Document:

Exhibit 4.2

 Exhibit 4.2 
 VIRGINIA ELECTRIC AND POWER COMPANY 
 Issuer, 
 THE BANK OF NEW YORK MELLON 
 (successor to JPMorgan Chase Bank, N.A. 
 (formerly known as The Chase Manhattan Bank)) 
 Original Trustee 
 AND 
 U.S. BANK NATIONAL ASSOCIATION 
 Series Trustee 
  
  
 Nineteenth Supplemental and Amending Indenture 
 Dated as of November 1, 2008

  
  
 $700,000,000 
 2008 Series B 8.875% Senior
Notes 
 Due 2038 

 TABLE OF CONTENTS* 
  

					
	ARTICLE I
	2008 SERIES B 8.875% SENIOR NOTES DUE 2038	  	
			
	SECTION 101.	  	Establishment	  	2
	SECTION 102.	  	Definitions	  	2
	SECTION 103.	  	Payment of Principal and Interest	  	5
	SECTION 104.	  	Denominations	  	6
	SECTION 105.	  	Global Securities	  	6
	SECTION 106.	  	Redemption.	  	7
	SECTION 107.	  	Sinking Fund	  	7
	SECTION 108.	  	Additional Interest	  	7
	SECTION 109.	  	Paying Agent	  	7
		
	ARTICLE II	  	
	AMENDMENTS TO THE ORIGINAL INDENTURE	  	
			
	SECTION 201.	  	Amendment to Section 101	  	8
	SECTION 202.	  	Amendment to Section 301	  	8
		
	ARTICLE III	  	
	THE SERIES TRUSTEE	  	
			
	SECTION 301.	  	Appointment of the Series Trustee	  	8
	SECTION 302.	  	Eligibility of Series Trustee	  	9
	SECTION 303.	  	Security Registrar and Paying Agent	  	9
	SECTION 304.	  	Concerning the Trustees	  	9
	SECTION 305.	  	Patriot Act Requirements of Series Trustee	  	9
		
	ARTICLE IV	  	
	MISCELLANEOUS PROVISIONS	  	
			
	SECTION 401.	  	Recitals by Company	  	10
	SECTION 402.	  	Ratification and Incorporation of Original Indenture	  	10
	SECTION 403.	  	Executed in Counterparts	  	10
	SECTION 404.	  	Assignment	  	10

  

	 *
	 This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of
its terms and provisions. 

 Exhibit 4.2 
 THIS NINETEENTH SUPPLEMENTAL AND AMENDING INDENTURE is made as of the 1st day of November, 2008, by and between VIRGINIA ELECTRIC AND POWER COMPANY, a Virginia corporation, having its principal office at 120 Tredegar Street,
Richmond, Virginia 23219 (the “Company”), THE BANK OF NEW YORK MELLON (successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), a New York banking corporation, as Trustee (herein called the “Original
Trustee”), and U.S. BANK NATIONAL ASSOCIATION, as Trustee of the series of Securities established by this Nineteenth Supplemental and Amending Indenture, having a corporate trust office at 1021 East Cary Street, Suite 1850, Richmond, Virginia
23219 (herein called the “Series Trustee”). 
 WITNESSETH: 
 WHEREAS, the Company has heretofore entered into a Senior Indenture, dated as of June 1, 1998 (the “Original Indenture”), as heretofore
supplemented and amended, with the Original Trustee; 
 WHEREAS, the Original Indenture is incorporated herein by this reference and the
Original Indenture, as heretofore supplemented and amended and as further supplemented and amended by this Nineteenth Supplemental and Amending Indenture, is herein called the “Indenture”; 
 WHEREAS, under the Original Indenture, a new series of Securities may at any time be established in accordance with the provisions of the Original
Indenture and the terms of such series may be described by a supplemental indenture executed by the Company and the Trustee; 
 WHEREAS, the
Company proposes to create under the Indenture a new series of Securities; 
 WHEREAS, the Company is entering into this Nineteenth
Supplemental and Amending Indenture with the Original Trustee and the Series Trustee to evidence and provide for the acceptance of appointment thereunder by a Trustee with respect to the series of Securities hereby established, to add to or change
any of the provisions of the Original Indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one Trustee, and to make certain amendments to the Original Indenture pursuant to
Section 901(9) of the Original Indenture to permit the appointment of the Series Trustee as Trustee for the series of Securities hereby established; 
 WHEREAS, the Company has requested that the Original Trustee enter into this Nineteenth Supplemental and Amending Indenture in connection with (i) the foregoing amendments, and (ii) the Company’s
appointing the Series Trustee with all the rights, powers, trusts and duties of the Original Trustee with respect to, and only with respect to, the series of Securities hereby established; 
 WHEREAS, additional Securities of other series hereafter established, except as may be limited in the Original Indenture as at the time supplemented and
modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and the Original Trustee will, unless and until a Person other than the Original Trustee is appointed to act as Trustee with respect to the
Securities of such series, serve as Trustee of such series; 

