<SUBMISSION>
<ACCESSION-NUMBER>0000906504-05-000016
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20050909
<ITEMS>1.01
<ITEMS>9.01
<FILING-DATE>20050909
<DATE-OF-FILING-DATE-CHANGE>20050909
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>RGC RESOURCES INC
<CIK>0001069533
<ASSIGNED-SIC>4923
<IRS-NUMBER>541909697
<STATE-OF-INCORPORATION>VA
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-26591
<FILM-NUMBER>051077998
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>519 KIMBALLAVENUE N.E.
<CITY>ROANOKE
<STATE>VA
<ZIP>24016
<PHONE>5407774427
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>519 KIMBALL AVENUE N.E.
<CITY>ROANOKE
<STATE>VA
<ZIP>24016
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>frm8k0905doc.txt
<DESCRIPTION>FORM 8-K FOR SEPTEMBER 2005
<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 --------------

                                    FORM 8-K
                                 --------------

                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


        Date of Report (Date of Earliest Event Reported): September 9, 2005

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


                               RGC RESOURCES, INC.
             (Exact name of Registrant as specified in its charter)

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


      Virginia                   000-26591                    54-1909697
-------------------------------------------------------------------------------
(State or other                 (Commission                 (IRS Employer
jurisdiction of                 File Number)               Identification No.)
incorporation)


519 Kimball Ave., N.E.        Roanoke, Virginia                  24016
-------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)


Registrant's telephone number, including area code: 540-777-4427


(Former name or former address, if changed since last report)
-------------------------------------------------------------------------------

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

|__|  Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 240.425)

|__|  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)

|__|  Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))

|__|  Pre-commencement communications pursuant to Rule 13c-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))

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


<PAGE>



ITEM 1.01.        ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

                  Effective September 9, 2005, Diversified Energy Company, a
                  subsidiary of RGC Resources, Inc., entered into a Promissory
                  Note in the principal amount of $3,000,000 in favor of
                  Wachovia Bank, National Association ("Wachovia") for the
                  purpose of providing working-capital financing for operations.
                  Monthly payments of accrued interest are due under the
                  Promissory Note until March 31, 2006, when all outstanding
                  principal and interest is due. The Promissory Note is in
                  addition to the notes issued for RGC Resources, Inc., Roanoke
                  Gas Company and Bluefield Gas Company on March 29, 2005.

                  In addition, effective September 9, 2005, RGC Resources, Inc.,
                  executed an Unconditional Guaranty in favor of Wachovia
                  unconditionally guaranteeing timely payment and performance of
                  the Promissory Note.

                  Total available limits under all line-of-credit arrangements
                  with Wachovia will be as follows:



                                                      Available
                                Beginning           Line of Credit
                          -------------------     -------------------

                              Sep 9, 2005           $    19,000,000
                              Sep 16, 2005               28,000,000
                              Nov 16, 2005               29,000,000
                              Feb 16, 2006               25,000,000




ITEM 9.01.        FINANCIAL STATEMENT AND EXHIBITS.


Exhibit No.       Description of Documents

10.1              Promissory Note in the original principal amount of $3,000,000
                  by Diversified Energy Company in favor of Wachovia Bank,
                  National Association, effective September 9, 2005.


10.2              Unconditional Guaranty by RGC Resources, Inc. in favor of
                  Wachovia Bank, National Association, effective September 9,
                  2005.




<PAGE>



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                   RGC RESOURCES, INC.



Date: September 9, 2005            By: s/Howard T. Lyon

                                       Howard T. Lyon
                                       Vice-President, Treasurer and Controller
                                      (Principal Financial Officer)


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>frm8k0905ex10-1.txt
<DESCRIPTION>EXHIBIT 10.1 TO FORM 8-K FOR SEPTEMBER 2005
<TEXT>
                                                                    Exhibit 10.1

                                PROMISSORY NOTE

$3,000,000.00                                                  September 9, 2005

Diversified Energy Company
519 Kimball Avenue NE
Roanoke, Virginia 24016
(Individually and collectively "Borrower")

Billing Address:
P.O. Box 13007
Roanoke, Virginia 24030

Wachovia Bank, National Association
201 S. Jefferson Street
Roanoke, Virginia 24011
(Hereinafter referred to as "Bank")

                                IMPORTANT NOTICE

THIS NOTE CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER
OF IMPORTANT RIGHTS YOU MAY HAVE AS A BORROWER AND ALLOWS BANK TO OBTAIN A
JUDGMENT AGAINST YOU WITHOUT FURTHER NOTICE.

Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Three Million and No/100 Dollars ($3,000,000.00) or such sum
as may be advanced and outstanding from time to time, with interest on the
unpaid principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this "Note").

LINE OF CREDIT. Borrower may borrow, repay and reborrow, and, upon the request
of Borrower, Bank shall advance and readvance under this Note from time to time
until the maturity hereof (each an "Advance" and together the "Advances"), so
long as the total principal balance outstanding under this Note at any one time
does not exceed the principal amount stated on the face of this Note, subject to
the limitations described in any loan agreement to which this Note is subject.
Bank's obligation to make Advances under this Note shall terminate if Borrower
is in Default. As of the date of each proposed Advance, Borrower shall be deemed
to represent that each representation made in the Loan Documents is true as of
such date.

