GUARANTY

EXHIBIT 10.2

GUARANTY

This Guaranty (“Guaranty”) dated as of 3-30-2009, is entered into between CAPITAL CITY ENERGY GROUP, INC. (“Guarantor”), in favor of CRESTMARK COMMERCIAL CAPITAL LENDING LLC (“Creditor”).

RECITALS

A.           Creditor and HOTWELL SERVICES, INC. (“Client”) are entering into an ACCOUNTS RECEIVABLE FINANCING AGREEMENT (the “Agreement”) pursuant to which Creditor will purchase certain accounts receivable from Client.

B.           In order to induce Creditor to enter into the Agreement with Client, Guarantor has agreed to enter into this Guaranty in order to guaranty any loans or advances or other financial accommodations made or extended by Creditor.

ACCORDINGLY, in consideration of the mutual covenants contained herein, the parties agree as follows:

AGREEMENT

1            GUARANTY

1.1            Guaranty of Obligations.   Guarantor, and any and all successor entities resulting by operation of merger, law, or otherwise, including but not limited to any successor debtor in possession of Guarantor as such term is used in Chapter 11 of the United States Bankruptcy Code (11 U.S.C. § 1101 et seq.), unconditionally, absolutely and irrevocably guarantees and promises to pay to Creditor, upon the written demand of Creditor, in lawful money of the United States of America and in immediately available funds, any and all indebtedness and obligations (hereinafter collectively, the “Guaranteed Obligations”) of the Client, and all successors-in-interest of Client by operation of law or otherwise, including, but not limited to, any Trustee (as defined in the United States Bankruptcy Code, 11 U.S.C. §101 et seq., or successor statutes) or debtor-in-possession, and including, but not limited to, any successor-in-interest arising out of any merger or reorganization involving Client, whether Client is a surviving or disappearing person or entity as a result of those transactions, to Creditor under the Agreement or any other note, loan agreement, credit agreement, security agreement, pledge agreement, mortgage, or other documents or instrument (hereinafter collectively, the “Documents”) or otherwise.

The term “Guaranteed Obligations” is used herein in its most comprehensive sense and includes all obligations of Client to Creditor (including, without limitation, attorneys’ fees and expenses, and unpaid interest, including interest that, but for the filing of a petition in bankruptcy, would have accrued on the Guaranteed Obligations) now existing or hereafter incurred or created, whether voluntarily or involuntarily, and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, whether Client may be liable jointly, severally, or solidarily with others, whether recovery upon such indebtedness may be or hereafter becomes barred by any statute of limitations or whether such indebtedness may be or hereafter becomes otherwise unenforceable, and includes Client’s prompt, full and faithful performance, observance and discharge of each and every term, condition, agreement, representation, warranty, undertaking and provision to be performed by Client under the Documents or otherwise.  Guarantor agrees that this Guaranty constitutes a guaranty of payment when due and not of collection.

1.2            Unlimited Guaranty.   There are no dollar limitations on the amount of Guarantor’s liability under this Guaranty.

1.3            Continuing Guaranty.   This Guaranty is a continuing guaranty and shall remain effective until the Guaranteed Obligations have been fully paid, performed and discharged as provided in Section 10 and Creditor has given written notice of that fact to Guarantor.

1.4            Solidary Liability.   Guarantor agrees that its liability and obligations in favor of Creditor shall be joint, several and in solidor with Client and all other guarantors of the Guaranteed Obligations, and that a separate action or actions may be brought and prosecuted against Guarantor to enforce Creditor’s rights under this Guaranty, whether action is brought against Client or whether Client is joined in any such action or actions.  Guarantor agrees that any releases which may be given by Creditor to Client or any other guarantor shall not release it from this Guaranty.

2            SECURITY INTEREST

 As collateral securing the Guaranteed Obligations, Guarantor grants to Creditor a continuing security interest in and to any collateral now or hereafter described in any form UCC-1 filed against Guarantor naming Creditor as the secured party, and all of Guarantor’s right, title and interest in and to the following property, now owned and hereafter acquired:

2.1           All accounts, chattel paper, general intangibles, including, but not limited to, tax and duty refunds, registered and unregistered patents, trademarks, service marks, copyrights, trade names, applications for the foregoing, trade secrets, customer lists, licenses, whether as licensor or licensee, and existing and future leasehold interest in equipment, and fixtures, documents,

instruments, deposit accounts, certificates of deposit, securities, and all rights of Guarantor as a seller of goods, including rights of reclamation, replevin and stoppage in transit;