 WHEREAS, all conditions necessary to authorize the execution and delivery of this Nineteenth Supplemental
and Amending Indenture and to make it a valid and binding obligation of the Company have been done or performed. 
 NOW, THEREFORE, in
consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 
 ARTICLE I 
 2008 SERIES B 8.875%
SENIOR NOTES DUE 2038 
 SECTION 101. Establishment. There is hereby established a new series of Securities to be issued under the
Indenture, to be designated as the Company’s 2008 Series B 8.875% Senior Notes Due 2038, (the “Series B Senior Notes”). 
 There are to be initially authenticated and delivered $700,000,000 principal amount of Series B Senior Notes, and such principal amount of the Series B Senior Notes may be increased from time to time pursuant to Section 301 of the
Indenture. All Series B Senior Notes need not be issued at the same time and such series may be reopened at any time, without the consent of any Holder, for issuances of additional Series B Senior Notes. Any such additional Series B Senior Notes
will have the same interest rate, maturity and other terms as those initially issued. Further Series B Senior Notes may also be authenticated and delivered as provided by Sections 304, 305, 306, 906 and 1106 of the Original Indenture. 
 The Series B Senior Notes shall be issued in definitive fully registered form without coupons, in substantially the form set out in Exhibit A
hereto. The entire initially issued principal amount of the Series B Senior Notes shall initially be evidenced by one or more certificates issued to Cede & Co., as nominee for The Depository Trust Company. 
 The form of the Series Trustee’s Certificate of Authentication for the Series B Senior Notes shall be in substantially the form set forth in
Exhibit B hereto. 
 Each Series B Senior Note shall be dated the date of authentication thereof and shall bear interest from the date
of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for. 
 SECTION
102. Definitions. The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below. Capitalized terms used herein for which no definition is provided herein shall have the meanings set
forth in the Original Indenture. 
 “Adjusted Treasury Rate” means, with respect to any Redemption Date: (i) the yield, under
the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of
Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity 

  

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corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Adjusted Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or (ii) if
such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. 
 “Business Day” means a day other than (i) a Saturday or a Sunday, (ii) a day on which banks in New York, New York are authorized or
obligated by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Series Trustee is closed for business. 
 “Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Series B Senior Notes to be
redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life. 
 “Comparable Treasury Price” for any Redemption Date means (i) the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (ii) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations. 

“Corporate Trust Office of the Series Trustee” means the office of the Series Trustee at which at any particular time its corporate trust
business with respect to the series of Securities herein described shall be principally administered, which office at the date of original execution of this Nineteenth Supplemental and Amending Indenture is located at 1021 East Cary Street, Suite
1850, Richmond, Virginia 23219. 
 “Independent Investment Banker” means Citigroup Global Markets Inc., Goldman, Sachs &
Co. or Greenwich Capital Markets, Inc. and their respective successors as selected by the Company, or if none of such firms is willing or able to serve as such, an independent investment and banking institution of national standing appointed by the
Company. 
 “Interest Payment Dates” means May 15 and November 15 of each year, commencing on May 15, 2009.

 “Original Issue Date” means November 6, 2008. 
 “Outstanding,” when used with respect to the Series B Senior Notes, means, as of the date of determination, all Series B Senior Notes,
theretofore authenticated and delivered under the Indenture, except: 
 (i) Series B Senior Notes theretofore canceled by the Series Trustee
or delivered to the Series Trustee for cancellation; 
  

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 (ii) Series B Senior Notes for whose payment at Maturity the necessary amount of money or money’s
worth has been theretofore deposited (other than pursuant to Section 1303 of the Original Indenture) with the Series Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such Series B Senior Notes; provided that, if such Series B Senior Notes are to be redeemed, notice of such redemption has been duly given pursuant to the Original Indenture or provision
therefor satisfactory to the Series Trustee has been made; 
 (iii) Series B Senior Notes with respect to which the Company has effected
Defeasance pursuant to Section 1302 of the Original Indenture; and 
 (iv) Series B Senior Notes that have been paid pursuant to
Section 306 of the Original Indenture or in exchange for or in lieu of which other Series B Senior Notes have been authenticated and delivered pursuant to the Indenture, other than any such Series B Senior Notes in respect of which there shall
have been presented to the Series Trustee proof satisfactory to it that such Series B Senior Notes are held by a bona fide purchaser in whose hands such Series B Senior Notes are valid obligations of the Company; provided, however, that in
determining whether the Holders of the requisite principal amount of Outstanding Series B Senior Notes have given, made or taken any request, demand, authorization, direction, notice, consent or waiver or other action hereunder as of any date,
Series B Senior Notes owned by the Company or any other obligor upon the Series B Senior Notes or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the
Series Trustee shall be protected in making any such determination or relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action only Series B Senior Notes which the Series Trustee actually knows to be
so owned shall be so disregarded. Series B Senior Notes so owned which shall have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Series Trustee (A) the pledgee’s right so to
act with respect to such Series B Senior Notes and (B) that the pledgee is not the Company or any other obligor upon the Series B Senior Notes or an Affiliate of the Company or such other obligor. 
 “Reference Treasury Dealer” means: (i) Citigroup Global Markets Inc., Goldman, Sachs & Co. and Greenwich Capital Markets, Inc.
and their respective successors; provided that, if any such firm or its successors ceases to be a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall substitute another Primary
Treasury Dealer; and (ii) up to two other Primary Treasury Dealers selected by the Company. 
 “Reference Treasury Dealer
Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as
a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. 
  

