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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.
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