2.2           All goods, including, but not limited to the following:

2.2.1           All inventory, wherever located;

2.2.2           All equipment and fixtures, wherever located, and all additions, substitutions, replacements (including spare parts), and accessions thereof and thereto;

2.3           All books and records relating to all of the foregoing property and interest in property, including, without limitation, all computer programs, printed output and computer readable data in the possession or control of Guarantor, any computer service bureau or other third party; and

2.4           All proceeds of the foregoing, including, but not limited to, all insurance proceeds, all claims against third parties of loss or destruction of or damage to any of the foregoing, and all income from the lease or rental of any of the foregoing.

3            SPECIAL POWER OF ATTORNEY

Guarantor hereby grants Creditor an irrevocable power of attorney (which, being coupled with an interest, is irrevocable) for the purpose of acting on Guarantor’s behalf to:

which come into Creditor’s possession with respect to Client’s accounts receivable; and

instruments as the sole owner thereof.

In granting this Power of Attorney, Guarantor hereby cancels and revokes all previous powers of attorney in respect of the matters comprised herein which have been granted to any other person.

4            INDEMNITY

4.1            Indemnity.   In addition to the payment of expenses pursuant to Section 11.1.2, Guarantor agrees to indemnify, defend, exonerate, pay and hold Creditor and the officers, directors, employees and agents of Creditor (the “Indemnitees”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, causes of action, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel to Creditor and expert witness fees and disbursements) for such Indemnitees in connection with any investigative, administrative or judicial proceeding, whether or not such Indemnitee shall be designated a party thereto, that may be imposed on, incurred by or asserted against such Indemnitee, in any manner relating to or arising out of or in connection with this Guaranty (the “Indemnified Liabilities”).  Notwithstanding the foregoing, Indemnified Liabilities shall not include liabilities, obligations, losses, damages, penalties, actions, causes of action, judgments, suits, claims, costs, expenses and disbursements to the extent caused by or resulting from the willful misconduct or gross negligence of such Indemnitee.

4.2            Notice.   Each Indemnitee will promptly notify Guarantor of each event of which it has knowledge that may give rise to a claim under this Section.

4.3            Defense of Actions.   If any investigative, judicial or administrative proceeding arising in connection with any of the Indemnified Liabilities is brought against any Indemnitee indemnified or intended to be indemnified pursuant to this Section, Guarantor, to the extent and in the manner directed by the Indemnitee or intended Indemnitee, will resist and defend such action, suit or proceeding or cause the same to be resisted and defended by counsel designated by Guarantor (which counsel shall be satisfactory to the Indemnitee or intended Indemnitee).  Each Indemnitee will use its best efforts to cooperate in the defense of any such action, suit or proceeding.  To the extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Guarantor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.

5            CONSENTS BY GUARANTOR

5.1            Consents.   Guarantor hereby authorizes Creditor, without notice or demand and without affecting Guarantor’s liability hereunder, from time to time to:

5.1.1            Changes in Terms.   Renew, compromise, extend, refinance, accept partial payments, accelerate or restructure the Guaranteed Obligations or otherwise change the time for payment or the terms of any of the Guaranteed Obligations, or any part thereof, including, without limitation, increasing or decreasing the rate of interest thereof;

5.1.2            Amendment of Documents.   Waive, amend, rescind or modify any of the terms or provisions of the Documents or any agreement or document executed in connection therewith;

5.1.3            Liquidation of Guaranteed Obligations.   Settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations, or any part thereof, and any security or collateral therefor in any manner as Creditor may determine in its sole discretion;

5.1.4            Collateral.   Take and hold collateral to secure the payment of the Guaranteed Obligations and exchange, enforce, waive and release any such collateral, and apply such collateral and direct the order or manner of sale thereof as Creditor in its sole discretion may determine;

5.1.5            Releases.   Release the Client, or release or substitute any one or more other guarantors;

5.1.6            Assignment.   Assign, without notice, this Guaranty in whole or in part and Creditor’s rights hereunder to any one at any time;

5.1.7            Application of Payments.   Apply payments on account of the Guaranteed Obligations, from any source in any manner deemed to be in the best interests of Creditor in the sole discretion of Creditor, including the application of payments on a “last-in-first-out basis;” and

5.1.8            Other Guaranties.   Take other gu