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 “Regular Record Date” means, with
respect to each Interest Payment Date, the close of business on the Business Day preceding such Interest Payment Date; provided, that with respect to Series B Senior Notes that are not represented by one or more Global Securities, the Regular
Record Date shall be the close of business on the 15th calendar day (whether or not a Business Day) preceding such Interest Payment Date.

 “Remaining Life” means the remaining term of the Series B Senior Notes. 
 “Stated Maturity” means November 15, 2038. 
 The terms “Company,” “Original Trustee,” “Series Trustee,” “Original Indenture,” and “Indenture” shall have the respective meanings set forth in the recitals to this
Nineteenth Supplemental and Amending Indenture and the paragraph preceding such recitals. 
 SECTION 103. Payment of Principal and
Interest. The principal of the Series B Senior Notes shall be due at the Stated Maturity (unless earlier redeemed). The unpaid principal amount of the Series B Senior Notes shall bear interest at the rate of 8.875% per annum until paid or
duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for. Interest shall be paid semi-annually in arrears on each Interest Payment Date
to the Person in whose name the Series B Senior Notes are registered on the Regular Record Date for such Interest Payment Date; provided that interest payable at the Stated Maturity of principal or on a Redemption Date as provided herein will be
paid to the Person to whom principal is payable. Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Regular Record Date and may either be paid to the Person or Persons in
whose name the Series B Senior Notes are registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Series Trustee (in accordance with Section 307 of the Original Indenture),
notice whereof shall be given to Holders of the Series B Senior Notes not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities
exchange, if any, on which the Series B Senior Notes may be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Original Indenture. 
 Payments of interest on the Series B Senior Notes will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments
for the Series B Senior Notes shall be computed and paid on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Series B Senior Notes is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or payment in respect of any such delay), in each case with the same force and effect as if made on the date the payment was originally
payable. 
 Payment of the principal and interest on the Series B Senior Notes shall be made at the office of the Paying Agent in such
currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, with any such payment that is due at the Stated Maturity of any Series B Senior Notes or on a Redemption Date being made upon
surrender of such Series B Senior Notes to the Paying Agent. Payments of interest 

  

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(including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by check
mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing
to the Series Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto. In the event that any date on which principal and interest is payable on the Series B Senior Notes is not a Business Day, then
payment of the principal and interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or payment in respect of any such delay), in each case with the same force and effect as if made on
the date the payment was originally payable. 
 SECTION 104. Denominations. The Series B Senior Notes may be issued in denominations
of $1,000, or any integral multiple thereof. 
 SECTION 105. Global Securities. The Series B Senior Notes will be issued initially in
the form of one or more Global Securities registered in the name of the Depositary (which shall be The Depository Trust Company) or its nominee. Except under the limited circumstances described below, Series B Senior Notes represented by such Global
Securities will not be exchangeable for, and will not otherwise be issuable as, Series B Senior Notes in definitive form. The Global Securities described above may not be transferred except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or its nominee. 
 Owners of
beneficial interests in such a Global Security will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing a Series B Senior Note shall be exchangeable, except for another Global Security of
like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee or except as described below. The rights of Holders of such Global Security shall be exercised only through the
Depositary. 
 A Global Security shall be exchangeable for Series B Senior Notes registered in the names of persons other than the Depositary
or its nominee only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary shall have been appointed by the Company within 90 days of receipt by
the Company of such notification, or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary
shall have been appointed by the Company within 90 days after it becomes aware of such cessation, or (ii) the Company in its sole discretion and subject to the procedures of the Depositary determines that such Global Security shall be so
exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Series B Senior Notes registered in such names as the Depositary shall direct. 
  

