret, change or restrict, the express terms and
provisions of this Agreement.

 

 

8

 

 

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

 

   

	

REKOR SYSTEMS, INC.

 

	
 

	
 

	

By:

	
 

	
   /s/
Robert Berman

	

Name:
Robert Berman

Title:
Chief Executive Officer

 

 

	

RIAZ LATIFULLAH

 

	
 

	
 

	

	
 

	
   /s/
Riaz Latifullah

	
 

 

 

 

 

 

 

9

 

 

EXHIBIT A

[FORM OF RELEASE AGREEMENT]

 

THIS AGREEMENT AND RELEASE (this
“Agreement”), dated as of [date] (“Effective
Date”), is entered into by and between Riaz Latifullah
(“Executive”) and Rekor Systems, Inc. (the
“Company”) (jointly, the
“Parties”).

 

WHEREAS, Executive is currently employed
by the Company; and

 

WHEREAS, Executive’s employment
with the Company will terminate effective as of
[date].

 

NOW, THEREFORE, in consideration of the
mutual promises and covenants contained in this Agreement and other
good and valuable consideration, the sufficiency of which the
Parties hereby acknowledge, Executive and the Company hereby agree
as follows:

 

1. Executive shall be
provided severance pay and other benefits (the “Severance
Benefits”) in accordance with the terms and conditions of the
employment agreement by and between Executive and the Company (the
“Employment Agreement”); provided, that no such
Severance Benefits shall be paid or provided if Executive revokes
this Agreement pursuant to Section 4 below.

 

2. Executive, for and
on behalf of himself and his heirs, successors, agents,
representatives, executors and assigns, hereby waives and releases
any common law, statutory or other complaints, claims, demands,
expenses, damages, liabilities, or causes of action (each, a
“Claim”) arising out of or relating to
Executive’s employment or termination of employment with the
Company, both known and unknown, in law or in equity, which
Executive may now have or ever had against the Company or any
equity holder, agent, representative, administrator, trustee,
attorney, insurer, fiduciary, employee, director or officer of any
member of the Company, including their successors and assigns
(collectively, the “Company Releasees”). Released
Claims include, without limitation, any claim for any severance
benefit which might have been due Executive under any agreement
executed by and between the Company and Executive, and any
complaint, charge or cause of action arising out of his employment
with the Company under any federal or state Law or regulation,
including, but not limited to, the Age Discrimination in Employment
Act of 1967 (“ADEA,” a law which prohibits
discrimination on the basis of age against individuals who are age
40 or older), the National Labor Relations Act, the Civil Rights
Act of 1991, the Americans with Disabilities Act of 1990,
Title VII of the Civil Rights Act of 1964, the Employee
Retirement Income Security Act of 1974, the Family Medical Leave
Act, the Equal Pay Act, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Rehabilitation Act of 1973, the Worker
Adjustment and Retraining Notification Act of 1988, all state
anti-discrimination and wage payment laws, all as amended, as well
an any other applicable federal, state and local statutes,
ordinances and regulations. By signing this Agreement, Executive
acknowledges that Executive intends to waive and release any rights
known or unknown Executive may have against the Company Releasees
under these and any other laws; provided, that Executive does
not waive or release (i) Claims with respect to the right to
enforce this Agreement or those provisions of the Employment
Agreement that expressly survive the termination of
Executive’s employment with the Company; (ii) Claims with
respect to any vested right Executive may have under any employee
benefit or compensation plan of the Company; (iii) any rights to
coverage under any applicable insurance policy; or (iv) Claims that
cannot be validly waived as a matter of law.

