Document:

EXHIBIT 4(e)
                        FORM OF RSU AWARD AGREEMENT
                        TRANSATLANTIC HOLDINGS, INC.
                         2003 STOCK INCENTIVE PLAN
                            RSU AWARD AGREEMENT

This award agreement (this "AWARD AGREEMENT") sets forth the terms and
conditions of an award (this "AWARD") of restricted stock units ("RSUS")
granted to you under the Transatlantic Holdings, Inc. 2003 Stock Incentive
Plan (the "Plan").

1. The Plan. This Award is made pursuant to the Plan, the terms of which
are incorporated in this Award Agreement. Capitalized terms used in this
Award Agreement that are not defined in this Award Agreement, or in the
attached Glossary of Terms, have the meanings as used or defined in the
Plan.

2. Award. The number of RSUs subject to this Award is set forth at
the end of this Award Agreement. Each RSU constitutes an unfunded and
unsecured promise of TRH to deliver (or cause to be delivered) to you,
subject to the terms of this Award Agreement, one share of Common Stock
(the "SHARE" or the "SHARES" as the context requires) (or cash equal to the
Fair Market Value thereof) on the Delivery Date as provided herein. Until
such delivery, you have only the rights of a general unsecured creditor,
and no rights as a shareholder, of TRH. THIS AWARD IS SUBJECT TO ALL TERMS,
CONDITIONS AND PROVISIONS OF THE PLAN AND THIS AWARD AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THE ARBITRATION AND CHOICE OF FORUM PROVISIONS SET
FORTH IN PARAGRAPH 14.

3. Vesting and Delivery.

(a) Vesting. Except as provided in this Paragraph 3 and in Paragraphs 4 and
6, you shall become vested in the RSUs, and the Shares underlying the RSUs
shall be delivered, on the fourth anniversary of the Date of Grant
specified at the end of this Award Agreement (the "VESTING DATE"). Unless
the Committee determines otherwise, and except as provided in Paragraph 6,
if your Employment terminates for any reason prior to the Vesting Date,
your rights in respect of all of your RSUs shall terminate, and no Shares
(or cash) shall be delivered in respect of such RSUs.

(b) Delivery. Except as provided in this Paragraph 3 and in Paragraphs 4,
6, 8 and 9, the Shares underlying the RSUs shall be delivered on the
Delivery Date. The Company may, at its option, deliver cash in lieu of all
or any portion of the Shares otherwise deliverable on the Delivery Date
specified at the end of this Award Agreement. Such cash payment shall equal
the product of the number of Shares to be delivered on the Delivery Date
and the Fair Market Value of one Share of Common Stock on the Delivery
Date. You shall be deemed the beneficial owner of the Shares at the close
of business on the Delivery Date and shall be entitled to any dividend or
distribution that has not already been made with respect to such Shares if
the record date for such dividend or distribution is after the close of
business on the Delivery Date. Notwithstanding the foregoing, if the
Delivery Date occurs at a time when you are considered by TRH to be one of
its "covered employees" within the meaning of Section 162(m) of the Code,
then, unless the Committee determines otherwise, delivery of the Shares (or
cash) automatically shall be deferred until after you have ceased to be
such a covered employee.

(c) Death. Notwithstanding any other provision of this Award Agreement, if
you die prior to the Delivery Date, and provided your rights in respect of
your RSUs have not previously terminated, the Shares (or cash in lieu of
all or any part thereof) corresponding to your outstanding RSUs shall be
delivered to the representative of your estate as soon as practicable after
the date of death and after such documentation as may be requested by the
Committee is provided to the Committee.

===============================================================================

4. Termination of RSUs and Non-Delivery of Shares.

(a) Unless the Committee determines otherwise, and except as provided in
Paragraphs 3(c) and 6, your rights in respect of your outstanding RSUs
shall immediately terminate, and no Shares (or cash) shall be delivered in
respect of such unvested RSUs, if at any time prior to the Vesting Date
your Employment with the Company terminates for any reason, or you are
otherwise no longer actively Employed by the Company.

(b) Unless the Committee determines otherwise, and except as provided in
Paragraph 6, your rights in respect of all of your RSUs (whether or not
vested) shall immediately terminate, and no Shares (or cash) shall be
delivered in respect of such RSUs, if at any time prior to the Delivery
Date:

(i) you attempt to have any dispute under this Award Agreement or the Plan
resolved in any manner that is not provided for by Paragraph 14; or

(ii) any event that constitutes Cause has occurred; or

(iii) you in any manner, directly or indirectly, (A) Solicit any Client to
transact business with a Competitive Enterprise or to reduce or refrain
from doing any business with the Company or (B) interfere with or damage
(or attempt to interfere with or damage) any relationship between the
Company and any such Client or (C) Solicit any person who is an employee of
the Company to resign from the Company or to apply for or accept employment
with any Competitive Enterprise; or

(iv) you fail to certify to TRH, in accordance with procedures established
by the Committee, with respect to the Delivery Date that you have complied,
or the Committee determines that you have failed as of the Delivery Date to
comply, with all of the terms and conditions of this Award Agreement. By
accepting the delivery of Shares (or cash) under this Award Agreement, you
shall be deemed to have represented and certified at such time that you
have complied with all the terms and conditions of this Award Agreement.

(c) Unless the Committee determines otherwise, if the Delivery Date in
respect of any of your outstanding RSUs occurs, and Shares (or cash) with
respect to such outstanding RSUs would be deliverable under the terms and
conditions of this Award Agreement, except that you have not complied with
the conditions or your obligations under Paragraph 4(b)(iv), all of your
rights with respect to your outstanding RSUs shall terminate no later than
the Delivery Date for such Shares.

5. Repayment. If, following the delivery of Shares (or cash), the Committee
determines that all terms and conditions of this Award Agreement in respect
of such delivery were not satisfied, the Company shall be entitled to
receive, and you shall be obligated to pay the Company immediately upon
demand therefore, the Fair Market Value of the Shares (determined as of the
Delivery Date) and the amount of cash (to the extent that cash was
delivered in lieu of Shares) delivered with respect to the Delivery Date,
without reduction for any Shares (or cash) applied to satisfy withholding
tax or other obligations in respect of such Shares (or cash).

                                    -2-

=============================================================================

6. Disability and Retirement.

(a) Notwithstanding any other provision of this Award Agreement, but
subject to Paragraph 6(b), if your Employment with the Company is
terminated by reason of Disability or Retirement, the condition set forth
in Paragraph 4(a) shall be waived with respect to your then outstanding
unvested RSUs (as a result of which any such then unvested outstanding RSUs
shall vest), but all other conditions of this Award Agreement shall
continue to apply.

(b) Without limiting the application of Paragraph 4(b) or Paragraph 4(c),
your rights in respect of any outstanding RSUs that become vested solely by
reason of Paragraph 6(a) immediately shall terminate, and no Shares (or
cash) shall be delivered in respect of such outstanding RSUs if, following
the termination of your Employment with the Company by reason of Disability
or Retirement and prior to the Delivery Date, you (i) form, or acquire a 5%
or greater equity ownership, voting or profit participation interest in,
any Competitive Enterprise or (ii) associate in any capacity (including,
but not limited to, association as an officer, employee, partner, director,
consultant, agent or advisor) with any Competitive Enterprise.