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 SECTION 106. Redemption. The Series B Senior Notes are redeemable, in whole or in part, at any
time, and at the option of the Company, at a Redemption Price equal to the greater of: 
 (i) 100% of the principal amount of Series B Senior
Notes then Outstanding to be so redeemed, or 
 (ii) the sum of the present values of the remaining scheduled payments of principal and
interest thereon (not including any portion of such payments of interest accrued as of the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury
Rate, plus 50 basis points, as calculated by an Independent Investment Banker, 
 plus, in either of the above cases, accrued and unpaid
interest thereon to the Redemption Date. 
 The Adjusted Treasury Rate shall be calculated on the third Business Day preceding the Redemption
Date. 
 Notwithstanding Section 1104 of the Original Indenture, (x) notice of redemption under this Section 106 shall with
respect to the Series B Senior Notes be given by first-class mail, postage prepaid, mailed not less than 20 nor more than 60 days prior to the Redemption Date, to each Holder of Series B Senior Notes to be redeemed, at his address appearing in the
Security Register, and (y) the notice of such redemption need not set forth the Redemption Price but only the manner of calculation thereof. The Company shall notify the Series Trustee of the Redemption Price promptly after the calculation
thereof and the Series Trustee shall have no responsibility for such calculation. 
 SECTION 107. Sinking Fund. The Series B Senior
Notes shall not have a sinking fund. 
 SECTION 108. Additional Interest. Any principal of and installment of interest on the Series B
Senior Notes that is overdue shall bear interest at the rate of 8.875% (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such
interest shall be payable on demand. 
 SECTION 109. Paying Agent. The Series Trustee shall initially serve as Paying Agent with
respect to the Series B Senior Notes, with the Place of Payment initially being the Corporate Trust Office of the Series Trustee. 
  

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 ARTICLE II 
 AMENDMENTS TO THE ORIGINAL INDENTURE 
 SECTION 201. Amendment to Section 101. The
definition of “Trustee” as set forth in Section 101 of the Original Indenture is hereby amended to read as follows: 
 “
‘Trustee’ means the Person named as the ‘Trustee’ in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture or until a Trustee for a series
of Securities shall have become such pursuant to Section 301(20) of this Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person,
“Trustee” as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.” 
 SECTION 202. Amendment to Section 301. Section 301(19) of the Original Indenture is hereby amended by deleting the word “and” at the end thereof, by renumbering Section 301(20) as Section 301(21) and by
inserting the following clause after Section 301(19): 
 “(20) if other than the Person named as the ‘Trustee’ in the
first paragraph of this instrument (or a successor to such Person pursuant to the applicable provisions of this Indenture) (for purposes of this clause (20), herein called the “Original Trustee”), the identity of a Trustee for the
Securities of the series (a “Series Trustee”), and if not the Series Trustee, the identity of each Security Registrar, Paying Agent or Authenticating Agent with respect to such Securities, and such additions or changes to any provisions of
this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood, anything contained herein or in any Board Resolution, Officers’ Certificate or
supplemental indenture to the contrary notwithstanding, that (i) nothing herein shall constitute such Trustees co-trustees of the same trust, (ii) each such Trustee shall be a trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee, (iii) the Series Trustee shall have all the rights, powers, trusts and duties of the Original Trustee with respect to, and only with respect to, the Securities of the series,
(iv) the Original Trustee shall have no rights, powers, trusts and duties with respect to the Securities of the series, (v) no Trustee hereunder shall have any liability for any acts or omissions of any other Trustee hereunder and
(vi) no appointment of a Series Trustee shall become effective until the acceptance of the appointment by the Series Trustee in writing; and” 
 ARTICLE III 
 THE SERIES TRUSTEE 
 SECTION 301. Appointment of the Series Trustee. Pursuant to the Original Indenture and pursuant to this Nineteenth Supplemental and Amending
Indenture, the Company hereby appoints the Series Trustee as Trustee under the Original Indenture with respect to, and only with respect to, the Series B Senior Notes, and by execution hereof the Series Trustee accepts such appointment. Pursuant to
the Original Indenture, all the rights, powers, trusts and duties of the Original Trustee under the Original Indenture shall be vested in the Series Trustee 
  

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with respect to the Series B Senior Notes, there shall continue to be vested in the Original Trustee all of its rights, powers, trusts and duties as Trustee
under the Original Indenture with respect to all of the series of Securities as to which it has served and continues to serve as Trustee, and the Original Trustee shall have no rights, powers, trusts and duties with respect to the Series B Senior
Notes. 
 SECTION 302. Eligibility of Series Trustee. The Series Trustee hereby represents that it is qualified and eligible under the
provisions of Section 609 of the Original Indenture and the provisions of the Trust Indenture Act to accept its appointment as Trustee with respect to the Series B Senior Notes under the Original Indenture and hereby accepts the appointment as
such Trustee. 
 SECTION 303. Security Registrar and Paying Agent. Pursuant to the Original Indenture, the Company hereby appoints
U.S. Bank National Association as “Security Registrar” and “Paying Agent” with respect to the Series B Senior Notes. 
 SECTION 304. Concerning the Trustees. Neither the Original Trustee nor the Series Trustee assumes any duties, responsibilities or liabilities by reason of this Nineteenth Supplemental and Amending Indenture other than as set forth in
the Original Indenture and, in carrying out its responsibilities hereunder, each shall have all of the rights, powers, privileges, protections, duties and immunities which it possesses under the Original Indenture. The Original Trustee and the
Series Trustee shall not constitute co-trustees of the same trust, and each of the Original Trustee and the Series Trustee shall be trustee of a trust or trusts under the Indenture separate and apart from any trust or trusts under the Indenture
administered by the other trustee. The Original Trustee shall have no liability for any acts or omissions of the Series Trustee and the Series Trustee shall have no liability for any acts or omissions of the Original Trustee. 
 References in this Nineteenth Supplemental and Amending Indenture to sections of the Original Indenture that require or permit actions by the Original
Trustee with respect to Securities of the series established hereby shall be deemed to require or permit actions only by the Series Trustee and the Original Trustee shall have no responsibility therefor. 
 SECTION 305. Patriot Act Requirements of Series Trustee. To help the government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust, or other legal entity, the Series
Trustee will ask for documentation to verify such non-individual person’s formation and existence as a legal entity. The Series Trustee may also seek to see financial statements, licenses, identification and authorization documents from
individuals claiming authority to represent the entity or other relevant documentation. 
  