 

 

A-1

 

 

THIS MEANS THAT, BY SIGNING THIS RELEASE, EXECUTIVE WILL HAVE
WAIVED ANY RIGHT EXECUTIVE MAY HAVE HAD TO BRING A LAWSUIT OR MAKE
ANY CLAIM AGAINST THE COMPANY RELEASEES BASED ON ANY ACTS OR
OMISSIONS OF THE COMPANY RELEASEES UP TO THE DATE OF THE SIGNING OF
THIS RELEASE, TO THE EXTENT PROVIDED FOR ABOVE. NOTWITHSTANDING THE
ABOVE, NOTHING IN THIS AGREEMENT SHALL PREVENT EXECUTIVE FROM (I)
INITIATING OR CAUSING TO BE INITIATED ON HIS BEHALF ANY PROCEEDING
AGAINST THE COMPANY BEFORE ANY LOCAL, STATE OR FEDERAL AGENCY,
COURT OR OTHER BODY CHALLENGING THE VALIDITY OF THE WAIVER OF HIS
CLAIMS UNDER ADEA CONTAINED IN THIS AGREEMENT (BUT NO OTHER PORTION
OF SUCH WAIVER); OR (II) INITIATING OR PARTICIPATING IN (BUT
NOT BENEFITING FROM) AN INVESTIGATION OR PROCEEDING CONDUCTED BY A
GOVERNMENTAL AGENCY CHARGED WITH ENFORCING LAWS UNDER THEIR
JURISDICTION, SUCH AS THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION.

 

3. Executive
acknowledges that Executive has been given twenty-one (21) days
from the date of receipt of this Agreement to consider all of the
provisions of this Agreement and, to the extent he has not used the
entire 21-day period prior to executing this Agreement, Executive
does hereby knowingly and voluntarily waive the remainder of said
21-day period. Executive further acknowledges that he has read this
agreement carefully, has been advised by the Company to consult an
attorney, and fully understands that by signing below he is giving
up certain rights which he may have to sue or assert a claim
against any of the Company Releasees, as described herein and the
other provisions hereof. Executive acknowledges that he has not
been forced or pressured in any manner whatsoever to sign this
agreement, and Executive agrees to all of its terms
voluntarily.

 

4. Executive shall
have seven (7) days from the date of Executive’s execution of
this Agreement to revoke the release, including with respect to all
claims referred to herein (including, without limitation, any and
all claims arising under ADEA). If Executive revokes the Agreement,
Executive will be deemed not to have accepted the terms of this
Agreement.

 

5. Each party and its
counsel have reviewed this Release and has been provided the
opportunity to review this Release and accordingly, the normal rule
of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Release. Instead, the language of all parts
of this Release shall be construed as a whole, and according to
their fair meaning, and not strictly for or against either
party.

 

6. This Agreement will
be deemed to be made and entered into in the State of Maryland, and
be governed by, and construed and enforced in accordance with, the
laws of the State of Maryland, without regard to its principles of
conflicts of laws.

 

 

A-2

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.

 

	
 

	

Rekor Systems, Inc.

 

 

By:      
                 
                 
                 
           
  

 

      
Name:                               
                 
           
  

                          

      
Title:                                                                  

 

 
	
 

	

Riaz Latifullah

 

 

_________________________________________

  

 

 

 

 

 

 

 

 

A-3Exhibit

Exhibit 4.3

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 May 2, 2019

	
				
	TABLE OF CONTENTS* 

	 
	 

	 
	 

	 
	Page

	 
	 

	PARTIES
	1

	RECITALS
	1

	GRANT
	12

	DESCRIPTION OF PROPERTY
	13

	APPURTENANCES, ETC
	13

	HABENDUM
	13

	ENCUMBRANCES
	13

	TRUST
	13

	SEC. 1.    Creation of Bonds of the New Series
	13

	 
	 
	Date of Maturity
	13

	 
	 
	Interest Rate
	13

	 
	 
	Redemption
	13

	SEC. 2.    Issuance of Bonds of the New Series
	14

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

	 
	 
	State of New Jersey not to be construed as approval of other acts
	14

	SEC. 4.    Supplemental Indenture and Original Indenture to be construed as one instrument
	14

	 
	 
	Limitation on rights of others
	14

	 
	 
