Energy Search, #466885 EXHIBIT 10.26 PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of June 23, 1999, made by ENERGY SEARCH, INCORPORATED, a Tennessee corporation ("Pledgor"), in favor of SOUTHERN PRODUCER SERVICES, L.P., a...

Energy Search, #466885





EXHIBIT 10.26

PLEDGE AGREEMENT

          THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
June 23, 1999, made by ENERGY SEARCH, INCORPORATED, a Tennessee corporation
("Pledgor"), in favor of SOUTHERN PRODUCER SERVICES, L.P., a Delaware
limited partnership ("Lender").

W I T N E S S E
T H:

          WHEREAS, pursuant to a Credit Agreement, dated as of June 23, 1999,
(together with all amendments and other modifications, if any, from time
to time thereafter made thereto, the "Credit Agreement"), between
Pledgor and Lender, Lender has agreed to make Loans to Borrower in accordance
with the Credit Agreement; and
          WHEREAS, as a condition precedent to the making of the initial Loan
under the Credit Agreement, Pledgor is required to execute and deliver
this Pledge Agreement; and
          WHEREAS, Pledgor has duly authorized the execution, delivery and performance
of this Pledge Agreement; and
          NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce Lender to make Loans (including
the initial Loan) to Borrower pursuant to the Credit Agreement, Pledgor
agrees, for the benefit of Lender, as follows:

ARTICLE I

DEFINITIONS

          SECTION 1.1  Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble
and recitals, shall have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):
          "Collateral" is defined in Section 2.1.
          "Credit Agreement" is defined in the first recital.
          "Distributions" means all distributions or options (in each case
whether in cash or in kind, and whether in the ordinary course of business
or upon liquidation or otherwise) on or with respect to any Partnership
Interests or other security entitlements constituting Collateral and any
other payment on account of any Partnership Interest.
          "Lender" is defined in the preamble.







          "Obligor" means Pledgor or any other Person obligated under any
Loan Document, including their permitted successors and assigns.
          "Partnership Agreement" means that certain Limited Partnership
Agreement of ESI Pipeline Operating L.P., attached hereto as Attachment
1, as the same may be amended, modified, restated and/or supplemented
from time to time, in which Pledgor participates as a general or limited
partner, as the case may be.
          "Partnership Interest" means all right, title and interest of
Pledgor in and to the Partnership, the cash or other property or assets
of such Partnership, and all profits, income, surplus, compensation, return
of capital, distributions and other reimbursements and payments from such
Partnership (including, without limitation, specific properties of the
Partnership upon dissolution or otherwise), all partnership interests in
such Partnership now owned or hereafter acquired by Pledgor as a result
of exchange offers, direct investments or otherwise, and all accounts,
general intangibles and other rights to payment or reimbursement, now existing
or hereafter arising or acquired, from the Partnership, existing or arising
from loans, advances or other extensions of credit by Pledgor from time
to time to or for the account of the Partnership, or from services rendered
by Pledgor from time to time to or for the account of the Partnership;
excluding, however, all obligations and liabilities of Pledgor in and to
the Partnership (including, without limitation, all duties of Pledgor as
a general or limited partner in any Partnership and all voting rights incidental
thereto).
          "Partnership" means ESI Pipeline Operating L.P.
          "Person" means any natural person, corporation, limited liability
company, partnership, limited liability partnership, firm, association,
trust, government, governmental agency or any other entity, whether acting
in an individual, fiduciary or other capacity.
          "Pledge Agreement" is defined in the preamble.
          "Pledged Property" means all Partnership Interests and all interests
in the Partnership, all securities, securities entitlement, securities
accounts, all assignments of any amounts due or to become due, all other
instruments which are now being delivered by Pledgor to Lender or may from
time to time hereafter be delivered by Pledgor to Lender for the purpose
of pledge under this Pledge Agreement or any other Loan Document, and all
proceeds of the foregoing.
          "Pledgor" is defined in the preamble.
          "Secured Obligations" is defined in Section 2.2.
          "Securities Act" is defined in Section 6.



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          "U.C.C." means the Uniform Commercial Code as in effect in the
State of Texas.
          SECTION 1.2    Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the
Credit Agreement.
          SECTION 1.3    U.C.C. Definitions. Unless otherwise defined herein
or the context otherwise requires, terms for which meanings are provided
in the U.C.C. are used in this Pledge Agreement, including its preamble
and recitals, with such meanings.

