Exhibit
      4.5


    FORM
      OF

    


    GUARANTY
      AGREEMENT

    


    THIS
      GUARANTY AGREEMENT (“Guaranty”)
      dated
      ______________, 2008, is executed and delivered by KENTUCKY
      USA ENERGY, INC.,
      a
      Delaware corporation (“Guarantor”),
      to
      NSES 12, LLC, a Delaware limited liability company (“Lender”),
      pursuant to the Credit Agreement (defined below). Capitalized terms used but
      not
      defined in this Guaranty have the meanings given them in the Credit Agreement
      (defined below).

     

    Background

     

    A. Guarantor
      owns, directly or indirectly, one hundred percent (100%) of the Equity Interest
      in KY USA Energy, Inc., a Kentucky corporation (“Borrower”).

     

    B. Borrower
      is a party to that certain $10,000,000 Senior Secured Credit Agreement, dated
      the date hereof, with Lender (as amended or supplemented from time to time,
      the
“Credit
      Agreement”).
      The
      Obligations are secured by the Security Documents and the liens, security
      interests and collateral assignment arising under and evidenced by those
      documents.

     

    C. As
      a
      condition to the making of an Advance to Borrower under the Credit Agreement,
      Lender requires that Guarantor unconditionally guaranty to Lender the full
      and
      final payment and performance of the Obligations of Borrower, as set forth
      herein.

     

    D. Guarantor
      will benefit, directly or indirectly, from the making of the loans to Borrower
      by Lender under the terms and conditions of the Credit Agreement and the other
      Loan Documents.

     

    Agreements

     

    For
      and
      in consideration of the financial accommodations made and to be made to Borrower
      by Lender under the Credit Agreement or otherwise and for other good and
      valuable consideration, the receipt and sufficiency of which are acknowledged
      by
      each of the parties, Guarantor and Lender agree as follows:

     

    ARTICLE
      I

    GUARANTY
      OF PAYMENT

     

    Section
      1.1 Guaranty
      of Payment.
      Guarantor unconditionally guarantees to Lender the prompt, complete and full
      payment of the Obligations of Borrower when due (whether at the stated maturity,
      by acceleration or otherwise) in accordance with the terms of the Loan
      Documents. This Guaranty is irrevocable, unconditional and absolute, and if
      for
      any reason any portion of the Obligations is not paid promptly when due,
      Guarantor will immediately pay the full amount owed to Lender and/or the other
      Persons to whom such amount is owed, regardless of any defense, right of set-off
      or counterclaim Borrower may have or assert, and regardless of whether Lender
      or
      any other Person has taken any steps to enforce any rights against Borrower
      or
      any other Person to collect such sum, and regardless of any other condition
      or
      contingency. This Guaranty will also cover interest on the Obligations (as
      provided for in the Loan Documents) and all reasonable expenses (including
      attorneys’ fees) incurred by Lender in enforcing the payment of the Obligations
      as provided for in the Loan Documents and the performance of this Guaranty.
      Notwithstanding any contrary provision in this Guaranty, however, Guarantor’s
      maximum liability under this Guaranty is limited to the extent, if any, required
      so that its liability is not subject to avoidance under applicable Debtor Relief
      Laws (as defined in the Credit Agreement).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      1.2 Guaranty
      Not Affected by Actions Under Loan Documents.
      The
      obligations, covenants, agreements and duties of Guarantor under this Guaranty
      will in no way be affected or impaired by the occurrence from time to time
      of
      any of the following with respect to the Loan Documents, without the necessity
      of any notice to, or further consent of, Guarantor:

     

    (a) the
      release or waiver, by operation of law or otherwise, of the performance or
      observance by Borrower or any co-guarantor, surety, endorser or other obligor
      (collectively, an “Obligor”)
      of any
      express or implied agreement, covenant, term or condition in any of the Loan
      Documents to be performed or observed by such party;

     

    (b) the
      extension of the time for the payment of all or any portion of the Obligations
      or any other sums payable under the Loan Documents or the extension of time
      for
      the performance of any other obligation under, arising out of, or in connection
      with any of the Loan Documents;

     