	Trustee assumes no responsibility for correctness of recitals of fact
	14

	 
	 
	Execution in counterparts
	14

	 
	 
	 
	 

	 
	 
	 
	 

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

- i -

SUPPLEMENTAL INDENTURE, dated as of May 2, 2019 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 New York banking corporation, 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, an Indenture Supplemental to Mortgage and Deed of Trust, dated as of December 1, 2015, and an Indenture Supplemental to Mortgage and Deed of Trust, dated as of October 9, 2018, such instruments amending and supplementing the Mortgage in certain respects (the Mortgage, as so amended and supplemented, being hereinafter called the “Original Indenture”) and 

- 1 -

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
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, $1,137,015,000 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 (i) a series of bonds under the Original Indenture in the aggregate principal amount of $100,000,000, to be entitled and designated as the First Mortgage Bonds, 3.50% Series due May 21, 2029 (herein sometimes referred to as the “Bonds of 2029 Series”) and (ii) a series of bonds under the Original Indenture in the aggregate principal amount of $50,000,000, to be entitled and designated as the First Mortgage Bonds, 4.14% Series due May 21, 2049 (herein sometimes referred to as the “Bonds of 2049 Series”); and
WHEREAS, each of the fully registered bonds of the Bonds of 2029 Series is to be substantially in the following form, to wit:
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR “BLUE SKY” LAWS OF ANY OTHER JURISDICTION, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH SUCH REGISTRATION REQUIREMENTS OR UNDER AN EXEMPTION THEREFROM.
No. ______                                                       $_________
PPN No. ___________
(FORM OF BOND)
(FACE)
ATLANTIC CITY ELECTRIC COMPANY
FIRST MORTGAGE BOND
3.50% Series due May 21, 2029

- 2 -

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, The City of New York in lawful money of the United States of America, and to pay interest thereon at the rate of 3.50% per centum per year in like money, at said office or agency on May 21 and November 21 in each year, commencing November 21, 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 2029 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 2029 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.
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, 3.50% Series due May 21, 2029” (hereinafter called “Bonds of 2029 Series”), all bonds of 

- 3 -

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), 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 2029 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.
In order to enable the Trustee to comply with its obligations under applicable tax laws, rules and regulations in effect from time to time (“Applicable Law”), the Company shall provide to the Trustee, following written request from the Trustee, such information concerning the holders of the Bonds of 2029 Series as the Trustee may reasonably request in order to determine whether the Trustee has any tax-related obligations under Applicable Law with respect to the payments made to holders of the Bonds of 2029 Series, but only to the extent (a) such information is in the Company’s possession, (b) such information is not subject to any confidentiality or similar agreement or undertaking or otherwise deemed by the Company to be confidential and (c) providing such information to the Trustee does not, in the judgment of the Company, breach or violate or constitute a default under any applicable laws, rules or regulations or any instrument or agreement to which the Company of any of its affiliates is a party or may be bound.  The Company, the Trustee or any paying agent for the Bonds of 2029 Series shall be permitted to make any withholding or deduction from the amount of principal and interest payable to holders of the bonds of 2029 Series to the extent required under Applicable Law.
The Bonds of 2029 Series shall be redeemable at the option of the Company prior to the express date of the maturity hereof, in whole or in part, at any time; provided that the Company may not redeem less than 5% of the aggregate principal amount of the Bonds of 2029 Series in the case of any partial redemption. The Company shall give notice of its intent to redeem such Bonds to the holders of such Bonds of 2029 Series at least 30 days but no more than 60 days prior to the date fixed for such redemption (the “Redemption Date”). 