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 ARTICLE IV 
 MISCELLANEOUS PROVISIONS 
 SECTION 401. Recitals by Company. The recitals in this Nineteenth
Supplemental and Amending Indenture are made by the Company only and not by the Original Trustee or the Series Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, powers, privileges, protections, duties
and immunities of the Original Trustee shall be applicable, but only to the Series Trustee, in respect of the Series B Senior Notes and of this Nineteenth Supplemental and Amending Indenture (to the extent relating to the Series B Senior Notes) as
fully and with like effect as if set forth herein in full. 
 SECTION 402. Ratification and Incorporation of Original Indenture. As
supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this Nineteenth Supplemental and Amending Indenture shall be read, taken and construed as one and the same instrument. 

SECTION 403. Executed in Counterparts. This Nineteenth Supplemental and Amending Indenture may be executed in several counterparts, each of
which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. 
 SECTION 404.
Assignment. The Company shall have the right at all times to assign any of its rights or obligations under the Indenture with respect to the Series B Senior Notes to a direct or indirect wholly-owned subsidiary of the Company; provided that,
in the event of any such assignment, the Company shall remain fully liable for the performance of all such obligations. The Indenture may also be assigned by the Company in connection with a transaction described in Article Eight of the Original
Indenture. 
  

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 IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by
its duly authorized officer, all as of the day and year first above written. 
  

			
	VIRGINIA ELECTRIC AND POWER COMPANY
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	 THE BANK OF NEW YORK MELLON
 (SUCCESSOR TO
JPMORGAN CHASE BANK, N.A. (FORMERLY KNOWN AS THE CHASE MANHATTAN BANK)), as Original Trustee, solely for purposes of Articles II, III and IV hereof.

		
	By:	 	  

	Name:	 	
	Title:	 	
	
	U.S. BANK NATIONAL ASSOCIATION, as Series Trustee
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

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 EXHIBIT A 
 FORM OF 
 2008 SERIES B 8.875% SENIOR NOTE 
 DUE 2038 
 [UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
[CEDE & CO.] OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO [CEDE & CO.], ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, [CEDE & CO.,] HAS AN INTEREST HEREIN.]** 
 [THIS SERIES B SENIOR NOTE IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SERIES B SENIOR NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO
TRANSFER OF THIS SERIES B SENIOR NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]** 
  
  
 VIRGINIA ELECTRIC AND 
 POWER COMPANY 
  
  
 $             
 2008
SERIES B 8.875% SENIOR NOTE 
 DUE 2038 
  

			
	No. R-	 	CUSIP No. 927804 FG4

 Virginia Electric and Power Company, a
corporation duly organized and existing under the laws of Virginia (herein called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to
[Cede & Co.] **, or registered assigns
(the “Holder”), the principal sum of              Dollars ($            ) on November 15, 2038
and to pay interest thereon from November 6, 2008 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on May 15 and November 15 of each year, commencing on
May 15, 2009, at the 
  
  
 ** Insert in Global Securities. 

 
rate of 8.875% per annum, until the principal hereof is paid or made available for payment, provided that any principal, and any such installment of
interest, that is overdue shall bear interest at the rate of 8.875% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment,
and such interest shall be payable on demand. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Series B Senior Note (or one
or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the close of business on the Business Day preceding such Interest Payment Date; provided, that with respect to
Series B Senior Notes that are not represented by one or more Global Securities, the Regular Record Date shall be the close of business on the 15th
calendar day (whether or not a Business Day) preceding such Interest Payment Date, provided, that interest payable at the Stated Maturity of principal or on a Redemption Date will be paid to the Person to whom principal is payable. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Series B Senior Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Series Trustee, notice whereof shall be given to Holders of Series B Senior Notes not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Series B Senior Notes may be listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture. 
 Payments of interest on the Series B Senior Notes will include interest accrued to but excluding the
respective Interest Payment Dates. Interest payments for the Series B Senior Notes shall be computed and paid on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Series B Senior
Notes is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or payment in respect of any such delay), in each case with the same force and
effect as if made on the date the payment was originally payable. 
 Payment of the principal of and premium, if any, and interest on this
Series B Senior Note will be made at the office of the Paying Agent, in the City of Richmond, Virginia, 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, with
any such payment that is due at the Stated Maturity of any Series B Senior Note or upon redemption being made upon surrender of such Series B Senior Note to such office or agency; provided, however, that at the option of the Company payment of
interest, subject to such surrender where applicable, may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such
account at a banking institution in the United States as may be designated in writing to the Series Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto. 
 Reference is hereby made to the further provisions of this Series B Senior Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place. 
  