7. Non-transferability. Except as otherwise may be provided by the
Committee, the limitations set forth in Section 3.4 of the Plan shall
apply. Any assignment in violation of the provisions of this Paragraph 7
shall be null and void.

8. Withholding, Consents and Legends.

(a) The delivery of Shares is conditioned on your satisfaction of any
applicable withholding taxes (in accordance with Section 3.2 of the Plan).

(b) Your rights in respect of your RSUs are conditioned on the receipt to
the full satisfaction of the Committee of any required consents (as defined
in Section 3.3 of the Plan) that the Committee may determine to be
necessary or advisable (including, without limitation, your consenting to
deductions from your wages, or another arrangement satisfactory to the
Committee, to reimburse the Company for advances made on your behalf to
satisfy withholding and other tax obligations in connection with this
Award).

(c) TRH may affix to Certificates representing Shares issued pursuant to
this Award Agreement any legend that the Committee determines to be
necessary or advisable (including to reflect any restrictions to which you
may be subject under a separate agreement with TRH). TRH may advise the
transfer agent to place a stop transfer order against any legended Shares.

9. Right of Offset. The Company shall have the right to offset against the
obligation to deliver Shares (or cash) under this Award Agreement any
outstanding amounts (including, without limitation, travel and
entertainment or advance account balances, loans, or amounts repayable to
the Company pursuant to tax equalization, housing, automobile or other
employee programs) you then owe to the Company and any amounts the
Committee otherwise deems appropriate.

10. No Rights to Continued Employment. Nothing in this Award Agreement or
the Plan shall be construed as giving you any right to continued Employment
by the Company or affect any right that the Company may have to terminate
or alter the terms and conditions of your Employment.

11. Successors and Assigns of TRH. The terms and conditions of this Award
Agreement shall be binding upon, and shall inure to the benefit of, TRH and
its successor entities (as defined in Section 3.6 of the Plan.

                                    -3-
=============================================================================

12. Committee Discretion. The Committee shall have full discretion with
respect to any actions to be taken or determinations to be made in
connection with this Award Agreement, and its determinations shall be
final, binding and conclusive.

13. Amendment. The Committee reserves the right at any time to amend the
terms and conditions set forth in this Award Agreement, and the Board may
amend the Plan in any respect; provided, that, notwithstanding the
foregoing and Sections 1.3.1(i), 1.3.1(ii) and 3.1 of the Plan, no such
amendment shall materially adversely affect your rights and obligations
under this Award Agreement without your consent, except that the Committee
reserves the right to accelerate the delivery of the Shares and in its
discretion provide that such Shares may not be transferable until the
Delivery Date on which such Shares otherwise would have been delivered (and
that in respect of such Shares you may remain subject to the repayment
obligations of Paragraph 5 in the circumstances under which the Shares
would not have been delivered pursuant to Paragraph 4 or Paragraph 6). Any
amendment of this Award Agreement shall be in writing signed by an
authorized member of the Committee or a person or persons designated by the
Committee.

14. Arbitration; Choice of Forum.

(a) Any dispute, controversy or claim between the Company and you, arising
out of or relating to or concerning the Plan or this Award Agreement, shall
be finally settled by arbitration in New York City before, and in
accordance with the rules then obtaining of, the New York Stock Exchange,
Inc. (the "NYSE") or, if the NYSE declines to arbitrate the matter (or if
the matter otherwise is not arbitrable by it), the American Arbitration
Association (the "AAA") in accordance with the commercial arbitration rules
of the AAA. Prior to arbitration, all claims maintained by you must first
be submitted to the Committee in accordance with claims procedures
determined by the Committee. This Paragraph is subject to the provisions of
Paragraphs 14(b) and (c) below.

(b) THE COMPANY AND YOU HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE CITY OF NEW YORK
OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO OR
CONCERNING THE PLAN OR THIS AWARD AGREEMENT THAT IS NOT OTHERWISE
ARBITRATED OR RESOLVED ACCORDING TO PARAGRAPH 14(A) OF THIS AWARD
AGREEMENT. This includes any suit, action or proceeding to compel
arbitration or to enforce an arbitration award. The Company and you
acknowledge that the forum designated by this Paragraph 14(b) has a
reasonable relation to the Plan, this Award Agreement, and to your
relationship with the Company. Notwithstanding the foregoing, nothing
herein shall preclude the Company from bringing any action or proceeding in
any other court for the purpose of enforcing the provisions of this
Paragraph 14.

(c) The agreement by you and the Company as to forum is independent of the
law that may be applied in the action, and you and the Company agree to
such forum even if the forum may under applicable law choose to apply
non-forum law. You and the Company hereby waive, to the fullest extent
permitted by applicable law, any objection which you or the Company now or
hereafter may have to personal jurisdiction or to the laying of venue of
any such suit, action or proceeding in any court referred to in Paragraph
14(b). You and the Company undertake not to commence any action, suit or
proceeding arising out of or relating to or concerning this Award Agreement
in any forum other than a forum described in this Paragraph 14. You and
(subject to the last sentence of Paragraph 14(a)) the Company agree that,
to the fullest extent permitted by applicable law, a final and
non-appealable judgment in any such suit, action or proceeding in any such
court shall be conclusive and binding upon you and the Company.

                                    -4-

=============================================================================

(d) You irrevocably appoint the Secretary of TRH as your agent for service
of process in connection with any action, suit or proceeding arising out of
or relating to or concerning this Award Agreement which is not arbitrated
pursuant to the provisions of Paragraph 14(a), who shall promptly advise
you of any such service of process.

(e) You hereby agree to keep confidential the existence of, and any
information concerning, a dispute described in this Paragraph 15, except
that you may disclose information concerning such dispute to the arbitrator
or court that is considering such dispute or to your legal counsel
(provided that such counsel agrees not to disclose any such information
other than as necessary to the prosecution or defense of the dispute).

(f) You recognize and agree that prior to the grant of this Award you have
no right to any benefits hereunder. Accordingly, in consideration of the
receipt of this Award, you expressly waive any right to contest the amount
of this Award, terms of this Award Agreement, any determination, action or
omission hereunder or under the Plan by the Committee, TRH or the Board, or
any amendment to the Plan or this Award Agreement (other than an amendment
to which your consent is expressly required by Paragraph 13) and you
expressly waive any claim related in any way to the Award including any
claim based on any promissory estoppel or other theory in connection with
this Award and your Employment with the Company.

15. Governing Law. THIS AWARD SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.

16. Headings. The headings in this Award Agreement are for the purpose of
convenience only and are not intended to define or limit the construction
of the provisions hereof.

                                    -5-

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      IN WITNESS WHEREOF, TRANSATLANTIC HOLDINGS, INC. HAS CAUSED this Award
Agreement to be duly executed and delivered as of the Date of Grant.

                       TRANSATLANTIC HOLDINGS, INC.
                                    By

Name:

                                   Title:
                                    By

Name:

                                   Title:

RECIPIENT:

NUMBER OF RSUS:

DATE OF GRANT:

DELIVERY DATE:

                                    -6-
=============================================================================

                             GLOSSARY OF TERMS

Solely for purposes of this award of RSUs, the following terms shall have
the meanings set forth below. Capitalized terms not defined in this
Glossary of Terms shall have the meanings as used or defined in the
applicable Award Agreement or the Plan.