ARTICLE II

PLEDGE

          SECTION 2.1    Grant of Security Interest. Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to Lender,
and hereby grants to Lender a continuing security interest in, all of the
following property whether now owned or hereafter acquired (the "Collateral"):
          (a)           the Partnership Interests;
          (b)           all cash and other property, real, personal, or mixed, distributable
or payable at any time or from time to time to Pledgor from the Partnership,
as a dividend or otherwise in complete or partial liquidation or otherwise,
including, without limitation, Pledgor's share of any revenues of the Partnership
derived from any contract but not including any cash or other property
actually paid to Pledgor as permitted pursuant to Section 2.4 hereof;
          (c)           all other Pledged Property; and
          (d)           all proceeds and products of any of the foregoing but not including
any cash or other property actually paid to Pledgor as permitted pursuant
to Section 2.4. hereof or any proceeds or products of such cash or other
property.
          SECTION 2.2   Security for Obligations. This Pledge Agreement secures
the payment in full of all Obligations now or hereafter existing under
the Credit Agreement, the Note and each other Loan Document, whether for
principal, interest, costs, fees, expenses, or otherwise, and all other
obligations of Borrower to Lender, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent or now or hereafter
existing or due or to become due, and all obligations of Pledgor now or
hereafter existing under this Pledge Agreement and each other Loan Document
to which it is or may become a party (all such Obligations and other obligations
of Borrower and Pledgor being the "Secured Obligations").



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          SECTION 2.3    Delivery of Pledged Property.      (a)    All certificates
or instruments representing or evidencing any Collateral, including those
representing or evidencing the Partnership Interests, if any, shall be
delivered to and held by or on behalf of Lender pursuant hereto, shall
be in suitable form for transfer by delivery, and shall be accompanied
by all necessary endorsements or instruments of transfer or assignment,
duly executed in blank.

(b)        (i)         To the extent any of the Collateral constitutes an "uncertificated
security" (as defined in Section 8-102(a)(18) of the U.C.C. or Section
8-102 of the Uniform Commercial Code as in effect in any jurisdiction that
has not adopted the 1994 Amendments) and the issuer of which is organized
in a jurisdiction, or has selected a jurisdiction (in circumstances permitted
by Section 8-110(d) of the U.C.C.), that has not enacted the 1994 Amendments,
Pledgor shall cause the issuer thereof to acknowledge to Lender the registration
on the books of such issuer of the pledge and security interest hereby
created in the manner required by Section 8-408(d) of the Uniform Commercial
Code of its jurisdiction of organization.
          (ii)         To the extent any of the Collateral constitutes an "uncertificated
security" (as defined in Section 8-102(a)(18) of the U.C.C.) and the issuer
of which is organized in a jurisdiction, or has selected a jurisdiction
(in circumstances permitted by Section 8-110(d) of the U.C.C.), that has
enacted the 1994 Amendments, Pledgor shall cause the issuer thereof to
acknowledge to Lender the registration on the books of such issuer of the
pledge and security interest hereby created in the manner required by Section
8-301(1)(b) of the U.C.C.
(c)        (i)         To the extent any of the Collateral constitutes a "security
entitlement" or a "securities account" (as such terms are defined in Sections
8-102(a)(17) and 8-501, respectively, of the U.C.C.) and the jurisdiction
of the securities intermediary (as described in Section 8-110(e) of the
U.C.C.) against which such securities entitlement is established or at
which such securities account is maintained is not a jurisdiction that
has adopted the 1994 Amendments, Pledgor shall cause such Collateral to
be transferred to Lender pursuant to Section 8-313(1) of the Uniform Commercial
Code as in effect in such jurisdiction in a manner satisfactory to Lender.
          (ii)         To the extent any of the Collateral constitutes a "security entitlement"
or a "securities account" (as such terms are defined in Sections 8-102(a)(17)
and 8-501, respectively, of the U.C.C.) and the jurisdiction of the securities
intermediary (as described in Section 8-110(e) of the U.C.C.) against which
such securities entitlement is established or at which such securities



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account is maintained is a jurisdiction that has adopted the 1994 Amendments,
Pledgor shall cause to be delivered to Lender an agreement, in form and
substance satisfactory to Lender, executed by such securities intermediary
whereby such securities intermediary agrees (i) that it will comply with
entitlement orders originated by Lender without further consent by Pledgor
with respect to all such Collateral (it being understood that such agreement
may provide that at all times when such securities intermediary has not
been notified that a Default is in existence, the securities intermediary
may comply with entitlement orders of Pledgor), (ii) to subordinate any
security interest it may have in and to all such Collateral to the security
interest of Lender therein and (iii) that it will not agree with any Person
other than Lender in any manner that would grant such Person "control"
over any such Collateral.