    (c) the
      supplementation, modification or amendment (whether material or otherwise)
      of
      any of the Loan Documents or any of the Obligations of Borrower or the
      obligations of Guarantor or any other Obligor under, arising out of or in
      connection with any of the Loan Documents;

     

    (d) any
      failure, omission, delay or lack of diligence on the part of Lender, or any
      other Person to enforce, assert or exercise any right, privilege, power or
      remedy conferred on Lender or any other Person in any of the Loan Documents,
      or
      any action on the part of Lender or such other Person granting indulgence or
      extension of any kind;

     

    (e) the
      release of any Collateral under any Mortgage, any other Security Document or
      any
      of the other Loan Documents, or the release, modification, waiver or failure
      to
      enforce any pledge, security device, insurance agreement, bond or other
      guaranty, surety or indemnity agreement whatsoever;

     

    (f) the
      release, modification, waiver or failure to enforce any right, benefit,
      privilege or interest under any contract or agreement, under which the rights
      of
      Borrower or any other Obligor have been collaterally or absolutely assigned,
      or
      in which a security interest has been granted, to Lender as direct or indirect
      security for payment or performance of any Obligations;

     

    (g) the
      voluntary or involuntary liquidation, dissolution, sale of any collateral,
      marshaling of assets and liabilities, receivership, insolvency, bankruptcy,
      assignment for the benefit of creditors, reorganization, arrangement,
      composition or readjustment of debt of, or other similar proceedings affecting,
      Borrower, or any other Obligor or any of the assets of Borrower or of any other
      Obligor or any allegation or contest of the validity of this Guaranty in any
      such proceeding;

     

    
      
         

      

      
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    (h) any
      invalidity of or defect or deficiency in any of the Loan Documents or failure
      to
      acquire, perfect or maintain perfection of any lien on or security interest
      in
      any collateral securing payment or performance of all or any portion of
      (i)
      the
      Obligations, (ii)
      any
      other Person’s obligations under any of the Loan Documents or (iii)
      the
      obligations of Guarantor under this Guaranty;

     

    (i) the
      settlement or compromise of any obligation guaranteed by or incurred in
      connection with this Guaranty;

     

    (j) the
      failure to give notice to Guarantor of the occurrence of an event of default
      under the Loan Documents;

     

    (k) any
      defense based upon any legal disability of Borrower or, to the extent permitted
      by law, any release, discharge, reduction or limitation of or with respect
      to
      any sums owing by Borrower or any other liability of Borrower to Lender or
      its
      Affiliates;

     

    (l) to
      the
      extent permitted by law, the release or discharge by operation of law of
      Guarantor from the performance or observance of any obligation, covenant or
      agreement contained in this Guaranty; 

     

    (m) the
      default or failure of Guarantor fully to perform any of its obligations set
      forth in this Guaranty; or

     

    (n) any
      change in the corporate structure, existence or ownership of Guarantor or
      Borrower.

     

    Section
      1.3 Waiver
      of Certain Rights.
      Guarantor hereby waives marshaling of assets and liabilities, sale in inverse
      order of alienation, notice of acceptance of this Guaranty and of any liability
      to which it applies or may apply, presentment, demand for payment, protest,
      notice of nonpayment, notice of dishonor, notice of acceleration, notice of
      intent to accelerate and all other notices and demands, collection suit and
      the
      taking of any other action by Lender.

     

    Section
      1.4 Obligations
      of Guarantor are Severable.
      This is
      a guaranty of payment and not of collection, and Guarantor waives any right
      to
      require that any action be brought against Borrower or any other Person. If
      Lender seeks to enforce the obligations of Guarantor under this Guaranty by
      action in any court, Guarantor waives any necessity, substantive or procedural,
      that a judgment be previously rendered against Borrower or any other Person
      or
      that Borrower or any other Person be joined in that cause or that a separate
      action be brought against Borrower or any other Person. The obligations of
      Guarantor under this Guaranty are several from the Obligations of Borrower
      or
      the obligations of any other Person, including any other Obligor, and are
      primary obligations of Guarantor and on which it is the principal obligor.
      All
      waivers in this Section
      1.4
      are and
      will be without prejudice to Lender to proceed, at its option, against Borrower
      or any other Person, whether by separate action or by joinder. Guarantor agrees
      that this Guaranty cannot be discharged except by (a) the full and final payment
      of the Obligations, (b) the termination of all obligations, if any, of Lender to
      make any Advance or extend any other accommodation (financial or otherwise)
      to
      or on behalf of Borrower and (c) the complete performance of all obligations
      of
      Guarantor arising under or in connection with this Guaranty.