"CAUSE" means (i) your conviction, whether following trial or by plea of
guilty or nolo contendere (or similar plea), in a criminal proceeding (A)
on a misdemeanor charge involving fraud, false statements or misleading
omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting
or extortion, or (B) on a felony charge or (C) on an equivalent charge to
those in clauses (A) and (B) in jurisdictions which do not use those
designations; (ii) your engaging in any conduct which constitutes an
employment disqualification under applicable law (including statutory
disqualification as defined under the Exchange Act); (iii) your failure to
perform your duties to the Company; (iv) your violation of any securities
or commodities laws, any rules or regulations issued pursuant to such laws,
or the rules and regulations of any securities or commodities exchange or
association of which TRH or any of its subsidiaries or affiliates is a
member; (v) your violation of any Company policy concerning hedging or
confidential or proprietary information, or your material violation of any
other Company policy as in effect from time to time; (vi) your engaging in
any act or making any statement which impairs, impugns, denigrates,
disparages or negatively reflects upon the name, reputation or business
interests of the Company; or (vii) your engaging in any conduct detrimental
to the Company. The determination as to whether "Cause" has occurred shall
be made by the Committee in its sole discretion. The Committee shall also
have the authority in its sole discretion to waive the consequences under
the Plan or any Award Agreement of the existence or occurrence of any of
the events, acts or omissions constituting "Cause."

"CLIENT" means any client or prospective client of the Company to whom you
provided services, or for whom you transacted business, or whose identity
became known to you in connection with your relationship with or Employment
by the Company.

"COMPETITIVE ENTERPRISE" means a business enterprise that (i) engages in
any activity, or (ii) owns or controls a significant interest in any entity
that engages in any activity, that, in either case, competes anywhere with
any activity in which the Company is engaged. The activities covered by the
previous sentence include, without limitation, all insurance and
re-insurance and insurance and re-insurance-related activities, asset
management, financial product activities (including, without limitation,
derivative activities) and financial services in the United States and
abroad.

"DELIVERY DATE" means each date specified as the Delivery Date in the Award
(or as soon as practicable, but in no case more than 10 days, thereafter).

"DISABILITY" means "permanent disability" as defined in the Transatlantic
Holdings, Inc. Group Long - Term Insurance Policy as in effect on the Date
of Grant.

"RETIREMENT" means "normal retirement" as defined in the Transatlantic
Holdings, Inc. Retirement Plan as in effect on the Date of Grant.

"SOLICIT" means any direct or indirect communication of any kind whatsoever,
regardless of by whom initiated, inviting, advising, encouraging or
requesting any person or entity, in any manner, to take or refrain from
taking any action.

                                    -7-ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC,

                                     Issuer

                                       and

                              THE BANK OF NEW YORK,

                                     Trustee

                         ------------------------------

                            2003-1 SERIES SUPPLEMENT

                          Dated as of December 23, 2003

                         ------------------------------

<PAGE>

     2003-1 SERIES SUPPLEMENT dated as of December 23, 2003 (this "Supplement"),
by and between ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC, a Delaware limited
liability company (the "Issuer"), and The Bank of New York, a New York banking
corporation (the "Trustee"), as Trustee under the Indenture dated as of December
19, 2002, between the Issuer and the Trustee (as supplemented or amended, the
"Indenture").

                              PRELIMINARY STATEMENT

     Section 9.01(a)(viii) of the Indenture provides that the Issuer and the
Trustee may at any time and from time to time enter into one or more indentures
supplemental to the Indenture for the purposes of authorizing the issuance by
the Issuer of a Series of Transition Bonds and specifying the terms thereof so
long as the Rating Agency Condition shall have been satisfied with respect to
such action. The Issuer has duly authorized the execution and delivery of this
Supplement and the creation of a Series of Transition Bonds with an initial
aggregate principal amount of $152,000,000 to be known as the Issuer's
Transition Bonds, Series 2003-1 (the "Series 2003-1 Transition Bonds"). All acts
and all things necessary to make the Series 2003-1 Transition Bonds, when duly
executed by the Issuer and authenticated by the Trustee as provided in the
Indenture and this Supplement and issued by the Issuer, the valid, binding and
legal obligations of the Issuer and to make this Supplement a valid and
enforceable supplement to the Indenture have been done, performed and fulfilled,
and the execution and delivery hereof have been in all respects duly and
lawfully authorized. The Issuer and the Trustee are executing and delivering
this Supplement in order to provide for the Series 2003-1 Transition Bonds.

     In order to secure the payment of principal of and interest on (i) the $440
million principal amount of the Issuer's Transition Bonds, Series 2002-1 (the
"Series 2002-1 Transition Bonds") issued under the Indenture and the Series
Supplement dated as of December 19, 2002 and (ii) the Series 2003-1 Transition
Bonds to be issued under the Indenture and this Supplement, the Issuer hereby
confirms the Grant to the Trustee, for the benefit of the Holders of the Series
2002-1 Transition Bonds and the Series 2003-1 Transition Bonds from time to time
issued and Outstanding, of all of the Issuer's right, title and interest in, to
and under the Collateral, including without limitation the Bondable Transition
Property transferred pursuant to the Sale Agreement by the Seller to the Issuer
on the Initial Transfer Date and the Bondable Transition Property transferred by
the Seller to the Issuer on the date hereof, and all proceeds thereof.

     The Trustee, on behalf of the Holders of the Series 2002-1 Transition Bonds
and the Series 2003-1 Transition Bonds, acknowledges the confirmation of such
Grant, accepts the trusts hereunder in accordance with the provisions hereof and
agrees to perform its duties required in the Indenture and this Supplement.

SECTION 1. DEFINITIONS.

     All terms used in this Supplement that are defined in the Indenture, either
directly or by reference therein, have the meanings assigned to them therein,
except to the extent such terms are defined or modified in this Supplement or
the context clearly requires otherwise.

<PAGE>

SECTION 2. OTHER DEFINITIONAL PROVISIONS.

     "Authorized Denominations" means $1,000 and integral multiples of $1.00
above that amount, provided, however, that one Series 2003-1 Transition Bond of
each Class may have a denomination of less than $1,000.

     "Expected Amortization Schedule" means Schedule A to this Supplement.

     "Expected Final Payment Date" means, with respect to any Class of the
Series 2003-1 Transition Bonds, the expected final Payment Date indicated for
such Class in Section 4 of this Supplement.

     "Final Maturity Date" means, with respect to any Class of the Series 2003-1
Transition Bonds, the final maturity date indicated for such Class in Section 4
of this Supplement.

     "Interest Rate" means, for any Class of the Series 2003-1 Transaction
Bonds, the percentage amount indicated for such Class in Section 4 of this
Supplement.

     "Overcollateralization Amount" has the meaning set forth in Section 5(d) of
this Supplement.

     "Record Date" means, with respect to any Payment Date, the Business Day
prior to such Payment Date or, with respect to any Definitive Transition Bonds,
the last Business Day of the month preceding such Payment Date.

     "Required Capital Amount" has the meaning set forth in Section 5(e) of this
Supplement.

     "Series Issuance Date" has the meaning set forth in Section 3(b) of this
Supplement.

SECTION 3. DESIGNATION; SERIES ISSUANCE DATES.