          SECTION 2.4 Distributions on Partnership Interest. In the event
that any Distribution is to be paid on the Partnership Interest at a time
when no Default has occurred and is continuing, such Distribution may be
paid directly to Pledgor and once so paid shall no longer constitute any
part of the Collateral. If any such Default or Event of Default has occurred
and is continuing then any such Distribution or payment shall be paid directly
to Lender and shall constitute part of the Collateral.
          SECTION 2.5 Continuing Security Interest. This Pledge Agreement
shall create a continuing security interest in the Collateral and shall




          (a)           remain in full force and effect until payment in full of all Secured
Obligations and the termination of the commitments of Lender to make Loans
to Borrower,
          (b)           be binding upon Pledgor and its successors, transferees and assigns,
and
          (c)           inure to the benefit of Lender and its successors, transferees,
and assigns.

Without limiting the foregoing clause (c), Lender may assign or
otherwise transfer (in whole or in part) the Note or any Loan to any other
Person or entity, and such other Person or entity shall thereupon become
vested with all the rights and benefits in respect thereof granted to Lender
under any Loan Document (including this Pledge Agreement) or otherwise.
Upon the payment in full of all Secured Obligations and the termination
of the commitments of Lender to make Loans to Borrower, the security interest
granted herein shall terminate and all rights to the Collateral shall revert
to Pledgor. Upon any such termination, Lender will, at Pledgor's sole expense,
deliver to Pledgor, without any representations, warranties or recourse
of any kind whatsoever, all certificates and instruments representing or
evidencing all Pledged Property, together with all other Collateral held
by Lender hereunder, and execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence such termination.



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          SECTION 2.6   Security Interest Absolute. All rights of the Lender
and the security interests granted to Lender hereunder, and all obligations
of Pledgor hereunder, shall be absolute and unconditional, irrespective
of


          (a)           any lack of validity or enforceability of the Credit Agreement,
the Note or any other Loan Document,
          (b)           the failure of Lender or any holder of the Note

          (i)           to assert any claim or demand or to enforce any right or remedy
against Borrower, any other Obligor or any other Person under the provisions
of the Credit Agreement, the Note, any other Loan Document or otherwise,
or
          (ii)           to exercise any right or remedy against any other Obligor of, or
collateral securing, any Secured Obligations,

          (c)           any change in the time, manner or place of payment of, or in any other
term of, all or any of the Secured Obligations or any other extension,
compromise or renewal of any Secured Obligation,
          (d)           any reduction, limitation, impairment or termination of any Secured
Obligations for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and Pledgor hereby
waives any right to or claim of) any defense or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, any Secured Obligations,
          (e)           any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Credit Agreement,
the Note or any other Loan Document,
          (f)           any addition, exchange, release, surrender, or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver
or release of or addition to or consent to departure from any guaranty,
for any of the Secured Obligations, or
          (g)           any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, Borrower, any other
Obligor, any surety or any guarantor.