     

    
      
         

      

      
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    Section
      1.5 No
      Right of Subrogation Until Guaranty Terminates.
      Notwithstanding any payment or payments made by Guarantor under this Guaranty
      or
      any set-off or application of any funds of Guarantor by Lender, Guarantor will
      not be entitled to be subrogated to any of the rights of Lender against Borrower
      or any collateral, security rights or rights of offset held by Lender for the
      payment of the Obligations until all amounts owing to Lender by Borrower for
      or
      on account of the Obligations are paid in full and this Guaranty has
      terminated.

     

    Section
      1.6 All
      Credit Granted in Reliance On Guaranty.
      All
      Loans, extensions of credit and other financial accommodations made or to be
      made to Borrower by Lender under the Credit Agreement or any of the other Loan
      Documents will be conclusively presumed to have been made in acceptance of
      and
      in reliance on this Guaranty.

     

    Section
      1.7 Debt.
      Guarantor
      shall not create, incur, assume or suffer to exist any Debt,
      except:

     

    (a) the
      Obligations; 

     

    (b) accounts
      payable and accrued expenses, liabilities or other obligations to pay the
      deferred purchase price of property or services, from time to time incurred
      in
      the ordinary course of business, any of which is not greater than ninety (90)
      days past the date of invoice and is not delinquent unless it is being contested
      in good faith by appropriate action and for which adequate reserves have been
      maintained in accordance with GAAP; provided,
      however,
      Guarantor may incur Debt not to exceed Fifty Thousand Dollars ($50,000) per
      transaction and an aggregate amount not to exceed One Hundred Fifty Thousand
      Dollars ($150,000) at any time outstanding with regard to direct costs and
      expenses relating to Guarantor Operations (as defined in Section
      2.7);

     

    (c) Debt
      arising in connection with purchase money liens incident to the purchase of
      new
      Equipment;

     

    (d) in
      connection with a capital raise relating to Guarantor Operations, Debt entitling
      the holder thereof to purchase, acquire or exchange such debt for any Equity
      Interest in the Guarantor, which Debt shall be subordinate in all respects
      to
      the Debt created pursuant to the Credit Agreement;

     

    (e) endorsements
      of negotiable instruments for collection in the ordinary course of business;
      or

     

    (f) Debt
      owed
      by Guarantor to any other Person that has entered into a Subordination
      Agreement
      with
      Guarantor and Lender.

     

    Section
      1.8 Information. Guarantor
      assumes responsibility for being and remaining informed of the financial
      condition of Borrower, and of all other circumstances bearing upon the risk
      of
      nonpayment of amounts owing under the Loan Documents, and agrees that neither
      Borrower nor Lender shall have any duty to advise Guarantor of information
      known
      to it regarding such condition or any such circumstances.

     

    
      
         

      

      
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    ARTICLE
      II

    REPRESENTATIONS
      AND WARRANTIES

     

    Guarantor
      warrants and represents that:

     

    Section
      2.1 Organization;
      Good Standing.
      Guarantor is duly formed, validly existing and in good standing under the laws
      of the jurisdiction of its formation and has the power and authority to carry
      on
      its business as presently conducted and to enter into and perform its
      obligations under this Guaranty and each instrument given to secure this
      Guaranty. The execution, delivery and performance by Guarantor of this Guaranty
      and each instrument given to secure this Guaranty have each been duly authorized
      by all necessary company or corporate action, as applicable.

     

    Section
      2.2 Binding
      Obligations.
      This
      Guaranty and each instrument given to secure this Guaranty have each been duly
      and validly executed, issued and delivered by Guarantor, and each constitutes
      the valid and legally binding obligations of Guarantor, enforceable in
      accordance with its terms except as the enforceability thereof may be limited
      or
      affected by bankruptcy, insolvency, reorganization, moratorium or similar laws
      affecting the enforcement of creditors rights generally and by general equitable
      principles.