          (a) Designation. The Series 2003-1 Transition Bonds shall be
designated generally as the Issuer's Transition Bonds, Series 2003-1, and
further denominated as Class A-1, Class A-2 and Class A-3.

          (b) Series Issuance Date. The Series 2003-1 Transition Bonds that are
authenticated and delivered by the Trustee to or upon the order of the Issuer on
December 23, 2003 (the "Series Issuance Date") shall have as their date of
authentication December 23, 2003.

SECTION 4. INITIAL PRINCIPAL AMOUNT; INTEREST RATE; EXPECTED FINAL PAYMENT DATE;
           FINAL MATURITY DATES.

<PAGE>

          The Transition Bonds of each Class of the Series 2003-1 Transition
Bonds shall have the initial principal amounts, bear interest at the respective
Interest Rates and have the respective Expected Final Payment Dates and Final
Maturity Dates set forth below:

<TABLE>
<CAPTION>
            Initial Principal                              Expected Final           Final
Class            Amount              Interest Rate          Payment Date        Maturity Date
<S>        <C>                       <C>                   <C>                  <C>
A-1              $46,000,000              2.890%%             7/20/2009             7/20/2011
A-2              $52,000,000              4.460%             10/20/2014            10/20/2016
A-3              $54,000,000              5.050%             10/20/2018            10/20/2020
</TABLE>

SECTION 5. PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL;
           INTEREST; OVERCOLLATERALIZATION AMOUNT; REQUIRED CAPITAL AMOUNT.

          (a) Payment Dates. The Payment Dates for each Class of the Series
2003-1 Transition Bonds are January 20, April 20, July 20 and October 20 of each
year, or, if any such date is not a Business Day, the next succeeding Business
Day, commencing on October 20, 2004 and continuing until the earlier of
repayment of such Class in full and the applicable Final Maturity Date.

          (b) Expected Amortization Schedule for Principal. Except in the case
of an optional redemption pursuant to Section 10.01 or 10.02 of the Indenture,
unless an acceleration upon an Event of Default has occurred and is continuing
and the unpaid principal amount of all Series of Transition Bonds has been
declared to be due and payable together with accrued and unpaid interest
thereon, on each Payment Date the Trustee shall distribute to the Series 2003-1
Transition Bondholders of record as of the related Record Date the amounts
payable as principal on the Series 2003-1 Transition Bonds in accordance with
the Expected Amortization Schedule; provided that if as of such Payment Date one
or more Classes of Series 2003-1 Transition Bonds did not receive a scheduled
payment of principal on a previous Payment Date and amounts are payable in
respect of more than one such Class in accordance with the Expected Amortization
Schedule, principal payments shall be allocated in a sequential manner as
follows: (i) to the holders of Series 2003-1 Transition Bonds, Class A-1, until
this Class is retired in full; (ii) to the holders of Series 2003-1 Transition
Bonds, Class A-2, until this Class is retired in full; and (iii) to the holders
of Series 2003-1 Transition Bonds, Class A-3, until this Class is retired in
full; provided, further, that no principal payment shall be made on any Class of
Series 2003-1 Transition Bonds in excess of the amount necessary to reduce the
Outstanding Amount of such Class to the amount specified for such Class and such
Payment Date in the Expected Amortization Schedule. In the case of an optional
redemption pursuant to Section 10.01 or 10.02 of the Indenture or an
acceleration upon an Event of Default pursuant to Section 5.02 of the Indenture,
if the amounts available to make payments of principal on the Series 2003-1
Transition Bonds are insufficient to make such payments in full, the Trustee
shall pay principal on each Class of the Series 2003-1 Transition Bondholders
pro rata based on the Outstanding Amount of each such Class as of such date, if
such date is a Payment Date, and otherwise as of the most recent Payment Date
after giving effect to all payments of principal made to the Holders of
Transition Bonds as of such most recent Payment Date.

          (c) Interest. On the initial Payment Date, interest shall be payable,
on each Class of the Series 2003-1 Transition Bonds, in an amount equal to the
product of:

                                       3

<PAGE>

          (1) the fraction (x) whose numerator is number of days (determined on
     the basis of a 360-day year of twelve 30-day months) from and including the
     Series Issuance Date to but excluding the initial Payment Date and (y)
     whose denominator is 360, times

          (2) the product of (x) the Interest Rate for such Class times (y) the
     Outstanding Amount of such Class as of the Series Issuance Date.

On each succeeding Payment Date, interest shall be payable, on each Class of the
Series 2003-1 Transition Bonds, in an amount equal to the product of:

          (1) the fraction (x) whose numerator is number of days (determined on
     the basis of a 360-day year of twelve 30-day months) from and including the
     preceding Payment Date to but excluding the current Payment Date and (y)
     whose denominator is 360, times

          (2) the product of (x) the Interest Rate for such Class times (y) the
     Outstanding Amount of such Class as of the close of business on the
     preceding Payment Date after giving effect to all payments of principal
     made to the Holders of such Class on such preceding Payment Date.

If the amounts available to make payments of interest on the Series 2003-1
Transition Bonds are insufficient to make such payments in full, the Trustee
shall make payments of interest to each Class of such Transition Bonds pro rata
based on the respective amounts of interest payable on each such Class. Interest
on the Series 2003-1 Transition Bonds shall be calculated on the basis of a
360-day year of twelve 30-day months.

          (d) Overcollateralization Amount. The Overcollateralization Amount for
the Series 2003-1 Transition Bonds with respect to each Payment Date shall be as
set forth in Schedule B hereto.

          (e) Required Capital Amount; Series 2003-1 Capital Subaccount. The
Required Capital Amount for the Series 2003-1 Transition Bonds shall be
$760,000.

          (f) No Premium. No premium shall be payable in connection with the
early redemption of the Series 2003-1 Transition Bonds.

     SECTION 6. AUTHORIZED DENOMINATIONS. The Series 2003-1 Transition Bonds
shall be issuable in the Authorized Denominations.

     SECTION 7. REDEMPTION.

          (a) Mandatory Redemption. The Series 2003-1 Transition Bonds shall not
be subject to mandatory redemption.

          (b) Optional Redemption. The Issuer may redeem the Series 2003-1
Transition Bonds at its option, on any Payment Date in accordance with Section
10.01 of the Indenture if, after giving effect to payments that would otherwise
be made on such Payment Date, the Outstanding Amount of such Series has been
reduced to less than five percent of the initial Outstanding Amount of such
Series.

                                       4

<PAGE>

     SECTION 8. CREDIT ENHANCEMENT. No credit enhancement (other than the
Overcollateralization Amount, the Required Capital Amount and any adjustments to
the Transition Bond Charge approved by the BPU as contemplated in the Servicing
Agreement) is provided for the Series 2003-1 Transition Bonds.

     SECTION 9. DELIVERY AND PAYMENT FOR THE SERIES 2003-1 TRANSITION BONDS;
FORM OF THE SERIES 2003-1 TRANSITION BONDS. The Trustee shall deliver the Series
2003-1 Transition Bonds to the Issuer when authenticated in accordance with
Section 2.02 of the Indenture. The Series 2003-1 Transition Bonds shall be in
the form of Exhibit A.