If Borrower subscribes to Bank's cash management services and such services are
applicable to this line of credit, the terms of such service shall control the
manner in which funds are transferred between the applicable demand deposit
account and the line of credit for credit or debit to the line of credit.

USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by
this Note for the commercial purposes of Borrower, as follows: for working
capital.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the LIBOR Market Index Rate plus 0.8%, as that rate
may change from day to day in accordance with changes in the LIBOR Market Index
Rate ("Interest Rate"). "LIBOR Market Index Rate", for any day, means the rate
for 1 month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00
a.m., London time, on such day, or if such day is not a London business day,
then the immediately preceding





<PAGE>



London business day (or if not so reported, then as determined by Bank from
another recognized source or interbank quotation).

DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations, other than Obligations under any swap agreements (as
defined in 11 U.S.C. Section 101, as in effect from time to time) between
Borrower and Bank or its affiliates, shall bear interest at the Interest Rate
plus 3% ("Default Rate"). The Default Rate shall also apply from acceleration
until the Obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective interest yield by taking the stated (nominal)
rate for a year's period and then dividing said rate by 360 to determine the
daily periodic rate to be applied for each day in the applicable period.
Application of the Actual/360 Computation produces an annualized effective rate
exceeding the nominal rate.

REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing on September 1, 2005, and
continuing on the same day of each month thereafter until fully paid. In any
event, all principal and accrued interest shall be due and payable on March 31,
2006.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.

DEFINITIONS. Loan Documents. The term "Loan Documents", as used in this Note and
the other Loan Documents, refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Section 101, as in effect from time to time). Obligations. The term
"Obligations", as used in this Note and the other Loan Documents, refers to any
and all indebtedness and other obligations under this Note, all other
obligations under any other Loan Document(s), and all obligations under any swap
agreements (as defined in 11 U.S.C. Section 101, as in effect from time to time)
between Borrower and Bank, or its affiliates, whenever executed. Certain Other
Terms. All terms that are used but not otherwise defined in any of the Loan
Documents shall have the definitions provided in the Uniform Commercial Code.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 8 or more days. This
late charge shall not apply to payments due at maturity or by acceleration
hereof, unless such late payment is in an amount not greater than the highest
periodic payment due hereunder.

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.

                                     Page 2

<PAGE>



ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses actually incurred to enforce or collect any of the
Obligations including, without limitation, reasonable arbitration, paralegals',
attorneys' and experts' fees and expenses, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.

DEFAULT. If any of the following occurs, a default ("Default") under this Note
shall exist: Nonpayment; Nonperformance. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents. False Warranty. A warranty or representation made or deemed made in
the Loan Documents or furnished Bank in connection with the loan evidenced by
this Note proves materially false, or if of a continuing nature, becomes
materially false. Cross Default. At Bank's option, any default in payment or
performance of any obligation under any other loans, contracts or agreements of
Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C.
Section 101, as in effect from time to time, except that the term "Borrower"
shall be substituted for the term "Debtor" therein; "Subsidiary" shall mean any
business in which Borrower holds, directly or indirectly, a controlling
interest). Cessation; Bankruptcy. The death of, appointment of a guardian for,
dissolution of, termination of existence of, loss of good standing status by,
appointment of a receiver for, assignment for the benefit of creditors of, or
commencement of any bankruptcy or insolvency proceeding by or against Borrower,
its Subsidiaries or Affiliates, if any, or any general partner of or the
holder(s) of the majority ownership interests of Borrower, or any party to the
Loan Documents. Material Capital Structure or Business Alteration. Without prior
written consent of Bank, (i) a material alteration in the kind or type of
Borrower's business or that of Borrower's Subsidiaries or Affiliates, if any;
(ii) the sale of substantially all of the business or assets of Borrower, any of
Borrower's Subsidiaries or Affiliates or any guarantor, or a material portion
(10% or more) of such business or assets if such a sale is outside the ordinary
course of business of Borrower, or any of Borrower's Subsidiaries or Affiliates
or any guarantor, or more than 50% of the outstanding stock or voting power of
or in any such entity in a single transaction or a series of transactions; (iii)
the acquisition of substantially all of the business or assets or more than 50%
of the outstanding stock or voting power of any other entity; or (iv) should any
Borrower or any of Borrower's Subsidiaries or Affiliates or any guarantor enter
into any merger or consolidation. Material Adverse Change. Bank determines in
good faith, in its sole discretion, that the prospects for payment or
performance of the Obligations are impaired or there has occurred a material
adverse change in the business or prospects of Borrower, financial or otherwise.

REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: Bank
Lien. Foreclose its security interest or lien against Borrower's accounts
without notice. Acceleration Upon Default. Accelerate the maturity of this Note
and, at Bank's option, any or all other Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. Section 101, as in effect
from time to time) between Borrower and Bank, or its affiliates, which shall be
due in accordance with and governed by the provisions of said swap agreements;
whereupon this Note and the accelerated Obligations shall be immediately due and
payable; provided, however, if the Default is based upon a bankruptcy or
insolvency proceeding commenced by or against Borrower or any guarantor or
endorser of this Note, all Obligations (other than Obligations under any swap
agreement as referenced above) shall automatically and immediately be due and
payable. Cumulative. Exercise any rights and remedies as provided under the Note
and other Loan Documents, or as provided by law or equity.

ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, unaudited management-prepared financial
statements reflecting its operations during such fiscal year, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules and in reasonable detail, prepared in
conformity with generally

                                     Page 3

<PAGE>



accepted accounting principles, applied on a basis consistent with that of the
preceding year. If unaudited statements are required, such statements shall be
certified as to their correctness by a principal financial officer of Borrower.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.

CONFESSION OF JUDGMENT. Each Borrower hereby constitutes and appoints John G.
Fox, Thomas G. Cooper, Sr. (each of whom is an officer of Bank), and Bank
through an officer duly authorized by Bank (any of the foregoing may act), as
the true and lawful attorneys-in-fact for them, in any or all of their names,
place and stead, and upon the occurrence of a Default in the payment of the
Obligations due under this Note, at maturity, or upon acceleration, to confess
judgment against them or any of them, in favor of Bank, before the Clerk of the
Circuit Court for City of Richmond, Virginia, in accordance with 1950 Code of
Virginia, Section 8.01-431 et seq., and any successor statute, for all amounts
owed with respect to the Obligations under and pursuant to this Note including,
without limitation, all costs of collection and attorneys' fees in an amount
equal to 15% of the Obligations then outstanding (which shall be deemed
reasonable attorneys' fees for the purposes of this paragraph), and court costs,
hereby ratifying and confirming the acts of said attorney-in-fact as if done by
themselves. Upon request of Bank, each Borrower will execute an amendment or
other agreement substituting attorneys-in-fact appointed to act for each
Borrower hereunder.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.

Except to the extent otherwise provided by the Loan Documents or prohibited
by law, each Borrower and each other person liable under this Note waives
presentment, protest, notice of dishonor, demand for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity, notice of
sale and all other notices of any kind. Further, each agrees that Bank may (i)
extend, modify or renew this Note or make a novation of the loan evidenced by
this Note, and/or (ii) grant releases, compromises or indulgences with respect
to any collateral securing this Note, or with respect to any Borrower or other
person liable under this Note or any other Loan Documents, all without notice to
or consent of each Borrower and other such person, and without affecting the
liability of each Borrower and other such person; provided, Bank may not extend,
modify or renew this Note or make a novation of the loan evidenced by this Note
without the consent of the Borrower, or if there is more than one Borrower,
without the consent of at least one Borrower; and further provided, if there is
more than one Borrower, Bank may not enter into a modification of this Note
which increases the burdens of a Borrower without the consent of that Borrower.

MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. Organization; Powers. Borrower
represents that Borrower (i) is (a) an adult individual and is sui juris, or (b)
a corporation, general partnership, limited partnership, limited liability
company or other legal entity, duly organized, validly existing and in good
standing under the laws of its state of organization, and is authorized to do
business in each other jurisdiction wherein its ownership of property or conduct
of business legally requires such organization (ii) has the power and authority
to own its