     

    Section
      2.3 No
      Violation.
      The
      execution, delivery and performance of this Guaranty and of each instrument
      given to secure this Guaranty do not and will not (1) violate any applicable
      law; (2) conflict with, or result in a breach of the terms, conditions or
      provisions of, or constitute a default under, any agreement or instrument to
      which Guarantor is now a party or by which Guarantor or any of its properties
      may be bound, except where any such conflict or breach would not reasonably
      be
      expected to have a Material Adverse Effect; (3) except with respect to any
      Debt
      provided for under Section
      1.7,
      result
      in the creation of any lien, charge or encumbrance upon any of Guarantor’s
      property or assets; (4) violate Guarantor’s charter documents; or (5) except as
      required by any applicable law, require (a) any consent of any other Person
      or
      (b) any consent, license, permit, authorization or other approval of, any giving
      of notice to, any exemption by, any registration, declaration or filing with,
      or
      any taking of any other action in respect of, any court, arbitrator,
      administrative agency or other Governmental Authority.

     

    Section
      2.4 Litigation.
      Except
      as disclosed on Schedule
      2.4
      hereto,
      there is no action, suit or proceeding pending or, to Guarantor’s knowledge,
      threatened against or affecting Guarantor, at law or in equity, or before or
      by
      any Governmental Authority, which might result in any material adverse change
      in
      Guarantor’s business or financial position or in Guarantor’s interest in any of
      its properties.

     

    Section
      2.5 No
      Defaults.
      To its
      knowledge, Guarantor is not in default in any material respect with respect
      to
      any applicable law or in the payment of any indebtedness for borrowed money
      or
      under the terms or provisions of any agreement or instrument evidencing or
      securing any such indebtedness.

     

    Section
      2.6 Benefits.
      The
      execution and delivery of this Guaranty to Lender will benefit, directly or
      indirectly, Guarantor.

     

    
      
         

      

      
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    Section
      2.7 Guarantor
      Operations.
      Guarantor has not and will not engage in any business other than (a) acquiring,
      owning, and developing oil and gas resource properties and (b) acquiring,
      owning, and obtaining capital for, and providing capital to, Borrower
      (“Guarantor
      Operations”).
      Guarantor is not a party to any contract or agreement except for those that
      directly relate to Guarantor Operations

     

    Section
      2.8 Solvency.
      Guarantor is solvent and will continue to be solvent after giving effect to
      the
      transactions hereunder.

     

    ARTICLE
      III

    TERMINATION

     

    Except
      as
      provided herein, this Guaranty shall terminate and be of no further force and
      effect upon (a) the full and final payment of the Obligations, (b) the
      termination of all obligations, if any, of Lender to make any Loan or extend
      any
      other accommodation (financial or otherwise) to or on behalf of Borrower and
      (c)
      the complete performance of all obligations of Guarantor arising under or in
      connection with this Guaranty. If any monies paid to Lender by or on behalf
      of
      Borrower are recovered from Lender for any reason, Guarantor shall pay all
      such
      sums to Lender on demand, together with interest thereon from date of recovery
      until paid at the same rate provided in the Note for interest on past due
      principal.

     

    ARTICLE
      IV

    MISCELLANEOUS

     

    Section
      4.1 Assignment.
      All
      guarantees, warranties, representations, covenants and agreements contained
      in
      this Guaranty shall bind the successors, assigns, receivers, trustees and
      representatives of Guarantor and shall inure to the benefit of Lender, its
      successors and assigns, and any holder of the Obligations or any part thereof.
      Guarantor shall not assign its obligations hereunder without the prior written
      consent of Lender.

     

    Section
      4.2 Waiver
      of Certain Rights.
      By its
      execution hereof, to the extent such laws and rules could be deemed to be
      applicable to this Guaranty, Guarantor expressly waives each and every right
      to
      which it may be entitled by virtue of the suretyship law of the State of New
      York.

     

    Section
      4.3 Amendment.
      This
      Guaranty will be amended, waived (in whole or in part) or otherwise modified
      only by an agreement in writing signed by all the parties to this
      Guaranty.