     SECTION 10. LISTING AGENT, PAYING AGENT, TRANSFER AGENT. For so long as any
Series 2003-1 Transition Bonds are listed on the Luxembourg Stock Exchange and
the rules and regulations of such exchange so require, the Issuer shall retain a
listing agent, a transfer agent and a paying agent in Luxembourg appointed
pursuant to Section 3.02(b) of the Indenture.

     SECTION 11. DESIGNATION OF ADDITIONAL DATES AS ADJUSTMENT DATES AND
CALCULATION DATES. As contemplated in the definitions of "Adjustment Date" and
"Calculation Date" in Appendix A to the Indenture, (a) January 1, April 1, July
1 and October 1 of each year, beginning October 1, 2017, are hereby designated
as Adjustment Dates so long as any Series 2003-1 Transition Bonds are
outstanding, and (b) March 1, June 1, September 1 and December 1 of each year,
beginning September 1, 2017, are hereby designated as Calculation Dates so long
as any Series 2003-1 Transition Bonds are outstanding.

     SECTION 12. CONFIRMATION OF INDENTURE. As supplemented by this Supplement,
the Indenture is in all respects ratified and confirmed and the Indenture, as so
supplemented by this Supplement, shall be read, taken and construed as one and
the same instrument.

     SECTION 13. COUNTERPARTS. This Supplement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.

     SECTION 14. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.

                                       5

<PAGE>

     IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Supplement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.

                                        ATLANTIC CITY ELECTRIC TRANSITION
                                        FUNDING LLC,
                                        as Issuer

                                        By: /s/ James P. Lavin
                                            --------------------------------
                                             Name: James P. Lavin
                                                   --------------------------
                                             Title: Manager

                                        THE BANK OF NEW YORK, not in its
                                             individual capacity but solely as
                                             Trustee on behalf of the
                                             Transition Bondholders,

                                        By: /s/ Catherine L. Cerilles
                                            -------------------------------
                                             Name: Catherine L. Cerilles
                                                   --------------------------
                                             Title: Assistance Vice President

<PAGE>

                                   SCHEDULE A
                         Expected Amortization Schedule
                       Scheduled Amortization Requirement

                    All amounts are in United States Dollars

--------------------------------------------------------------------------------
Payment Date      Class A-1      Class A-2         Class A-3      Series 2003-1
                    balance        balance          balance          balance
--------------------------------------------------------------------------------
Closing         $46,000,000     $ 52,000,000      $54,000,000     $ 152,000,000
--------------------------------------------------------------------------------
10/20/04        $39,359,305     $ 52,000,000      $54,000,000     $ 145,359,305
--------------------------------------------------------------------------------
01/20/05        $36,993,083     $ 52,000,000      $54,000,000     $ 142,993,083
--------------------------------------------------------------------------------
04/20/05        $35,183,230     $ 52,000,000      $54,000,000     $ 141,183,230
--------------------------------------------------------------------------------
07/20/05        $33,612,707     $ 52,000,000      $54,000,000     $ 139,612,707
--------------------------------------------------------------------------------
10/20/05        $31,280,008     $ 52,000,000      $54,000,000     $ 137,280,008
--------------------------------------------------------------------------------
01/20/06        $29,286,261     $ 52,000,000      $54,000,000     $ 135,286,261
--------------------------------------------------------------------------------
04/20/06        $27,300,864     $ 52,000,000      $54,000,000     $ 133,300,864
--------------------------------------------------------------------------------
07/20/06        $25,539,009     $ 52,000,000      $54,000,000     $ 131,539,009
--------------------------------------------------------------------------------
10/20/06        $22,973,776     $ 52,000,000      $54,000,000     $ 128,973,776
--------------------------------------------------------------------------------
01/20/07        $20,870,458     $ 52,000,000      $54,000,000     $ 126,870,458
--------------------------------------------------------------------------------
04/20/07        $18,842,048     $ 52,000,000      $54,000,000     $ 124,842,048
--------------------------------------------------------------------------------
07/20/07        $17,037,857     $ 52,000,000      $54,000,000     $ 123,037,857
--------------------------------------------------------------------------------
10/20/07        $14,426,754     $ 52,000,000      $54,000,000     $ 120,426,754
--------------------------------------------------------------------------------
01/20/08        $12,266,379     $ 52,000,000      $54,000,000     $ 118,266,379
--------------------------------------------------------------------------------
04/20/08        $10,178,005     $ 52,000,000      $54,000,000     $ 116,178,005
--------------------------------------------------------------------------------
07/20/08        $ 8,312,681     $ 52,000,000      $54,000,000     $ 114,312,681
--------------------------------------------------------------------------------
10/20/08        $ 5,632,773     $ 52,000,000      $54,000,000     $ 111,632,773
--------------------------------------------------------------------------------
01/20/09        $ 3,523,672     $ 52,000,000      $54,000,000     $ 109,523,672
--------------------------------------------------------------------------------
04/20/09        $ 1,428,802     $ 52,000,000      $54,000,000     $ 107,428,802
--------------------------------------------------------------------------------
07/20/09            $     -     $ 51,319,472      $54,000,000     $ 105,319,472
--------------------------------------------------------------------------------
10/20/09            $     -     $ 48,581,722      $54,000,000     $ 102,581,722
--------------------------------------------------------------------------------
01/20/10            $     -     $ 46,260,437      $54,000,000     $ 100,260,437
--------------------------------------------------------------------------------
04/20/10            $     -     $ 44,078,457      $54,000,000       $98,078,457
--------------------------------------------------------------------------------
07/20/10            $     -     $ 41,931,883      $54,000,000       $95,931,883
--------------------------------------------------------------------------------
10/20/10            $     -     $ 39,161,913      $54,000,000       $93,161,913
--------------------------------------------------------------------------------
01/20/11            $     -     $ 36,755,413      $54,000,000       $90,755,413
--------------------------------------------------------------------------------
04/20/11            $     -     $ 34,460,356      $54,000,000       $88,460,356
--------------------------------------------------------------------------------
07/20/11            $     -     $ 32,198,453      $54,000,000       $86,198,453
--------------------------------------------------------------------------------
10/20/11            $     -     $ 29,310,441      $54,000,000       $83,310,441
--------------------------------------------------------------------------------
01/20/12            $     -     $ 26,790,878      $54,000,000       $80,790,878
--------------------------------------------------------------------------------
04/20/12            $     -     $ 24,384,699      $54,000,000       $78,384,699
--------------------------------------------------------------------------------
07/20/12            $     -     $ 22,010,568      $54,000,000       $76,010,568
--------------------------------------------------------------------------------
10/20/12            $     -     $ 19,009,095      $54,000,000       $73,009,095
--------------------------------------------------------------------------------
01/20/13            $     -     $ 16,374,177      $54,000,000       $70,374,177
--------------------------------------------------------------------------------
04/20/13            $     -     $ 13,851,023      $54,000,000       $67,851,023
--------------------------------------------------------------------------------
07/20/13            $     -     $ 11,358,611      $54,000,000       $65,358,611
--------------------------------------------------------------------------------
10/20/13            $     -       $8,237,392      $54,000,000       $62,237,392
--------------------------------------------------------------------------------
01/20/14            $     -       $5,481,535      $54,000,000       $59,481,535
--------------------------------------------------------------------------------
04/20/14            $     -       $2,836,150      $54,000,000       $56,836,150
--------------------------------------------------------------------------------
07/20/14            $     -        $ 220,160      $54,000,000       $54,220,160
--------------------------------------------------------------------------------
10/20/14            $     -           $    -      $50,973,850       $50,973,850
--------------------------------------------------------------------------------
01/20/15            $     -           $    -      $48,086,975       $48,086,975
--------------------------------------------------------------------------------
04/20/15            $     -           $    -      $45,304,801       $45,304,801
--------------------------------------------------------------------------------
07/20/15            $     -           $    -      $42,546,405       $42,546,405
--------------------------------------------------------------------------------
10/20/15            $     -           $    -      $39,151,856       $39,151,856
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
01/20/16            $     -           $    -      $36,114,574       $36,114,574
--------------------------------------------------------------------------------
04/20/16            $     -           $    -      $33,180,088       $33,180,088
--------------------------------------------------------------------------------
07/20/16            $     -           $    -      $30,267,474       $30,267,474
--------------------------------------------------------------------------------
10/20/16            $     -           $    -      $26,716,558       $26,716,558
--------------------------------------------------------------------------------
01/20/17            $     -           $    -      $23,521,038       $23,521,038
--------------------------------------------------------------------------------
04/20/17            $     -           $    -      $20,426,345       $20,426,345
--------------------------------------------------------------------------------
07/20/17            $     -           $    -      $17,351,522       $17,351,522
--------------------------------------------------------------------------------
10/20/17            $     -           $    -      $13,636,139       $13,636,139
--------------------------------------------------------------------------------
01/20/18            $     -           $    -      $10,294,741       $10,294,741
--------------------------------------------------------------------------------
04/20/18            $     -           $    -      $ 7,063,392       $ 7,063,392
--------------------------------------------------------------------------------
07/20/18            $     -           $    -      $ 3,850,175       $ 3,850,175
--------------------------------------------------------------------------------
10/20/18            $     -           $    -          $     -           $     -
--------------------------------------------------------------------------------