- 4 -

Except as otherwise provided in the succeeding paragraph with respect to optional redemption during the Prepayment Period (as defined herein), if the Company redeems all or any part of the Bonds of 2029 Series pursuant to the provisions of this paragraph, it shall pay an amount equal to 100% of the principal amount of the Bonds of 2029 Series to be redeemed and a Make-Whole Amount, which shall be calculated as follows:
“Make-Whole Amount” means, as determined by the Company, with respect to any Bonds of 2029 Series, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Bonds of 2029 Series over the amount of such Called Principal of such Bonds of 2029 Series, provided, that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings and each of which will be determined by the Company:
“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.
“Called Principal” means, with respect to any of the Bonds of 2029 Series, the principal of such Bonds of 2029 Series that are to be redeemed or have become or are declared to be immediately due and payable pursuant to the Mortgage.
“Discounted Value” means, with respect to the Called Principal of any Bond of 2029 Series, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Bonds of 2029 Series is payable) equal to the Reinvestment Yield with respect to such Called Principal.
“Reinvestment Yield” means, with respect to the Called Principal of any Bonds of 2029 Series, the sum of (a) 0.50% plus (b) the yield to maturity implied by the “Ask Yield(s)” reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  If there are no such U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (i) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (ii) interpolating linearly between the “Ask Yields” Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bonds of 2029 Series.
If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Bonds of 2029 Series, the sum of (x) 0.50% plus (y) the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bonds of 2029 Series.
“Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal 

- 5 -

component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year comprised of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.
“Remaining Scheduled Payments” means, with respect to the Called Principal of any Bonds of 2029 Series, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Bonds of 2029 Series, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date.
“Settlement Date” means, with respect to the Called Principal of any Bonds of 2029 Series, the date on which such Called Principal is to be prepaid or has become or is declared to be immediately due and payable pursuant to the Mortgage, as the context requires. The Company’s notice of redemption to the holders of Bonds of 2029 Series shall specify such date (which shall be a Business Day), the aggregate principal amount of the Bonds of 2029 Series to be prepaid on such date, the principal amount of each Bonds of 2029 Series held by such holder to be prepaid (determined in accordance with the next paragraph hereof), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of the chief financial officer, principal accounting officer, treasurer, assistant treasurer or comptroller of the Company (each, a “Senior Financial Officer”) as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  Two Business Days prior to such prepayment, the Company shall deliver to the Trustee and each holder of Bonds of 2029 Series a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
Provided that no default or event of default has occurred and is continuing, within ninety days (90) days of the stated maturity date of the Bonds of 2029 Series (the period from such date to the stated maturity of the Bonds of 2029 Series being referred to herein as the “Prepayment Period”), the Company may, at its option, upon prior written notice as provided below, prepay all the Bonds of 2029 Series at 100% of the principal amount so prepaid, together with interest on such principal amount accrued to the date of prepayment and without any Make-Whole Amount.
In the case of each partial prepayment of the Bonds of 2029 Series, the principal amount of the Bonds of 2029 Series to be prepaid shall be allocated among all of the Bonds of 2029 Series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.
In the case of each prepayment of Bonds of 2029 Series, the principal amount of each of the Bonds of 2029 Series to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any Bonds of 2029 Series paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Bonds of 2029 Series shall be issued in lieu of any prepaid principal amount of any Bonds of 2029 Series.
The Company shall deliver to the Trustee before any Redemption Date for the Bonds of 2029 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 2029 Series.
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.

- 6 -

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 2029 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

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

WHEREAS, each of the fully registered bonds of the Bonds of 2049 Series is to be substantially in the following form, to wit:
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR “BLUE SKY” LAWS OF ANY OTHER JURISDICTION, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH SUCH REGISTRATION REQUIREMENTS OR UNDER AN EXEMPTION THEREFROM.
No. ______                                                       $_________
PPN No. ___________
(FORM OF BOND)
(FACE)
ATLANTIC CITY ELECTRIC COMPANY
FIRST MORTGAGE BOND
4.14% Series due May 21, 2049

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, The City of New York in lawful money of the United States of America, and to pay interest thereon at the rate of 4.14% per centum per year in like money, at said office or agency on May 21 and November 21 in each year, commencing November 21, 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 2049 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 2049 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 