     

    Section
      4.4 Notices.
      Any
      notice, demand or document which either party is required or may desire to
      give
      hereunder shall be in writing and, except to the extent provided in the other
      provisions of this Agreement, given by messenger, telecopy or other electronic
      transmission, or United States registered or certified mail, postage prepaid,
      return receipt requested, addressed to such party at its address and telecopy
      number shown below, or at such other address as either party shall have
      furnished to the other by notice given in accordance with this
      provision:

     

    
      
         

      

      
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    If
      to Guarantor:

     

    Kentucky
      USA Energy Inc.

    321
      Somerset Road

    London,
      KY 40741

    Attention:
       Steven
      D.
      Eversole

    Telephone:
       (606)
      878-5987

    Facsimile:
       (606)
      878-[____]

    


    with
      copies to:

    


    Ronald
      R.
      Fieldstone, P.A.

    Fieldstone
      Lester Shear & Denberg

    201
      Alhambra Circle, Suite 601

    Coral
      Gables, FL 33131

    Telephone:
      (305) 357-5548

    Telecopy:
      

    


    If
      to
      Lender:
      

    


    NSES
      12,
      LLC

    38
      Grove
      Street, Building C

    Ridgefield,
      Connecticut 06877

    Attention:
      Roger
      Eustance

    Telephone:
      (203) 431-0330 ext.872

    Telecopy:
      [______________]

     

    with
      copies to:

     

    Greenberg
      Traurig, LLP

    1000
      Louisiana, Suite 1700

    Houston,
      Texas 77002 

    Attention:
      Douglas
      C. Atnipp

    Telephone:
      (713)
      374-3513

    Facsimile:
      (713)
      _________


     

    Any
      notice delivered or made by messenger, telecopy, electronic mail or United
      States mail will be deemed to be given on the date of actual delivery as shown
      by messenger receipt, the sender’s facsimile machine confirmation or other
      verifiable electronic receipt, or the registry or certification receipt.
      Notwithstanding the previous sentence, if either party receives from the other
      any message via electronic mail that purports to be a notice under this
      Agreement but that contains information that is syntactically incorrect, garbled
      or otherwise unintelligible, the recipient will notify the sender and the
      message containing the unintelligible information will not be deemed to be
      given
      until it is successfully delivered (including redelivery by electronic mail)
      pursuant to this Section
      4.4.
      If
      Lender receives oral notice of any event from an authorized officer of
      Guarantor, Lender will not be required to delay the exercise of any rights
      arising from the occurrence of that event until it receives written confirmation
      of the oral notice. In the event that a discrepancy exists between the notice
      received by Lender orally and the written confirmation, or in the absence of
      a
      written confirmation, the oral notice, as understood by Lender will be deemed
      the controlling and proper notice.

     

    
      
         

      

      
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    Section
      4.5 

     

    (a) CHOICE
      OF LAW.
      THIS
      AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
      WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES
      OF CONFLICTS OF LAWS.

     

    (b) VENUE.
      ANY
      LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
      DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
      YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE,
      AND
      BY EXECUTION AND DELIVERY OF THIS AGREEMENT, GUARANTOR, FOR ITSELF AND IN
      RESPECT OF ITS PROPERTY, AND LENDER CONSENT TO THE NON-EXCLUSIVE JURISDICTION
      OF
      THOSE COURTS. GUARANTOR AND LENDER IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING
      ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
      NON CONVENIENS,
      WHICH
      EITHER PARTY MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
      PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
      DOCUMENT RELATED THERETO. GUARANTOR AND LENDER WAIVE PERSONAL SERVICE OF ANY
      SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
      PERMITTED BY THE LAW OF SUCH STATE.

     

    (c) Process
      Agent.
      Guarantor shall have irrevocably appointed, for a period of not less than one
      (1) year, and shall maintain such appointment so long as any Obligations remain
      outstanding, Borrower as its agent, or another agent satisfactory to Lender,
      for
      service of process in connection with any action or proceeding arising under
      or
      relating to this Guaranty or the Loan Documents, and Lender shall have received
      a copy of such written appointment by Guarantor, and a letter, addressed to
      Lender and in form and substance satisfactory to Lender, from such agent for
      service of process accepting such appointment in writing.