                                     Page 4

<PAGE>



properties and assets and to carry on its business as now being conducted and as
now contemplated; and (iii) has the power and authority to execute, deliver and
perform, and by all necessary action has authorized the execution, delivery and
performance of, all of its obligations under this Note and any other Loan
Document to which it is a party. Compliance with Laws. Borrower represents that
Borrower and any subsidiary and affiliate of Borrower and any guarantor are in
compliance in all respects with all federal, state and local laws, rules and
regulations applicable to its properties, operations, business, and finances,
including, without limitation, any federal or state laws relating to liquor
(including 18 U.S.C. Section 3617, et seq.) or narcotics (including 21
U.S.C. Section 801, et seq.) and/or any commercial crimes; all applicable
federal, state and local laws and regulations intended to protect the
environment; and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), if applicable. None of Borrower, or any subsidiary or affiliate of
Borrower or any guarantor is a Sanctioned Person or has any of its assets in a
Sanctioned Country or does business in or with, or derives any of its operating
income from investments in or transactions with, Sanctioned Persons or
Sanctioned Countries in violation of economic sanctions administered by OFAC.
The proceeds from the Loan will not be used to fund any operations in, finance
any investments or activities in, or make any payments to, a Sanctioned Person
or a Sanctioned Country. "OFAC" means the U.S. Department of the Treasury's
Office of Foreign Assets Control. "Sanctioned Country" means a country subject
to a sanctions program identified on the list maintained by OFAC and available
at http://www.treas.gov/offices/enforcement/ofac/sanctions/, or as otherwise
published from time to time. "Sanctioned Person" means (i) a person named on the
list of Specially Designated Nationals or Blocked Persons maintained by OFAC
available at http://www.treas.gov/offices/enforcement/ofac/sdn/, or as otherwise
published from time to time, or (ii) (A) an agency of the government of a
Sanctioned Country, (B) an organization controlled by a Sanctioned Country, or
(C) a person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC. Applicable Law; Conflict Between
Documents. This Note and, unless otherwise provided in any other Loan Document,
the other Loan Documents shall be governed by and construed under the laws of
the state named in Bank's address on the first page hereof without regard to
that state's conflict of laws principles. If the terms of this Note should
conflict with the terms of any loan agreement or any commitment letter that
survives closing, the terms of this Note shall control. Borrower's Accounts.
Except as prohibited by law, Borrower grants Bank a security interest in all of
Borrower's accounts with Bank and any of its affiliates. Swap Agreements. All
swap agreements (as defined in 11 U.S.C. Section 101, as in effect from time to
time), if any, between Borrower and Bank or its affiliates are independent
agreements governed by the written provisions of said swap agreements, which
will remain in full force and effect, unaffected by any repayment, prepayment,
acceleration, reduction, increase or change in the terms of this Note, except as
otherwise expressly provided in said written swap agreements, and any payoff
statement from Bank relating to this Note shall not apply to said swap
agreements except as otherwise expressly provided in such payoff statement.
Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction
in the state named in Bank's address on the first page hereof. Severability. If
any provision of this Note or of the other Loan Documents shall be prohibited or
invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Note or other such
document. Notices. Any notices to Borrower shall be sufficiently given, if in
writing and mailed or delivered to the Borrower's address shown above or such
other address as provided hereunder, and to Bank, if in writing and mailed or
delivered to Wachovia Bank, National Association, Mail Code VA7628, P. O. Box
13327, Roanoke, VA 24040 or Wachovia Bank, National Association, Mail Code
VA7628, 10 South Jefferson Street, Roanoke, VA 24011 or such other address as
Bank may specify in writing from time to time. Notices to Bank must include the
mail code. In the event that Borrower changes Borrower's address at any time
prior to the date the Obligations are paid in full, Borrower agrees to promptly
give written notice of said change of address by registered or certified mail,
return receipt requested, all charges prepaid. Plural; Captions. All references
in the Loan Documents to Borrower, guarantor, person, document or other nouns of
reference mean both the singular and plural form, as the case may be, and the
term "person" shall mean any individual, person or entity. The captions
contained in the Loan Documents are inserted for convenience only and shall not
affect the meaning or interpretation of the Loan Documents. Advances. Bank may,
in its sole discretion, make other advances which shall be deemed to be advances
under this Note, even though the stated principal amount of this Note may be
exceeded as a result thereof. Posting of Payments. All payments received during
normal banking hours after 2:00 p.m. local time at the office of Bank first
shown above shall be

                                     Page 5

<PAGE>


deemed received at the opening of the next banking day. Joint and Several
Obligations. If there is more than one Borrower, each is jointly and severally
obligated. Fees and Taxes. Borrower shall promptly pay all documentary,
intangible recordation and/or similar taxes on this transaction whether assessed
at closing or arising from time to time. LIMITATION ON LIABILITY; WAIVER OF
PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE
HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY
CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY
WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR
DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED
HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER
FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY
DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO
PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN
CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS
RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. Patriot Act Notice.
To help 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 purposes of
this section, account shall be understood to include loan accounts. FINAL
AGREEMENT. This Note and the other Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED
IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE.
EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY
PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED
IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN
CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR
MODIFIED BY, THIS NOTE.

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.


                                Diversified Energy Company


                                By: s/John B. Williamson, III   (SEAL)
                                      John B. Williamson, III, Chairman/CEO


                                    s/ Howard T. Lyon            (SEAL)
                                       Howard T. Lyon, Controller/Treasurer

Tracking #: 107557-1768rke
CAT - Deal # 582885 Facility ID 388286


                                     Page 6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>frm8k0905ex10-2.txt
<DESCRIPTION>EXHIBIT 10.2 TO FORM 8-K FOR SEPTEMBER 2005
<TEXT>
                                                                    Exhibit 10.2

                             UNCONDITIONAL GUARANTY


                                                               September 9, 2005

Diversified Energy Company
519 Kimball Avenue NE
Roanoke, Virginia 24016
(Individually and collectively "Borrower")

RGC Resources, Inc.
519 Kimball Avenue NE
Roanoke, Virginia 24030
(Individually and collectively "Guarantor")

Wachovia Bank, National Association
201 S. Jefferson Street
Roanoke, Virginia 24011
(Hereinafter referred to as "Bank")