- 7 -

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.
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, 4.14% Series due May 21, 2049” (hereinafter called “Bonds of 2049 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), 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 

- 8 -

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 2049 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.
In order to enable the Trustee to comply with its obligations under applicable tax laws, rules and regulations in effect from time to time (“Applicable Law”), the Company shall provide to the Trustee, following written request from the Trustee, such information concerning the holders of the Bonds of 2049 Series as the Trustee may reasonably request in order to determine whether the Trustee has any tax-related obligations under Applicable Law with respect to the payments made to holders of the Bonds of 2049 Series, but only to the extent (a) such information is in the Company’s possession, (b) such information is not subject to any confidentiality or similar agreement or undertaking or otherwise deemed by the Company to be confidential and (c) providing such information to the Trustee does not, in the judgment of the Company, breach or violate or constitute a default under any applicable laws, rules or regulations or any instrument or agreement to which the Company of any of its affiliates is a party or may be bound.  The Company, the Trustee or any paying agent for the Bonds of 2049 Series shall be permitted to make any withholding or deduction from the amount of principal and interest payable to holders of the bonds of 2049 Series to the extent required under Applicable Law.
The Bonds of 2049 Series shall be redeemable at the option of the Company prior to the express date of the maturity hereof, in whole or in part, at any time; provided that the Company may not redeem less than 5% of the aggregate principal amount of the Bonds of 2049 Series in the case of any partial redemption. The Company shall give notice of its intent to redeem such Bonds to the holders of such Bonds of 2049 Series at least 30 days but no more than 60 days prior to the date fixed for such redemption (the “Redemption Date”). 
Except as otherwise provided in the succeeding paragraph with respect to optional redemption during the Prepayment Period (as defined herein), if the Company redeems all or any part of the Bonds of 2049 Series pursuant to the provisions of this paragraph, it shall pay an amount equal to 100% of the principal amount of the Bonds of 2049 Series to be redeemed and a Make-Whole Amount, which shall be calculated as follows:
“Make-Whole Amount” means, as determined by the Company, with respect to any Bonds of 2049 Series, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Bonds of 2049 Series over the amount of such Called Principal of such Bonds of 2049 Series, provided, that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings and each of which will be determined by the Company:
“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.

- 9 -

“Called Principal” means, with respect to any of the Bonds of 2049 Series, the principal of such Bonds of 2049 Series that are to be redeemed or have become or are declared to be immediately due and payable pursuant to the Mortgage.
“Discounted Value” means, with respect to the Called Principal of any Bond of 2049 Series, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Bonds of 2049 Series is payable) equal to the Reinvestment Yield with respect to such Called Principal.
“Reinvestment Yield” means, with respect to the Called Principal of any Bonds of 2049 Series, the sum of (a) 0.50% plus (b) the yield to maturity implied by the “Ask Yield(s)” reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  If there are no such U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (i) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (ii) interpolating linearly between the “Ask Yields” Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bonds of 2049 Series.
If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Bonds of 2049 Series, the sum of (x) 0.50% plus (y) the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bonds of 2049 Series.
“Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year comprised of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.
“Remaining Scheduled Payments” means, with respect to the Called Principal of any Bonds of 2049 Series, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Bonds of 2049 Series, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date.
“Settlement Date” means, with respect to the Called Principal of any Bonds of 2049 Series, the date on which such Called Principal is to be prepaid or has become or is declared to be immediately due and payable pursuant to the Mortgage, as the context requires. The Company’s notice of redemption to the holders of Bonds of 