     

    (d) Failure
      to Comply.
      Should
      Guarantor fail to appear or answer any summons, complaint, process or papers
      so
      served within thirty (30) days after the mailing thereof, Guarantor shall be
      deemed in breach of this Guaranty and an order and/or judgment may be entered
      against Guarantor as demanded or prayed for in such summons, complaint, process
      or papers.

     

    Section
      4.6 WAIVER
      OF JURY TRIAL.
      TO THE
      MAXIMUM EXTENT NOT PROHIBITED BY LAW, GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY
      AND INTENTIONALLY WAIVES ANY RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY IN
      RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
      UNDER OR IN CONNECTION WITH THE NOTE, THIS GUARANTY OR ANY OF THE OTHER LOAN
      DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED THEREBY, BEFORE OR AFTER
      MATURITY.

     

    
      
         

      

      
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    Section
      4.7 No
      Usurious Interest.
      It is
      the intention of the parties hereto to comply strictly to usury laws applicable
      to Lender. Interest on the Obligations is expressly limited so that in no
      contingency or event whatsoever, whether by acceleration of the maturity of
      the
      Promissory Note or otherwise, shall the interest taken, reserved, contracted
      for, charged or received by Lender exceed the maximum amount permissible under
      applicable law. If, from any circumstances whatsoever, fulfillment of any
      provisions of this Guaranty, the Promissory Note or the other Security Documents
      or of any other document evidencing, securing or pertaining to the indebtedness
      evidenced by the Promissory Note, at the time performance of such provision
      shall be due, would be usurious under applicable law, then, ipso facto, the
      obligation to be fulfilled shall be reduced to the limit of such validity so
      that the aggregate consideration which constitutes interest that is contracted
      for, taken, reserved, charged for, or received shall not exceed the maximum
      amount allowed by applicable law and such amount that would otherwise be
      excessive interest shall be applied to the reduction of the principal amount
      owing under the Promissory Note or on account of any other indebtedness of
      the
      Borrowers or Guarantor to Lender, or if principal of the Promissory Note and
      such other indebtedness has been paid in full, refunded to the Borrower or
      Guarantor, as applicable. In determining whether or not the interest paid or
      agreed to be paid for the use, forbearance, or detention of sums hereunder
      exceeds the highest lawful rate, the Borrower and Lender shall, to the maximum
      extent permitted by applicable law, (a) characterize any non-principal payment
      as an expense, fee or premium rather than as interest, (b) exclude voluntary
      prepayments and the effects thereof, (c) amortize, prorate, allocate and spread
      the total amount of interest throughout the full term of such indebtedness
      so
      that the actual rate of interest on account of such indebtedness does not exceed
      the highest lawful rate, and/or (d) allocate interest between portions of such
      indebtedness, to the end that no such portion shall bear interest at a rate
      greater than that permitted by applicable law.

     

    Section
      4.8 FINAL
      AGREEMENT.
      THIS
      GUARANTY AND THE SECURITY DOCUMENTS TO WHICH GUARANTOR IS A PARTY REPRESENT
      THE
      FINAL AGREEMENT BETWEEN GUARANTOR AND LENDER 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.

    


    [SIGNATURE
      PAGE FOLLOWS]

    


    
      
         

      

      
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    IN
      WITNESS WHEREOF, the undersigned have caused this Guaranty to be duly executed
      and delivered as of the date first above written.

    
      	 	 	 
	 	
              GUARANTOR:

               

              Kentucky
                USA Energy, Inc.,

              a
                Delaware corporation

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

            
	 	
              Steven
                D. Eversole

              President
                and Chief Executive Officer

            


    

     

    
      	
            	 	 
	 	
              
                LENDER:

                 

                NSES
                  12, LLC,

                a
                  Delaware limited liability company

              

            
	 
 	 
 	 
 
	 	By:  	
               

              
                

              

            
	 	Name:  	
               

              
                

              

            
	 	Title:	
               

              
                

              

            


    

     

    
      [Signature
        page to the Guaranty Agreement]