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ARTICLE III

REPRESENTATIONS AND WARRANTIES

          SECTION 3.1   Warranties, etc. Pledgor represents and warrants
unto Lender, as at the date of each pledge and delivery hereunder (including
each pledge and delivery of Pledged Property) by Pledgor to Lender of any
Collateral, as set forth in this Article.
          SECTION 3.2   Organization, etc. Pledgor is a corporation duly
organized, and is validly existing and in good standing under the laws
of the State of [Tennessee]; and Pledgor is duly qualified and in good
standing as a corporation authorized to do business in each jurisdiction
where, because of the nature of its activities or properties, such qualification
is required and where the failure so to qualify would have a material adverse
effect on the financial condition, business, operations and prospects of
Pledgor.
          SECTION 3.3   Due Authorization; Non-Contravention; etc. Pledgor
has the full legal power, right and capacity to enter into and perform
this Pledge Agreement and the other Loan Documents to which it is a party.
The consummation of the transactions contemplated by this Pledge Agreement
and the other Loan Documents to which it is a party are within Pledgor's
legal power, have received all necessary governmental and other approvals,
exemptions, authorizations, licenses and permits (if any shall be required),
and do not and will not contravene or conflict with any provision of any
law, rule, regulation, order, writ, judgment, decree, determination or
award presently in effect having applicability to Pledgor, and do not and
will not result in the breach or termination of any provision of, or constitute
a default under, any indenture, mortgage, deed of trust or other agreement
or instrument to which Pledgor is a party or by which Pledgor or its properties
may be bound or pursuant to which Pledgor was created, including, without
limitation, any confidentiality agreement or restrictions or disclosure
of information.
          SECTION 3.4 Validity. This Pledge Agreement and the other Loan
Documents to which Pledgor is a party have been duly executed and delivered
and constitutes the legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with their terms.
          SECTION 3.5 No Consent. No authorization, consent or approval,
or any formal exemption, of any governmental body or regulatory authority
(federal, state or local) or other Person is or will be necessary to the
valid execution, delivery or performance by Pledgor of this Pledge Agreement
or the other Loan Documents to which Pledgor is a party.
          SECTION 3.6 Ownership, No Liens, etc.  Pledgor is the legal
and beneficial owner of, and has good and marketable title to (and has
full right and authority to pledge and assign) such Collateral, free and
clear of all liens, security interests, options, or other charges or encumbrances,
except any lien or security interest granted pursuant hereto in favor of
Lender.



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          SECTION 3.7 Valid Security Interest. The delivery of such Collateral
to Lender is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Secured
Obligations. Other than filing a UCC-1 financing statement with the Secretary
of State of Tennessee, no filing or other action will be necessary to perfect
or protect such security interest.
          SECTION 3.8 Partnership Interests. The character (general and/or
limited partner), of Pledgor's interest in the Partnership, and Pledgor's
percentage interest in the Partnerships' profits (with profits interests
as a general and as a limited partner separately stated) as of the date
hereof is a [one percent (1%) general partner interest] [twenty-seven and
seventy-four hundredths percent (27.74%) limited partner interest]. Pledgor
has provided to Lender true, correct and complete copies of the Partnership
Agreement in effect on the date hereof.
          SECTION 3.9 Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either

          (a)           for the pledge by Pledgor of any Collateral pursuant to this Pledge
Agreement or for the execution, delivery, and performance of this Pledge
Agreement by Pledgor, or
          (b)           for the exercise by Lender of the voting or other rights provided
for in this Pledge Agreement, or, except with respect to any Partnership
Interest, as may be required in connection with a disposition of such Partnership
Interest by laws affecting the offering and sale of such type of Partnership
Interest generally, the remedies in respect of the Collateral pursuant
to this Pledge Agreement.

          SECTION 3.10 Compliance with Laws. Pledgor is in compliance with
the requirements of all applicable laws (including, without limitation,
the provisions of the Fair Labor Standards Act), rules, regulations and
orders of every governmental authority, the non-compliance with which might
materially adversely affect the business, properties, assets, operations,
condition (financial or otherwise) or prospects of Pledgor or the value
of the Collateral or the worth of the Collateral as collateral security.
          SECTION 3.11 Uncertificated Nature of Partnership Interests.
No right, title and interest of Pledgor in the Partnership is represented
by a certificate of interest or instrument, except such certificates or
instruments, if any, as have been delivered to Lender and are held in its
possession, together with transfer documents as required in this Pledge
Agreement (and Pledgor covenants and agrees that any such certificates
or instruments hereafter received by Pledgor with respect to any of the
Collateral will be held in trust for Lender and promptly delivered to Lender).



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ARTICLE IV

COVENANTS

          SECTION 4.1 Protect Collateral; Further Assurances, etc. Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner
the Collateral (except in favor of Lender hereunder). Pledgor will warrant
and defend the right and title herein granted unto Lender in and to the
Collateral (and all right, title, and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. Pledgor agrees
that at any time, and from time to time, at the expense of Pledgor, Pledgor
will promptly execute and deliver all further instruments, and take all
further action, that may be necessary or desirable, or that Lender may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Lender to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Pledgor agrees that without the prior written consent of Lender, in its
sole and absolute discretion, it will not vote the Partnership Interest
in a way that allows the Partnership, to (i) enter into any employment
contracts, (ii) make any amendments to the certificate of formation or
limited liability company agreement of the Partnership, or (iii) enter
in any other agreements which, in the opinion of Lender, in its sole and
absolute discretion, will reduce the value of the Pledged Collateral.
          SECTION 4.2 Instruments of Transfer; Additional Undertakings and
Agreements. Pledgor agrees that it will:

          (a)           Execute such additional Uniform Commercial Code financing statements
and other documents (and pay the cost of filing or recording the same in
all public offices reasonably deemed necessary or appropriate by Lender)
and do such other acts and things, all as Lender may from time to time
request to establish and maintain a valid, perfected pledge (including
without limitation, a perfected pledge by means of control) on, and security
interest in, the Collateral (free of all other Liens, except as expressly
permitted by the Credit Agreement) to secure the payment and performance
of the Secured Obligations;
          (b)           Notify the Partnership of the existence of this Pledge Agreement
by sending to them a notice by certified mail, return receipt requested,
in substantially the form set forth in Attachment 2 hereto or in
other form satisfactory to Lender, and serve a certified copy of this Agreement
upon the Partnership, immediately following the execution and delivery
of this Pledge Agreement;
          (c)           Keep, at its address so indicated below its signature hereto, all
its records concerning the Collateral, which records will be of such character
as will enable Lender or its designees to determine at any time the status
thereof;



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          (d)           Furnish to Lender, as soon as possible and in any event within fifteen
(15) days after the occurrence from time to time of any change in the address
of Pledgor's location (as described below its signature) or in the name
of Pledgor, notice in writing of such change;
          (e)           Furnish Lender such information concerning the Collateral as Lender
may from time to time reasonably request, and permit Lender and its designees,
at such times during normal business hours as Lender may desire, to inspect,
audit and make copies of and extracts from all records and all other papers
in the possession of Pledgor which pertain to the Collateral;
          (f)           Provide Lender, not less than ten (10) days after entering into
same, a copy of any amendment or supplement to, or modification or waiver
of, any term or provision of the Partnership Agreement, provided, that
Pledgor will not enter into any such amendment, supplement or modification,
or execute any such waiver, which would adversely affect Lender, without
the prior written approval of Lender;
          (g)           Upon the occurrence of any Event of Default, promptly upon request
by Lender, transfer any Partnership Interests constituting Collateral into
the name of any other nominee designated by Lender;
          (h)           Upon learning of the occurrence of any event which could reasonably
be expected to cause termination and/or dissolution of any of the Partnership,
notify Lender in writing thereof; and
          (i)           Not give control to any other Person other than Lender.

          SECTION 4.3 Continuous Pledge. Subject to Section 2.4 hereof,
Pledgor will, at all times, keep pledged to Lender pursuant hereto all
Pledged Property and all other interests constituting Collateral, and all
other Collateral and other securities, instruments, proceeds, and rights
from time to time received by or distributable to Pledgor in respect of
any Collateral.
          SECTION 4.4 Voting Rights; etc. Pledgor agrees:

          (a)           after any Default of the Credit Agreement shall have occurred
and be continuing, promptly upon receipt thereof by Pledgor and without
any request therefor by Lender, to deliver (properly endorsed where required
hereby or requested by Lender) to Lender all Distributions, all interest,
all principal, all other cash payments, and all proceeds of the Collateral,
all of which shall be held by Lender as additional Collateral for use in
accordance with Section 6.3; and



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          (b)           after any Event of Default shall have occurred and be continuing
and Lender has notified Pledgor of Lender's intention to exercise its voting
power under this Section

          (i)           Lender may exercise (to the exclusion of Pledgor) the voting power
and all other incidental rights of ownership with respect to any Partnership
Interests or other Pledged Property constituting Collateral and Pledgor
hereby grants Lender an irrevocable proxy, exercisable under such circumstances,
to vote the Partnership Interests and such other Collateral, and
          (ii)           promptly to deliver to Lender such additional proxies and other
documents as may be necessary to allow Lender to exercise such voting power.