- 10 -

2049 Series shall specify such date (which shall be a Business Day), the aggregate principal amount of the Bonds of 2049 Series to be prepaid on such date, the principal amount of each Bonds of 2049 Series held by such holder to be prepaid (determined in accordance with the next paragraph hereof), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of the chief financial officer, principal accounting officer, treasurer, assistant treasurer or comptroller of the Company (each, a “Senior Financial Officer”) as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  Two Business Days prior to such prepayment, the Company shall deliver to the Trustee and each holder of Bonds of 2049 Series a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
Provided that no default or event of default has occurred and is continuing, within ninety days (90) days of the stated maturity date of the Bonds of 2049 Series (the period from such date to the stated maturity of the Bonds of 2049 Series being referred to herein as the “Prepayment Period”), the Company may, at its option, upon prior written notice as provided below, prepay all the Bonds of 2049 Series at 100% of the principal amount so prepaid, together with interest on such principal amount accrued to the date of prepayment and without any Make-Whole Amount.
In the case of each partial prepayment of the Bonds of 2049 Series, the principal amount of the Bonds of 2049 Series to be prepaid shall be allocated among all of the Bonds of 2049 Series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.
In the case of each prepayment of Bonds of 2049 Series, the principal amount of each of the Bonds of 2049 Series to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any Bonds of 2049 Series paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Bonds of 2049 Series shall be issued in lieu of any prepaid principal amount of any Bonds of 2049 Series.
The Company shall deliver to the Trustee before any Redemption Date for the Bonds of 2049 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 2049 Series.
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)

- 11 -

AND WHEREAS each of the Bonds of 2049 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

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 “2019 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 2019 Supplemental Indenture, according to their tenor and effect, and the performance of all the provisions of the Original Indenture and this 2019 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 October 9, 2018 (except such property as is hereinafter expressly excepted from the lien and operation of this 2019 Supplemental Indenture).
The property covered by the lien of the Original Indenture and this 2019 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 2019 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 October 9, 2018, 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 2019 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, 

- 12 -

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, 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 2019 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 2019 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 2019 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 2019 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 2019 Supplemental Indenture.

- 13 -

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:
Section 1.  (a)     The Company hereby creates (i) a fifty-eighth series of bonds to be issued under and secured by the Original Indenture and this 2019 Supplemental Indenture, to be designated and to be distinguished from the bonds of all other series by the title “First Mortgage Bonds, 3.50% Series due May 21, 2029” and (ii) a fifty-ninth series of bonds to be issued under and secured by the Original Indenture and this 2019 Supplemental Indenture, to be designated and to be distinguished from the bonds of all other series by the title “First Mortgage Bonds, 4.14% Series due May 21, 2049.”  The Bonds of 2029 Series and the Bonds of 2049 Series are herein referred to collectively as the bonds of the New Series.
(b)     The Bonds of 2029 Series shall mature on May 21, 2029 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 3.50 per centum per year, payable semiannually on May 21 and November 21 each year, commencing November 21, 2019.  The Bonds of 2049 Series shall mature on May 21, 2049 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 4.14 per centum per year, payable semiannually on May 21 and November 21 each year, commencing November 21, 2019.  The principal of, premium, if any, and interest on each of the bonds of the New Series 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.
Subject to the preceding paragraph, the person in whose name any bonds 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 bonds 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, all of the bonds 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 bonds of the New Series 