                                IMPORTANT NOTICE

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS GUARANTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, which are and will
be to the direct interest and advantage of the Guarantor, and in consideration
of loans, advances, credit, or other financial accommodations made, extended or
renewed to or for the benefit of Borrower, which are and will be to the direct
interest and advantage of the Guarantor, Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to Bank and its successors, assigns
and affiliates the timely payment and performance of all liabilities and
obligations of Borrower to Bank and its affiliates, including, but not limited
to, all obligations under any notes, loan agreements, security agreements,
letters of credit, instruments, accounts receivable, contracts, drafts, leases,
chattel paper, indemnities, acceptances, repurchase agreements, overdrafts, and
the Loan Documents, as defined below, and all obligations of Borrower to Bank or
any of its  affiliates  under any swap  agreement  (as defined in 11 U.S.C.
Section 101, as in effect from time to time),  however and whenever  incurred or
evidenced, whether primary, secondary,  direct, indirect, absolute,  contingent,
due or to become due, now existing or hereafter contracted or acquired,  and all
modifications,  extensions and renewals thereof, (collectively,  the "Guaranteed
Obligations").

Guarantor further covenants and agrees:

GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on Bank to extend or continue to extend credit or otherwise deal with
Borrower at any subsequent time. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of the Guaranteed
Obligations is rescinded, avoided or for any other reason must be returned by
Bank, and the returned payment shall remain payable as part of the Guaranteed
Obligations, all as though such payment had not been made. Except to the extent
the provisions of this Guaranty give Bank additional rights, this Guaranty shall
not be deemed to supersede or replace any other guaranties given to Bank by
Guarantor; and the obligations



<PAGE>



guaranteed hereby shall be in addition to any other obligations guaranteed by
Guarantor pursuant to any other agreement of guaranty given to Bank and other
guaranties of the Guaranteed Obligations.

TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty only by written
notice, delivered personally to or received by certified or registered United
States Mail by an authorized officer of Bank at the address for notices provided
herein. Such termination shall be effective only with respect to Guaranteed
Obligations arising more than 15 days after the date such written notice is
received by said Bank officer. Such termination shall not be effective with
respect to Guaranteed Obligations (including any subsequent extensions,
modifications or compromises of the Guaranteed Obligations) then existing, or
Guaranteed Obligations arising subsequent to receipt by Bank of said notice if
such Guaranteed Obligations are a result of Bank's obligation to make advances
pursuant to a commitment, or are based on Borrower's obligations to make
payments pursuant to any swap agreement (as defined in 11 U.S.C. Section 101, as
in effect from time to time), entered into prior to expiration of the 15 day
notice period, or are a result of advances which are necessary for Bank to
protect its collateral or otherwise preserve its interests. Termination of this
Guaranty by any single Guarantor will not affect the existing and continuing
obligations of any other Guarantor hereunder.

CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Bank (and, with
respect to swap obligations, its affiliates) may from time to time, in its sole
discretion, without affecting, impairing, lessening or releasing the obligations
of Guarantor hereunder: (a) extend or modify the time, manner, place or terms of
payment or performance and/or otherwise change or modify the credit terms of the
Guaranteed Obligations; (b) increase, renew, or enter into a novation of the
Guaranteed Obligations; (c) waive or consent to the departure from terms of the
Guaranteed Obligations; (d) permit any change in the business or other dealings
and relations of Borrower or any other guarantor with Bank; (e) proceed against,
exchange, release, realize upon, or otherwise deal with in any manner any
collateral that is or may be held by Bank in connection with the Guaranteed
Obligations or any liabilities or obligations of Guarantor; and (f) proceed
against, settle, release, or compromise with Borrower, any insurance carrier, or
any other person or entity liable as to any part of the Guaranteed Obligations,
and/or subordinate the payment of any part of the Guaranteed Obligations to the
payment of any other obligations, which may at any time be due or owing to Bank;
all in such manner and upon such terms as Bank may deem appropriate, and without
notice to or further consent from Guarantor. No invalidity, irregularity,
discharge or unenforceability of, or action or omission by Bank relating to any
part of the Guaranteed Obligations or any security therefor shall affect or
impair this Guaranty.

WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following rights,
demands, and defenses Guarantor may have with respect to Bank (and, with respect
to swap obligations, its affiliates) and collection of the Guaranteed
Obligations: (a) promptness and diligence in collection of any of the Guaranteed
Obligations from Borrower or any other person liable thereon, and in foreclosure
of any security interest and sale of any property serving as collateral for the
Guaranteed Obligations; (b) any law or statute that requires that Bank (and,
with respect to swap obligations, its affiliates) make demand upon, assert
claims against, or collect from Borrower or other persons or entities, foreclose
any security interest, sell collateral, exhaust any remedies, or take any other
action against Borrower or other persons or entities prior to making demand
upon, collecting from or taking action against Guarantor with respect to the
Guaranteed Obligations, including any such rights Guarantor might otherwise have
had under Va. Code Sections 49-25 and 49-26, et seq., N.C.G.S. Sections 26-7, et
seq., Tenn. Code Ann. Section 47-12-101, O.C.G.A. Section 10-7-24, Mississippi
Code Ann. Section 87-5-1, and any successor statute and any other applicable
law; (c) any law or statute that requires that Borrower or any other person be
joined in, notified of or made part of any action against Guarantor; (d) that
Bank or its affiliates preserve, insure or perfect any security interest in
collateral or sell or dispose of collateral in a particular manner or at a
particular time, provided that Bank's obligation to dispose of Collateral in a
commercially reasonable manner is not waived hereby; (e) notice of extensions,
modifications, renewals, or novations of the Guaranteed Obligations, of any new
transactions or other relationships between Bank, Borrower and/or any guarantor,
and of changes in the financial condition of, ownership of, or business
structure of Borrower or any other guarantor; (f) presentment, protest, notice
of dishonor, notice of default, demand