 2 

 Unless the certificate of authentication hereon has been executed by the Series Trustee referred to on
the reverse hereof by manual signature, this Series B Senior Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 
 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 
  

					
	Dated:	 	VIRGINIA ELECTRIC AND POWER COMPANY
			
		 	By:	 	  

		 	Name:	 	
		 	Title:	 	

  

			
	(SEAL)	 	
	Attest:	 	
	
	  

	Name:	 	  

	[Assistant] Corporate Secretary

  

 3 

 [REVERSE OF SERIES B 8.875% SENIOR NOTE] 
 This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one
or more series under an Indenture, dated as of June 1, 1998, as heretofore supplemented and amended, between the Company and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N. A. (formerly known as The Chase Manhattan Bank)), as
Trustee (herein called the “Original Trustee”), and as further supplemented and amended by a Nineteenth Supplemental and Amending Indenture dated as of November 1, 2008, by and among the Company, the Original Trustee and U.S. Bank
National Association, as Trustee of the series of Securities established thereby (herein called the “Series Trustee,” which term includes any successor series trustee for the Series B Senior Notes under the Indenture) (collectively, as
amended or supplemented through the date hereof and from time to time, herein called the “Indenture,” which term shall have the meaning assigned to it in such instrument), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Original Trustee, the Series Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated
and delivered. This Security is one of the series designated on the face hereof (the “Series B Senior Notes”) which is unlimited in aggregate principal amount. 
 The Series B Senior Notes are redeemable, in whole or in part, at any time in the manner and with the effect provided in the Indenture. 
 If an Event of Default with respect to Series B Senior Notes shall occur and be continuing, the principal of the Series B Senior Notes may be declared due and payable in the manner and with the effect provided in the
Indenture. 
 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee for the series of Securities affected, with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Series B Senior Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Series B Senior Note and of any Series B Senior Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Series B Senior Note. 
 As provided in and subject to the provisions of the Indenture, the Holder of this Series B
Senior Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Series Trustee
written notice of a continuing Event of Default with respect to the Series B Senior Notes, the Holders of not less than a majority in principal amount of the Series B Senior Notes at the time Outstanding shall have made written request to the Series
Trustee to institute proceedings in respect of such Event of Default as Series Trustee and offered the Series Trustee reasonable indemnity, and the Series Trustee shall not have received from the Holders of a 

  

 4 

 
majority in principal amount of Series B Senior Notes at the time Outstanding a direction inconsistent with such request, and shall have failed to institute
any such proceeding for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Series B Senior Note for the enforcement of any payment of principal hereof or
premium, if any, or interest hereon on or after the respective due dates expressed or provided for herein. 
 No reference herein to the
Indenture and no provision of this Series B Senior Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Series B Senior Note
at the times, place and rate, and in the coin or currency, herein prescribed. 
 As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Series B Senior Note is registrable in the Security Register, upon surrender of this Series B Senior Note for registration of transfer at the office or agency of the Company in any place where the
principal of, premium, if any, and interest on this Series B Senior Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new Series B Senior Notes of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or
transferees. 
 The Series B Senior Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Series B Senior Notes are exchangeable for a like aggregate principal amount of Series B Senior Notes having the same Stated Maturity and of like
tenor of any authorized denominations as requested by the Holder upon surrender of the Series B Senior Note or Series B Senior Notes to be exchanged at the office or agency of the Company. 
 No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. 
 Prior to due presentment of this Series B Senior Note for registration
of transfer, the Company, the Series Trustee and any agent of the Company or the Series Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Series B Senior Note be overdue,
and neither the Company, the Series Trustee nor any such agent shall be affected by notice to the contrary. 
 All terms used in this Series
B Senior Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. 
  

 5 

 ABBREVIATIONS 
 The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: 
  

					
	TEN COM -	 	as tenants in common	 	
			
	TEN ENT -	 	as tenants by the entireties	 	
		
	JT TEN -	 	as joint tenants with rights of survivorship and not as tenants in common
			
	UNIF GIFT MIN ACT -	 	  
	 	Custodian for
		 	(Cust)	 	
		 	  
	 	
		 	(Minor)	 	
			
		 	Under Uniform Gifts to Minors Act of	 	
			
		 	  
	 	
		 	(State)	 	
		
	Additional abbreviations may also be used though not on the above list.	 	
		
	  
	 	

  

 6 

			
	 FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

		
	  
	 	.
	(please insert Social Security or other identifying number of assignee)
		
	  
	 	.
		
	  
	 	.
		
	  
	 	.

 PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE 
 the within Series B Senior Note and all rights thereunder, hereby irrevocably constituting and appointing 
  

			
		
	  
	 	.
		
	  
	 	.
		
	  
	 	.
		
	  
	 	.
		