- 14 -

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 November 21, 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 applicable the form of bond of the New Series set forth in this 2019 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 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)    So long as any Initial Bondholder (as hereinbelow defined) or its nominee shall be the registered holder of any bond of the New Series, and notwithstanding anything contained in the Original Indenture to the contrary, the Company will pay all sums becoming due on such bond of the New Series for principal, premium, if any, and interest by the method and at the address specified for such purpose by such Initial Bondholder in Schedule A to the Bond Purchase Agreement, of even date herewith, between the Company and the Initial Bondholders (the “Purchase Agreement”), or by such other method or at such other address as such Initial Bondholder shall have from time to time specified to the Trustee in writing for such purpose in accordance with the Purchase Agreement, without the presentation or surrender of such bond of the New Series, except that concurrently with payment and redemption in full of any bond of the New Series, the Initial Bondholder shall surrender such bond of the New Series for cancellation to the Company at its principal office or place of payment designated by the Company pursuant to Section 8(a) of the Original Indenture. The Company shall afford the benefits of this Section 1(f) to any Institutional Investor (as hereinbelow defined) that is the direct or indirect transferee of any bond of the New Series purchased by the Initial Bondholder under the Original Indenture. Upon receiving payment as specified above without the presentation or surrender of any bond of the New Series, the Initial Bondholder, its nominee or subsequent Institutional Investor shall be deemed to have agreed to indemnify the Company and the Trustee for, and to hold each of them harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on either of their parts, arising out of or in connection with the Initial Bondholder’s, its nominee’s or such subsequent Institutional Investor’s failure to comply with the provisions of this Section 1(f), including the costs of defending itself in connection therewith, such indemnity to survive the payment of such bond of the New Series and any resignation or removal of the Trustee.
The term “Initial Bondholder” as used in this Section 1 means any registered holder of bonds of the New Series listed on Schedule A to the Purchase Agreement. Further, the term “Institutional Investor” as used in this Section 1 means (a) any Initial Bondholder, (b) any holder of a bond of the New Series holding more than $1,000,000 in aggregate principal amount of the bonds of the New Series then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form.
SECTION 2.  In accordance with and in compliance with the provisions of Article VI of the Original Indenture, (i) One Hundred Million Dollars ($100,000,000) principal amount of Bonds of 2029 Series and (ii) Fifty Million Dollars ($50,000,000) principal amount of Bonds of 2049 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 2019 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 2019 Supplemental Indenture shall not in any way be construed as approval by said Board of any 

- 15 -

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 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 2019 Supplemental Indenture, the Original Indenture is in all respects ratified and confirmed and the Original Indenture and this 2019 Supplemental Indenture shall be read, taken and construed as one and the same instrument.
Nothing in this 2019 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 2019 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 2019 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 2019 Supplemental Indenture.
This 2019 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)

- 16 -

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 3rd day of May, 2019.

ATLANTIC CITY ELECTRIC COMPANY

(SEAL)
	
		
	By:
	       /S/    

	 
	Phillip S. Barnett

	 
	Senior Vice President, Chief Financial Officer and Treasurer

ATTEST:

	
		
	           /S/
	 

	Brian J. Buck
	 

	Assistant Secretary
	 

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

	 
	 Katherine Smith

	 
	  /S/ 

	 
	Helene Minaglia

Company Signature Page

INDENTURE SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST, DATED AS OF MAY 2, 2019
TO THE ATLANTIC CITY ELECTRIC COMPANY MORTGAGE AND DEED OF TRUST, DATED JANUARY 15, 1937

- 17 -

THE BANK OF NEW YORK MELLON,
      as Trustee

(SEAL)
	
		
	By:
	  /S/ 

	 
	Name:  Laurence J. O’Brien

	 
	Title:    Vice President

ATTEST:

	
		
	  /S/ 
	 

	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

	
		
	 
	  /S/ 

	 
	Filippo Triolo

Trustee Signature Page

INDENTURE SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST, DATED AS OF MAY 2, 2019
TO THE ATLANTIC CITY ELECTRIC COMPANY MORTGAGE AND DEED OF TRUST, DATED JANUARY 15, 1937

- 18 -

DISTRICT OF COLUMBIA: SS.

BE IT REMEMBERED that on this 3rd day of May, in the year of our Lord two thousand nineteen 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/

	 
	NOTARY PUBLIC OF THE DISTRICT OF COLUMBIA

	 
	Helene Minaglia

	 
	My Commission Expires _________________________

( SEAL )

- 19 -

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

BE IT REMEMBERED that on this 3rd day of May, in the year of our Lord two thousand nineteen 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/

	 
	Rosemarie Socorro-Garcia

	 
	Notary Public

	                                                                                        State of New Jersey
	State of New Jersey

	 
	My Commission Expires December 5, 2021

( SEAL )

- 20 -

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/

	 
	Name:  Laurence J. O’Brien

	 
	Title:    Vice President

- 21 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00296-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00296-of-00352.parquet"}]]