All Distributions, interest, principal, cash payments, and proceeds which
may at any time and from time to time be held by Pledgor but which Pledgor
is then obligated to deliver to Lender, shall, until delivery to Lender,
be held by Pledgor separate and apart from its other property in trust
for Lender. Lender agrees that unless an Event of Default shall have occurred
and be continuing and Lender shall have given the notice referred to in
Section 4.4(b), Pledgor shall have the exclusive voting power with
respect to any Partnership Interests or other Pledged Property constituting
Collateral and Lender shall, upon the written request of Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by Pledgor which are necessary to allow Pledgor to exercise voting
power with respect to any Partnership Interests or other Pledged Property
constituting Collateral; provided, however, that no vote
shall be cast, or consent, waiver, or ratification given, or action taken
by Pledgor that would impair any Collateral or be inconsistent with or
violate any provision of the Credit Agreement or any other Loan Document
(including this Pledge Agreement).

ARTICLE V

LENDER

          SECTION 5.1 Lender Appointed Attorney-in-Fact. Pledgor hereby
irrevocably appoints Lender as Pledgor's attorney-in-fact, with full authority
in the place and stead of Pledgor and in the name of Pledgor or otherwise,
from time to time in Lender's discretion, to take any action and to execute
any instrument which Lender may deem necessary or advisable to accomplish
the purposes of this Pledge Agreement, including without limitation:

          (a)           to ask, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
          (b)           to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
and



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          (c)           to file any claims or take any action or institute any proceedings
which Lender may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Lender with respect
to any of the Collateral.

Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
          SECTION 5.2 Lender May Perform. If Pledgor fails to perform any
agreement contained herein, Lender may itself perform, or cause performance
of, such agreement, and the expenses of Lender incurred in connection therewith
shall be payable by Pledgor pursuant to Section 6.4.
          SECTION 5.3 Lender Has No Duty. The powers conferred on Lender
hereunder are solely to protect its interest in the Collateral and shall
not impose any duty on it to exercise any such powers. Except for the reasonable
care of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Lender shall have no duty as to any
Collateral or responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Property, whether or not Lender has or
is deemed to have knowledge of such matters, or (b) taking any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral.
          SECTION 5.4 Reasonable Care. Lender is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its possession;
provided, however, Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral,
if it takes such action for that purpose as Pledgor reasonably requests
in writing at times other than upon the occurrence and during the continuance
of any Event of Default, but failure of Lender to comply with any such
request at any time shall not in itself be deemed a failure to exercise
reasonable care.

ARTICLE VI

REMEDIES

          SECTION 6.1 Certain Remedies. If any Event of Default shall have
occurred and be continuing:

          (a)           Lender may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under
the U.C.C. (whether or not the U.C.C. applies to the affected Collateral)
and also may sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Lender's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Lender
may deem


12



commercially reasonable. Pledgor agrees that at least ten (10)
days' prior notice to Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Lender shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Lender may
adjourn any public or private sale from time to time without necessity
of announcement at the time and placed fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
          (b)           Lender may:

          (i)           transfer all or any part of the Collateral into the name of Lender
or its nominee, with or without disclosing that such Collateral is subject
to the lien and security interest hereunder,
          (ii)           notify the parties obligated on any of the Collateral to make payment
to Lender of any amount due or to become due thereunder,
          (iii)           enforce collection of any of the Collateral by suit or otherwise,
and surrender, release or exchange all or any part thereof, or compromise
or extend or renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with respect thereto,
          (iv)           endorse any checks, drafts, or other writings in Pledgor's name
to allow collection of the Collateral,

          (v)           take control of any proceeds of the Collateral, and
          (vi)           execute (in the name, place and stead of Pledgor) endorsements,
assignments, stock powers and other instruments of conveyance or transfer
with respect to all or any of the Collateral.



          SECTION 6.2 Compliance with Restrictions. Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, Lender is hereby authorized to comply with
any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number
of prospective bidders and purchasers, require that such prospective bidders
and purchasers have certain qualifications, and restrict such prospective
bidders and purchasers to persons who will represent and agree that they
are purchasing for their own account for investment and not with a view
to the distribution or resale of such Collateral), or in order to obtain
any required approval of the sale or of the purchaser by any governmental
regulatory authority or official, and Pledgor further agrees that such
compliance shall not result in such sale being considered or deemed not
to have been made