	  
	 	.
		
	  
	 	.

 agent to transfer said Series B Senior Note on the books of the Company, with full power of substitution in the
premises. 
 Dated:             
    ,         
  

	
	  

 NOTICE: The signature to this assignment must correspond with the name as written upon the face of the
within instrument in every particular without alteration or enlargement, or any change whatever. 
  

 7 

 EXHIBIT B 
 CERTIFICATE OF AUTHENTICATION 
 This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture. 
  

			
	 U.S. BANK NATIONAL ASSOCIATION,
 as Series
Trustee

		
	By:	 	  

		 	Authorized SignatoryUnassociated Document

    SECURED
CONVERTIBLE PROMISSORY NOTE

     

    
      	
              $500,000.000

              (Original
      Principal Amount)

            	
              New York, New
      York 

              July 16,
      2008

            

    

     

     FOR
VALUE RECEIVED, the adequacy of which is hereby acknowledged, the undersigned,
Blue Holdings, Inc., a Nevada corporation having an address at 4901 Zambrano
Street, Commerce, Ca 90040 (the “Maker” or “Borrower”), hereby
promises to pay to Headgear, Inc., having an address at 3409 Chandler Creek
Road, Virginia Beach, VA 23453 (the “Lender”), the
aggregate sum of FIVE HUNDRED THOUSAND UNITED STATES DOLLARS ($500,000.00),
subject to adjustment as provided herein.  This Note shall be due and
payable in full, together with any other charges (if any), on March 15, 2009
(the “Maturity
Date”).

     

    Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Loan and Security Agreement executed of even date herewith (the “Loan
Agreement”).

     

    1.          Repayment
Terms.   All sums due to Lender hereunder shall be made as
per the terms of this Section 1.  The Lender has agreed to accept
payment under this Note as follows:  the principal amount of this Note
shall be utilized as a Purchase Order Credit that allows the Lender to acquire
Five Hundred Thousand Dollars worth of Borrower’s goods at a discount of 22.5%
to Borrower’s spring merchandise line wholesale price list (the “Spring Line
Sheets”), which is attached hereto as Exhibit A.  The selection of the
goods shall be in Lender’s sole and absolute discretion from the Spring Line
Sheets, provided that Borrower has the right to change the Spring Line Sheets
from time to time to substitute an item of comparable quality and style for any
item currently on the Sheets.  If the Maker does not provide shipment
of the goods ordered within thirty (30) days of the delivery date prescribed by
Lender which in no event shall be prior to January 15, 2009, this Note shall be
in Default and the Lender shall have the right to demand immediate payment
and/or exercise any and all rights hereunder or under the Loan
Agreement.

    

    2.           Allocation.   Except
as otherwise provided herein, all payments made hereunder (whether in prepayment
or otherwise) shall be applied against principal.

     

    3.           Events of
Default.   Each and any of the following shall constitute
Events of Default:

     

    (a)           The
Maker does not provide shipments of goods ordered by the Lender within sixty
(60) days of the Delivery Date requested by Lender as set forth in Section 1
hereof.

    

    (b)           The
Borrower fails to comply in any material respect with any term, obligation,
covenant, or condition contained in this Note or in the Loan and Security
Agreement within ten (10) days after receipt of written notice from the Lender
demanding such compliance.

    

    (c)           Any
warranty or representation made to the Lender by the Borrower under this Note or
in the Loan and Security Agreement proves to have been false in any material
respect when made or furnished.

    

    (d)           Any
event that results in acceleration of the maturity of any indebtedness of
Borrower in the outstanding principal amount of $50,000 or more, under any note,
indenture, contract, or agreement.

     

    (e)           Any
levy, seizure, attachment, lien, or encumbrance of or on the Collateral which is
not discharged by the Borrower within twenty (20) days and is not being disputed
by the Borrower in good faith, or any sale, transfer, or disposition of any
interest in the Collateral, other than in the ordinary course of business,
without the written consent of the Lender.

    

    
      	
               
      

            	
              (f)

            	
              Lender’s
      insolvency as set forth in the Loan
Agreement.

            

    

    

    
      	
               
      

            	
              (g)

            	
              Any
      other Event of Default as set forth in the Loan
  Agreement.

            

    

    

    If an
Event of Default should occur, Lender, at its option, may declare the
outstanding principal balance of this Note, along with other fees (if any), to
be immediately due and payable without presentment, demand, protest, or notice
of any kind, all of which are hereby expressly waived.

     

    Further,
Maker agrees to pay all fees, costs and expenses, including reasonable
attorneys’ fees and legal expenses, incurred by Lender in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.

     

    4.           Conversion.   If
the Maker remains in default of this Note for over sixty (60) days, then the
Lender shall have the option, but not the obligation, to convert the principal
amount of the Note that remains outstanding at the time Default into fully paid
and non-assessable shares of Common Stock of the Maker at $0.40 per share (the
“Conversion Price”).