                                  Schedule A-2

<PAGE>

                                   SCHEDULE B
                  Schedule of Overcollateralization Requirement

                    All amounts are in United States Dollars

------------------------------------------------------------------
Payment Date           Calculated Overcollaterization Level
------------------------------------------------------------------
Closing                 $                                    -
------------------------------------------------------------------
10/20/04                $                               50,667
------------------------------------------------------------------
01/20/05                $                               63,333
------------------------------------------------------------------
04/20/05                $                               76,000
------------------------------------------------------------------
07/20/05                $                               88,667
------------------------------------------------------------------
10/20/05                $                             101,333
------------------------------------------------------------------
01/20/06                $                             114,000
------------------------------------------------------------------
04/20/06                $                             126,667
------------------------------------------------------------------
07/20/06                $                             139,333
------------------------------------------------------------------
10/20/06                $                             152,000
------------------------------------------------------------------
01/20/07                $                             164,667
------------------------------------------------------------------
04/20/07                $                             177,333
------------------------------------------------------------------
07/20/07                $                             190,000
------------------------------------------------------------------
10/20/07                $                             202,667
------------------------------------------------------------------
01/20/08                $                             215,333
------------------------------------------------------------------
04/20/08                $                             228,000
------------------------------------------------------------------
07/20/08                $                             240,667
------------------------------------------------------------------
10/20/08                $                             253,333
------------------------------------------------------------------
01/20/09                $                             266,000
------------------------------------------------------------------
04/20/09                $                             278,667
------------------------------------------------------------------
07/20/09                $                             291,333
------------------------------------------------------------------
10/20/09                $                             304,000
------------------------------------------------------------------
01/20/10                $                             316,667
------------------------------------------------------------------
04/20/10                $                             329,333
------------------------------------------------------------------
07/20/10                $                             342,000
------------------------------------------------------------------
10/20/10                $                             354,667
------------------------------------------------------------------
01/20/11                $                             367,333
------------------------------------------------------------------
04/20/11                $                             380,000
------------------------------------------------------------------
07/20/11                $                             392,667
------------------------------------------------------------------
10/20/11                $                             405,333
------------------------------------------------------------------
01/20/12                $                             418,000
------------------------------------------------------------------
04/20/12                $                             430,667
------------------------------------------------------------------
07/20/12                $                             443,333
------------------------------------------------------------------
10/20/12                $                             456,000
------------------------------------------------------------------
01/20/13                $                             468,667
------------------------------------------------------------------
04/20/13                $                             481,333
------------------------------------------------------------------
07/20/13                $                             494,000
------------------------------------------------------------------
10/20/13                $                             506,667
------------------------------------------------------------------
01/20/14                $                             519,333
------------------------------------------------------------------
04/20/14                $                             532,000
------------------------------------------------------------------
07/20/14                $                             544,667
------------------------------------------------------------------
10/20/14                $                             557,333
------------------------------------------------------------------
01/20/15                $                             570,000
------------------------------------------------------------------
04/20/15                $                             582,667
------------------------------------------------------------------
07/20/15                $                             595,333
------------------------------------------------------------------
10/20/15                $                             608,000
------------------------------------------------------------------
01/20/16                $                             620,667
------------------------------------------------------------------

<PAGE>

------------------------------------------------------------------
04/20/16                $                             633,333
------------------------------------------------------------------
07/20/16                $                             646,000
------------------------------------------------------------------
10/20/16                $                             658,667
------------------------------------------------------------------
01/20/17                $                             671,333
------------------------------------------------------------------
04/20/17                $                             684,000
------------------------------------------------------------------
07/20/17                $                             696,667
------------------------------------------------------------------
10/20/17                $                             709,333
------------------------------------------------------------------
01/20/18                $                             722,000
------------------------------------------------------------------
04/20/18                $                             734,667
------------------------------------------------------------------
07/20/18                $                             747,333
------------------------------------------------------------------
10/20/18                $                             760,000
------------------------------------------------------------------

                                  Schedule A-4

<PAGE>

                         Exhibit A to Series Supplement

                                  Form of Bond

REGISTERED                         $

No. R-__      CUSIP NO. ______

                       SEE REVERSE FOR CERTAIN DEFINITIONS

     THE PRINCIPAL OF THIS CLASS A-[ ] TRANSITION BOND SHALL BE PAID IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS CLASS A-[ ] TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS CLASS A-[ ] TRANSITION BOND HEREBY
COVENANTS AND AGREES THAT, PRIOR TO THE DATE WHICH IS ONE (1) YEAR AND ONE (1)
DAY AFTER THE PAYMENT IN FULL OF THE CLASS A-[ ] TRANSITION BONDS, IT WILL NOT
INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER
ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION
PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR
ANY STATE OF THE UNITED STATES. TRANSFERS OF THIS GLOBAL TRANSITION BOND SHALL
BE LIMITED TO TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL TRANSITION BOND
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE.

<PAGE>

                  ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC

                  TRANSITION BONDS, SERIES 2003-1, CLASS A-[ ].

