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GUARANTY <br /> <br />Ma~insville, Virginia <br /> ,2004 <br /> <br /> For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce <br />AMERICAN NATIONAL BANK AND TRUST COMPANY, a national banking association (herein, with its participants, <br />successors and assigns, called "Lender"), at its option, at any time or from time to time to make loans or extend other <br />accommodations to or for the account of BLUE RIDGE POWER AGENCY, a Virginia corporation (herein called <br />"Borrower") or to engage in any other transactions with Borrower, the Undersigned hereby absolutely and unconditionally <br />guarantees to Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or <br />otherwise, of the debts, liabilities and obligations described as follows: <br /> <br />The Undersigned guarantees to Lender the payment and performance of the debt, liability or obligation of <br />Borrower to Lender evidenced by or arising out of the following: that certain Letter of Credit Agreement dated <br /> ,2004, by and between the Lender and the Borrower which provides for and is <br />secured by a Promissory Note payable to Lender in the maximum principal amount of One Million Five Hundred <br />Ei,qhty Six Thousand and 00/100 Dollars ($1~586~000.00), to secure that certain Irrevocable Letter of Credit of <br />even date, issued by Lender in favor of PJM Interconnection, L.L.C. ("PJM"), for the account of Borrower (the <br />"Letter of Credit"), and any extensions, renewals or replacements thereof (hereinafter collectively referred to as the <br />"Indebtedness"); provided however that this Guaranty shall expire and be of no further force and effect on <br />January 1,2007, except to the extent that any sums were previously advanced by the Lender under the aforesaid <br />Irrevocable Letter of Credit, which have not been repaid by Borrower to Lender. <br /> <br />The Undersigned further acknowledges and agrees with Lender that: <br /> <br /> 1. No act or thing need occur to establish the liability of the Undersigned hereunder, and no act or thing, except full <br />payment and discharge of all Indebtedness, shall in any way exonerate the Undersigned or modify, reduce, limit or release <br />the liability of the Undersigned hereunder. <br /> <br /> 2. This is an absolute, unconditional and continuing guaranty of payment of the Indebtedness and shall continue to be <br />in force and be binding upon the Undersigned, whether or not all Indebtedness is paid in full, until this guaranty is revoked <br />by written notice actually received by the Lender, and such revocation shall not be effective as to Indebtedness existing or <br />committed for at the time of actual receipt of such notice by the Lender, or as to any renewals, extensions and refinancings <br />thereof. <br /> <br /> 3. If the Undersigned shall be dissolved or shall be or become insolvent (however defined) or revoke this guaranty, <br />then the Lender shall have the right to declare immediately due and payable, and the Undersigned will forthwith pay to the <br />Lender, the full amount of all Indebtedness, whether due and payable or unmatured. If the Undersigned voluntarily <br />commences or there is commenced involuntarily against the Undersigned a case under the United States Bankruptcy <br />Code, the full amount of all Indebtedness, whether due and payable or unmatured, shall be immediately due and payable <br />without demand or notice thereof. <br /> <br /> 4. The liability of the Undersigned hereunder shall be limited to a principal amount of One Hundred Ninety <br />Thousand and 00/100 Dollars ($190~000.00), plus accrued interest thereon and all attorneys' fees, collection costs and <br />enforcement expenses referable thereto. Indebtedness may be created and continued in any amount, whether or not in <br />excess of such principal amount, without affecting or impairing the liability of the Undersigned hereunder. The Lender may <br />apply any sums received by or available to Lender on account of the Indebtedness from Borrower or any other person <br />(except the Undersigned), from their properties, out of any collateral security or from any other source to payment of the <br />excess. Such application of receipts shall not reduce, affect or impair the liability of the Undersigned hereunder. If the <br />liability of the Undersigned is limited to stated amount pursuant to this paragraph 4, any payment made by the <br />Undersigned under this guaranty shall be effective to reduce or discharge such liability only if accompb, nied by a written <br />transmittal document, received by the Lender, advising the Lender that such payment is made under this guaranty for such <br />purpose. <br /> <br /> <br />