     

    In case
the Company shall at any time divide its outstanding shares of Common Stock into
a greater number of shares, the Conversion Price in effect immediately prior to
such subdivision should be proportionately reduced, and, conversely, in the case
of outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the actual conversion price in effect immediately
prior to such combination shall be proportionately increased.

     

    In any reclassification or change of
outstanding shares of Common Stock available for issue upon conversion of the
Note (other than a change in stated value or from no par to par value) or in the
case of any consolidation or merger of the Company with any other company, or in
the case of the sale and conveyance to another to another company or person of
the property of the Company in its entirety or substantially as an entirety, the
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made that the Lender shall have the right thereafter to convert
the Notes into the kind and amount of shares of Stock and other securities and
property receivable upon such reclassification, change, consolidation, merger,
sale or conveyance by Lender of the number of shares of Common Stock in the
Company into which the Note might have been converted immediately prior to such
reclassification, change, consolidation, merger, sale or
conveyance.

     

    5.           Waiver.   No
delay or omission of Lender in exercising any right or power hereunder shall
impair such right or power or be a waiver of any default or an acquiescence
therein; and no single or partial exercise of any such right or power shall
preclude other or further exercise thereof, or the exercise of any other right;
and no waiver shall be valid unless in writing signed by Lender, and then only
to the extent specifically set forth in such writing.  All remedies
hereunder or by law afforded shall be cumulative and shall be available to
Lender until the principal amount of and all interest on this Note has been paid
in full.

     

    6.           Security &
Pledge.  Maker hereby acknowledges and affirms its assignment
and pledge to Lender of all of the Collateral described in the Loan
Agreement.

     

    7.           Notices.  All
notices, requests, demands or other communications required or permitted
hereunder shall be in writing, addressed to the appropriate party as
follows:

     

    
      	
               
      

            	
              (i)

            	
              If to Lender,
      to:

            

    

     

    Headgear,
Inc.

    3409
Chandler Creek Road

    Virginia
Beach, VA 23453

    Attention:
Jeff Watson, Chief Executive Officer

     

    With a copy
to:

     

    Marc X.
LoPresti, Esq.

    Tagliaferro
& LoPresti, LLP

    45
Broadway, Suite 2200

    New York,
New York 10006

    

    (ii)         
If to Maker, to Maker’s address listed above, or to such other address as may
have been designated in prior notice.  Notices may be sent by (a)
overnight courier, or (b) registered or certified mail, postage prepaid, return
receipt requested; and shall be deemed given (i) in the case of overnight
courier, the next business day after the day sent, and (ii) in the case of
mailing, three (3) business days after being mailed by registered or certified
mail, and otherwise notices shall be deemed to have been given when
received.

     

    8.           Assignment.  Lender
shall be permitted to assign this Note without the consent of
Maker.

     

    9.           Binding
Effect.  The terms and provisions of this Note shall be binding
upon Maker and its successors and permitted assigns, and shall inure to the
benefit of Lender and its successors and assigns, and any subsequent holder of
this Note.

     

    10.         Governing
Law.  (a) This Note shall be interpreted in accordance with and
governed by the laws of the State of New York (without giving effect to any
choice or conflict of laws provisions thereof).

     

               (b)           Each
party hereto hereby irrevocably and unconditionally submits to the jurisdiction
of any federal and state court in the State of New York sitting in the borough
of Manhattan in the City of New York and irrevocably agrees that all actions or
proceedings arising out of or relating to this Note or the transactions
contemplated hereby shall be litigated exclusively in such
courts.  Each party hereto agrees not to commence any legal proceeding
related hereto or thereto except in such courts.  Each party hereto
irrevocably waives any objection which it may now or hereafter have to the
laying of the venue of any such proceeding in any such court and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each party hereto consents to process
being served in any such action or proceeding by mailing a copy thereof by
registered or certified mail.

     

                          (c)           EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT.  Each party hereto (a) certifies that no representative,
agent or attorney of any of the other parties has represented, expressly or
otherwise, that any of the other parties would not, in the event of litigation,
seek to enforce the foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Note, by, among other
things, the mutual waivers and certifications in this Section 9.

     

    11.           Headings.  The
section headings contained in this Note are intended solely for convenience of
reference and do not themselves constitute a part of this Note.

     

    12.           Severability.  If
any provision of this Note or the application thereof to any person or
circumstance should, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Note and the application of such provision
to other persons or circumstances shall not be affected thereby, but rather
shall be enforced to the greatest extent permitted by law.

     

    IN WITNESS WHEREOF, Maker has executed
this Note as of the date first above written.

     

    
      
        	 	MAKER:	 
	 	 	 
	 	

                BLUE
      HOLDINGS, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Glenn
      Palmer	 
	 	Name:  	Glenn
      Palmer	 
	 	Title:  	Chief
      Executive Officer	 
	 	 	 	 

      

       

      
        	 	LENDER: 	 
	 	 	 
	 	

                HEADGEAR,
      INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Jeff
      Watson	 
	 	Name:  	Jeff
      Watson	 
	 	Title: 	Chief
      Executive Officer

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