Interest          Original Principal         Expected Final        Maturity Date
Rate              Amount                     Payment Date

     ATLANTIC CITY ELECTRIC Transition Funding LLC, a limited liability company
formed and existing under the laws of the State of Delaware (herein referred to
as the "Issuer"), for value received, hereby promises to pay to the Registered
Holder hereof, or registered assigns, the principal amount shown above in
quarterly installments on the Payment Dates (as defined below) and in the
amounts determined as specified on the reverse hereof or, if less, the amounts
determined pursuant to Section 8.02(e) of the Indenture referred to on the
reverse hereof, in each year, commencing on October 20, 2004 and ending on or
before the Final Maturity Date, to pay the entire unpaid principal hereof on the
Final Maturity Date and to pay interest, at the Interest Rate shown above at a
fixed rate, on each January 20, April 20, July 20 and October 20, or, if any
such day is not a Business Day, the next succeeding Business Day, commencing on
October 20, 2004 and continuing until the earlier of the payment of the
principal hereof and the Final Maturity Date hereof (each a "Payment Date"), on
the principal amount of this Class A-[ ] Transition Bond outstanding from time
to time. Interest shall be computed (i) for the initial Payment Date, on the
basis of the number of days (determined on the basis of a 360-day year of twelve
30-day months) from and including the Series Issuance Date to but excluding the
initial Payment Date, divided by 360, multiplied by [ ]%, multiplied by the
Outstanding Amount of the Class A-[ ] Transition Bonds as of the Series Issuance
Date and (ii) for each succeeding Payment Date, on the basis of the number of
days (determined on the basis of a 360-day year of twelve 30-day months) from
and including the preceding Payment Date to but excluding the current Payment
Date, divided by 360, multiplied by [ ]%, multiplied by the Outstanding Amount
of the Class A-[ ] Transition Bonds as of the close of business on the preceding
Payment Date after giving effect to all payments of principal made to the
Holders of the Class A-[ ] Transition Bonds on such preceding Payment Date. Such
principal of and interest on this Class A-[ ] Transition Bond shall be paid in
the manner specified on the reverse hereof.

     The principal of and interest on this Class A-[ ] Transition Bond are
payable in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Class A-[ ] Transition Bond shall be
applied first to interest due and payable on this Class A-[ ] Transition Bond as
provided above and then to the unpaid principal of this Class A-[ ] Transition
Bond, all in the manner set forth in Section 8.02 of the Indenture and the
Series Supplement referred to on the reverse hereof.

     Reference is made to the further provisions of this Class A-[ ] Transition
Bond set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A-[ ] Transition Bond.

                                  Exhibit A-2

<PAGE>

     Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Class A-[ ]
Transition Bond shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an authorized Manager of the Issuer.

Dated:  _____________ __, 2___

                                       ATLANTIC CITY ELECTRIC TRANSITION
                                       FUNDING LLC

                                       By: _______________________________
                                            Name: __________________________
                                            Title: Manager

                                  Exhibit A-2

<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

_____________ __, 2___

     This is one of the Class A-[ ] Transition Bonds of the Series 2003-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.

                                         THE BANK OF NEW YORK, not in its
                                              individual capacity but solely as
                                              Trustee on behalf of the
                                              Transition Bondholders,

                                         By: _______________________________
                                             Name: __________________________
                                             Title: ___________________________

                                  Exhibit A-4

<PAGE>

                           REVERSE OF TRANSITION BOND

     This Class A-[ ] Transition Bond is one of a duly authorized issue of
Transition Bonds of the Issuer, designated as its Transition Bonds (herein
called the "Transition Bonds"), issued and to be issued in one or more Series,
which Series are issuable in one or more Classes. The Series 2003-1 Transition
Bonds consist of three Classes, including the Class A-[ ] Transition Bonds
(herein called the "Class A-[ ] Transition Bonds"). The Class A-[ ] Transition
Bonds have been issued under an indenture dated as of December 19, 2002, and a
series supplement thereto dated as of December __, 2003 (such series supplement,
as supplemented or amended, the "Series Supplement" and, collectively with such
indenture, as supplemented or amended, the "Indenture"), each between the Issuer
and The Bank of New York, a New York banking corporation, as Trustee (the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the Collateral pledged, the nature and extent of the
security, the respective rights, obligations and immunities thereunder of the
Issuer, the Trustee and the Holders of the Transition Bonds and the terms and
conditions under which additional Transition Bonds may be issued. All terms used
in this Class A-[ ] Transition Bond that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in the
Indenture.

     The Class A-[ ] Transition Bonds, the other Classes of Series 2003-1
Transition Bonds and any other Series of Transition Bonds issued by the Issuer
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.

     The principal of this Class A-[ ] Transition Bond shall be payable on each
Payment Date only to the extent that amounts in the Collection Account are
available therefor, and only until the outstanding principal balance of the
Class A-[ ] Transition Bonds on such Payment Date (after giving effect to all
payments of principal made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule attached to
the Series Supplement as Schedule A, unless payable earlier either because

          (i) an Event of Default has occurred and is continuing and the Trustee
     or the Holders of Transition Bonds representing not less than a majority of
     the Outstanding Amount of the Transition Bonds of all Series have declared
     the Transition Bonds to be immediately due and payable in accordance with
     Section 5.02 of the Indenture, or

          (ii) the Issuer, at its option, has called for the redemption of the
     Series 2003-1 Transition Bonds in whole pursuant to Section 7(b) of the
     Series Supplement and Section 10.01 of the Indenture.

However, actual principal payments may be made in lesser than expected amounts
and at later than expected times as determined pursuant to Section 8.02(e) of
the Indenture. The entire unpaid principal amount of this Class A-[ ] Transition
Bond shall be due and payable on the earlier of the Final Maturity Date hereof
and the Redemption Date, if any. Notwithstanding the foregoing, the entire
unpaid principal amount of the Transition Bonds shall be due and payable, if not
then previously paid, on the date on which an Event of Default shall have
occurred and be continuing and the Trustee or the Holders of the Transition
Bonds of all Series representing not less than a majority of the Outstanding
Amount of the Transition Bonds have declared the

                                  Exhibit A-5

<PAGE>

Transition Bonds to be immediately due and payable in accordance with Section
5.02 of the Indenture.

Except in the case of an optional redemption pursuant to Section 10.01 of the
Indenture, unless an acceleration upon an Event of Default has occurred and is
continuing and the unpaid principal amount of all Series of Transition Bonds has
been declared to be due and payable together with accrued and unpaid interest
thereon, on each Payment Date the Trustee shall distribute to the Series 2003-1
Transition Bondholders of record as of the related Record Date the amounts
payable as principal on the Series 2003-1 Transition Bonds in accordance with
the Expected Amortization Schedule; provided that if as of such Payment Date one
or more Classes of Series 2003-1 Transition Bonds did not receive a scheduled
payment of principal on a previous Payment Date and amounts are payable in
respect of more than one such Class in accordance with the Expected Amortization
Schedule, principal payments shall be allocated in a sequential manner as
specified in, and subject to the limitations set forth in, Section 5(b) of the
Series Supplement. In the case of an optional redemption pursuant to Section
10.01 of the Indenture or an acceleration upon an Event of Default pursuant to
Section 5.02 of the Indenture, if the amounts available to make payments of
principal on the Series 2003-1 Transition Bonds are insufficient to make such
payments in full, the Trustee shall pay principal on each Class of the Series
2003-1 Transition Bondholders pro rata based on the Outstanding Amount of each
such Class as of such date, if such date is a Payment Date, and otherwise as of
the most recent Payment Date after giving effect to all payments of principal
made to the Holders of Transition Bonds as of such most recent Payment Date.

