Exhibit
      4.2

     

    TERM
      NOTE

     

    
      	
              US
                $10,000,000

            	
              ________________,
                2008

            


    

     

    FOR
      VALUE
      RECEIVED, the undersigned, KY USA ENERGY, INC., a Kentucky corporation (the
      “Borrower”),
      HEREBY PROMISES TO PAY in accordance with the Credit Agreement referred to
      below, to the order of NSES 12, LLC, a Delaware limited liability company (the
      “Lender”),
      the
      principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000), or so much
      thereof as may be advanced to the Borrower from time to time in immediately
      available funds, together with interest on the unpaid principal balance of
      this
      Term Note (this “Note”)
      from
      time to time outstanding at the rate per annum and in the manner set forth
      in
      the Credit Agreement (herein defined); provided
      that in
      no event shall interest on this Note ever be charged, paid, taken or received
      at
      a rate greater than the highest lawful rate. Interest on the principal balance
      outstanding from time to time under this Note shall be calculated in accordance
      with the Credit Agreement and shall be due and payable as set forth in the
      Credit Agreement. Additionally, in the event of prepayment of the principal
      balance of this Note in whole or in part, accrued interest on the principal
      portion prepaid shall also be due and payable at the time of prepayment. Accrued
      interest on any principal balance outstanding hereunder post-maturity (whether
      brought about by acceleration or otherwise) shall be due and payable on demand.
      The final maturity of this Note, unless demanded or accelerated earlier, shall
      be as set forth in the Credit Agreement, at which time all principal and accrued
      interest then unpaid shall be due and payable in full.

     

    This
      Note
      is a Term Note as referred to in, and is subject to and is entitled to the
      benefits of, that certain Senior Secured Credit Agreement dated as of
      ______________, 2008, by and between Borrower and Lender (as amended,
      supplemented or modified from time to time, the “Credit
      Agreement”).
      All
      capitalized terms used herein and not otherwise defined herein shall have the
      meanings given thereto in the Credit Agreement. The Credit Agreement,
      among other things, contains provisions for acceleration of the maturity hereof
      upon the happening of certain stated events. If this Note shall be collected
      by
      legal proceedings or through a bankruptcy court, or shall be placed in the
      hands
      of an attorney for collection after default or maturity (regardless of how
      maturity is brought about), the Borrower agrees to pay all costs of collection,
      including reasonable attorneys’ fees.

     

    
      
        
Initials

    

    
      
        
        

      

      
        Page
          1

        
          

        

      

      
        
        

      

    

     

    It
      is the
      intention of the Borrower and the Lender to comply with applicable state and
      federal usury laws now or hereafter enacted. Accordingly, and notwithstanding
      any provision to the contrary herein or in any Security Document or in any
      other
      document related thereto, in no event shall this Note, any Security Document
      or
      any other document related thereto require payment or permit the collection
      of
      interest in excess of the maximum amount permitted by such laws. If, for any
      reason whatsoever, the interest paid or received on this Note during its full
      term produces a rate which exceeds the highest lawful rate applicable to the
      holder, the holder of this Note shall refund to the Borrower or, at the holder’s
      option, credit against the principal of this Note such portion of said interest
      as shall be necessary to cause the interest paid on this Note to produce a
      rate
      equal to the highest lawful rate. All sums paid or agreed to be paid to the
      holder of this Note for the use, forbearance or detention of the indebtedness
      evidenced hereby shall, to the extent permitted by applicable law, be amortized,
      prorated, allocated and spread in equal parts throughout the full term of this
      Note, so that the interest rate is uniform throughout the full term of this
      Note.

     

    Interest
      shall be calculated on the unpaid principal balance of this Note from time
      to
      time outstanding from the date of each Advance of principal to the date of
      repayment in full of such Advance pursuant to the terms of the Credit
      Agreement.

     

    The
      Borrower hereby authorizes the Lender to enter into Lender’s records the date
      and principal amount of each Advance, and the rate of interest payable thereon,
      which shall be binding on the Borrower absent manifest error; provided
      that the
      failure of the Lender to make any such record entry shall not affect the
      obligation of the Borrower to repay each Advance and to pay interest accrued
      thereon and other sums payable hereunder.

     

    The
      Borrower waives notice (including, but not limited to, notice of protest, notice
      of dishonor, notice of intent to accelerate, notice of acceleration) of
      presentment for payment and protest and any other notice of any kind except
      as
      specifically required by the Credit Agreement. No failure to exercise, and
      no
      delay in exercising any rights hereunder on the part of the holder hereof shall
      operate as a waiver of such rights. The Borrower agrees that its liability
      on or
      with respect to this Note shall not be affected by any release of or change
      in
      any security at any time existing or by any failure to perfect or maintain
      perfection of any lien against or security interest in any such security or
      the
      partial or complete unenforceability of any guaranty or other surety obligation,
      in each case in whole or in part, with or without notice and before or after
      maturity.

     

    BORROWER
      HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
      OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS NOTE,
      ANY
      OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN BORROWER AND LENDER RELATING
      TO
      THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR
      THE
      RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LENDER AND BORROWER. THE SCOPE
      OF
      THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT
      MAY
      BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
      CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.)
      THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
      OR
      IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
      SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR TO ANY
      OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
      TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
      CONSENT TO A TRIAL BY THE COURT.

    
       

      
        
          
Initials

      

    

    
      
        
        

      

      
        Page
          2

        
          

        

      

      
        
        

      

    

     

    THE
      OBLIGATIONS OF BORROWER UNDER THIS NOTE ARE TO BE PERFORMED IN THE STATE OF
      NEW
      YORK AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
      LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES OF
      CONFLICTS OF LAWS.

     

    [The
      Remainder of this Page was Intentionally Left Blank]

    
       

      
        
          
Initials

      

    

    
      
        
        

      

      
        Page
          3

        
          

        

      

      
        
        

      

    


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


     

    
      	
              BORROWER:

            
	 	 
	
              KY
                USA Energy, Inc., a Kentucky corporation

            
	 	 
	
              By:

            	 
	
              Name:

            	 
	
              Title:

            	 


    

    

      [Signature
        Page to Term Note]