                                     Page 2

<PAGE>




for payment, notice of intention to accelerate maturity, notice of acceleration
of maturity, notice of sale, and all other notices of any kind whatsoever to
which Guarantor may be entitled; (g) the right to assert against Bank or its
affiliates any defense (legal or equitable), set-off, counterclaim, or claim
that Guarantor may have at any time against Borrower or any other party liable
to Bank or its affiliates; (h) all defenses relating to invalidity,
insufficiency, unenforceability, enforcement, release or impairment of Bank or
its affiliates' lien on any collateral, of the Loan Documents, or of any other
guaranties held by Bank; (i) any right to which Guarantor is or may become
entitled to be subrogated to Bank or its affiliates' rights against Borrower or
to seek contribution, reimbursement, indemnification, payment or the like, or
participation in any claim, right or remedy of Bank or its affiliates against
Borrower or any security which Bank or its affiliates now has or hereafter
acquires, until such time as the Guaranteed Obligations have been fully
satisfied beyond the expiration of any applicable preference period; (j) any
claim or defense that acceleration of maturity of the Guaranteed Obligations is
stayed against Guarantor because of the stay of assertion or of acceleration of
claims against any other person or entity for any reason including the
bankruptcy or insolvency of that person or entity; and (k) the right to
marshalling of Borrower's assets or the benefit of any exemption claimed by
Guarantor. Guarantor acknowledges and represents that Guarantor has relied upon
Guarantor's own due diligence in making an independent appraisal of Borrower,
Borrower's business affairs and financial condition, and any collateral;
Guarantor will continue to be responsible for making an independent appraisal of
such matters; and Guarantor has not relied upon Bank or its affiliates for
information regarding Borrower or any collateral.

FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank and
its affiliates that on and after the date hereof: (a) the fair saleable value of
Guarantor's assets exceeds its liabilities, Guarantor is meeting its current
liabilities as they mature, and Guarantor is and shall remain solvent; (b) all
financial statements of Guarantor furnished to Bank are correct and accurately
reflect the financial condition of Guarantor as of the respective dates thereof;
(c) since the date of such financial statements, there has not occurred a
material adverse change in the financial condition of Guarantor; (d) there are
not now pending any court or administrative proceedings or undischarged
judgments against Guarantor, no federal or state tax liens have been filed or
threatened against Guarantor, and Guarantor is not in default or claimed default
under any agreement; and (e) at such reasonable times as Bank requests,
Guarantor will furnish Bank and its affiliates with such other financial
information as Bank and its affiliates may reasonably request.

INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of this
Guaranty or other Loan Documents, if for any reason the effective interest on
any of the Guaranteed Obligations should exceed the maximum lawful interest, the
effective interest shall be deemed reduced to and shall be such maximum lawful
interest, and any sums of interest which have been collected in excess of such
maximum lawful interest shall be applied as a credit against the unpaid
principal balance of the Guaranteed Obligations. Monies received from any source
by Bank or its affiliates for application toward payment of the Guaranteed
Obligations may be applied to such Guaranteed Obligations in any manner or order
deemed appropriate by Bank and its affiliates.

DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) failure of timely payment or performance of the
Guaranteed Obligations or a default under any Loan Document; (b) a breach of any
agreement or representation contained or referred to in the Guaranty, or any of
the Loan Documents, or contained in any other contract or agreement of Guarantor
with Bank or its affiliates, whether now existing or hereafter arising; (c) the
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against Guarantor or any general
partner of or the holder(s) of the majority ownership interests of Guarantor;
and/or (d) Bank determines in good faith, in its sole discretion, that the
prospects for payment or performance of the Guaranteed Obligations are impaired
or a material adverse change has occurred in the business or prospects of
Borrower or Guarantor, financial or otherwise.


                                     Page 3

<PAGE>



If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice, other than Guaranteed Obligations under any swap
agreements (as defined in 11 U.S.C. Section 101, as in effect from time to time)
with Bank or its affiliates, which shall be due in accordance with and governed
by the provisions of said swap agreements, and, Bank and its affiliates may
exercise any rights and remedies as provided in this Guaranty and other Loan
Documents, or as provided at law or equity. Guarantor shall pay interest on the
Guaranteed Obligations from such Default at the highest rate of interest charged
on any of the Guaranteed Obligations.

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of Bank's
and its affiliates' reasonable expenses incurred to enforce or collect any of
the Guaranteed Obligations, including, without limitation, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred without the commencement of a suit, in any suit, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.

SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to Bank or its affiliates now or
hereafter existing while this Guaranty is in effect, provided however that
Guarantor may receive regularly scheduled principal and interest payments on the
Subordinated Debt so long as (i) all sums due and payable by Borrower to Bank
and its affiliates have been paid in full on or prior to such date, and (ii) no
event or condition which constitutes or which with notice or the lapse or time
would constitute an event of default with respect to the Guaranteed Obligations
shall be continuing on or as of the payment date; (b) Guarantor will either
place a legend indicating such subordination on every note, ledger page or other
document evidencing any part of the Subordinated Debt or deliver such documents
to Bank; and (c) except as permitted by this paragraph, Guarantor will not
request or accept payment of or any security for any part of the Subordinated
Debt, and any proceeds of the Subordinated Debt paid to Guarantor, through error
or otherwise, shall immediately be forwarded to Bank by Guarantor, properly
endorsed to the order of Bank, to apply to the Guaranteed Obligations.

MISCELLANEOUS. Assignment. This Guaranty and other Loan Documents shall inure to
the benefit of and be binding upon the parties and their respective heirs, legal
representatives, successors and assigns. Bank's interests in and rights under
this Guaranty and other Loan Documents are freely assignable, in whole or in
part, by Bank. Any assignment shall not release Guarantor from the Guaranteed
Obligations. Organization; Powers. Guarantor (i) is (a) an adult individual and
is sui juris, or (b) a corporation, general partnership, limited partnership,
limited liability company or other legal entity (as indicated below), duly
organized, validly existing and in good standing under the laws of its state of
organization, and is authorized to do business in each other jurisdiction
wherein its ownership of property or conduct of business legally requires such
organization, (ii) has the power and authority to own its properties and assets
and to carry on its business as now being conducted and as now contemplated; and
(iii) has the power and authority to execute, deliver and perform, and by all
necessary action has authorized the execution, delivery and performance of, all
of its obligations under this Guaranty and any other Loan Document to which it
is a party. Applicable Law; Conflict Between Documents. This Guaranty shall be
governed by and construed under the laws of the state named in Bank's address
shown above without regard to that state's conflict of laws principles. If the
terms of this Guaranty should conflict with the terms of any commitment letter
that survives closing, the terms of this Guaranty shall control. Guarantor's
Accounts. Except as prohibited by law, Guarantor grants Bank and its affiliates
a security interest in all of Guarantor's accounts with Bank and its affiliates.
Jurisdiction. Guarantor irrevocably agrees to nonexclusive personal jurisdiction
in the state named in Bank's address shown above. Severability. If any provision
of this Guaranty or of the other Loan Documents shall be prohibited or invalid
under applicable law, such provision shall be ineffective but only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty or other Loan Documents.
Notices. Any notices to Guarantor shall be sufficiently given if in writing and
mailed or delivered to Guarantor's address shown above or such other address as
provided hereunder, and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code VA7628, P.O. Box 13327, Roanoke,
VA 24040 or Wachovia Bank, National Association, Mail Code VA7628, 10

                                     Page 4

<PAGE>



South Jefferson Street, Roanoke, VA 24011 or such other address as Bank may
specify in writing from time to time. Notices to Bank must include the mail
code. In the event that Guarantor changes Guarantor's address at any time prior
to the date the Guaranteed Obligations are paid in full, Guarantor agrees to
promptly give written notice of said change of address to Bank by registered or
certified mail, return receipt requested, all charges prepaid. Plural; Captions.
All references in the Loan Documents to borrower, guarantor, person, document or
other nouns of reference mean both the singular and plural form, as the case may
be, and the term "person" shall mean any individual person or entity. The
captions contained in the Loan Documents are inserted for convenience only and
shall not affect the meaning or interpretation of the Loan Documents. Binding
Contract. Guarantor by execution of and Bank by acceptance of this Guaranty
agree that each party is bound to all terms and provisions of this Guaranty.
Amendments, Waivers and Remedies. No waivers, amendments or modifications of
this Guaranty and other Loan Documents shall be valid unless in writing and
signed by an officer of Bank. No waiver by Bank or its affiliates of any Default
shall operate as a waiver of any other Default or the same Default on a future
occasion. Neither the failure nor any delay on the part of Bank or its
affiliates in exercising any right, power, or privilege granted pursuant to this
Guaranty and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise or the
exercise of any other right, power or privilege. All remedies available to Bank
or its affiliates with respect to this Guaranty and other Loan Documents and
remedies available at law or in equity shall be cumulative and may be pursued
concurrently or successively. Partnerships. If Guarantor is a partnership, the
obligations, liabilities and agreements on the part of Guarantor shall remain in
full force and effect and fully applicable notwithstanding any changes in the
individuals comprising the partnership. The term "Guarantor" includes any
altered or successive partnerships, and predecessor partnership(s) and the
partners shall not be released from any obligations or liabilities hereunder.
Loan Documents. The term "Loan Documents" refers to all documents executed in
connection with or related to the Guaranteed Obligations and may include,
without limitation, commitment letters that survive closing, loan agreements,
other guaranty agreements, security agreements, instruments, financing
statements, mortgages, deeds of trust, deeds to secure debt, letters of credit
and any amendments or supplements (excluding swap agreements as defined in 11
U.S.C. Section 101, as in effect from time to time). LIMITATION ON LIABILITY;
WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY
ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION
PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT
OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED
HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE
LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2)
PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE
IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY,
WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.
FINAL AGREEMENT. This Agreement and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.

FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Guarantor's
financial condition. Such information shall be true, complete, and accurate.

NEGATIVE COVENANTS. Guarantor agrees that from the date hereof and until final
payment in full of the Guaranteed Obligations, unless Bank shall otherwise
consent in writing, Guarantor will not: Default on Other Contracts or
Obligations. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. Government Intervention. Permit the assertion or
making of any seizure, vesting or intervention by or

                                     Page 5

<PAGE>



under authority of any governmental entity, as a result of which the management
of Guarantor or any guarantor is displaced of its authority in the conduct of
its respective business or such business is curtailed or materially impaired.
Judgment Entered. Permit the entry of any monetary judgment or the assessment
against, the filing of any tax lien against, or the issuance of any writ of
garnishment or attachment against any property of or debts due. Retire or
Repurchase Capital Stock. Retire or otherwise acquire any of its capital stock.

ANNUAL FINANCIAL STATEMENTS. Guarantor shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. If audited statements are required, all such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to any limitations in scope imposed by Guarantor or any
other person or entity. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
GUARANTOR BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONNECTION WITH THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH
RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS
GUARANTY. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND
REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE
PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT
HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED,
SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS GUARANTY.

CONFESSION OF JUDGMENT. Each Guarantor hereby constitutes and appoints John G.
Fox, Thomas G. Cooper, Sr. (each of whom is an officer of Bank), and Bank
through an officer duly authorized by Bank (any of the foregoing may act), as
the true and lawful attorneys-in-fact for them, in any or all of their names,
place and stead, and upon the occurrence of a Default in the payment of the
Guaranteed Obligations due under this Guaranty, at maturity, or upon
acceleration, to confess judgment against them or any of them, in favor of Bank,
before the Clerk of the Circuit Court for City of Richmond, Virginia, in
accordance with 1950 Code of Virginia, Section 8.01-431 et seq., and any
successor statute, for all amounts owed with respect to the Guaranteed
Obligations under and pursuant to this Guaranty including, without limitation,
all costs of collection and attorneys' fees in an amount equal to 15% of the
Guaranteed Obligations then outstanding (which shall be deemed reasonable
attorneys' fees for the purposes of this paragraph), and court costs, hereby
ratifying and confirming the acts of said attorney-in-fact as if done by
themselves. Upon request of Bank, each Guarantor will execute an amendment or
other agreement substituting attorneys-in-fact appointed to act for each
Guarantor hereunder.



                                     Page 6

<PAGE>



IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.


                               RGC Resources, Inc.



                               By: s/John B. Williamson, III      (SEAL)
                                   John B. Williamson, Chairman/CEO


                                   s/Howard T. Lyon                (SEAL)
                                   Howard T. Lyon, Controller/Treasurer


Commonwealth of Virginia
County of Roanoke


                            Corporate Acknowledgment

         I certify that before me appeared this day John B. Williamson, a person
known to me, who after being sworn said he/she is Chairman/CEO of RGC Resources,
Inc., a Virginia corporation, and is duly authorized to act on behalf of said
Corporation, that the seal affixed to the foregoing instrument is the seal of
said Corporation and that said instrument was signed and sealed by him/her on
behalf of said Corporation, and being informed of the contents thereof,
acknowledged execution of the foregoing instrument on behalf of said
Corporation.

Witness my hand and official seal, this 9th day of September, 2005.

                         s/Susan E. Miller, Notary Public

Notary Seal              Susan E. Miller
                         (Printed Name of Notary)

                         My Commission Expires: 4/30/2009



                                     Page 7

<PAGE>



Commonwealth of Virginia
County of Roanoke


                            Corporate Acknowledgment

         I certify that before me appeared this day Howard T. Lyon, a person
known to me, who after being sworn said he/she is Controller/Treasurer of RGC
Resources, Inc., a Virginia corporation, and is duly authorized to act on behalf
of said Corporation, that the seal affixed to the foregoing instrument is the
seal of said Corporation and that said instrument was signed and sealed by
him/her on behalf of said Corporation, and being informed of the contents
thereof, acknowledged execution of the foregoing instrument on behalf of said
Corporation.

Witness my hand and official seal, this 9th day of September, 2005.

                         s/Susan E. Miller, Notary Public

Notary Seal              Susan E. Miller
                         (Printed Name of Notary)

                         My Commission Expires: 4/30/2009


Tracking #: 107557-1768rke
CAT - Deal # 582885 Facility ID 388286



                                     Page 8

</TEXT>
</DOCUMENT>
</SUBMISSION>