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in a commercially reasonable manner, nor shall Lender
be liable nor accountable to Pledgor for any discount allowed by the reason
of the fact that such Collateral is sold in compliance with any such limitation
or restriction.
          SECTION 6.3 Application of Proceeds. All cash proceeds received
by Lender in respect of any sale of, collection from, or other realization
upon, all or any part of the Collateral may, in the discretion of Lender,
be held by Lender as additional collateral security for, or then or at
any time thereafter be applied in whole or in part by Lender against, all
or any part of the Secured Obligations in such order as Lender shall elect.
Any surplus of such cash or cash proceeds held by Lender and remaining
after payment in full of all the Secured Obligations, and the termination
of all commitments by Lender to make Loans to Borrower, shall be paid over
to Pledgor or to whomsoever may be lawfully entitled to receive such surplus.
          SECTION 6.4 Indemnity and Expenses. Pledgor hereby indemnifies
and holds harmless Lender from and against any and all claims, losses,
and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses,
or liabilities resulting from Lender's gross negligence or willful misconduct.
Upon demand, Pledgor will pay to Lender the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its counsel
and of any experts and agents, which Lender may incur in connection herewith.

ARTICLE VII

MISCELLANEOUS PROVISIONS

          SECTION 7.1 Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof. Unless otherwise defined herein
or the context otherwise requires, the capitalized terms used in this Pledge
Agreement have the meanings provided in the Credit Agreement.
          SECTION 7.2 Amendments, etc. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by Pledgor
herefrom shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it
is given.
          SECTION 7.3 Protection of Collateral. Lender may from time to
time, at its option, perform any act which Pledgor agrees hereunder to
perform and which Pledgor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be
given after the occurrence and during the continuance of an Event of Default)
and Lender may from time to time take any other action which Lender reasonably
deems necessary


14



for the maintenance, preservation or protection of any
of the Collateral or of its security interest therein.
          SECTION 7.4 Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and, if to any Pledgor, mailed or faxed or delivered to it at the address
set forth below his signature hereto, if to Lender, mailed or delivered
to it, addressed to it at the address of Lender specified in the Credit
Agreement or, as to either party, at such other address as shall be designated
by such party in a written notice to each other party complying as to delivery
with the terms of this Section. All such notices and other communications
shall, when mailed or facsimilied, respectively, be effective when deposited
in the mails or when transmitted if facsimilied, respectively, addressed
as aforesaid.
          SECTION 7.5 Captions. Section captions used in this Pledge Agreement
are for convenience of reference only, and shall not affect the construction
of this Pledge Agreement.
          SECTION 7.6 Severability. Wherever possible each provision of
this Pledge Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Pledge Agreement
shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Pledge Agreement.
          SECTION 7.7 Governing Law, Entire Agreement, etc. THIS PLEDGE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION
OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF
ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF TEXAS. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT
TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN
OR ORAL, WITH RESPECT THERETO.
          SECTION 7.8 Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS PLEDGE AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LENDER OR PLEDGOR SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF TEXAS OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST


15



ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY
MAY BE FOUND. PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE COURTS OF THE STATE OF TEXAS AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF THE STATE OF TEXAS FOR THE PURPOSE OF ANY
SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. PLEDGOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
TEXAS. PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY
HAVE TO THE LAYING OF VENUE OF SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT PLEDGOR HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT
IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY,
PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS PLEDGE AGREEMENT.
          SECTION 7.9 Waiver of Jury Trial. LENDER AND PLEDGOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF LENDER OR PLEDGOR. PLEDGOR AND LENDER EACH ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH
IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER
ENTERING INTO THIS PLEDGE AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.



16



          IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be duly executed and delivered by their respective officers thereunto
duly authorized as of the day and year first above written.

 

 

 
PLEDGOR:
ENERGY SEARCH, INCORPORATED

 
By: 
Name:  Xxxxxxx X. Xxxxxx, Xx.

Title:    Chief Executive Officer
Address:      000 Xx. Xxxxxxx X. Xxxx.

                   Xxxxx 000

                   Xxxxxxxxx, Xxxxxxxxx 00000
Attention:     Xxxxxxx X. Xxxxxx
Telephone No.:    (000) 000-0000

Telecopy No.:      (000) 000-0000
LENDER:
SOUTHERN PRODUCER SERVICES, 
L.P.
By: 
Name:  Xxxxx X. Xxxxxxx

Title:    Vice President
Address:             0000 Xxxxx Xxxxxx
                           Xxxxx 0000

                           Xxxxxxx, XX 00000



Attention:            Mr. Xxxxx Xxxxxxx 
Telephone No.:  (000) 000-0000

Telecopy No.:    (000) 000-0000