     Payments of interest on this Class A-[ ] Transition Bond due and payable on
each Payment Date, together with the installment of principal, if any, payable
on this Class A-[ ] Transition Bond on such Payment Date, shall be made by check
mailed first-class, postage prepaid, to the Person whose name appears as the
Registered Holder of this Class A-[ ] Transition Bond (or one or more
predecessors of such Transition Bond) in the Transition Bond Register as of the
close of business on the Record Date or in such other manner as may be provided
in the Series Supplement, except that with respect to Class A-[ ] Transition
Bonds registered on the Record Date in the name of a Clearing Agency, payments
shall be made by wire transfer in immediately available funds to the account
designated by such Clearing Agency and except for the final installment of
principal payable with respect to this Class A-[ ] Transition Bond on a Payment
Date which shall be payable as provided below. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring that
this Class A-[ ] Transition Bond be submitted for notation of payment. Any
reduction in the principal amount of this Class A-[ ] Transition Bond (or any
one or more predecessors to such Transition Bond) effected by any payments made
on any Payment Date shall be binding upon all future Holders of this Class A-[ ]
Transition Bond and of any Class A-[ ] Transition Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Class A-[ ] Transition Bond on a Payment Date, then the Trustee, in the
name of and on behalf of the Issuer, shall notify the Person who was the
Registered Holder hereof as of the second preceding Record Date to such Payment
Date by notice mailed no later than five days prior to such final Payment Date
and shall specify that such final installment will be payable to the Registered
Holder hereof as of the Record Date

                                  Exhibit A-6

<PAGE>

immediately preceding such final Payment Date and only upon presentation and
surrender of this Class A-[ ] Transition Bond and shall specify the place where
this Class A-[ ] Transition Bond may be presented and surrendered for payment of
such installment.

     The Issuer shall pay interest on overdue installments of interest on this
Class A-[ ] Transition Bond at the Interest Rate for Class A-[ ] to the extent
lawful.

     The Class A-[ ] Transition Bonds may be redeemed, in whole but not in part,
in certain circumstances as provided in Section 7(b) of the Series Supplement
and Section 10.01 of the Indenture.

     This Class A-[ ] Transition Bond is a "transition bond" as such term is
defined in the Competition Act. Principal and interest due and payable on this
Transition Bond are payable from and secured primarily by bondable transition
property authorized by a bondable stranded costs rate order issued by the State
of New Jersey Board of Public Utilities pursuant to the Competition Act. The
bondable transition property securing the Transition Bonds includes the
irrevocable right to impose and collect a nonbypassable, usage-based charge
(defined in the Competition Act as a "transition bond charge") to be included in
electric utility bills of customers of Atlantic City Electric Company, a New
Jersey corporation.

     The Competition Act provides that:

          "The State of New Jersey does hereby pledge and agree with the holders
          of any transition bonds issued under the authority of this act, with
          the pledgee, owner or assignee of bondable transition property, with
          any financing entity which has issued transition bonds with respect to
          which a bondable stranded costs rate order has been issued and with
          any person who may enter into agreements with an electric public
          utility or an assignee or pledgee thereof or a financing entity
          pursuant to this act, that the State will not limit, alter or impair
          any bondable transition property or other rights vested in an electric
          public utility or an assignee or pledgee thereof or a financing entity
          or vested in the holders of any transition bonds pursuant to a
          bondable stranded costs rate order until such transition bonds,
          together with the interest and acquisition or redemption premium, if
          any, thereon, are fully paid and discharged or until such agreements
          are fully performed on the part of the electric public utility, any
          assignee or pledgee thereof or the financing entity or in any way
          limit, alter, impair or reduce the value or amount of the bondable
          transition property approved by a bondable stranded costs rate order
          ...."

     As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Class A-[ ] Transition Bond may be registered in
the Transition Bond Register upon surrender of this Class A-[ ] Transition Bond
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder hereof or his attorney duly authorized in writing, with such signature
guaranteed by an Eligible

                                  Exhibit A-7

<PAGE>

Guarantor Institution, and thereupon one or more new Class A-[ ] Transition
Bonds of any Authorized Denominations and in the same aggregate initial
principal amount shall be issued to the designated transferee or transferees. No
service charge shall be charged for any registration of transfer or exchange of
this Class A-[ ] Transition Bond, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange.

     Prior to the due presentment for registration of transfer of this Class A-[
] Transition Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Class A-[ ] Transition Bond is
registered (as of the day of determination) as the owner hereof for the purpose
of receiving payments of principal of and interest on this Class A-[ ]
Transition Bond and for all other purposes whatsoever, whether or not this Class
A-[ ] Transition Bond may be overdue, and neither the Issuer, the Trustee nor
any such agent shall be affected by notice to the contrary.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Transition Bonds under the Indenture
at any time by the Issuer with the consent of the Holders of Transition Bonds
representing a majority of the Outstanding Amount of all Transition Bonds at the
time Outstanding of each Series or Class to be affected and upon satisfaction of
the Rating Agency Condition. The Indenture also contains provisions permitting
the Holders of Transition Bonds representing specified percentages of the
Outstanding Amount of the Transition Bonds of all Series, on behalf of the
Holders of all the Transition Bonds, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Class A-[ ] Transition Bond (or any one of more predecessors of such
transition bonds) shall be conclusive and binding upon such Holder and upon all
future Holders of this Class A-[ ] Transition Bond and of any Class A-[ ]
Transition Bond issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Class A-[ ] Transition Bond. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Transition Bonds issued
thereunder.

     The Issuer is permitted by the Indenture, under certain circumstances, to
merge, consolidate or sell substantially all of its assets, subject to the
rights of the Trustee and the Holders of Transition Bonds under the Indenture.
The term "Issuer" as used in this Class A-[ ] Transition Bond includes any
successor to the Issuer under the Indenture.

     The Class A-[ ] Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series Supplement,
subject to certain limitations therein set forth.

     This Class A-[ ] Transition Bond, the Indenture and the Series Supplement
shall be construed in accordance with the laws of the State of New Jersey,
without reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.

                                  Exhibit A-8

<PAGE>

     No reference herein to the Indenture, and no provision of this Class A-[ ]
Transition Bond or of the Indenture, shall alter or impair the right of the
Holder hereof, which is absolute and unconditional and which shall not be
impaired without the consent of such Holder: (a) to receive payment of (i) the
interest on this Transition Bond on or after the due dates thereof expressed in
this Transition Bond or in the Indenture, (ii) the unpaid principal of this
Transition Bond on or after the Final Maturity Date herefor and (iii) in the
case of redemption, the unpaid principal and interest on this Transition Bond on
or after the Redemption Date hereof; and (b) to institute suit for the
enforcement of any such payment.

                                  Exhibit A-9

<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto __

                         (name and address of assignee)

the within Class A-[ ] Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints

                         (name and address of appointee)

attorney, to transfer said Class A-[ ] Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.

Dated:
                                                                    *
-----------------          -----------------------------------------

Signature Guaranteed:

-----------------          -----------------------------------------

*    NOTE: The signature to this assignment must correspond with the name of the
     registered owner as it appears on the face of the within Class A-[ ]
     Transition Bond in every particular, without alteration, enlargement or any
     change whatsoever.

                                  Exhibit A-10

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